The plaintiff, Westmount-Keele Limited, purchased a hotel from the defendants, Royal Host Hotels and Resorts Real Estate Investment Trust and North York (Keele St.) Purchaseco Inc., with an agreement to reimburse Royal Host for up to $2 million in hotel closure costs.
Westmount's obligation was secured by a mortgage, later replaced by $2.2 million paid into court.
The central issue was to determine Royal Host's entitlement from these funds.
The court found Royal Host's initial claim of over $2.1 million in closing costs to be largely unsubstantiated, particularly a fictitious franchise termination fee.
The court determined that Royal Host was entitled to $638,201 plus prejudgment interest at a blended rate of 1.72%, significantly less than claimed, and Westmount was entitled to the return of the remaining funds.
The court also found Royal Host's conduct contributed to the delay in proceedings.