



COURT OF APPEAL
        FOR BRITISH COLUMBIA




Citation:



Tahvili
                v. HSBC Bank Canada ,









2004 BCCA
            22




Date: 20040116





Docket: CA030828

Between:

Omid Tahvili

Appellant

(
Defendant
)

And

HSBC Bank
      Canada

Respondent

(
Plaintiff
)












Before:



The Honourable
            Madam Justice Southin





The Honourable
            Mr. Justice Braidwood





The Honourable
            Mr. Justice Mackenzie









H.C.R. Clark,
            Q.C.



Counsel for the Appellant





J.G. Shatford



Counsel for the Respondent





Place and
            Date of Hearing:



Vancouver, British Columbia





November 25, 2003





Place and
            Date of Judgment:



Vancouver, British Columbia





January 16, 2004









Written
              Reasons by
:





The Honourable
            Mr. Justice Braidwood





Concurred
              in by:





The Honourable Madam Justice Southin

The Honourable Mr. Justice Mackenzie





Reasons for Judgment of the Honourable Braidwood:

Background

[1]

This
        is an appeal from the decision of Madam Justice Loo allowing the respondents
        action on an application brought under Rule 18 of the
Rules of Court
:
      2003 BCSC 844.

[2]

The
      material facts are not in dispute.

[3]

On
        29 September 2000, Mr. Omid Tahvili executed a line of credit overdraft
        agreement and statement of disclosure (the Line of Credit) with HSBC
        Bank Canada (HSBC). Under the terms of the Line of Credit HSBC agreed
        to advance up to $25,000.00 to Mr. Tahvili by way of overdraft. Mr. Tahvili
        agreed to repay any amount advanced under the Line of Credit together with
      interest at HSBCs prime rate of interest plus 2% per annum.

[4]

The
      Line of Credit was the only account Mr. Tahvili had with HSBC.

[5]

On
        1 November 2001, HSBC demanded payment from Mr. Tahvili for $24,264.09,
        the amount advanced to Mr. Tahvili under the Line of Credit as of that
      date.

[6]

Mr.
        Tahvili does not deny the amount claimed by HSBC, that HSBC has made the
        demand for payment, or that he has failed to pay the amount claimed by
      HSBC.

[7]

On
        26 February 2002, HSBC filed a writ of summons and statement of claim.
      A statement of defence and counterclaim were filed in May 2002.

[8]

In
        his statement of defence, Mr. Tahvili alleges that HSBC put some form of
        security warning about him on a service accessed by HSBC and other financial
        institutions in the Lower Mainland. Mr. Tahvili submits that, as a result
        of this security warning, HSBCs decision to freeze the accounts of the
        Corporations in October 2001 and HSBCs refusal to honour cheques drawn
        on the Corporations accounts, he has been unable to open bank accounts
        at other financial institutions; his credit rating has been ruined; and
        his credit cards have been cancelled. All of these consequences, Mr. Tahvili
      argues, have caused him loss and damage.

[9]

The
        counterclaim was filed by five corporate plaintiffs controlled by Mr.
      Tahvili: A & R Rent-a-Benz Ltd.; First British National Holdings Ltd.; South
        Seas International Holdings Ltd.; D & C General Holdings Ltd.; and
        Show Time Car Wash Inc. (collectively, the Corporations). Each of the
        Corporations had a separate account with HSBC. The counterclaim repeats
      Mr. Tahvilis allegations as contained in the statement of defence.

[10]

In
        granting HSBCs claim for summary judgment against Mr. Tahvili, Loo J.
        expressed some doubt as to whether Mr. Tahvili was also the plaintiff by
        counterclaim. The learned chambers judge found that whatever claims the
        Corporations may have against HSBC are totally unconnected to HSBCs
      claim under the Line of Credit against Mr. Tahvili.

[11]

Keeping
        in mind Mr. Tahvilis cross-claim that his credit rating has somehow
      been ruined and that he has had difficulty dealing with other financial
      institutions,
        Loo J. held that equitable set-off was not available to Mr. Tahvili,
      that it would not be manifestly unjust to allow HSBC to enforce payment
      of
        Mr. Tahvilis debt under the Line of Credit without taking into account
      Mr. Tahvilis cross-claim.

[12]

Mr.
        Tahvili raises two issues on appeal. First, did the learned chambers judge
        fail to apply the appropriate test for determining the Rule 18 application?
        Second, did the learned chambers judge fail to properly apply the law of
      equitable set-off?

Discussion

[13]

The
        test to be applied on a Rule 18 application for summary judgment is well-settled:
        is there a
bona fide
triable issue? See
Memphis Rogues Ltd.
        v. Skalbania
(1982), 38 B.C.L.R. 193, 29 C.P.C. 105 (C.A.);
Ewachniuk
        v. Abraxis Holdings Ltd.
, 2003 BCCA 611 at para. 3. The applicant
        for judgment, in this case HSBC, bears the burden of proving beyond a reasonable
        doubt that no such issue exists:
Montroyal Estates Ltd. v. D.J.C.A.
      Investments Ltd. et al.
(1984), 55 B.C.L.R. 137 at 138-39, (C.A.).

[14]

As
        noted above, Mr. Tahvili does not deny his outstanding debt to HSBC under
        the Line of Credit. The only defence advanced by Mr. Tahvili and the
      Corporations before Loo J. was that damage and loss to Mr. Tahvili as a
      result of HSBCs
        alleged security warning about him to other Lower Mainland financial
        institutions and losses suffered by the Corporations as a result of HSBCs
        decisions vis-à-vis the Corporations accounts should be set-off in equity
      against HSBCs claim against Mr. Tahvili under the Line of Credit.

[15]

Mr.
        Tahvili submits that, rather than merely determining whether there was
        a triable issue, the chambers judge decided a complicated issue of fact
        and law, namely, the availability of the defence of equitable set-off.
        Essentially, Mr. Tahvili argues that a trial is necessary to determine
      whether equitable set-off is available.

[16]

I
        cannot accede to Mr. Tahvilis submissions on this issue as it is clear
        from the authorities that a chambers judge has the discretion to grant
        summary judgment for the amount of a claim even if there is an arguable
        cross-claim or counterclaim offered as a defence:
Metro-Can Construction
        (HS) Ltd. v. Noel Developments Ltd.
(1996), 26 B.C.L.R. (3d) 26,
        78 B.C.A.C. 61, 29 C.L.R. (2d) 47 at paras. 28-30;
First City Development
        Corp. Ltd. v. Stevenson Construction Co. Ltd.
(1983), 3 D.L.R.
      (4th) 505 at 508, 48 B.C.L.R. (2d) 242, 40 C.P.C. 253, 3 C.L.R. 230 (C.A.).

[17]

The
        question for the chambers judge was therefore whether the defence of equitable
        set-off was a
bona fide
triable issue in this proceeding. In my
        view, Loo J. applied the appropriate test and correctly held that it was
      not.

[18]

Five
        main principles with respect to equitable set-off were discussed and set
        out by this Court in
Coba Industries Ltd. v. Millies Holdings (Canada)
        Ltd.
(1985), 20 D.L.R. (4th) 689, 65 B.C.L.R. 31, [1985] 6 W.W.R.
        14, 36 R.P.R. 259 (C.A.), and cited with approval by Madam Justice Wilson
        in
Holt v. Telford
, [1987] 2 S.C.R. 193 at 212, 81 A.R. 385,
      41 D.L.R. (4th) 385, [1987] 6 W.W.R. 385:

1.    The party relying on a set-off must show some
        equitable ground for being protected against his adversary's demands:
Rawson
      v. Samuel
, [1841] Cr. & Ph. 161, 41 E.R. 451 (L.C.).

2.    The equitable ground must go to the very root
        of the plaintiff's claims before a set-off will be allowed:  [
Br.
Anzani
(
Felixstowe
) Ltd. v. Int.
        Marine Mgmt (U.K.) Ltd.
, [1980] Q.B. 137, [1979] 3 W.L.R. 451, [1979]
      2 All E.R. 1063].

3.    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:  [
Fed. Commerce and Navigation Co. v.
Molena
Alpha
      Inc.
, [1978] Q.B. 927, [1978] 3 W.L.R. 309, [1978] 3 All E.R. 1066].

4.    The plaintiff's claim and the cross-claim need
        not arise out of the same contract:
Bankes
v.
      Jarvis
, [1903] 1 K.B. 549 (Div. Ct.);
Br.
Anzani
.

5.    Unliquidated
claims are on the same footing as liquidated
        claims:  [
Nfld. v. Nfld.
Ry
. Co.
,
      [1888] 13 App. C. 199 (P.C.)].

[19]

In
        my view, in light of the above, well-established principles, equitable
        set-off is not available to Mr. Tahvili in this case. Mr. Tahvili has not
        demonstrated some equitable ground for being protected against HSBCs claim.
        The relationship between Mr. Tahvili and HSBC is in the nature of debtor-creditor;
        there certainly was no fiduciary relationship between HSBC and Mr. Tahvili.
        Thus, any claims Mr. Tahvili may have against HSBC appear to fall under
        other areas of the law, such as contract or tort; his cross-claim does
      not, at any rate, sound in equity.

[20]

Furthermore,
        I do not view Mr. Tahvilis cross-claim as so clearly connected to HSBCs
        demand that it would be manifestly unjust to allow HSBC to enforce payment
      of the Line of Credit without taking into consideration Mr. Tahvilis cross-claim.

[21]

Equitable
        set-off was not available to Mr. Tahvili in this case and he raised no
        other defence to HSBCs claim. The decision to grant summary judgment was
      therefore just and appropriate in this case.

[22]

Accordingly,
      I would dismiss this appeal.

The Honourable
      Mr. Justice Braidwood

I AGREE:

The Honourable
      Madam Justice Southin

I AGREE:

The Honourable
      Mr. Justice Mackenzie




