COURT FILE NO.: CV-17-588594

DATE: 2018/12/31

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

AgriMarine Holdings Inc. and AgriMarine Industries Inc.

Applicants

– and –

akvatech as

Respondent

Peter E.J. Wells and Adam D.H. Chisholm for the Applicants

Jason W.J. Woycheshyn and Joseph Blinick for the Respondent

HEARD: November 29, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction and Overview

[1] The Applicants, AgriMarine Holdings Inc. and AgriMarine Industries Inc. (collectively “AgriMarine”), develop aquaculture equipment. AgriMarine owns a closed containment fish- rearing technology. AgriMarine brings an application for a declaration that the Respondent, Akvatech A.S., breached a Letter Agreement dated November 22, 2012 and, therefore, Akvatech has no license to market and sell AgriMarine’s fish-rearing technology.

[2] AgriMarine submits that the Akvatech’s Default Notice and the Exercise Notice delivered under the Letter Agreement were invalid, and, therefore, Akvatech’s license is invalid. AgriMarine submits that Akvatech cannot rely on its breach of the Letter Agreement; i.e., its failure to deliver the Definitive Transaction Documents as a way to obtain a license. Agrimarine relies on the legal principle that no one can take advantage of his or her own breach of contract. And AgriMarine argues that, in any event, Akvatech’s purported license wants for certainty and is, therefore, unenforceable.

[3] Akvatech resists the application for a declaration. It submits is that it lawfully acquired an irrevocable license for AgriMarine’s fish-rearing technology and, therefore, AgriMarine’s application for a declaration to the contrary should be dismissed on its merits. In the alternative, Akvatech submits that AgriMarine’s application should be dismissed because it is statute-barred under the Limitations Act, 2002[^1] or is barred because of the doctrines of laches or several types of estoppel. Akvatech submits that the equities weigh against AgriMarine because it acknowledged Akvatech’s license and because AgriMarine sat idly by for five years without disputing the license while Akvatech invested money, time, and effort and staked its own business’s existence on commercializing the fish-rearing technology, all in reliance on having an irrevocable license. In the further alternative, Akvatech submits the relief requested by Akvatech goes beyond the relief that can be granted on an application for a declaration.

[4] For the reasons that follow, I dismiss AgriMarine’s application. I do so on the merits that: (a) Akvatech did not breach the Letter Agreement and was entitled to the license; (b) Akvatech’s Default Notice and the Exercise Notice were valid exercises of its contract rights; and (c) the license was certain and is enforceable.

[5] I make a decision on the merits and, therefore, Akvatech’s defences based on the Limitations Act, 2002, laches, estoppel, and the scope of relief available by application are moot and I shall not address them.

B. Facts

[6] AgriMarine and Akvatech and their respective principals have had a business relationship of various sorts from 2011 until to date, when the dispute at bar is one of several that are before courts or arbitration tribunals.

[7] For the purposes of deciding AgriMarine’s application now before this court, it is necessary to focus only on the events in the autumn of 2012 until the winter of 2013 with a few references to events thereafter.

[8] For the purposes of deciding Agrimarine’s application, it is not necessary to describe the factual background on the moot issues associated with Akvatech’s defences based on the Limitations Act, 2002, laches, or estoppel, which are based on what happened between the parties after the winter of 2013 to the commencement of Agrimarine’s application in 2017.

1. The Parties

[9] AgriMarine Holdings Inc. (“AHI”) is a Canadian aquaculture company incorporated in British Columbia. It is a public company that trades on the TSX Venture Exchange ("TSXV").

[10] AHI’s subsidiary, AgriMarine Industries Inc. (“AII”), specializes in fish farming and in developing technologies for commercial aquaculture applications, including a proprietary closed containment fish-rearing technology. The technology is designed to nurture fish in a solid-wall closed containment systems that floats in the water.

[11] Sean Wilton of Nanaimo, British Columbia is a Director (since 2010) of AgriMarine Holdings Inc. and of AgriMarine Industries Inc. He was the President, CEO, and Secretary of AgriMarine Holdings from October 4, 2012 until February 1, 2017, after which he continued to serve as a Vice-President.

[12] During the relevant events, AgriMarine’s legal counsel was McMillan LLP in Toronto.

[13] Akvatech AS is a corporation incorporated under the laws of Norway. It operates, markets and sells aquaculture production equipment, including AgriMarine’s proprietary technology in Norway and in Northern Europe. The principals of Akvatech are Leon George Raubenheimer and Geir Spiten.

[14] Mr. Raubenheimer of Toronto, Ontario, formerly a lawyer in South Africa, is the managing partner of ZED Financial Partners, an investment bank in Toronto. Mr. Raubenheimer was involved in business dealings between ZED Financial Partners, Akvatech, and AgriMarine. Mr. Raubenheimer is a Director and a non-controlling shareholder of Akvatech.

[15] Mr. Spiten of Oslo, Norway, is a Director, officer, and shareholder of Akvatech. Mr. Spiten along with Mr. Raubenheimer represented Akvatech in its negotiations and agreements with AgriMarine that are the subject matter of the application now before the court.

[16] During the relevant events, Akvatech was represented by Bennett Jones LLP in Toronto.

2. The Factual Background to the Letter Agreement

[17] In 2011, after extensive negotiations, AgriMarine signed a joint venture agreement with Akvatech under which AgriMarine would license its closed containment fish-rearing technology to Akvatech. The joint venture agreement, however, was stillborn.

[18] Akvatech says that the failure of the joint venture occurred because AgriMarine was in a precarious financial situation and because AgriMarine reneged on the joint venture. I need not determine why the joint venture did not flourish, but what is true and what is an important background circumstances is that in the autumn of 2012, AgriMarine was in dire straits and the survival of its business was imperilled by its poor financial situation.

[19] In the autumn of 2012, AgriMarine was not paying its landlord for rent nor its employees or consultants their salaries. AgriMarine was possibly at risk of going out of business.

[20] In the autumn of 2012, AgriMarine's owed Watchtower Bible & Tract Society of Pennsylvania ("Watchtower") $2,644,166 in a debt secured by guarantees and by a General Security Agreements over AgriMarine’s assets. The Watchtower loan was not in good standing, and Watchtower was forbearing taking any proceedings to enforce its securities.

[21] It was in these circumstances of a failed joint venture and a business that was floundering that AgriMarine and Akvatech, which was still eager to acquire rights to the fish-rearing technology, engaged in the negotiations that led to the Letter Agreement of November 22, 2012.

3. The Letter Agreement

[22] On November 22, 2012, AgriMarine and Akvatech signed a Letter Agreement for the sale of AgriMarine’s fish-rearing technology to Akvatech.

[23] The Letter Agreement envisioned the outright sale of some rights in the technology and also the sale of some licenses to commercialize and exploit the technology. The key provisions of the agreement were:

a. Agrimarine agreed to grant Akvatech outright ownership of the technology for the territory of Northern Europe, including Norway, in consideration of the payment of $1.0 million;

b. AgriMarine agreed to grant Akvatech a exclusive license for the technology for the territories of Middle East, North Africa, Southern Europe, and South America (“MENASE Territory”) in consideration of the payment of royalties;

c. AgriMarine agreed to grant Akvatech a non-exclusive license for the technology for anywhere in the world, exclusive of China and Canada, in consideration of the payment of royalties;

d. Akvatech agreed to use reasonable commercial efforts to commercialize the technology in the Northern Europe Territory, the South America Territory, and the MENASE Territory;

e. Akvatech agreed to lend $2.5 million to AgriMarine for the designated purpose of retiring all of AgriMarine’s indebtedness to Watchtower;

f. Akvatech would immediately advance $200,000 to AgriMarine, “the Pre-Payment Amount” to be used only to pay office rental and employee salaries;

g. the agreement was subject to the approval of the TSX Venture Exchange;

h. the parties would exchange “Definitive Transaction Documents” by December 7, 2012, the "Target Closing Date" or such other date as mutually agreed by the parties in writing;

i. upon execution and delivery of the Definitive Transaction Documents, these documents would replace and supersede the provisions of the Letter Agreement;

j. the Pre-Payment Amount ($200,000) would be immediately refundable if the Definitive Transaction Documents were not signed and delivered on the Target Closing Date or such later date agreed by the parties in writing;

k. the Pre-Payment Amount would be immediately refundable if AgriMarine failed to obtain all necessary consents and approvals required to close the transactions, including the TSXV approval;

l. if the TSXV refused to approve the Transaction, the Agreement automatically terminated and AgriMarine shall immediately refund the Pre-Payment Amount to Akvatech;

m. if the TSXV required the approval of AgriMarine’s shareholders, Akvatech had a right to deliver a Termination Notice to end the transaction, in which case the $200,000 would become refundable;

n. if the $200,000 became refundable and was not immediately refunded, Akvatech could deliver a "Default Notice" and AgriMarine would have five calendar days to cure its default by refunding the $200,000;

o. if AgriMarine failed to repay the $200,000 Akvatech could elect, in full satisfaction of the $200,000, to acquire either: (a) four million AgriMarine shares; or (b) an irrevocable, exclusive, perpetual, license for the technology for the Northern European Territory; and,

p. the Letter Agreement is silent as to whether Akvatech must pay a royalty under the license that would discharge repayment of the Pre-Payment Amount.

[24] More precisely, the pertinent provisions of the Letter Agreement are set out in Schedule “A” to these Reasons for Decision.

[25] For the purposes of this application, it should be noted and kept in mind that under the Letter Agreement, there were elaborate provisions with respect to the payment, the use, and the possible repayment of what the parties described as the Pre-Payment Amount.

[26] Mr. Wilton of AgriMarine had requested this advance payment from Akvatech because, as noted above, in the autumn of 2012 AgriMarine was in a financial precarious position. Akvatech, however, was only prepared to made the $200,000 Pre-Payment: (a) if the money was used for specific purposes; (b) if the money was treated as a partial payment should the transaction close; (c) the money must be refunded should the transaction not close; and (d) provided that Akvatech obtained security for the repayment of the $200,000 if the transaction did not close.

[27] It should be noted and kept in mind that that under the Letter Agreement, AgriMarine was refinancing and replacing all the Watchtower debt, which encumbered the assets of AgriMarine, with a secured debt to Akvatech. It was integral to the Letter Agreement that the Watchtower debt be repaid and refinanced. Because this provision will prove significant in understanding both the factual history of the transaction and the legal analysis of it, I shall repeat it with emphasis added:

The Loan Amount shall be used by AII strictly for the purpose of settling all of AII's indebtedness (the "Watchtower Debt") with the Watchtower Bible & Tract Society of Pennsylvania ("Watchtower") and securing the release of all security interests held by Watchtower over the assets of AII (the "Watchtower Security").

[28] Discharging all of the Watchtower debt, however, was to prove a challenge for both parties. At the time of the signing the Letter Agreement, AgriMarine owed Watchtower approximately $2.6 million, but the refinancing loan under the Letter Agreement was for only $2.5 million. Thus, AgriMarine confronted a problem from the outset about its ability to perform and complete the Letter Agreement by discharging all of Watchtower’s debt. In a press release issued by AgriMarine on November 20, 2012 regarding the Letter Agreement, AgriMarine stated that: "there can be no assurance that the transactions contemplated under the Agreement will be completed as proposed."

[29] It is also to be noted and kept in mind that under the Letter Agreement, the parties were obliged to negotiate and deliver Definitive Transaction Documents by December 7, 2012 or such other date as mutually agreed by the parties in writing. The Definitive Transaction Documents included the IPAL Agreement (an Intellectual Property Assignment and Licensing Agreement) and the Credit Agreement (the $2.5 million loan) along with associated General Security Agreements and Guarantees.

4. The Performance of the Letter Agreement

[30] Upon the signing of the Letter Agreement, Akvatech’s lawyers began to draft the Definitive Transaction Documents, and Akvatech took steps to raise the $2.5 million that it was going to lend to AgriMarine.

[31] On November 29, 2012, Akvatech paid the $200,000 Pre-Payment Amount.

[32] While outside the provisions of the Letter Agreement, the parties knew that Akvatech had to fund its loan of $2.5 million. Akvatech had investors to fund all but $100,000 of the loan, but there was the problem that the Watchtower indebtedness was $2.64 million. In the autumn of 2011, there was, thus, a shortfall of $244,166 in the available funding necessary to discharge the Watchtower debt.

[33] The Letter Agreement transaction did not close on December 7, 2012. With the Watchtower matter unresolved and with Akvatech continuing its efforts to fund its loan commitment, neither party was in a position to close on December 7, 2012. Moreover, the Definitive Transaction Documents had not been signed by either party and were still being prepared. Neither party tendered or treated the failure to close on December 7, 2012 as a default under the Letter Agreement.

[34] On December 7, 2012, neither party called the transaction off, and rather they informally agreed to try and close the transaction around December 31, 2012. The change to the Target Closing Date, however, was informal, and the change was not documented in writing. The parties seemed content to leave the status of the Letter Agreement ambiguous.

[35] After December 7, 2012, the parties discussed how they might complete the transaction. They discussed paying down the Watchtower indebtedness by $2.4 million and then asking Watchtower to discharge its security and take a subordinated promissory note for $244,166. This promissory note would rank behind the Akvatech secured $2.5 loan under the Letter Agreement and would be registered under the Personal Property Security Act. Mr. Wilton agreed to approach Watchtower with this proposal.

[36] On December 10, 2012, Akvatech received an email from Mr. Wilton indicating that Watchtower had accepted the subordinated promissory note proposal, and it now appeared that the parties had found a path to closing the Letter Agreement transaction.

[37] However, the situation changed again on December 18, 2012, when Watchtower informed AgriMarine that it was no longer willing to proceed as had been apparently agreed. Watchtower now planned to eventually assign the entire $2.64 million loan to Dundee Agricultural Corporation, a subsidiary of Dundee Corporation, a Toronto based holding and investment company, which also was a substantial minority shareholder in AgriMarine.

[38] On December 18, 2012, Mr. Wilton received the following email message from Watchtower that explained its position:

Dear Sean,

I regret to inform you that we have made the decision to sell our loan to another organization, the Dundee Agricultural Corporation. The requirement to remain lenders for another 18 months for a portion of our loan and to do so without any specific security was not to my board's liking. We did our best to get comfortable with what you proposed, but at the end of the day we could not.

We have been lenders to AgriMarine for nearly 5 years now, with the last 20 months without interest payments and the last 8 months in default. We have telegraphed our need to avoid further extensions of our loan on multiple occasions but have allowed ourselves to be imposed upon on numerous occasions. We are not at liberty to maintain this exposure any longer than we already have. We sincerely regret that we could not make a timelier and more mutually agreeable exit from this loan.

[39] Mr. Wilton felt blindsided by Watchtower’s change of mind. Mr. Wilton sent an angry email message to Mr. Raubenheimer apparently blaming Akvatech’s lawyers for Watchtower’s change of mind because of the delay it took to draft the paperwork. The email message stated:

Hi Leon, this is a big blind side. Tell the lawyers at [Bennett Jones LLP] that what “guts” an agreement is taking too long in lawyering and not closing the deal. Now is the time to put money up in escrow and deliver firm written notice to [Watchtower] that we are paying them or this is all going to be for nothing. Sean.

[40] In light of the news from Watchtower, AgriMarine’s lawyers sent the following email message to Akvatech’s lawyers about reconsidering how to the payout of Watchtower’s debt would work in connection with the loan under the Letter Agreement. The email stated:

Please see below correspondence from Watch Tower advising that they are selling their AgriMarine debt to Dundee. In light of these comments, we will need to reconsider how the payout of the existing debt will work in connection with the [Akvatech] loan. We understand that our client will be contacting your client directly to discuss how best to move forward given this new development.

[41] Meanwhile, Akvatech went back to its investors to find more funding for the loan, but the request for more money was not well received, and the major investor decided to reduce, not increase, his participation in the loan. Akvatech looked for other sources of funds including approaching Dundee Corporation.

[42] As 2012 was coming to a close, the parties, however, remained committed to find a way to close the Letter Agreement. On December 27, 2019, in anticipation that the transaction would eventually close, AgriMarine signed Definitive Transaction Documents and delivered them in escrow to Bennett Jones LLP, Akvatech’s lawyers. On December 28, 2012, in anticipation that the transaction would eventually close, Akvatech signed the Definitive Documents and left them in escrow with Bennett Jones LLP.

[43] On December 28, 2012, AgriMarine’s lawyers sent the following email message to Akvatech’s lawyers to keep the transaction on track:

Subject: AK/AII/AHI- Signed Documents from AgriMarine

To keep this on track, and per the most recent draft of the closing agenda, we attached signed (undated) copies of the documents to be delivered by McMillan/ Agrimarine in connection with this transaction, all of which are delivered on your undertaking to hold them in escrow until we confirm release in writing at closing. […]

We understand that the current intention would be to date documents as of December 31, but we have left the dates blank for now.

This email does not include the following documents, and I've noted the status below: […]

4. Existing Lender Payout Letter I Notice pursuant to Section (i)(b) of Flow of Funds Direction -I have followed up with Sean and asked him to press Watchtower and/or Dundee for an answer as to whom payment should be made [Outstanding]

5. TSXV Approval- Upon receipt of BJ/AT's signed documents, as well as written confirmation that the money is in Bennett Jones's trust account, we will submit the relevant agreements to the TSXV for final approval [In Process]

Other than those items, we believe the attached to be what is required of us to bring this matter to closing, so please confirm if you feel we have missed something.

[44] It should be noted as of December 28, 2012, the approval of the TSXV had not yet been obtained and the application for approval would not be made until there was written confirmation that the loan money was in Bennet Jones LLP’s trust account. As of December 28, 2012, the parties did not know whether the loan funds were to be paid to Watchtower or Dundee.

[45] The parties shortly appreciated that, in any event, they would not be able to close before the year end because the issues associated with retiring the Watchtower debt remained outstanding. On December 31, 2018, Mr. Wilton sent Mr. Raubenheimer the following email message:

Hi Geir and Leon, Any hope for Norway for the shortfall. I am trying to hold things together given that we are not closing this year. Are we close for later this week do you think? If you are only short a bit, is there a workaround where we could pay out [Watchtower] and not complete on some other part and hold everything in escrow pending funding or some such solution? Any hope for additional funds from the Norway side if the Canada based back up funds do not come in or can’t come in in a timely faction? I have email confirmation that [Watchtower] will accept payment and our suggested form of payout and release letter. Is this helpful at all? Please advise. Sean.

[46] Through the holiday season and into the New Year, Mr. Spiten and Mr. Raubenheimer of Akvatech continued to try to find investors to eliminate the shortfall in the funding. On January 7, 2013, Mr. Wilton and Mr. Raubenheimer exchanged the following email messages:

Dear Geir and Leon,

Re: Please let me know how it is going. Welcome back to the official return to work. Hopefully, all of the investors, backers, bankers and lawyers are back on the job now and we can get down to closing this off. Please let me know if you have any updates or progress to report. Every little bit helps. I am under massive pressure to perform on this now. Board meeting tomorrow, and so far, I am not a popular guy. Hope all is well. Thanks, Sean

Sean, Re: RE: Please let me know how it is going. I am heading over to the investor and his partners at 2.00 pm. We also have a call with our European investor later at 4.30 pm. We are also waiting on our Polish guys. Everyone is back, so we are pushing hard. I will let you know later today. Leon

[47] On January 9, 2012, the situation changed yet again. AgriMarine’s Board of Directors was unhappy with the suspended animation of the Letter Agreement, and on January 9, 2012, Mr. Wilton sent Mr. Raubenheimer an email advising that the AgriMarine Board had overruled him. Mr. Wilton had been directed to send a letter, which was prepared by AgriMarine’s lawyers, to Akvatech demanding a firm closing date for the Letter Agreement. Mr. Wilton, however, was reluctant to send the letter to Mr. Spiten. In the email response to Mr. Wilton’s message of the 9th, Mr. Raubenheimer told Mr. Wilton to send the letter and then he would discuss it with Mr. Spiten. This exchange of email stated:

Leon, The Board has over-ruled me and asked that I send a letter demanding that I send through a letter putting a hard time limit for closing the deal. It was pre-addressed by counsel to go directly to Geir. I am reluctant to send it him as I do not want to push Geir over the edge. Sean

Sean, Send it. I will discuss with Geir in the morning. Leon

Hi Leon, Here, it is. Let’s discuss options in the morning, Sean

[48] The letter attached to the email exchange was a letter from Mr. Wilton of AgriMarine to Mr. Spiten of Akvatech invoking time of the essence and setting January 14, 2013 as the date for closing. The letter submitted that Akvatech had breached the Letter Agreement; it stated:

[…] Final drafts of these documents were agreed to by all parties and were executed by AgriMarine and Industries and submitted to [Akvatech] on December 27, 2012 for [Akvatech’s] counter-signature. As at the date of this Notice, [Akvatech] has not executed the Definitive Transaction Documents nor performed any of the actions required by it upon execution of such. Additionally, [Akvatech] has not provided evidence of availability of funds to complete the transactions contemplated therein.

As stipulated under Section 11 of the Agreement, time is of the essence with respect to all of the provisions the Agreement and any delay in performance by any party hereto shall constitute a material breach of the Agreement by such party.

This letter serves as notice of intent of the Company and on the behalf of Industries to rescind its execution of the Agreement and the Definitive Transaction Documents, as earlier submitted, should the transactions contemplated therein fail to close no later than January 14, 2013 at 10:00 am PST.

[49] On January 11, 2013, Hugo M. Alves of Akvatech’s Canadian legal counsel wrote Mr. Wilton to reply to Mr. Wilton’s letter of January 9, 2013 to Mr. Spiten. Mr. Alves’ letter stated:

[…] Akvatech was disappointed with the assertions made in your letter, which it denies. Akvatech has, at all times, acted in good faith and exerted its commercially-reasonable efforts to comply with the all of the terms of the Letter Agreement dated November 20, 2012 (the "Agreement"). Akvatech continues to view the Agreement to be valid and binding, and we expect AgriMarine Holdings Inc. and AgriMarine Industries Inc. collectively, ("AgriMarine") to comply with the Agreement as well. Akvatech looks forward to working with AgriMarine to concluding the transactions contemplated in the Agreement (the "Transaction").

As we have advised your counsel, the Definitive Transaction Documents (as defined in the Agreement) have been executed and are being held in escrow by Bennett Jones LLP pending resolution of outstanding issues related to the Transaction. These issues arose as a result of Akvatech's attempts to accommodate AgriMarine's request to allow Watchtower Tract Society of Pennsylvania to remain as a secured creditor of AgriMarine following the closing date of the Transaction, something which was not contemplated at the time Agreement was executed and delivered.

Akvatech has done nothing to suggest that it is not bound by the Agreement and, as such, AgriMarine has no basis to rescind, repudiate or terminate the Agreement. In any event, nothing in the Agreement gives AgriMarine any right to unilaterally set a closing date of January 14, 2013.

In a good faith effort to work towards to the closing of the Transaction on commercially-reasonable terms, Akvatech would be happy to discuss a reasonable target closing date to be mutually agreed to in writing by both parties. If you would like us to coordinate a preliminary conference call with you, Akvatech and counsel, please advise.

[50] While the lawyers were exchanging their lawyer letters, on January 11, 2013, there was more email communications between Mr. Raubenheimer and Mr. Wilton as set out below, in which the parties were attempting to negotiate a new transaction:

Sean, I have now had a chance to speak to Geir and the structure works for him with a few tweaks.

1. Akvateck will pay all of the arrear interest and prepay all of next year's interest. 2. [Watchtower] extends the loan for 12 months. 3. [Watchtower] signs a waiver letter to allow Akvatech to buy the IP. 4. Akvatech buys the IP rights in Northern Europe as per the IPAL Agreement for $1,000,000 less any advances. 5. Akvatech pays cost of developing 5500m3 tank. 6.The interest that Akvatech pays is offset against the $500k payable for the consulting fees for 5500 tank and future royalties. 7. In exchange for guaranteeing the loan Akvatech will also receive the IP rights for Chile and Brazil. Have to figure out what our guarantee looks like. I am talking to counsel. 8. No shares. 9. [AgriMarine] other exclusive licenses stay with [AgriMarine]. 10.Akvatech gets non-exclusive license with 3% royalty worldwide to allow us to follow our customers except China and Canada. 11. We will sell Janicki tanks. 12. $751K advance as we head to close. 13. All monies put into attorney's trust account.

a. This way you will have $800K clear. b. No interest for a year and no back interest. c. Material costs for Janicki tanks. d. Very little salary costs as we will be using your technical guys to sort out the 5500m3 and commissioning. We will also try sort out China for you. Let me know if this works, Regards, Leon

[51] It appears that nothing was done to take up Akvatech’s counsel’s suggestion that the parties bilaterally agree to a new Closing Date, and it appears that Watchtower had decided it would no longer forebear enforcing its security.

[52] On January 18, 2013, Mr. Wilton told Mr. Raubenheimer that Watchtower had issued formal notice of default, an eviction notice had been issued for AgriMarine’s site in Hong Kong, a search of control notice had been issued in China, and a bailiff had distrained AgriMarine's premises in Vancouver. On January 18, 2013, there was another email exchange between Mr. Raubenheimer and Mr. Wilton as set out below:

Hi Leon, I have been going back and forth with Horst, Richard, Geir, Phil and on and on trying to keep this moving to avoid what you call the "scorched earth" outcome of this whole opportunity blowing up while lawyers and investors dither about. I think our best bet now is to let Dundee proceed and then deal with Horst to get the best deal we can in Norway. I am sure I have him convinced that Norway cannot be entered effectively without Geir and [Akvatech] and that Norwegian interests control the vast majority of the industry globally. The ending we must avoid is some form of stalemate where the company and the business in Norway bleeds to death or clocks out and we all wind up with nothing for all our investment of the, effort, reputation and legal costs. What are your thoughts? Sean

Sean, I agree. If we can get Northern Europe with non-exclusive right to follow our Norwegian clients, then it works. If we can get exclusive license in Chile and Brazil, it would work even better. Leon

Leon, I doubt it will be exclusive in Chile and Brazil, but we will have to work on all of this after I close with Dundee. I have been issued formal notice of default on the debt, an eviction notice from the Middle Bay site, a seizure of control notice in China and the office and contents in Vancouver are under Bailiff control. I am officially out of time. Our deal did not complete in time and if we are going to salvage anything, I need the ability to move forward with Plan B and then salvage what we can thereafter. We can do all of this quickly and we must do so. Do you agree? Sean

Sean, let me check with my counsel. I will get back to you shortly. Leon

[53] After this email exchange, Mr. Raubenheimer spoke to Mr. Wilton by phone. Mr. Raubenheimer deposed that Mr. Wilton said that he would like to terminate the transaction between Akvatech and AgriMarine and instead do a financing with Dundee as he had no other option to save AgriMarine’s business. Mr. Raubenheimer deposed that Mr. Wilton said that AgriMarine's lawyers had informed him that Akvatech would have grounds to sue AgriMarine for breach of contract, as no mutual closing date had been set.

[54] Mr. Raubenheimer deposed that in his phone call, he told Mr. Wilton that Akvatech would agree to terminate the Letter Agreement transaction; however, to protect its right to a return of the $200,000, Akvatech would issue a Default Notice pursuant to the Letter Agreement.

[55] On January 18, 2013, Akvatech did sent a Default Notice to AgriMarine. The Default Notice, which was signed by Mr. Raubenheimer, came as an attachment to an email message from Mr. Raubenheimer that confirmed that they had discussed the matter. The email message stated:

Sean, As discussed, regards, Leon.

[56] The Default Notice attached to the email message stated:

DEFAULT NOTICE

Repayment of Pre-Payment Amount

Execution Copy

Reference is made to that certain binding letter agreement dated November 20, 2012 between AHI, AII and AT (the "Letter Agreement"). All capitalized terms used herein and not otherwise defined shall have the meaning attributed to them in the Letter Agreement.

WHEREAS AT has advanced the Pre-Payment Amount to AHI in accordance with the terms of the Letter Agreement;

AND WHEREAS AT pursuant to the Letter Agreement the Pre-Payment Amount is immediately refundable if the Definitive Transaction Documents have not been executed and delivered on or before the Target Closing Date;

AND WHEREAS the Definitive Transaction Documents have not been executed and delivered on or prior to the Target Closing Date and the Pre-Payment Amount has not been refunded to AT (the "Default")

NOW THEREFORE:

1. this Notice is a Default Notice; and

2. in accordance with the terms of the Letter Agreement we hereby request that you remedy the Default by refunding the Pre-Payment Amount in full to AT at the address set out in the LOI within 5 calendar days of the date hereof, such date being January 23, 2013.

[57] On January 19, 2018, Mr. Wilton sent the following email message to Mr. Raubenheimer thanking him for the Default Notice:

Thanks Leon. This should light a fire and keep things moving! Sean.

[58] Although Mr. Wilton attempted to persuade Dundee to provide the funding, AgriMarine did not repay the $200,000, and on January 24, 2013, Akvatech sent an Exercise Notice to AgriMarine. The Exercise Notice, which was signed by Mr. Spiten, stated:

EXERCISE NOTICE

Repayment of Pre-Payment Amount

AND WHEREAS the Definitive Transaction Documents have not been executed and delivered on or prior to the Target Closing Date and the Pre-Payment Amount has not been refunded to AT;

AND WHEREAS in accordance with the terms of the Letter Agreement, AT delivered the Default Notice to AHI and AII on January 18, 2012;

AND WHEREAS as at the date of this Exercise Notice the Pre-Payment Amount has not been refunded to AT;

NOW THEREFORE:

1. this Notice is an Exercise Notice; and

2. in accordance with section 2(d)(i) of the Letter Agreement, AT hereby exercises its option to obtain a perpetual, irrevocable, transferrable, sole and exclusive license to exploit the Technology in any manner whatsoever including, without limitation, the right to use, sell, have made, have sold, import or export, distribute, reproduce, offer for sale, market, advertise and promote the Technology within the Northern Europe Territory in full satisfaction of the Pre-Payment Amount.

[59] A few days latter, on January 25, 2013, Mr. Wilton wrote a “Without Prejudice” letter on behalf of AgriMarine to Mr. Spiten, Mr. Raubenheimer, and Are Herren of Akvatech. The letter, which was delivered by email, stated:

Reference is made herein to that certain binding letter agreement dated November 20, 2012 (the "Letter Agreement") between AgriMarine Holdings Inc. ("AHI"), AgriMarine Industries Inc. ("AII") and Akvatech AS ("AT"), our letter to AT dated January 9, 2013, the letter from AT's counsel Bennett Jones to AHI dated January 11, 20 13, the alleged default notice from AT to AHI and AII dated January 18, 2013 and the alleged exercise notice from AT to AHI and AII dated January 23, 2013.

As you are well aware, under the terms of the Letter Agreement, the Pre-Payment Amount of $200,000 (the "Pre-Payment Amount") made by AT to AHI was to be immediately refundable if, among other circumstances that did not occur, the Definitive Transaction Documents (as defined in the Letter Agreement) were not executed and delivered on or before the mutually agreed closing date. It was agreed between our respective counsel that the closing date for the transactions contemplated in the Letter Agreement was to be December 31,2012. In fact, on December 28, 2012, we provided fully executed copies of the Definitive Transaction Documents to your counsel to hold in escrow pending closing, demonstrating that we were ready, willing and able to complete the transactions contemplated under the Letter Agreement on the agreed upon closing date. Even by January 14, a very generous extension given AHI's position, AT still was not in a position to deliver its executed Definitive Transaction Documents or fund the Transaction. AT was and remains well aware of AHI’s situation and the need to secure the Transaction or an alternative transaction, and its delay demonstrated a clear intent not to comply with the Letter Agreement, particularly in light of time being of the essence therein.

It was AT's inability to fund the Transaction, and its own inability to execute and deliver to AHI the Definitive Transaction Documents, that caused the closing date to be missed. AT cannot rely on its own inaction to trigger a default under the Letter Agreement, and cause a repayment of the Pre-Payment Amount, when AHI was willing to comply. As time was of the essence in the Letter Agreement, and for the reasons stated above, it is our position that the Letter Agreement was rescinded by AT and that AT has forfeited the Pre-Payment Amount.

Accordingly, by the terms of the Letter Agreement, the Pre-Payment is not refundable. As the Pre-Payment Amount is not refundable, there was no option for AT to exercise under Section 2(d), and so the notices given on January 18 and 23 are invalid. To be clear, AT is not entitled to refund of the Pre-Payment Amount, and AT does not have any license to the Technology (as defined in the Letter Agreement) pursuant to Section 2(d)(i) of the Letter Agreement.

In an effort to put this matter to rest amicably, and on a without prejudice basis, if AT were willing to enter into a full and final mutual release with AHI and AII in a form reasonably agreed amongst the parties on or before 5:00 PM PST January 25, 2013, we would be willing to pay to AT an amount equal to the Pre-Payment Amount even though we have no obligation to do so.

Please notify us if the above proposal is acceptable to you by no later than 5:00 PM PST January 5, 2013; otherwise, we suggest that, as AHT has been forced to do by AT's inaction, AT treat the agreement as having been rescinded.

[60] Also, on January 25, in response to Mr. Wilton’s letter, Mr. Alves, Akvatech’s legal counsel, wrote Mr. Wilton. The letter, which was delivered by email, stated:

We are counsel to Akvatech AS ("AT") and are delivering this letter on behalf of [Akvatech]. Reference is made to the following:

1. The binding letter agreement dated November 20, 2012 (the "Letter Agreement") dated November 20, 2012 between AgriMarine Holdings Inc. ("AHI"), AgriMarine Industries Inc. ("AII") and AT. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Letter Agreement;

2. The letter from AHI to AT dated January 9, 2013 and the letter responding thereto from Bennett Jones LLP to AHI dated January 11, 2013;

3. The Default Notice from AT to AHI and Ali dated January 18, 2013;

4. The Exercise Notice from AT to AHI and All dated January 24, 2013; and

5. The letter from AHI to AT dated January 25, 2013 (the "January 25 Letter")

This Letter is in response to the January 25 Letter. As indicated in our letter of January 11, 2013, the delay in the ability of the parties to execute and deliver the Definitive Transactions Documents arose as a result your request to allow Watchtower Tract Society of Pennsylvania to remain a secured creditor of AU following the closing of the transactions contemplated by the Letter Agreement (the "Transactions"), a request which was neither contemplated nor bargained for at the time that the Letter Agreement was executed and delivered. AT denies your assertion that AT has, at any time, demonstrated any intention not to comply with the terms of the Letter Agreement.

Further, AT denies that neither AII nor AHI have any grounds upon which to rescind the Letter Agreement. AT has at all times worked in good faith to perform its obligations under the Letter Agreement, including the payment of the Pre-payment Amount in accordance with the terms of the Letter Agreement. AT relied on the terms of Letter Agreement in agreeing to advance the Pre-payment Amount and such terms were a material inducement to AT's agreement to make such advance.

AT declines the proposal set out in the January 25 Letter. In delivering the Default Notice and the Exercise Notice, AT has exercised its rights under the Letter Agreement and in accordance with the terms of the Letter Agreement, terms which were freely negotiated by two sophisticated arm's length parties with the help of respective legal counsel. Upon delivery of such notices the license granted in the Technology for the Northern Europe Territory has now been validly transferred to AT, as bargained for, and in accordance with the terms of the Letter Agreement. AT will firmly defend any assertion to the contrary.

[61] After January 25, 2013, the Letter Agreement did not close and AgriMarine did not repay the $200,000. AgriMarine did refinance and take out the Watchtower indebtedness with Dundee Agricultural Corporation replacing Watchtower.

5. Events after January 2013

[62] On February 7, 2013, in a press release, AgriMarine announced that Dundee Agricultural Corporation had advanced a $1.75 million loan and taken an assignment of the Watchtower existing secured debt of approximately $2,683,000. The press release also announced that AgriMarine’s proposed transaction with Akvatech, previously announced on November 20, 2012, had been terminated.

[63] On February 7, 2013, Mr. Raubenheimer emailed Mr. Wilton to explore the possibility of completing the outright purchase of the AgriMarine’s technology in Northern Europe.

[64] In its Management Discussion & Analysis ("MD&A") dated February 28, 2013, AgriMarine stated that on February 7th, 2013, it had announced the termination of the Letter Agreement with Akvatech but that discussions with Akvatech regarding repayment of the Pre-payment Amount were ongoing at present.

[65] In AgriMarine’s MD&A dated July 29, 2013 it attributed an increase in revenue to the $200,000 Pre-Payment Amount being a non-refundable payment. The MD&A stated that upon the signing of the Letter Agreement, a non-refundable advance of $200,000 was made to the AgriMarine. During his cross-examination, Mr. Wilton could not recall what prompted the different characterization of the Pre-Payment Amount.

[66] For present purposes, I need not recount the events involving the parties between 2013 and December 18, 2017 when AgriMarine commenced the application now before the court.

C. Discussion

1. Was Akvatech Entitled to Invoke the Default Notice and Exercise Notice Provisions of the Letter Agreement?

[67] In arriving at my conclusion that AgriMarine’s application should be dismissed, there are two issues to explain. The first issue is to explain why Akvatech was entitled to invoke the Default Notice and Exercise Notice provisions of the Letter Agreement and the second issue is to explain why I reject AgriMarine’s argument that the license granted to Akvatech was unenforceable because it wanted for fundamental terms and, therefore, was too uncertain to be unenforceable.

[68] The analysis of the first issue may begin with two observations. The first observation is that the lawyers’ letters written for the parties and the correspondence between the principals of AgriMarine and Akvatech, which includes some letters and email messages that show the signs of having been ghostwritten by the parties’ lawyers, provide a more than adequate basis to determine the issues of fact in this application.

[69] The correspondence speaks for itself, and there is little, if anything, to dispute about the facts or the credibility of Mr. Winton, Mr. Raubenheimer, and Mr. Spiten in terms of their versions of the events as reflected by the correspondence. It is possible to put together a clear account of what was happening in the negotiation and performance of the Letter Agreement.

[70] The second observation is that where the parties part company is not in the issues of fact but rather in the legal interpretation of the factual events. While the lawyers’ letters accurately depict the factual situation, they are self-serving letters that do not accurately report the application of the law to those facts. The parties’ lawyers were spinning the facts to suit their clients’ purposes and positions.

[71] As explained below, my opinion is that the lawyers on both sides have incorrectly analyzed the legal issues.

[72] This first observation is not to be critical of the lawyers for either side. It was their job to spin the facts in a way that was favourable to their clients. For the lawyers, implementing the Letter Agreement was not a straight-forward matter because as AgriMarine noted in its November 20, 2012 press release, "there can be no assurance that the transactions contemplated under the Agreement will be completed as proposed."

[73] The lawyers’ task was further complicated because the law firms were far from being in control of the situation, since the representatives of AgriMarine and Akvatech had independent tasks associated with negotiating with Watchtower and in raising funding for the loan, and the representatives of AgriMarine and Watchtower were communicating directly and independently of their lawyers about these tasks and about other matters. The lawyers were receiving instructions from their clients after the fact and after the clients had made assurances, commitments, and promises. The lawyers had to deal with this awkward circumstance.

[74] There was the further complication for the lawyers that AgriMarine was a public company. Mr. Winton was under enormous pressure from his Board of Directors and from the floundering business and his views of how to proceed ultimately did not receive the backing of the Board.

[75] And, if this not enough to complicate the lawyers’ role, there was the circumstance that AgriMarine’s business of floating marine technology, pardon the pun, was sinking with the issuance of a default notice by Watchtower and with seizures in Hong Kong, China, and Vancouver.

[76] The lawyers on both sides attempted to put the best legal spin they could in these dynamic circumstances.

[77] From the outset, the Letter Agreement had a fundamental flaw. For the agreement to operate, AgriMarine had to discharge Watchtower’s security over AgriMarine’s assets for a $2.64 million debt, but the Letter Agreement provided only $2.5 million in funding for a refinancing. There was thus a $140,000 shortfall, which problem was compounded by Akvatech’s own problem of wanting for $100,000 in its $2.5 million loan funding. There was thus, a shortfall of $244,166 in the funding necessary to discharge the Watchtower debt and its securities, which had to be done to close the transaction.

[78] This obstacle to closing the transaction existed on December 7, 2012, which was the Target Closing Date. The parties did not close. The parties, however, did not bilaterally agree in writing to a new Closing Date, and while there were informal dates discussed, it was not until January 9, 2013 when AgriMarine purported to invoke time of the essence and to unilaterally set January 14, 2013 as the date for the Letter Agreement transaction to close.

[79] The parties accuse one another of having breached the Letter Agreement. AgriMarine submits that Akvatech breached the Letter Agreement when it did not close on January 14, 2013 and the parties focus on the failure to release from escrow the Definitive Transaction Documents and to set a date to close the transaction. I disagree with the analysis of the parties and their lawyers.

[80] The accurate legal analysis, not the one spun by the lawyers’ self-serving letters, is that when the Letter Agreement did not close on December 7, 2012, neither party breached the contract but time of the essence for performance of the contract was no long active after December 7, 2012. The Letter Agreement was not terminated, but it was in a state of suspended animation with time no longer of the essence.

[81] In my opinion, neither party breached the contract by failing to close in 2012 and in the early weeks of 2013. On December 7, 2012 and up until January 9, 2013, the parties did not terminate the Letter Agreement which would have been the result if there had been an acceptance of a breach of a fundamental term of the contract with time being of the essence.

[82] There was no breach because the parties had waived time of the essence and a breach of contract requires an acceptance of the breach by the innocent party. Up until the events of mid-January 2013, neither party regarded the other as having breached the contract, and there was no acceptance of any breach of the contract in 2012 and in the early weeks of 2013. The parties essentially kept the Letter Agreement alive, i.e., not terminated, but paused time of the essence while they attempted to resolve the Watchtower refinancing problems.

[83] To terminate a contract for breach, the breach of the contract must be accepted. As noted by Lord Justice Asquith in Howard v. Pickford Tool:[^2] "an unaccepted repudiation is a thing writ in water and is of no value to anybody: it confers no legal rights of any sort or kind." As a general rule, for the contract to come to an end, the innocent party must communicate his or her decision to treat the contract as at an end to the repudiating party within a reasonable time, although in some cases, the election to treat the contract at an end will be found to have been sufficiently communicated by the innocent party's conduct.[^3] In the immediate case, the parties did not elect to treat the contract at an end in 2012 nor into the early weeks of 2012.

[84] Both the common law and equity required that time be of the essence before an innocent party could exercise a right to terminate an agreement.[^4] In other words, the right to terminate a contract for a breach is connected to time being of the essence.

[85] In the immediate case, neither party could terminate the contract after December 7, 2012 until time of the essence was properly restored, which never occurred. Time of the essence was turned off on December 7, 2012, and in order for a party to terminate it had to be ready to close and it had to restore time being of the essence.

[86] Time was always of the essence at common law, but equity took a softer position. Equity’s position was that timely performance is generally not required unless the parties expressly specify that time is of the essence or the nature of the subject-matter of the contract or the surrounding circumstances call for prompt performance in the sense that it would be inequitable not to require prompt performance.[^5] After the fusion of the common law and equity arising out of the Judicature Act, 1873, the equitable rule of contract interpretation now governs in all cases of contract interpretation. Legislation directs that contractual stipulations as to time are not to be deemed of the essence unless they would be so construed by a court of equity. This particular provision is now found in the Mercantile Law Amendment Act, s. 15.[^6] In the immediate case, the parties had stipulated time of the essence, but by their conduct they had suspended the operation of time of the essence.

[87] The commonly recited rule for time of the essence is that time may be insisted upon as of the essence only by a litigant: (1) who has shown himself or herself ready, desirous, prompt, and eager to carry out the agreement; (2) who has not been the cause of the delay or default; and, (3) who has not subsequently recognized the agreement as still existing.[^7] In the immediate case, neither party has ever shown itself, ready to carry out the Letter Agreement and both parties recognized the Letter Agreement as still existing after December 7, 2012.

[88] The rule from King v. Urban & Country Transport[^8] allows a party who has let time of the essence to be suspended to reinstate time of the essence by giving notice: (1) clearly bringing home to the other party that time of the essence is being reinstated; and (2) fixing a new date for closing, which new date must be reasonable in the particular circumstances.[^9]

[89] In my opinion, AgriMarine was never in a position to reinstate time of the essence and its proposed new date was not reasonable in the circumstances. Time of the essence was never restored in the immediate case.

[90] On January 9, 2013, AgriMarine purported to re-establish time of the essence. However, in my opinion, this effort was unsuccessful for three reasons: first, AgriMarine was not in a position to close the transaction because the Watchtower problems remained unresolved; second, AgriMarine’s lawyer’s unilateral selection of January 14, 2013 for the closing of the transaction was unreasonable in the circumstances of this case; and three, while the restoration of time of the essence was the position taken by AgriMarine’s lawyers, Mr. Wilton in his direct dealings with Akvatech was recognizing the Letter Agreement as still existing.

[91] AgriMarine nevertheless submits that Akvatech’s issuance of the Default Notice and the Exercise Notice was illegal. It argues that by virtue of Akvatech’s s alleged breaches of contract, Akvatech could not trigger the refund of the Pre-payment Amount and had forfeited repayment of the $200,000. Thus, AgriMarine submits it can keep the $200,000 and that it was not obliged to grant a license to Akvatech. Once again, I disagree.

[92] For the reasons expressed above, there was no breach of contract by Akvatech and no accepted breach of contract by AgriMarine.

[93] My legal interpretation of the events of January 18, 2013 is that Mr. Raubenheimer and Mr. Wilton agreed that the Letter Agreement should be terminated and that the refund provisions of the Letter Agreement should be triggered. Although, it seems that Mr. Raubenheimer and Mr. Wilton viewed this as a breach of contract situation, in truth, for the reasons already expressed, neither party was in a position to terminate the contract on the grounds of a breach of contract. However, that there was no enforceable breach of contract is not to say that the parties could not mutually agree to bring the contract to an end and invoke the Default Notice and Exercise Notice provisions of the Letter Agreement. The parties wanted to end the Letter Agreement by whatever means and they had always envisioned a fair exit strategy.

[94] Ironically, the Letter Agreement had been terminatable as far back as perhaps December 7, 2012, without any breach of contract because the agreement was conditional on TSXV approval, a condition to the Letter Agreement that has never been satisfied. Had the Letter Agreement been terminated for non-satisfaction of this condition precedent to performance, then the refund provisions for the Pre-payment Amount would have been triggered. There were other non-fault circumstances that would trigger repayment of the Pre-Payment Amount.

[95] The point to note is that the Letter Agreement was clear that if the transaction did not close, then AgriMarine was obliged to refund the $200,000.

[96] The Letter Agreement had a methodology to implement the refund provisions for the Pre-Payment Amount that involved a Default Notice to be followed by the Exercise Notice. The Default Notice was ill-named because it was to be used in a variety of circumstances not all of which involved a breach of contract. Visualize, the refund provision involving a Default Notice was available if: (a) any portion of the Pre-Payment Amount was used for an authorized purpose; (b) the Definitive Transaction Documents were not executed and delivered on or before December 7, 2012 or such later date as the parties may mutually agree to in writing; (c) AgriMarine did not obtain the TSXV approvals; and (d) Akvatech delivered a Termination Notice because the TSXV required AgriMarine shareholder approval.

[97] I agree with AgriMarine’s submission that there is a venerable principle of contract law that a party cannot use its own breach of contract or default in satisfying a condition precedent as a basis for being relieved of its contractual obligations,[^10] but that principle does not apply to the circumstances of the immediate case.

[98] In the case at bar, on January 18, 2018, AgriMarine and Akvatech simply agreed to end the Letter Agreement and to implement the provisions that they had bargained for if the transaction was not completed. On behalf of AgriMarine, Mr. Wilton wished the Letter Agreement terminated because he could turn to his backup plan to deal with the refinancing of the Watchtower loan, which was now being enforced. Ending the Letter Agreement was consistent with the commands of his Board of Directors and AgriMarine contracted from the outset to repay the Pre-Payment Amount if the Letter Agreement was not completed.

[99] On behalf of Akvatech, Mr. Raubenheimer was prepared to have the Letter Agreement terminated provided that the $200,000 was refunded. As already noted, this circumstance had been foreseen by the parties negotiating the Letter Agreement. Akvatech also had the aspiration that an agreement that did not involve a loan could subsequently be negotiated, and it hoped that it could still acquire rights to AgriMarine’s fish-rearing technology without having to lend money to refinance the Watchtower debt.

[100] Before and after the fact of this agreement or understanding between AgriMarine and Akvatech reached on January 18, 2013, their lawyers wrote self-serving letters to secure better positions for their respective clients, and AgriMarine in its February 27, 2013 MD&A incorrectly stated that upon the signing of the Letter Agreement, a non-refundable advance of $200,000 had been made to the AgriMarine, which is just a false statement.

[101] The true legal position based on the facts of this case is that neither party breached the Letter Agreement or accepted a breach by their counterparty and that neither party was in a position to treat the Letter Agreement as at end because neither party was ever in a position to close the transaction because of the outstanding matter of the Watchtower indebtedness. The Letter Agreement was in suspended animation until Mr. Winton and Mr. Raubenheimer mutually agreed to bring it to an end in accordance with its terms that envisioned a refund of the Pre-Payment Amount or security in lieu thereof should the Letter Agreement not be completed.

[102] In my opinion, it was proper for Akvatech to deliver the so-called Default Notice and the Exercise Notice. It is further my opinion that Akvatech was entitled to elect to take a license in AgriMarine’s fish-rearing technology in lieu of AgriMarine’s missed opportunity to repay the Pre-Payment Amount.

2. Was the License Granted to Akvatech Unenforceable on Grounds of Uncertainty.

[103] Turning to the second issue of whether the license was void for uncertainty, AgriMarine argues that the license granted under the Letter Agreement was void for uncertainty largely because it submits that essential terms to the license are missing.

[104] Particularly where the parties are sophisticated and represented by component lawyers, courts are reluctant to treat an agreement as uncertain, and courts will strain to give effect to an agreement and will only treat a contract as uncertain when taking into account the extrinsic evidence available, the court cannot interpret the contract and give it a reasonable commercial meaning.[^11]

[105] In my opinion, the terms of the license in the immediate case are certain and the license is enforceable.

[106] In the immediate case, the essential terms regarding the license are contained in the Letter Agreement: (a) the temporal scope of the license is defined; (b) the Technology subject to the license is defined; (c) the permissible activities under the license are defined; and (d) the geographic scope of the license is defined. The terms of the license are all defined with sufficient particularity.

[107] The absence of a licensing fee or royalty rate does not make the license in the immediate case unenforceable. Royalty-free licenses are not uncommon,[^12] and in the immediate case it should be recalled that under the Letter Agreement, AgriMarine was prepared to sell an outright ownership in its technology for $1.0 million; i.e., ownership without ongoing royalties, and, therefore, it does not seem unreasonable or uncertain that AgriMarine would agree to grant a royalty-free license as security for its obligation to repay $200,000, especially when it had an opportunity to avoid the grant of the issuance of 4 million shares by repaying the $200,000.

[108] Both sides employed first-tier legal counsel, and it is no stretch in the immediate case to give operative meaning to the Letter Agreement, including the provisions associated with the Pre-Payment Amount.

[109] I, therefore, conclude that Akvatech acquired a valid and enforceable license.

D. Conclusion

[110] For the above reasons, AgriMarine’s application is dismissed.

[111] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Akvatech’s submissions within twenty days of the release of these Reasons for Decision followed by AgriMarine’s submissions within a further twenty days.

Perell, J.

Released: December 31, 2018

Schedule “A”

LETTER AGREEMENT

Re: Purchase and Licensing of Closed Containment Fish Rearing Technology and Associated Commercial Arrangements

This binding letter agreement (this "Agreement") sets out the basic commercial terms pursuant to which Akvatech AS ("AT") is: (a) purchasing from AgriMarine Industries Inc. ("AII") any and all of the intellectual property rights and know-how associated with and relating to the Closed Containment Fish Rearing Technology which is owned by AII or its affiliate AgriMarine Holdings Inc. ("AHI" and collectively with AT and AII, the "parties" and each is a "party") on the date hereof or otherwise developed or procured by AHI or AII after the date hereof (collectively, the "Technology") for a certain geographic region; (b) licensing the Technology for certain other geographic regions; and (c) entering into associated commercial arrangements with AHI and AII, all as further detailed herein (collectively, the "Transaction"). This Agreement is intended to be legally binding on each of the parties hereto. As soon as reasonably practicable after the execution and delivery of this Agreement, each of the parties hereto shall use their commercially reasonable efforts to negotiate, execute and deliver definitive transaction agreements to more fully describe and complement the provisions of this Agreement (collectively, the "Definitive Transaction Documents"). Upon execution and delivery of the Definitive Transaction Documents the provisions of this Agreement shall automatically replace and supersede the provisions of this Agreement.

1. Consents and Approvals

(a) The parties acknowledge that the Transaction is a Reviewable Transaction (as defined in the TSX Venture Exchange Corporate Finance Manual (the "Manual")) and is subject to the approval of the TSX Venture Exchange (the "TSXV"). Each party shall comply with all regulatory requirements of the TSXV and applicable securities regulators.

(c) AHI shall use its best efforts to obtain conditional TSXV approval [the "Conditional TSXV Approval") and final TSXV approval for the Transaction (the "Final TSXV Approval") on the terms set out in this Agreement as quickly as possible after the execution and delivery of this Agreement.

(d) Each party acknowledges that until such time as AHI obtains the Final TSXV Approval no amounts shall be advanced to AHI or All by AT other than the Pre-payment Amount.

(e) If the TSXV refuses to issue the Conditional TSXV Approval or the Final TSXV Approval for the Transaction, this Agreement shall automatically terminate and AHI shall immediately refund the Pre-Payment Amount to AT.

(f) If:

(i) the TSXV refuses to issue the Conditional TSXV Approval or the Final TSXV Approval for the Transaction on the terms set out in this Agreement, or such other modified terms which are reasonably acceptable to AT; or

(ii) the TSXV determines that the completion of the Transaction is subject to the prior approval of the shareholders of AHI or All ("Shareholder Approval"), AT shall have the right to terminate this Agreement by written notice to AHI and AIl (the "Termination Notice"). AHI shall refund the Pre-payment Amount to AT immediately after its receipt of the Termination Notice.

2. Pre-payment Amount

(a) Within 24 hours of the execution and delivery of this Agreement […] AT shall remit by wire transfer to AHI a sum of $200,000 (the "Pre-payment Amount"). The payment of the Pre-Payment Amount is being made strictly to allow AHI to retain key employees and consultants and shall be used by AHI exclusively to settle salaries payments which are currently in arrears and payments to consultants which are currently in arrears (each a "Permitted Purpose"). AHI will also be permitted to use $20,000 of the Pre-Payment Amount for rent and employee health benefit payments. The amounts payable to each such employee and/or consultant is set out in Schedule A hereto.

(b) The Pre-Payment Amount shall be immediately refundable if: (a) all or any portion of the Pre-Payment Amount is used for any purpose other than a Permitted Purpose; (b) the Definitive Transaction Documents are not executed and delivered on or before December 7, 2012 or such later date as the parties may mutually agree to in writing (the "Target Closing Date"); (c) the failure of AHI or AII to obtain all necessary consents and approvals required for the Transaction, including the Conditional TSXV Approval or Final TSXV Approval; or (d) AT delivering the Termination Notice to AHI.

(c) Provided that the Pre-Payment Amount is not refunded to AT in accordance with the terms of this Agreement, the Pre-Payment Amount shall be set-off and deducted from the Purchase Price (as defined below).

(d) If the Pre-Payment Amount becomes refundable to AT in accordance with the terms of this Agreement and AHI fails to refund the Pre-payment Amount, AT may deliver a notice (a "Default Notice") in respect of such failure and AHI shall have 5 calendar days to cure such failure. If AHI fails to cure such failure within such 5-calendar day period, AT shall have the option, exercisable at its sole discretion to:

(i) obtain a perpetual, irrevocable, transferrable, sole and exclusive, license to exploit the Technology in any manner whatsoever including, without limitation, the right to use, sell, have made, have sold, import or export, distribute, reproduce, offer for sale, market, advertise and promote the Technology within the Northern Europe Territory (as defined below) in full satisfaction of the Pre-Payment Amount; or

(ii) accept the issuance of 4,000,000 common shares of AHI in full satisfaction of the Pre-Payment Amount.

Once the foregoing option becomes exercisable, AT may exercise its option at any time prior to AHI's repayment of the Pre-Payment Amount by delivering a written notice of such exercise to AHI and AII (the "Exercise Notice"). The foregoing option shall be in addition to and shall not derogate from any rights which AT may have at law or in equity in connection with the refund of the Pre-Payment Amount. Until such time as the Exercise Notice is delivered AT shall continue to have all rights and remedies available to it at law or in equity.

Upon the delivery of the Exercise Notice AHI and AII shall execute and deliver all such further documents and instruments and do all such acts and things as AT may from time to time reasonably require in order to effect or better evidence and perfect the full intention of this section l(d).

3. Purchase and Licensing of the Technology

The parties shall execute and enter into an Intellectual Property Assignment and Licensing Agreement (the "IPAL Agreement'') as a Definitive Transaction Document by no later than the Target Closing Date. The IPAL Agreement shall be governed by the laws of Norway and will contain provisions to further describe and complement the provisions of this Agreement and, once executed and delivered, shall replace and supersede the provisions of this Agreement related to the same. Until such time as the IPAL Agreement is executed and delivered the parties hereto agree as follows:

(a) Purchase of Technology for Northern Europe Territory

(i) AHI and AII each hereby sell and AT hereby purchases, for a sum of $1,000,000 (the "Purchase Price"), any and all of AHI's and AII's right, title and interest in, to and under the Technology, including but not limited to, all rights of copyright, trade secret, design, patent, know-how and all other intellectual property or industrial property laws or rights of any type or nature concerning or relating to, in any manner whatsoever, the Technology, exclusively for the Northern European countries as set out in Schedule B (collectively, the "Northern Europe Territory") [Denmark, Norway, Sweden, Finland, England, the United Kingdom (England, Scotland and New Hebrides, Whales and Northern Ireland), Ireland, Russia, Iceland, Faroe Islands and Poland];

(b) Exclusive License of Technology for South America Territory and MENASE Territory

(i) AHI and AII each hereby grant AT a perpetual. irrevocable, transferrable, sole and exclusive, license (the "License") to exploit the Technology in any manner whatsoever including, without limitation, the right to use, sell, have made, have sold, import or export, distribute, reproduce, offer for sale, market, advertise and promote the Technology within the South American countries set out in Schedule C hereto (collectively, the "South America Territory") and the Middle Eastern, North African and Southern European countries set out in Schedule D hereto (collectively, the "MENASE Territory").

(iii) As consideration for the License, AT hereby agrees:

(1) to bind itself to the development obligations contained in section 3(c) of this Agreement;

(2) pay AHI a royalty payment (the "Royalty") for each 30m Tank and 24m Tank sold by AT in the South America Territory and MENASE Territory equal to:

(d) Non-Exclusive License of the Technology

(i) Each of AHI and AII hereby grant AT a perpetual, irrevocable, transferrable, nonexclusive license (the "Non-Exclusive License") to exploit the Technology in any manner whatsoever including, without limitation, the right to make, use, sell, have made, have sold, import or export, distribute, reproduce, offer for sale, market, advertise and promote the Technology anywhere throughout the world exclusive of China and Canada to AT Customers. For the purposes hereof, a "AT Customer" means, any person or entity that has executed a letter of intent to purchase or has purchased any tangible manifestation of the Technology (including a 24m Tank or a 30m Tank) from AT (or an affiliate thereof} in the Northern Europe Territory, the South America Territory or the MENASE Territory.

(ii) AT shall pay the above Royalty to AHI on each sale of a 24m Tank or 30m Tank to a AT Customer in a country which is outside the Northern Europe Territory, the South America Territory or the MENASE Territory and such sale shall be treated as a sale of such 24m Tank or 30m Tank within the South American Territory or MENASE Territory for the purpose of calculating the amount and due date of such Royalty.

(e) Commercialization of Technology

(i) AT shall use its reasonable commercial efforts to commercialize the Technology in each country listed as being within the Northern Europe Territory, the South America Territory or the MENASE Territory (each a "Country").

(ii) "Commercialized" shall mean having entered into a conditional purchase order or other similar instrument with a third party for the purchase and sale of a 24m Tank or a 30m Tank in the Country or having sold a 24m Tank or a 30m Tank to a third party in the Country.

(iii) With respect to each Country, if AT has not Commercialized the Technology in the Country within 6.5 years from the date of this Agreement:

(1) if such Country is located in the South America Territory or the MENASE Territory, such Country shall automatically cease to fall within the scope of such territory and the License shall cease to apply to such Country; or

(2) if such Country is located in the Northern Europe Territory, AT execute all documents and take all steps reasonably necessary or desirable to sell, transfer, assign and convey the Technology to AHI or AII fur such Country for the sum of $1.00. All costs (other than legal costs) associated with such sale, transfer, assignment and conveyance shall be borne by AT.

4. Credit Agreement

(a) As part of the consideration for the Transaction, AT agrees to lend AII the sum of $2,500,000 (the "Loan Amount") on the terms and conditions set out in a credit agreement to be entered into between AHI, AII and AT (the "Credit Agreement") contemporaneously with the execution and delivery of the IPAL Agreement and which shall contain the following terms. For greater certainty, the Credit Agreement and all other documents, agreements and instruments contemplated under this section 4 shall be Definitive Transaction Documents:

(i) the Loan Amount shall be used by AII strictly for the purpose of settling all of AII's indebtedness (the "Watchtower Debt") with the Watchtower Bible & Tract Society of Pennsylvania ("Watchtower") and securing the release of all security interests held by Watchtower over the assets of AII (the "Watchtower Security"). Notwithstanding the foregoing, AII and/or AHI is able to negotiate the satisfaction of the Watchtower Debt in whole or in part and the discharge of the Watchtower Security (in full) prior to the Target Closing Date in consideration for the issuance of shares of AHI and/or AII to Watchtower, the balance of any Loan Amount not used to satisfy the Watchtower Debt may be used by AII and/ or AHI for bona fide working capital purposes;

(ii) the Loan Amount shall have an 18-month term;

(iii) 12.5% interest paid quarterly in arrears until repayment of the principal amount thereof in full;

(iv) assignable by AT in order to allow for the syndication thereof;

(v) the Loan Amount shall be:

(1) secured by a general security agreement in favour of AT over all of the assets and undertaking of AII (the "AII GSA”); and

(2) guaranteed by AHI (the "Parental Guarantee")

(vi) the Parental Guarantee shall be secured by a general security agreement in favour of AT over all of the assets and undertaking of AHI (the "AHI GSA") and together with the AII GSA, the “GSAs”);

(vii) the GSAs shall constitute first-ranking, fully-perfected security interests and all financing statements and intellectual property notices and filings shall be completed as a condition to the advance of the Loan Amount;

11. General Provisions

(c) This Agreement shall be governed by the laws of Ontario and the laws of Canada applicable therein and shall be treated in all respects as an Ontario contract. The parties irrevocably attorn to the non-exclusive jurisdiction of the courts of the Province of Ontario.

(e) Nothing in this Agreement shall be deemed to create a partnership, joint venture, principal-agent or any authorization for any party to act for, represent or bind any other party.

(f) The determination that any provision of this Agreement is invalid or unenforceable shall not invalidate this Agreement, all such provisions being inserted conditionally on their being legally valid and this Agreement shall be construed and performed in all respects as if such invalid or unenforceable provisions were omitted.

(k) The failure of any party at any time or times to demand strict performance by any other party of any of the terms, warranties or conditions contained herein shall not of itself be construed as a continuing waiver or relinquishment thereof and each may at any time demand strict and complete performance by the other party of the said terms, warranties and conditions.

(l) Time is of the essence with respect to all of the provisions this Agreement. Any delay in performance by any party hereto shall constitute a material breach of this Agreement by such party.

[^1]: S.O. 2002, c.24 Sched. B.

[^2]: [1951] 1 K.B. 419 at p. 421 (Eng. C.A.) at p. 421.

[^3]: Brown v. Belleville, 2013 ONCA 148, affg. 2012 ONSC 2554; Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc. 2008 ONCA 92 at para. 53 (C.A.), leave to appeal to S.C.C. ref’d [2008] S.C.C.A 151; Place Concorde East Limited Partnership v. Shelter Corp. of Canada Ltd. [2006] O.R. No. 1961 (C.A.); Chapman v. Ginter, [1968] S.C.R. 560 at p. 568.

[^4]: “Putting Together the Puzzle of Time of the Essence” (1990), 69 Can. Bar Rev. 417.

[^5]: Sail Labrador Ltd. v. Challenge One (The), [1999] 1 S.C.R. 265.

[^6]: R.S.O. 1990, c. M. 10.

[^7]: Southcott Estates Inc. v. Toronto Catholic District School Board., 2010 ONCA 310, aff’d. 2012 SCC 51, 2012 S.C.C. 51; McCallum v. Zivojinovic (1977), 16 O.R. (2d) 721 (C.A.) at p. 726; Shaw & Shaw v. Holmes and Holmes, [1952] O.J. No. 518 (C.A.); Consolidated Press Ltd. v. Gibson et al., [1933] O.R. 458 (H.C.J.); Foster v. Anderson (1908), 16 O.L.R. 565; aff’d, 42 S.C.R. 251; Labelle v. O'Connor (1908), 15 O.L.R. 519; Harris v. Robinson (1892), 21 S.C.R. 390; Mills v. Haywood (1877), 6 Ch. D. 196.

[^8]: (1973), 1 O.R. (2d) 449 (C.A.).

[^9]: 1250364 Ontario Ltd. (c.o.b Lionshead Homes) v. Townend. 2012 ONSC 3576 (S.C.J.); Beacon Industrial Development Corp. Ltd. v. G.C. Farm Supply Ltd. (1981), 123 D.L.R. (3d) 467 (Alta. Q.B.); Drinkle v. Steedman, [1916] A.C. 275.

[^10]: 2628 St-Joseph Boulevard Inc. v. Fondation Olangi-Wosho, 2012 ONSC 541; Southcott Estates Inc. v. Toronto Catholic District School Board 2010 ONCA 310 at para. 13, affd. 2012 SCC 51, 2012 S.C.C. 51; St. Thomas Subdividers Ltd. v. 639373 Ontario Ltd. (1996), 91 O.A.C. 193 at paras. 36-37 (C.A.); Shapiro v. 1086891 Ontario Inc. (2006), 39 R.P.R. (4th) 246 (Ont. S.C.J.), at para. 107; McCallum v. Zivojinovic (1977), 16 O.R. (2d) 721 (Ont. C.A.), at p. 726, quoting New Zealand Shipping Co. v. Société des Ateliers & Chantiers de France (1918), [1919] A.C. 1 (U.K. H.L.), at p. 6, for the following proposition: "It is a principle of law that no one can in such a case take advantage of the existence of a state of things which he himself produced."

[^11]: Vhora v. Vhora, 2016 ONSC 2951; Canada Square Corp. v. Versafood Services Ltd., (1981) 34 O.R. (2d) 250 (C.A.)

[^12]: See, for instance, Merck & Co., Inc. v. Apotex Inc., 2013 FC 751 at paras. 235-236, 242-245,