COURT OF APPEAL FOR ONTARIO
CITATION: Ang v. Premium Staffing Ltd., 2015 ONCA 821
DATE: 20151130
DOCKET: C60455
Strathy C.J.O., LaForme and Huscroft JJ.A.
BETWEEN
Fausto Ang Jr. and Nina Buena Bigayan
Respondents (Plaintiffs)
and
Premium Staffing Ltd., SKR Immigration Services and Rose L. Noel
Appellant (Defendant)
Glenn Yoon, for the appellant Premium Staffing Ltd.
Thomas Mathews, for the respondents
Heard: November 23, 2015
On appeal from the order of Justice Sandra Chapnik of the Superior Court of Justice, dated April 7, 2015.
ENDORSEMENT
[1] The appellant, Premium Staffing Ltd, appeals from an order of the motion judge striking a defence of set-off from its statement of defence in an action brought by the respondents.
[2] The respondents allege they paid the appellants $580,000 in advance pursuant to an oral contract with the appellants in exchange for a guarantee of employment positions for temporary foreign workers from Taiwan and the Philippines, and that the employment contracts turned out to be fraudulent. The vast majority of applicants never worked in Canada as promised.
[3] The appellant counterclaimed for $170,000 it alleges is owing on an oral contract with the respondent that makes the respondent the exclusive supplier of candidates from Taiwan and the Philippines for temporary work permits. The appellant also claimed set-off of $170,000 in its defence.
[4] The motion judge found that it is "plain and obvious that the plea of set-off in these circumstances is inappropriate and must be struck". The motion judge stated that neither party admitted owing any money to the other.
[5] On a motion to strike a pleading under Rule 21.01(b) on the ground that it discloses no reasonable cause of action, "the court must accept the facts alleged … as proven unless they are patently ridiculous or incapable of proof": Nash v. Ontario (1995), 1995 CanLII 2934 (ON CA), 27 O.R. (3d) 1 (C.A.) at 6.
[6] In this case, that means that there is an oral contract pursuant to which the respondents owe the appellant $170,000 and that the respondents submitted fraudulent information in their work permit applications, causing damage to themselves as well as the appellant.
[7] Although the nature of the set-off was not pleaded, the motion judge properly treated the pleading as one for equitable set-off.
[8] The motion judge set out the relevant principles governing equitable set-off approved in Holt v. Telford, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193, at p. 212:
the party relying on a set-off must show some equitable ground for being protected against his adversary's demands;
the equitable ground must go to the very root of the plaintiff's claim before a set-off will be allowed;
a cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim;
the plaintiff's claim and the cross-claim need not arise out of the same contract; and
unliquidated claims are on the same footing as liquidated claims.
[9] However, her decision does not address these principles specifically. The motion judge simply stated that the parties disagree as to the nature of the contract or agreement between them and that neither admits owing any money to the other. She added that the conflict was more appropriately dealt with by means of a counterclaim.
[10] It is not clear why the appellant chose to plead set-off in addition to making a counterclaim, or what advantage there is to the respondents to attempt to strike out the plea of set-off in these circumstances. Be that as it may, once set-off was pleaded it, was incumbent on the motion judge to address the Telford factors in order to make a decision on the motion and she failed to do so.
[11] We are satisfied that this is a proper claim for set-off on the Telford test. Although there is disagreement about the nature of the parties' contractual relationship, there is no question that the claims of the appellant and respondent are closely connected and arise out of one or more related contractual relationships between them.
[12] The appellant's plea of set-off is relatively thin. However, the motion judge was required to read the statement of claim "generously with allowance for inadequacies due to drafting deficiencies": Nash. The lack of particularity caused no prejudice to the respondents.
[13] Accordingly, the appeal is allowed.
[14] The appellant is entitled to its costs from the respondent, fixed by agreement of the parties at $5700, inclusive of disbursements and all applicable taxes.
"G.R. Strathy C.J.O."
"H.S. LaForme J.A."
"Grant Huscroft J.A."