The defendant, Cozy Corner Bedding Inc., appealed a summary judgment that dismissed its counterclaim for equitable set-off and granted judgment to the plaintiff, 3113736 Canada Ltd. (Valle Foam), for unpaid invoices.
Cozy Corner alleged overcharging due to a price-fixing scheme.
The motion judge had ruled the counterclaim was barred by a class action release and lacked sufficient evidence.
The Court of Appeal allowed the appeal, finding that an exception in the class action release preserved the right to pursue claims in insolvency proceedings, including equitable set-off under s. 21 of the CCAA.
The Court also found the motion judge erred in concluding there was insufficient evidence of overcharging, noting Valle Foam's own admissions regarding overcharge percentages.
The summary judgment was set aside, and the matter was directed to trial.