Commercial Certainty Trumps Commercial Reality: B.C. Appeal Court Decides Receivers Must Give Written Notice Under Purchase & Sale Contract in KPMG Inc. v. 0747825 B.C. Ltd.

Advanced Filters

Please search by first or last name. e.g: "John" or "Smith". Your search will begin after typing at least 2 characters. Searching...
Sort by: Relevance | Name

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Use the search bar above or the advanced filters to further narrow your search by service, industry, office location, bar admissions, title, education and language.

: Service; Industry; Office; Position; Bar Admission; Education; Language

Contact Form

: Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

141 Kent St., Suite 300
McInnes Cooper Building
Charlottetown, PE
C1A 1N3

Tel: 902.368.8473
Fax: 902.368.8346

Fredericton

570 Queen St., Suite 600
Barker House
Fredericton, NB
E3B 6Z6

Tel: 506.458.8572
Fax: 506.458.9903

Halifax

1969 Upper Water St., Suite 1300
Purdy’s Wharf Tower II
Halifax, NS
B3J 3R7

Tel: 902.425.6500
Fax: 902.425.6350

Moncton

644 Main St., Suite 400
Blue Cross Building, South Tower
Moncton, NB
E1C 1E2

Tel: 506.857.8970
Fax: 506.857.4095

Saint John

1 Germain St., Suite 1700
Brunswick Square
Saint John, NB
E2L 4V1

Tel: 506.643.6500
Fax: 506.643.6505

St. John’s

10 Fort William Pl., 5th Floor
Baine Johnston Centre
St. John’s, NL
A1C 1K4

Tel: 709.722.8735
Fax: 709.722.1763

More Publications

Publication

Commercial Certainty Trumps Commercial Reality: B.C. Appeal Court Decides Receivers Must Give Written Notice Under Purchase & Sale Contract in KPMG Inc. v. 0747825 B.C. Ltd.

August 15, 2017

By Tim McLaughlin, at McInnes Cooper

Receivers across Canada seeking to sell assets can learn two important lessons about the importance of adhering to the letter of agreements of purchase and sale from a recent decision of the B.C. Court of Appeal. In KPMG Inc. v. 0747825 B.C. Ltd., the receiver learned these lessons the hard way when the Court chose commercial certainty over commercial reality: its failure to provide written notice that a condition had been satisfied, as required by the contract, resulted in losing its breach of contract claim of over $1.2 million – despite the fact the buyer had actual notice the receiver had satisfied the condition on time.

Comply with notice requirements. If the contract requires written notice, then give written notice. Doing so where the buyer has actual notice may seem a superfluous task, especially when both parties just want to conclude the deal. But if the contract requires written notice, giving it can save the receiver millions if the transaction doesn’t close: a court might very well let the buyer walk away from a transaction if the receiver fails to give written notice.

Fully understand agreements before entering them. The Court of Appeal’s comments about commercial certainty show that courts will enforce many other types of contractual provisions –in addition to those regarding notice – so long as they are clear and unambiguous. So a receiver should fully understand an agreement and its requirements before entering into and acting under it.

KPMG was the court-appointed receiver-manager of the assets and undertaking of Carmel Cove Resort & Spa Inc., a lakeside resort in B.C. On October 25, 2013, the receiver accepted the offer of 0747825 B.C. Ltd. to buy Carmel Cove’s business assets for $5.025 million. The contract was subject to a list of conditions and provided that unless “each condition is waived or declared fulfilled by written notice given by the benefiting party to the other party on or before the date specified for each condition, this Contract will be terminated”. The contract specifically included a condition that the Court approve the transaction within 21 days of October 25, 2013. The receiver obtained court approval for the transaction on November 15, 2013 – precisely 21 days after October 25. The buyer, 0747825, sent a representative to the November 15 court hearing, and likely had actual notice as of that date. Yet the receiver failed to deliver written notice to the buyer until November 19, 2013. By November 15, however, the buyer wanted out of the agreement and treated the receiver’s failure to deliver written notice as a termination of the contract. In turn, it refused to tender funds. After the receiver found another purchaser, it brought a breach of contract claim against the original buyer, 0747825, for $1,237,150.96, representing the expenses of maintaining and operating the business assets until it could find another buyer, and the difference in sale price it eventually received. The receiver relied heavily on the fact the buyer had actual notice that the receiver had satisfied the condition, insisting that, under such circumstances, written notice was unnecessary. Neither the trial court nor the Court of Appeal, however, agreed:

Clear Terms. The B.C. Supreme Court’s reasoning is simple: the parties had agreed the contract was null if the receiver failed to give written notice in a timely fashion. The buyer may have had actual notice, but by the contract’s clear and unambiguous terms, such notice was insufficient. Since the receiver failed to deliver written notice by November 15, the contract was terminated as of that date.

Commercial Certainty. The B.C. Court of Appeal agreed and dismissed the receiver’s appeal. The Court of Appeal noted that parties specify how to remove conditions in order to obtain commercial certainty in their agreements: such provisions clarify the parties’ obligations and reduce the risk of litigation. Out of respect for commercial certainty, courts should give effect to such agreements.

Please contact your McInnes Cooper lawyer or any member of the Bankruptcy & Insolvency Team @ McInnes Cooper to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2017. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Email us at publications@mcinnescooper.com to request our consent.

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Advanced Filters

Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

Fredericton

Halifax

Moncton

Saint John

St. John’s

Send Us Feedback

Un moment s'il vous plaît...

We are pleased to provide you with detailed biographies on our lawyers, paralegals and administrative team, so you can learn more about how we can best support your business' success.

Advanced Filters

Contact

We want to hear from you: Did we delight you with great service or a timely insight? Did we miss the mark? Are you looking for legal advice? If so, we want to know. Just type a few lines into our form, send an email to client.service@mcinnescooper.com, or call 1-855-622-6668.

Charlottetown

Fredericton

Halifax

Moncton

Saint John

St. John’s

Send Us Feedback

Un moment s'il vous plaît...

Share this with others

Twitter

Facebook

Google +

LinkedIn

Email