Background: Skychain Technologies Inc. planned to build a cryptocurrency mining facility in Birtle, Manitoba, and entered into a financing agreement with The9 Limited and its subsidiary 1111 Limited. The9 provided a total of $4 million in financing, half as equity and half as a loan under convertible debentures.

Dispute: Skychain failed to obtain necessary permits and defaulted on its time-limited obligations to complete the facility by the agreed dates. The9 claimed that the $2 million loan was immediately due and payable. Skychain argued that the contract limited The9’s remedies to liquidated damages due to the delays.

Lower Court Decision: The chambers judge granted summary judgment in favor of The9, interpreting that the contract allowed The9 to demand immediate repayment of the loan. Skychain's interpretation of the contract, which suggested remedies were limited to liquidated damages, was not accepted.

Appeal: Skychain appealed, arguing that the judge erroneously expanded the scope of the dispute by considering the relocation of the facility as a fundamental breach of the agreement, which was not explicitly pleaded.

Appeal Decision: The Court of Appeal dismissed the appeal. It agreed with the lower court that the contract language clearly allowed The9 to demand repayment and that liquidated damages were intended only for short-term delays. The appeal court concluded that Skychain’s failure to meet specified deadlines permitted The9 to accelerate the repayment of the debentures regardless of any intended relocation or redefinition of the project’s scope.