Raymond Francis Royal Leach

An appeal concerning the calculation of a bonus payable to a subordinate debt and equity financing fund upon the sale of a borrower company.

The lower court determined the bonus at $242,552.79 based on net proceeds excluding $55.125 million in debt created through a pre-sale reorganization.

The appellate court reversed in part, holding that the $55.125 million should be included in the bonus calculation as it formed part of the proceeds of sale and was created in violation of the loan agreement's consent requirement.

The court upheld the lower court's rejection of arguments that the bonus contravened the criminal rate of interest, was unconscionable, or was ultra vires the lender's statutory mandate.

The bonus was recalculated at $793,800.48.

Wittington Properties Limited applied for declarations that GoodLife Fitness Centres Inc. had lost its right to extend a lease due to ongoing breaches related to gross revenue reporting and a competition provision.

GoodLife brought a cross-application for declarations affirming its right to extend the lease and, in the alternative, relief from forfeiture.

The court found GoodLife was in default of the lease regarding both gross revenue reporting and the competition provision, and that GoodLife had not proven its breaches were de minimis or that Wittington had waived its rights or acted in bad faith.

Consequently, the court declared GoodLife had no right to extend the lease and ordered vacant possession.

The applicants sought declaratory relief to deny a bonus provision to the respondent, arguing it was criminal, unconscionable, or ultra vires.

The court found a bonus was owing but accepted the applicants' expert opinion on its quantum, significantly reducing the amount claimed by the respondent.

Both parties sought costs.

The court considered contractual full indemnity costs versus partial indemnity, noting the divided success and the absence of settlement offers.

Ultimately, the court ordered no costs, with each party bearing their own, and denied interest on the judgment.

The applicants sought a declaratory order that a bonus payment clause in a 2011 loan agreement with the Business Development Bank of Canada (BDC) was unenforceable, arguing it contravened section 347 of the Criminal Code, was unconscionable, or was ultra vires to BDC's statutory objects.

The court dismissed all these arguments, finding the interest rate was not criminal, the transaction was not unconscionable given the applicants' sophistication, and the bonus provision was within BDC's powers.

However, the court ruled on the calculation of "net proceeds" for the bonus, allowing deductions for certified indebtedness, income taxes, and accounting fees, significantly reducing the bonus amount payable to the respondent.