According to Holt v. Telford, 1987 CanLII 18 (SCC), [1987] 2 SCR 193 such a set‑off has its origin in equity. It can apply where mutuality is lost or never existed. It can apply where the cross obligations are not debts. The principals to be applied as follow: 1. The party relying on a set‑off must show some equitable ground for being protected against his adversary's demands. 2. The equitable ground must go to the very root of the plaintiff's claim before a set‑off will be allowed. 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. 4. The plaintiff's claim and the cross‑claim need not arise out of the same contract. 5. Unliquidated claims are on the same footing as liquidated claims.
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