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The Court of Appeal upheld the application judge's directions regarding the purchase price and terms of an employee's option to buy the testator's company.
An appeal concerning the interpretation of a will provision granting an employee an option to purchase the testator's auto supply company.
The application judge determined the purchase price to be $529,611 (calculated using the formula in the will with adjustments for salary normalization and deductions for improperly made support payments), and dispensed with the requirement for a collateral mortgage against the employee's residence.
The Court of Appeal upheld the application judge's decision, finding no error in treating the employee as a potential purchaser rather than a beneficiary, in dispensing with the collateral mortgage requirement, in accepting the employee's expert valuation for salary purposes, and in deducting the support payments from the purchase price.
Court determines purchase price and terms for an option to buy a deceased's business.
The applicant sought to exercise an option under a secondary will to purchase the shares of the deceased's business.
The estate trustee and the applicant disputed the calculation of the purchase price based on an earnings formula, as well as the terms of the purchase.
The court determined the appropriate earnings calculation, rejected the estate trustee's attempt to impose unilateral conditions such as a spousal guarantee and restrictive covenants, and ordered that certain funds withdrawn by the estate be credited against the purchase price.
The applicant was granted 30 days to exercise the option at the determined price.
