Whether 427703 B.C. Ltd. established a strong prima facie case of fraud to justify an injunction restraining payment under a Letter of Credit (LOC).
Whether the court should order any payment under the LOC to be paid into court pending the litigation.
Background Facts
The plaintiff (part of the Emterra Group) and Mu3 entered into a Consulting Services Agreement (CSA). A LOC was issued by Canadian Western Bank (CWB) to secure payments to Mu3.
The plaintiff alleged it terminated the agreement in October 2024 due to Mu3’s breach, while Mu3 claimed the plaintiff repudiated the contract in July 2024.
On January 22, 2025, Mu3 demanded $1,252,298.14 under the LOC. The plaintiff sought to restrain payment, arguing the demand was fraudulent.
The court found the dispute to be a legitimate disagreement over contract interpretation rather than fraud.
Decision
Injunction Denied: The plaintiff failed to establish strong prima facie fraud.
Payment Into Court Denied: The LOC’s purpose is to ensure prompt payment.
Outcome: The injunction was lifted, and the application was dismissed with costs to Mu3. Exact amount was not specified.
