Maxam Opportunities Fund Limited Partnership et al. v. Greenscape Capital Group Inc. et al., 2013 BCCA 460

• Judge: Newbury, D. Smith and Garson, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: August 15, 2013
• Jurisdiction: British Columbia
• Citations: 2013 BCCA 460;(2013), 344 B.C.A.C. 282 (CA)

Maxam Opportunities v. Greenscape Capital (2013), 344 B.C.A.C. 282 (CA);

    587 W.A.C. 282

MLB headnote and full text

Temp. Cite: [2013] B.C.A.C. TBEd. OC.057

Maxam Opportunities Fund Limited Partnership, Maxam Opportunities Fund (International) Limited Partnership, Maxam Opportunities GP Ltd., Maxam Opportunities (International) GP Ltd. (appellants/petitioners) v. Greenscape Capital Group Inc., Greenswitch Capital Ltd., Greenswitch America, Inc. (respondents/respondents)

(CA040946)

Maxam Opportunities Fund Limited Partnership, Maxam Opportunities Fund (International) Limited Partnership, Maxam Opportunities GP Ltd., Maxam Opportunities (International) GP Ltd. (respondents/petitioners) v. Greenscape Capital Group Inc., Greenswitch Capital Ltd., Greenswitch America, Inc. (appellants/respondents)

(CA040948; 2013 BCCA 460)

Indexed As: Maxam Opportunities Fund Limited Partnership et al. v. Greenscape Capital Group Inc. et al.

British Columbia Court of Appeal

Newbury, D. Smith and Garson, JJ.A.

October 25, 2013.

Summary:

In January 2011, a borrower and its corporate guarantors (collectively, Greenscape) entered into a loan agreement with a lender (Maxam) wherein Greenscape agreed to borrow up to $7 million from Maxam over a five year term. The loan was to be paid in quarterly installments and was to mature in January 2016. The agreement contained various covenants on the part of Greenscape, the breach of which would constitute an "Event of Default" that entitled Maxam to declare the entire principal amount outstanding and all other "Obligations" immediately due and payable. "Obligations" was defined in the agreement to include a "Prepayment Fee". Greenscape did not attempt to make any prepayment of principal during the term of the loan. In March 2013, Maxam advised Greenscape that there had been an Event of Default. Maxam elected to accelerate the loan, claiming the principal and various fees, including the Prepayment Fee. Maxam began enforcement proceedings. Greenscape sought a stay of Maxam's enforcement rights to allow it an opportunity to obtain refinancing. It also denied that the Prepayment Fee was due and owing to Maxam.

The British Columbia Supreme Court granted an order declaring that the loan was in default and that the principal amount was due and owing. However, the court stayed the enforcement of Maxam's remedies for 60 days on specified terms that required various payments to be made by Greenscape. The court found that there were two possible interpretations of the agreement with respect to the Prepayment Fee. The question of whether it was due and payable was ordered to be tried by summary trial. Both Maxam and Greenscape appealed respecting the Prepayment Fee issue.

The British Columbia Court of Appeal allowed Greenscape's appeal and dismissed Maxam's appeal. No amount was due and payable to Maxam under the loan agreement in respect of a Prepayment Fee. There was no clear and unambiguous language in the definition of Prepayment Fee that indicated that anything other than the ordinary meaning of "prepayment" was to be adopted in construing that term. In its ordinary and grammatical sense, "prepayment" referred to a payment that was made prior to the due date of a loan. Since Maxam had accelerated the loan, it was now due and no prepayment could be made.

Contracts - Topic 7404

Interpretation - General principles - Ordinary meaning (Golden Rule) - General - See paragraphs 20 to 51.

Contracts - Topic 7416

Interpretation - General principles - Most commercially reasonable interpretation - See paragraphs 20 to 51.

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - See paragraph 23.

Creditors and Debtors - Topic 1654

Payment of debt - Prepayment - When available - See paragraphs 20 to 51.

Evidence - Topic 6204

Parol evidence rule - Evidence offered to explain written agreement - See paragraphs 11 and 27.

Cases Noticed:

Water Street Pictures Ltd. v. Forefront Releasing Inc. et al. (2006), 231 B.C.A.C. 189; 381 W.A.C. 189; 2006 BCCA 459, refd to. [para. 12].

Melanesian Mission Trust Board v. Australian Mutual Provident Society, [1996] U.K.P.C. 53, refd to. [para. 12].

Group Eight Investments Ltd. v. Taddei et al. (2005), 217 B.C.A.C. 184; 358 W.A.C. 184; 2005 BCCA 489, refd to. [para. 21].

Black Swan Gold Mines Ltd. v. Goldbelt Resources Ltd. (1996), 78 B.C.A.C. 193; 128 W.A.C. 193; 25 B.C.L.R.(3d) 285 (C.A.), refd to. [para. 21].

Hillis Oil and Sales Ltd. v. Wynn's Canada Ltd., [1986] 1 S.C.R. 57; 65 N.R. 23; 71 N.S.R.(2d) 353; 171 A.P.R. 353, refd to. [para. 23].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, 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, refd to. [para. 26].

Prenn v. Simmonds, [1971] 3 All E.R. 237 (H.L.), refd to. [para. 27].

Kingsway General Insurance Co. v. Lougheed Enterprises Ltd. et al. (2004), 202 B.C.A.C. 220; 331 W.A.C. 220; 2004 BCCA 421, refd to. [para. 27].

Mannai Investment Co. v. Eagle Star Life Assurance Co., [1997] A.C. 749; 215 N.R. 321 (H.L.), refd to. [para. 44].

Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 W.L.R. 896 (H.L.), refd to. [para. 45].

Ferreira v. Yared (1992), 32 Mass. App. Ct. 328, refd to. [para. 48].

Baybank Middlesex et al. v. 1200 Beacon Properties, Inc. (1991), 760 F. Supp. 957, refd to. [para. 49].

Texas Airfinance Corp. v. Lesikar (1989), 777 S.W.(2d) 559 (Texas C.A.), refd to. [para. 49].

LHD Realty Corp., Re (1984), 726 F.2d 327 (7th Cir. C.A.), refd to. [para. 49].

O'Shanter Development Co. v. Gentra Canada Investments Inc. (1995), 25 O.R.(3d) 188 (Gen. Div.), refd to. [para. 50].

Lee v. Skalbania (1987), 47 R.P.R. 162 (B.C.S.C.), affd. (1989), 4 R.P.R.(2d) xxxiii (B.C.C.A.), refd to. [para. 54].

Coal Harbour Properties Partnership v. Liu et al. (2006), 230 B.C.A.C. 78; 380 W.A.C. 78; 2006 BCCA 385, refd to. [para. 54].

Hinkson Holdings Ltd. v. Silver Sea Developments Limited Partnership (2007), 246 B.C.A.C. 37; 406 W.A.C. 37; 2007 BCCA 408, refd to. [para. 54].

Maguire et al. v. Revelstoke Mountain Resort Limited Partnership et al., [2010] B.C.T.C. Uned. 1618; 2010 BCSC 1618, refd to. [para. 54].

Pinto v. Revelstoke Mountain Resort Limited Partnership (2011), 304 B.C.A.C. 193; 513 W.A.C. 193; 2011 BCCA 210, refd to. [para. 56].

Authors and Works Noticed:

Corpus Juris Secundum, vol. 10, §§ 132, 261 [para. 47].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (5th Ed. 2006), p. 776 [para. 54].

Counsel:

H. Shapray, Q.C., and T. Jeffries, for the Maxam appellants;

D. Le Dressay, for the Greenscape respondents.

These appeals were heard at Vancouver, B.C., on August 15, 2013, before Newbury, D. Smith and Garson, JJ.A., of the British Columbia Court of Appeal. Newbury, J.A., delivered the following judgment for the court on October 25, 2013.