Subject: Two related claims regarding breaches of a Share Purchase Agreement (SPA) for a Honda dealership.
Key Facts:
- Share Purchase Agreement (SPA): Signed June 1, 2021, for $4,438,079.
- $3,688,079 paid at closing.
- $150,000 held in escrow for post-closing adjustments.
- $750,000 to be paid via preferred shares, redeemable in installments.
- Dispute Origin: The purchaser provided draft post-closing financial adjustments over five months late, reducing the price by $866,253, alleging unpaid vendor liabilities before the sale.
First Action (BC-21-2022):
- Claims: Plaintiffs argue:
- The defendant breached the SPA by missing deadlines for post-closing adjustments.
- Plaintiffs are entitled to the $150,000 escrow and a waiver of post-closing adjustments.
- Defenses: Defendant claims delays were caused by vendors' failure to cooperate and alleged bad faith by the vendors (e.g., stopping supplier payments).
Second Action (BC-103-2022):
- Claims: Plaintiffs allege non-payment of $75,000 installments due under the SPA.
- Defenses: Defendant asserts a right of set-off due to the adjusted purchase price and alleges bad faith.
Court Findings:
-
Summary Judgment Denied for Both Actions:
- Reasoning: Genuine issues requiring a trial exist regarding:
- Whether vendors implicitly waived their right to enforce deadlines.
- Allegations of bad faith and breaches of the SPA (e.g., stopping supplier payments affecting the price).
- Credibility and conduct of both parties.
-
Costs: Plaintiffs must pay $4,000 in costs.
Key Legal Principles:
- Strict compliance with contractual terms can be waived by conduct.
- Duty of honest performance under Canadian contract law requires parties not to mislead or act in bad faith.
