Focus On

NEGOTIABLE INSTRUMENTS - Counterclaim, equitable assignment or set-off

Tuesday, October 01, 2019 @ 8:40 AM  

Lexis Advance® Quicklaw®
Appeal by Fauser Energy Inc. (“Fauser”) from the summary judgment granted to the respondents and the decision declining to grant a stay of that judgment. The respondents sold shares to Fauser under a share purchase agreement. Partial payment of the purchase price was made by means of a promissory note. The parties also executed a non-competition agreement. Fauser made two payments under the promissory note but did not make the third and final payment of $155,920 because it believed the respondents had breached the terms of the non-competition agreement. The respondents commenced an action for payment of the monies owed under the promissory note. Fauser claimed entitlement to set-off both as a defence and as part of its counterclaim for damages for breaches of the non-competition agreement. The chambers judge granted the respondents’ summary judgment application for the outstanding amount under the promissory note but dismissed their application to summarily dismiss Fauser’s counterclaim. He declined to grant a stay of the summary judgment based on Fauser’s delay, and on the basis that there was little to no evidence as to the amount that might be awarded on the counterclaim, the merits of the counterclaim, or the respondents’ ability to satisfy a judgment.

HELD: Appeal dismissed. While the chambers judge overstated the law by indicating that equitable set-off did not apply to bills of exchange, there were no exceptional circumstances that justified the withholding of summary judgment in the within case. The chambers judge did not err by granting summary judgment. The decision not to grant a stay of the summary judgment was discretionary and entitled to deference. The chambers judge considered the appropriate factors in determining whether to grant the stay.

Fauser Energy Inc. v. Skjerven, [2019] S.J. No. 307, Saskatchewan Court of Appeal, R.G. Richards C.J.S., G.R. Jackson and N.W. Caldwell JJ.A., August 22, 2018. TLD-September302019006