Al-Nawaz Zulfikar Nanji

The respondent purchased the appellant's business in exchange for securities, with the appellant becoming a minority shareholder.

The acquisition agreement contained a representation and warranty regarding tax pools.

Years later, the Canada Revenue Agency disallowed the respondent's use of the tax pools and assessed approximately $11.8 million in additional taxes, interest, and penalties.

The respondent invoked an indemnity from the appellant, who argued the respondent had breached the tax pools representation and warranty.

The motion judge granted summary judgment for the respondent, interpreting the representation and warranty as directed solely to the accurate identification of tax pools and their values at closing, not as a guarantee of future tax utilization.

The appeal was dismissed.

The plaintiff brought a motion for summary judgment seeking indemnification from the defendants for a percentage of taxes, interest, and penalties assessed by the Canada Revenue Agency (CRA).

The parties had previously entered into a Share Put Agreement containing an indemnity clause.

The defendants argued they were protected by a prior representation and warranty regarding the future use of tax pools, and sought a set-off.

The court found that the plaintiff did not guarantee the future use of the tax pools against CRA reassessment, and that any such prior representations were superseded by an entire agreement clause.

The court granted summary judgment for the plaintiff, enforcing the indemnity, and declined to stay execution of the judgment pending the CRA appeal.