Background:
Argo Mezzanine Financing No. 1 Ltd. ("Argo") sued Plaza 88 Developments Ltd. ("Plaza 88") over deductions from profits owed under a financing agreement for a real estate development in New Westminster, B.C. Argo had loaned $40 million to Plaza 88, with repayment terms including both principal and interest, as well as a 10% share of the "Net Distributable Cash" (NDC) generated by the project.

Under their Participation Agreement, Argo was entitled to 10% of the NDC, defined as gross project revenue minus agreed-upon deductions. Although Plaza 88 repaid the loan and interest, disputes arose over deductions Plaza 88 applied to the NDC formula, specifically: (1) $3,050,051 in profit participation payments, (2) $4,138,013 in interest expenses, and (3) a $413,000 project manager payment.

Legal Issues and Judgment:
Argo argued that the profit participation and project manager payments did not qualify as “reasonable non-construction costs” and were therefore non-deductible. Plaza 88 contended these deductions were valid project costs. The court found that only the interest expenses were permissible deductions, leading to an increase of $3,463,051 in the NDC. This adjustment awarded Argo an additional 10% share, totaling $346,305.10, but denied pre-judgment interest due to lack of contractual or statutory basis.