The appellant purchased three apartment buildings from the respondent.
The agreement included an escrow provision holding $300,000 of the purchase price, to be released to the respondent if the gross rental income reached a $960,000 threshold at the end of a three-year performance period.
The application judge found the threshold was met and ordered the funds released to the respondent.
On appeal, the Court of Appeal found the application judge erred in his approach to contractual interpretation by separating the words from their context, contrary to Sattva.
However, applying the correct framework, the Court concluded the parties intended to measure income performance by annualizing the rent roll at the end of the performance period.
As the threshold was met under this interpretation, the appeal was dismissed.