Background:
CLEAResult acquired Eco-Fitt Corporation under a Share Purchase Agreement (SPA) dated June 27, 2022, which included a Reverse Earn-Out mechanism with payments based on EBITDA. Disputes arose over earn-out calculations after CLEAResult reported $0 owed for the first earn-out period. The Vendors alleged CLEAResult breached SPA covenants, improperly reducing EBITDA.

Key Issues:

• CLEAResult sought enforcement of the SPA’s dispute resolution, requiring BDO Canada LLP (Independent Auditor) to resolve accounting issues.
• Vendors argued court intervention was needed due to breaches affecting earn-out payments.

Decision:
The court ruled that BDO should independently determine the Reverse Earn-Out Payment as per the SPA. BDO’s role is limited to financial calculations (EBITDA), not investigating covenant breaches, which are to be adjudicated separately in court. This preserves the efficiency and finality of the expert dispute resolution process.

Costs:
CLEAResult was awarded costs, subject to further submissions from the Respondents.

Implication:
The ruling enforces contractual provisions for expert resolution of financial disputes while allowing separate court proceedings for legal claims.