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Appeal allowed; equitable set-off permitted for closely connected contracts in CCAA proceedings.
The appellant, Union Gas Limited, appealed an order made in CCAA proceedings regarding its right to set off amounts owed by the respondent, Algoma Steel Inc., against a rebate owed to the respondent.
The motions judge had denied legal set-off and limited equitable set-off to only one of two contracts.
The Court of Appeal upheld the decision on legal set-off but allowed the appeal regarding equitable set-off, finding a close connection between the contracts that made it manifestly unjust to enforce payment of the rebate without taking into account the full cross-claim.
