Two related vendor companies applied for payment of holdback funds following the sale of land, building, and an industrial gas business to the purchaser.
The agreements required the vendors to obtain a zoning compliance letter satisfactory to the purchaser and permitted indemnity holdbacks for breaches relating to the property.
The purchaser refused to release the funds after concluding the business did not comply with municipal zoning restrictions and incurred relocation costs.
The court held the purchaser acted reasonably and in good faith in relying on professional advice and exercising contractual discretion under the holdback provisions.
Both applications were dismissed and the holdback funds were ordered released to the purchaser.
