Case Background:

• Loan Agreement: 660 Sunningdale agreed to pay a $426,500 Lender Fee to First Source as part of a loan commitment. $100,000 was paid initially, with the balance held in trust pending litigation.
• Dispute: 660 Sunningdale paid the initial amount but did not proceed with the loan or pay the remaining balance. First Source registered a caution against the property.

Lower Court Decision:

• The motion judge ruled the balance of the Lender Fee as an unenforceable penalty clause and granted relief against forfeiture.

Appeal Issues:

1. Unenforceable Penalty Clause: The motion judge erred, as the fee was consideration for the loan commitment, not a penalty for breach.
2. Relief Against Forfeiture: Misapplied, since the fee was not a penalty for breach but part of the contractual consideration.
3. Fee Contingency: The judge incorrectly interpreted that the fee was contingent on the loan being advanced.

Court of Appeal Decision:

• Reversed the Lower Court:
  • The fee balance was not a stipulated remedy for breach but consideration for the loan.
  • The relief against forfeiture doctrine was misapplied.
  • The fee was due regardless of the loan advancement.
• Conclusion:
  • Appeal allowed. First Source is entitled to the balance of the Lender Fee.
  • Costs: $50,000 for the summary judgment motion and $20,000 for the appeal awarded to First Source.