The respondent borrower sued for the return of a $138,000 commitment fee after a commercial mortgage transaction failed to close.
The transaction failed because the borrower did not meet the required rental achievement figure due to deteriorating economic conditions.
The trial judge ordered the return of the fee, finding the borrower was not in 'default' because the failure was not its fault.
The Court of Appeal allowed the appeal and dismissed the action, holding that in a commercial contract, 'default' simply means failure to fulfill an obligation, regardless of fault.
The lender was entitled to retain the commitment fee.