Ontario: Court of Appeal on the limitation of equitable set-offs

In 3113736 Canada Ltd. v. Cozy Corner Bedding Inc., the Court of Appeal explains why an equitable set-off is not subject to limitation:

[37]      I would not give effect to this argument. Although equitable set-off is a defence, it is one that arises from the defendant having a “cross-claim” that is closely connected to the plaintiff’s claim: Telford v. Holt1987 CanLII 18 (SCC)[1987] 2 S.C.R. 193, at p. 212. It is a way of raising, as a defence, a plaintiff’s liability to take into account a loss it occasioned to the defendant in reduction of the plaintiff’s claim. It is often referred to as a “claim for equitable set-off”: Canada Trustco Mortgage Co. v. Pierce (Estate Trustee of) (2005), 2005 CanLII 15706 (ON CA)254 D.L.R. (4th) 79 (C.A.), at para. 50, leave to appeal refused: [2005] S.C.C.A. No. 337.