Claude Chabot

Following the dismissal of the applicants' applications regarding holdback funds from a commercial transaction, the respondent sought costs.

The respondent had made an offer to settle that was better than the result obtained by the applicants.

The applicants objected to the costs claimed, arguing the matter was over-lawyered and the costs were disproportionate.

The court agreed there was some over-lawyering but found the applicants' unproven allegations of dishonesty against the respondent justified an elevated costs award.

The court awarded the respondent partial indemnity costs up to the date of the offer and substantial indemnity costs thereafter, fixed at $73,036 inclusive of disbursements.

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.