Creston Moly Corp. v. Sattva Capital Corp.

• Jurisdiction: British Columbia
• Court: Court of Appeal (British Columbia)
• Judge: Kirkpatrick, Neilson and Bennett, JJ.A.
• Citation: 2012 BCCA 329,(2012), 326 B.C.A.C. 114 (CA)
• Date: 13 December 2011
• Subject Matter: CONTRACTS

Creston Moly v. Sattva Capital (2012), 326 B.C.A.C. 114 (CA);

    554 W.A.C. 114

MLB headnote and full text

Temp. Cite: [2012] B.C.A.C. TBEd. AU.004

Creston Moly Corp. formerly Georgia Ventures Inc. (appellant/petitioner) v. Sattva Capital Corp. formerly Sattva Capital Inc. (respondent/respondent)

(CA039064; 2012 BCCA 329)

Indexed As: Creston Moly Corp. v. Sattva Capital Corp.

British Columbia Court of Appeal

Kirkpatrick, Neilson and Bennett, JJ.A.

August 7, 2012.

Summary:

Georgia Ventures Inc. and Sattva Capital Corp. entered into a finder's fee agreement. The issue of the valuation of the finder's fee proceeded to arbitration. An arbitrator awarded $4,140,000 to Sattva for breach of the agreement. Georgia applied for leave to appeal the award.

The British Columbia Supreme Court, in a decision reported at [2009] B.C.T.C. Uned. 1079, denied Georgia's application. It was the court's view that Georgia's grounds of appeal were not limited to questions of law alone, as required by s. 31(2) of the Commercial Arbitration Act. Georgia appealed.

The British Columbia Court of Appeal, in a decision reported at [2010] B.C.A.C. Uned. 34, overturned the decision, and granted leave to appeal on two issues of law regarding the interpretation of the agreement.

The British Columbia Supreme Court, in a decision reported at [2011] B.C.T.C. Uned. 597, construed the agreement in a manner that supported the award. Georgia appealed that decision.

The British Columbia Court of Appeal allowed the appeal and granted an order that the finder's fee had been paid, with the costs of the appeal to Georgia.

Contracts - Topic 2106

Terms - Express terms - Provisos - The sole issue on this appeal was the construction to be given to a finder's fee agreement made between the appellant ("Georgia"), and the respondent corporation ("Sattva") - Georgia was a public company whose shares traded on the TSX Venture Exchange - Sattva introduced Georgia to an opportunity to acquire a property; Georgia pursued the opportunity - The agreement limited the amount of Sattva's finder's fee to $1.5 million US - Sattva was entitled to receive that amount in shares of Georgia - The parties differed in their interpretation of the agreement with respect to the conversion of the fee to shares - An arbitrator awarded $4,140,000 to Sattva - Georgia argued that the arbitrator and the chambers judge erred in failing to construe paragraph 3.1 of the agreement in a manner that gave determinative effect to the "maximum fee proviso", opting instead for an interpretation that found the Market Price of Georgia's stock was compatible with the proviso - The British Columbia Court of Appeal allowed the appeal - "When one examines paragraph 3.1 in the context of the Agreement as a whole, the proviso limiting the fee to $1.5 million when paid must be given paramount effect. To give effect only to the 'Market Price' definition results in an absurdity that could not reasonably be said to be within the contemplation of the parties or in accordance with good business sense ... Paragraph 3.1 provided that Sattva was entitled to a finder's fee calculated at the Market Price definition, but paid in shares in an amount not to exceed the Exchange limits. In context, the calculated amount provided the Agreement with the parameters of the potential fee. By contrast, the amount to be paid was the amount the Exchange would scrutinize and approve or not. Thus, it is clear that the fee, when payable, was subject to the proviso and was sensibly within the contemplation of the parties at the time the Agreement was made." - See paragraphs 47 and 48.

Contracts - Topic 7401

Interpretation - General principles - Intention of parties (incl. reasonable interpretation) - [See Contracts - Topic 7407 ].

Contracts - Topic 7407

Interpretation - General principles - Whole contract to be considered - The sole issue on this appeal was the construction to be given to a finder's fee agreement made between the parties - The parties agreed the interpretation of the agreement was a question of law alone, reviewable on a standard of correctness - They agreed as well on the principles of contractual construction that governed the issue - The British Columbia Court of Appeal summarized those principles as follows - "The intention of the parties should be ascertained by the words of the contract, construed in the context of the entire agreement and the circumstances surrounding its execution. Those words must be given their plain and ordinary meaning unless this produces an absurd result. Effect should be given to all of the contractual provisions, and an interpretation that renders one of them ineffective should be rejected. Sound commercial principles and good business sense should inform the construction of a commercial agreement." - See paragraph 26.

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - [See Contracts - Topic 2106 ].

Cases Noticed:

Aquadel Golf Course Ltd. v. Lindell Beach Holiday Resort Ltd. et al. (2009), 265 B.C.A.C. 98; 446 W.A.C. 98; 306 D.L.R.(4th) 744; 2009 BCCA 5, refd to. [para. 26].

Group Eight Investments Ltd. v. Taddei et al. (2005), 217 B.C.A.C. 184; 358 W.A.C. 184; 47 B.C.L.R.(4th) 278; 2005 BCCA 489, refd to. [para. 26].

Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., [1980] 1 S.C.R. 888; 32 N.R. 488; 112 D.L.R.(3d) 49, refd to. [para. 46].

Scanlon v. Castlepoint Development Corp. et al. (1992), 59 O.A.C. 191; 99 D.L.R.(4th) 153 (C.A.), refd to. [para. 47].

Counsel:

D. Roberts, Q.C., and D. Mitchell, for the appellant;

H. Van Ommen, for the respondent.

This appeal was heard at Vancouver, British Columbia, on December 13, 2011, before Kirkpatrick, Neilson and Bennett, JJ.A., of the British Columbia Court of Appeal. On August 7, 2012, the Court of Appeal delivered the following judgment, with written reasons.