Can a creditor of a bankrupt set off an unliquidated claim for damages suffered in a motor vehicle accident against a debt owing by the bankrupt?

The purpose and function of the rules supports the conclusion reached in Stooke v. Taylor, supra. The rules are designed to ensure the "just, speedy and inexpensive determination of every proceeding on its merits" (R. 1(5)). Rule 19(13) contains within its provisions its own object-"so as to enable the court to pronounce a final judgment on all claims in the same action". The rule also refers to counterclaims and set-offs. This distinction would not have been retained if it was intended to abolish any distinction between the two forms of cross-demands. Nor would R. 21(15), which permits judgment to a defendant for the balance in his favour established to be owing by way of a "set-off or counterclaim", have continued the two concepts. Thus, the liberal interpretation of R. 19(13) put forth by the applicant, by giving the defendant the option of raising any cross-claim as a set-off or counterclaim, would imply a significant amendment to the statutory law and the equitable principles relating to set-offs. It would have consequences beyond the merely procedural, particularly in the field of bankruptcy. The provisions of s. 75(3) of the Bankruptcy Act refer to the "law of set-off". If the rules amend the "law of set-off" in the way suggested by the applicant, then a creditor of a bankrupt could set off an unliquidated claim for damages suffered in a motor vehicle accident against a debt owing by the bankrupt. I cannot accept that the drafters of the rules intended to permit a totally unrelated claim to be set off as a defence. This conclusion is expressly espoused by Cockburn C.J. in Stooke v. Taylor, supra. He states at p. 862: …a set-off appears to consist of a defence to the original claim of the plaintiff; a counter-claim is the assertion of a separate and independent demand, which does not answer or destroy the original claim of the plaintiff. Clearly, therefore, the court limits set-offs to those cross-actions which arise out of the same subject matter as the plaintiff's action.