



COURT OF APPEAL FOR ONTARIO

CITATION: PDM Entertainment Inc. v. Three
    Pines Creations Inc., 2015 ONCA 488

DATE: 20150629

DOCKET: C60024

MacPherson, Epstein and Roberts JJ.A.

BETWEEN

PDM Entertainment Inc.

Applicant (Respondent)

and

Three Pines Creations Inc. and Louise Penny

Respondents (Appellants)

Kenneth Prehogan and Hilary Book for the appellants

M. Scott Martin, for the respondent

Heard: June 12, 2015

On appeal from the judgment of Justice Kevin W. Whitaker
    of the Superior Court of Justice, dated January 23, 2015.

MacPherson
    J.A.:

A.

Overview

[1]

The appellant, Louise Penny, is an award-winning Canadian mystery
    writer. In 2011, she optioned certain rights to her books to a television
    production company, the respondent PDM Entertainment Inc. (PDM). Through her
    company, the appellant Three Pines Creations Inc. (Three Pines), Ms. Penny granted
    PDM the option to purchase the rights to her works for the purpose of producing
    made-for-television movies.

[2]

The option agreement had an initial two-year term. It also provided for extensions.
    When PDM gave notice that it was invoking the extension clause, Ms. Penny and
    Three Pines asserted that PDMs rights under the agreement had ended.

[3]

The parties brought duelling applications, which the application judge
    heard together on January 22, 2015. He found for PDM the next day.

[4]

Ms. Penny and Three Pines appeal.

B.

Facts

(1)

The parties and events

[5]

Louise Penny is a wonderful writer. She is the author of a series of ten
    novels featuring Chief Inspector Armand Gamache of the Sûreté de Québec and the
    imaginary, bucolic Quebec village of Three Pines. These books are, in a word,
    delightful. (I have read them all, usually by a fireplace on Boxing Day.)

[6]

The first novel in the series,
Still Life
, was published in
    2005. The second,
Dead Cold
, followed in 2007 and the tenth,
The
    Long Way Home
, in 2014. The novels have been a huge success; more than
    three million copies have been sold in 30 countries and 23 languages. They have
    appeared on the bestseller lists of the
Globe and Mail
, the
London
    Times
and the
New York Times
.

[7]

The novels have also achieved significant critical acclaim. Ms. Penny
    has won awards for her books, including the Arthur Ellis Award (Canada), the
    Dagger Award (United Kingdom) and the Agatha Award (United States). She is the
    only writer ever to have won the Agatha Award five times.

[8]

Three Pines is a Canadian company and the assignee of Ms. Pennys rights
    in the Gamache novels. Ms. Penny is its sole officer, director and shareholder.

[9]

PDM is an Ontario company that produces television programs. It was
    formed in 2011 by Phyllis Platt, Brian Dennis and Peter Moss, all of whom have
    substantial experience in the production of television movies.

[10]

In
    September 2011, PDM as Producer and Three Pines as Owner entered into an
    Option/Purchase Agreement (Option Agreement). It gave PDM an exclusive option
    to acquire certain rights in the Gamache novels, including the exclusive right
    to make made-for-television movies based on the novels.

[11]

Section
    2.1 of the Option Agreement required PDM to pay Three Pines $16,000 for an
    option on an initial set of two books (the First Set Option Fee). PDM paid
    this fee.

[12]

The
    Option Agreement provides that the option for the initial two books terminates
    after two years unless extended:

2.2     Unless
    extended as provided for in Section 2.3 or Section 2.3B, the Option for the
    initial two Books (the First Set Option) will terminate on the day that is 24
    months from the date of execution of this Agreement (the Initial First Set
    Option Period).

[13]

Sections
    2.3 and 2.3B, which are at the heart of this litigation, enable PDM to extend
    the initial two-year term:

2.3 Provided
    that Producer remains in active development with respect to one or both
    Productions based on the initial two Books, Producer will be entitled to extend
    the Initial First Set Option Period for a further 12-month period (the
    Extended First Set Option Period) upon payment to Owner of the sum of C$8,000
    (the First Set Option Extension Fee) on or before the last day of the Initial
    First Set Option Period. The First Set Option Extension Fee will not be
    applicable against the purchase price payable for any set of Books.

B.      Notwithstanding
    the foregoing, if the initial production order received by Producer is for one
    Production and not two, then, upon payment of the purchase price for the
    initial Book, Producer shall have the right to further extend the First Set
    Option Period with respect to the other Book that is the subject of the First
    Set Option upon payment of the sum of C$4,000 (the First Set Additional Option
    Extension Fee) on or before the last day of the Extended First Set Option
    Period. The First Set Additional Option Extension Fee will not be applicable
    against the purchase price payable for that remaining Book.

[14]

Section
    5.1B was added to the Option Agreement pursuant to an Amending/Confirmation
    Agreement executed in 2012. It provides, in part:

5.1B   if
    despite the best efforts of Producer the initial production order received by
    Producer for the initial set of two Books is for only one Production and not
    two as contemplated in Section 5.1, Producer shall have the right to exercise
    the Option for the initial Book .

Provided that Producer has paid
    Owner the sum of C$16,000 representing the First Set Option Fee as contemplated
    in Section 2.1 above, Producer shall be entitled to extend the First Set Option
    Period for the other Book that is the subject of the First Set Option as contemplated
    in Section 2.3B above.

[15]

The
    Option Agreement also gives PDM rolling rights to cover additional sets of
    Gamache novels. (When the Option Agreement was signed, there were six novels in
    the series. There are now ten.)

[16]

In
    October 2012, PDM purchased the television movie rights to
Still Life
,
the first book in the Gamache series, and
    paid Three Pines $104,625 in accordance with s. 5.1(i) of the Option Agreement.
    The movie aired on CBC on September 15, 2013. It was the highest rated
    television movie for the year on CBC and was nominated for several Directors
    Guild of Canada Awards including best television movie and best director (Peter
    Moss). CBC funded the preparation of a script for a movie based on the second
    Gamache novel,
Dead Cold
, but ultimately did not order the production
    of the movie.

[17]

Thus,
    in September 2013, as the second anniversary of the Option Agreement neared, PDM
    had exercised its option to purchase the rights to the first two books in the
    Gamache series  namely,
Still Life
and
Dead Cold
. It had
    purchased the television movie rights to
Still Life
and produced the
    movie. It had not taken these additional steps with respect to
Dead Cold
.

[18]

On
    September 4, 2013, Brian Dennis of PDM sent an email to Ms. Pennys agent
    giving notice that PDM was extending the Option Agreement pursuant to s. 2.3B:

I am writing to notify you that, in accordance with Clause 2.3B
     we are extending the First Set Option Period for one more year.

Pursuant to Clause 9.1 of the Agreement, we made payment today
    by electronic transfer of $4,000 Cdn to the Knight Hall Agency.

[19]

A
    year later, in September 2014, PDM still had not finalized a production order
    for
Dead Cold
. On September 18, Mr. Dennis sent an email purporting to
    extend the Option Agreement for a fourth year:

I am writing to notify you that, in accordance with Clause 2.3B
     we are extending the Extended First Set Option Period with respect to Dead
    Cold for one more year.

Pursuant to Clause 9.1 of the Agreement, we made payment today
    via electronic transfer of $4,000 Cdn to the Knight Hall Agency.

[20]

On
    October 8, 2014, Ms. Pennys agent, Knight Hall Agency, sent an email to Mr.
    Dennis informing PDM that the agency was not accepting PDMs proposed extension
    of the Option Agreement:

Upon legal advice, we have determined that PDM holds no such
    right to any extension of the Extended First Set Option Period.

More specifically, when PDM gave notice on September 5, 2013,
    that it was extending the First Set Option Period it did not pay C$8,000 for
    that extension as required by clause 2.3. PDMs notice at that time
    specifically invoked clause 2.3B to permit PDM to extend the First Set Option
    Period by payment of only C$4,000. In doing so, PDM interpreted clause 2.3B in
    the same manner in which we too had understood it: as permitting the reduction
    by half of the First Set Option Extension Fee since PDM had then produced one
    of the two titles in the first set.

Clause 2.3B was only intended for the purpose to which it has
    already been invoked. It was never intended to accord, and is not drafted in
    such a way as to accord, any option term additional to the Extended First
    Option Period.

[21]

In
    the same email, Ms. Pennys agent also declared that PDM had no further right
    to purchase
Dead Cold
or any other books in the Gamache series. The
    agency returned PDMs payment.

(2)

The application judges decision

[22]

On
    November 10, 2014, PDM brought an application seeking a declaration that the
    Option Agreement remained in effect and, if necessary, granting relief from
    forfeiture due to its payment of $4,000, rather than the $8,000 required by s.
    2.3 of the Option Agreement.

[23]

On
    December 22, 2014, Three Pines commenced its own application seeking a
    declaration that any option rights PDM may have had pursuant to the Option
    Agreement, save for the option with respect to
Still Life
that had
    already been exercised, had ended.

[24]

The
    application judge heard the duelling applications together on January 22, 2014.
    He released brief reasons (11 paragraphs) the next day. He accepted PDMs
    interpretation of the Option Agreement and concluded that the option agreement
    allows for an extension of a fourth year by the clearest language and which
    makes the most commercial sense.

[25]

The
    application judge also granted PDM relief from forfeiture. He noted that, if
    PDMs interpretation of ss. 2.3 and 2.3B of the Option Agreement was correct, then
    PDM had underpaid Three Pines by $4,000 on the first extension. The question thus
    became: should relief from forfeiture be granted and PDM permitted to pay an
    additional $4,000 to comply with s. 2.3 of the Option Agreement? The
    application judge answered this question in the affirmative. He reasoned:

I accept the suggestion that there is no restriction on the use
    of the equitable relief. I would suggest that the gross disproportionate
    outcome, if no relief is granted, is a significant part of the context to be
    considered. It is a comparison of the two values: a payment of $4,000 and the
    loss of opportunity to create and produce a very valuable and successful film
    property.

I agree that the relief should be used sparingly however, this
    is  a case where it should appropriately be used.

I agree with the factors set out in the applicants factum 
    good faith on the part of PDM, the breach of the options was trivial and based
    on a common mistake, there will be significant consequences for PDM.

[26]

Three
    Pines and Ms. Penny appeal.

C.

Issues

[27]

The
    appellants raise three issues on appeal and frame them as follows:

(1)

Did the application judge provide
    adequate reasons for judgment?

(2)

Did the application judge err in
    finding that the Option Agreement provides for two one-year extensions of the
    Initial First Set Option Period?

(3)

Did the application judge exceed
    his jurisdiction or otherwise err in granting the respondent relief from
    forfeiture?

D.

Analysis

(1)

Sufficiency of reasons

[28]

The
    appellants contend that the application judges reasons are wholly inadequate.
    They attach this description to the application judges reasons on both the
    contract and relief from forfeiture issues.

[29]

On
    the contract issue, the appellants submit that, although the application judge
    held that the Option Agreement in the clearest language permitted an extension
    for a fourth year, he did not say anything about the actual wording of the two
    key provisions, ss. 2.3 and 2.3B. Nor did he even mention a third relevant
    provision, s. 5.1B.

[30]

On
    the relief from forfeiture issue, the appellants assert that, in weighing the
    competing interests relating to this discretionary equitable remedy, the
    application judge disregarded or minimized the creative and reputational
    importance of the Option Agreement to Ms. Penny and Three Pines.

[31]

I
    do not accept this submission. I acknowledge that the application judges
    reasons on the contract issue are conclusory and that his reasons on the relief
    from the forfeiture issue are terse. They do not, however, cross the line and
    fall into the category of insufficient as described in the leading cases: see
R. v. Sheppard
, 2002 SCC 26,
[2002] 1 S.C.R. 869
;
Hill v. Hamilton-Wentworth Regional Police Services Board
,
2007 SCC 41, [2007] 3
    S.C.R. 129
; R
. v. R.E.M.
, 2008 SCC 51,
[2008]
    3 S.C.R. 3
;
F.H. v. McDougall
, 2008 SCC 53,
[2008]
    3 S.C.R. 41
.

[32]

I
    begin with an important contextual point. After the two applications were
    filed, they were scheduled for hearing on an urgent basis on the first
    available date that permitted time for responding materials, examinations and
    facta. In its Notice of Application, PDM said, under a separate heading titled Urgency:

(eee) [I]t is
    imperative that the Application be heard on an urgent basis. PDM has funding
    applications that are presently being considered and, if there is uncertainty
    as to the ownership of the rights, the funding applications may have to be
    withdrawn[.]

[33]

Moreover,
    at the conclusion of argument on January 22, 2015, PDMs counsel advised the
    application judge of the urgency of the matter and requested that, if possible,
    a decision be issued quickly. There is no indication that the appellants took
    issue with that request or with PDMs justification therefor. The application
    judge released his decision the next morning, on January 23, 2015. He gave the
    parties what he had been asked for: an early hearing and an immediate decision.

[34]

In
F.H. v. McDougall
, at para. 98, Rothstein J. summarized the rationales
    underlying the duty to give adequate reasons:

(1)

to justify and explain the result;

(2)

to tell the losing party why he or
    she lost;

(3)

to provide for informed
    consideration of the grounds of appeal; and

(4)

to satisfy the public that justice
    has been done.

[35]

In
    my view, the application judges reasons in this case meet this standard.

[36]

First,
    they justify and explain the result. Although the application judges reasons
    on the contract issue are conclusory, the two main provisions in issue are
    quite short. Moreover, the record before the court was comprehensive, the parties
    having advanced clear  and opposing  positions: see
Hill
, at para. 101.
    On the relief from forfeiture issue, the application judge stated explicitly
    that he agreed with the arguments in PDMs factum, including PDMs good faith,
    the minor nature of PDMs breach of the Option Agreement  that is, paying
    $4,000 instead of the required $8,000  and PDMs great loss if it were not
    granted any relief, namely, the loss of opportunity to create and produce a
    very valuable and successful film property.

[37]

Second,
    from reading the application judges reasons, Three Pines and Ms. Penny would
    know why they lost. The application judge did not agree with their interpretation
    of the contract and thought that PDM deserved equitable relief so that the
    contract could continue to operate.

[38]

Third,
    the application judges reasons, coupled with the record (especially the terms
    of the Option Agreement) and the parties excellent facta and oral submissions
    provide for this courts informed consideration of the grounds of appeal.

[39]

Fourth,
    there is nothing to suggest that a reasonable member of the public would doubt
    that justice has been done. The Superior Court arranged an expedited hearing,
    the application judge heard submissions for several hours and he rendered a
    decision the next day. The public could be satisfied that justice was done.

(2)

The contract issue

[40]

The
    appellants contend that the application judge erred in interpreting ss. 2.3 and
    2.3B of the Option Agreement which, for ease of reference, I set out again:

2.3 Provided
    that Producer remains in active development with respect to one or both
    Productions based on the initial two Books, Producer will be entitled to extend
    the Initial First Set Option Period for a further 12-month period (the
    Extended First Set Option Period) upon payment to Owner of the sum of C$8,000
    (the First Set Option Extension Fee) on or before the last day of the Initial
    First Set Option Period. The First Set Option Extension Fee will not be
    applicable against the purchase price payable for any set of Books.

B.      Notwithstanding
    the foregoing, if the initial production order received by Producer is for one
    Production and not two, then, upon payment of the purchase price for the
    initial Book, Producer shall have the right to further extend the First Set
    Option Period with respect to the other Book that is the subject of the First
    Set Option upon payment of the sum of C$4,000 (the First Set Additional Option
    Extension Fee) on or before the last day of the Extended First Set Option
    Period. The First Set Additional Option Extension Fee will not be applicable
    against the purchase price payable for that remaining Book.

[41]

In
    my view, the appellants accurately and succinctly state the crucial issue in their
    factum, at para. 52:

The difference of interpretation between the parties may be
    simply stated: Was PDM permitted to extend the Option Agreement (a) pursuant to
    s. 2.3
and
s. 2.3B, or (b) pursuant to ss.
    2.3
or
2.3B? [Emphasis in original.]

[42]

The
    Option Agreement is a contract. The respondent asserts that its interpretation
    presents a question of mixed fact and law because, as Rothstein J. stated in
Sattva
    Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53 (
Sattva
), at
    para. 55, the goal of contractual interpretation, to ascertain the objective
    intentions of the parties, is inherently fact specific. Accordingly, the general
    rule in favour of deference to first instance decision-makers on points of
    contractual interpretation (
Sattva
, at para. 52) applies on this
    appeal.

[43]

I
    do not accept this submission. In his reasons, the application judge did not
    provide any analysis of ss. 2.3 and 2.3B of the Option Agreement; rather, all
    he said was, I am of the view that the option agreement allows for an
    extension of a fourth year by the clearest language. He said nothing about s.
    5.1 of the Option Agreement, on which the appellants heavily relied. I also
    observe that the decision in this case was made in relation to two
    applications, not a trial; that there are no credibility issues; and that there
    are only two or perhaps three contractual provisions that need to be
    considered. Taking these circumstances together, I think it is appropriate to
    review the decision under appeal on a standard of correctness.

[44]

The
    appellants advance four arguments in support of their position that ss. 2.3 and
    2.3B of the Option Agreement are alternative, not cumulative, sources of an
    extension right.

[45]

First,
    the appellants rely on s. 2.2 of the Option Agreement:

Unless extended as provided for in Section 2.3
or
Section 2.3B, the
    Option for the initial two Books (the First Set Option) will terminate on the
    first day that is 24 months from the date of execution of this Agreement (the
    Initial First Set Option Period). [Emphasis added.]

The appellants contend that the word or is
    disjunctive in this provision; PDM can extend its option, but only once.

[46]

I
    am not persuaded by this submission. In my view, the word or in s. 2.2 cannot
    be interpreted in isolation from ss. 2.3 and 2.3B. Or signals only that there
    are, depending on the facts on the ground with respect to development, two
    possible routes to an extension. PDM could initially choose the s. 2.3 route
    near the end of the original contract period; the s. 2.3B route allows for a
    potential second extension a year later.

[47]

Second,
    the appellants rely on the phrase [n]otwithstanding the foregoing in s. 2.3B of
    the Option Agreement. They say that this phrase indicates that s. 2.3B is an
    alternative, not an addition, to the extension route set out in s. 2.3.

[48]

Again,
    I disagree. When the words of s. 2.3B are considered as a whole, it becomes
    clear that all the notwithstanding phrase does is provide a transition from
    the extension route in s. 2.3 to the extension route in s. 2.3B in
    circumstances where PDM has moved from no production order to an initial
    production order.

[49]

Third,
    the appellants submit that s. 5.1B, which was added to the Option Agreement in
    2012, supports its position. For ease of reference, I set out the relevant part
    of s. 5.1B again:

Provided that Producer has paid Owner the sum of C$16,000
    representing the First Set Option Fee as contemplated in Section 2.1 above,
    Producer shall be entitled to extend the First Set Option Period for the other
    Book that is the subject of the First Set Option as contemplated in Section
    2.3B above.

According to the appellants, this provision makes it
    clear that where PDM has obtained the rights to produce a movie relating to one
    book, but not the second, s. 2.3B (and not s. 2.3) is to be used to extend the
    Initial First Set Option Period.

[50]

I
    do not accept this submission. In my view, s. 5.1B speaks to the timing and
    circumstances (one movie moving forward) relating to the exercise of the
    extension right in s. 2.3B. Section 5.1B says nothing about whether that right
    is alternative or cumulative to the extension right in s. 2.3 of the Option
    Agreement. Rather, s. 5.1B expressly states that the Producers entitlement to
    extend is as contemplated in s. 2.3B, which provides for a further extension
    during the Extended First Set Option Period.

[51]

Fourth,
    the appellants submit that, since part of the basic test for contractual
    interpretation is to ascertain the objective intentions of the parties (
Sattva
,
    at para. 55), PDMs own actions support the appellants reading of the
    provisions at issue. The appellants note that PDM sought legal advice when it
    extended its option in 2013. Based on that advice, it specifically invoked s.
    2.3B of the Option Agreement, not s. 2.3. It paid a fee of $4,000, not $8,000.
    In short, say the appellants, PDM knew that there were two potential routes for
    extending its option. It sought and obtained legal advice in choosing between
    them. It accepted and acted on that advice. PDMs eyes were wide open
    throughout the extension process and it arrived, in 2013, at an interpretation
    of the contract opposite to the one it advanced before the application judge in
    January 2015.

[52]

I
    agree with this submission. It is a strong point in the appellants favour.

[53]

However,
    in the end, I think that the wording of ss. 2.3 and 2.3B, taken together, supports
    the respondents interpretation of the Option Agreement. Section 2.3 provides
    for an extension of the contract into a third year. Section 2.3B provides for a
    further extension, albeit in more limited circumstances.

[54]

Section
    2.3 applies when, after almost two years of effort, the Producer (PDM) is, at a
    minimum, in active development with respect to at least one of the two books
    in its First Set Option. In 2013, PDM was easily inside that requirement; it
    had developed the project to the point of purchasing the movie rights to
Still
    Life
from Three Pines for $104,625. So PDM could have invoked s. 2.3 at
    this juncture to obtain an extension of the Option Agreement for a third year.
[1]

[55]

To
    obtain a further extension thereafter, under s. 2.3B, it would not have been enough
    for PDM merely to have been engaged in the active development of the project.
    Rather, PDM would have needed to have received an initial production order to
    trigger the extension. This was precisely the lay of the land in September 2014;
    PDM had obtained a production order from CBC. Section 2.3B had been triggered.

[56]

What,
    then, does s. 2.3B say?

[57]

In
    my view, the wording of s. 2.3B strongly supports an additional extension. It provides
    the Producer with the right to further extend the First Set Option Period
    with respect to the second book in the First Set Option. It requires payment of
    a fee of $4,000 and calls it the First Set Additional Option Extension Fee.
    It requires that the option be exercised on or before the last day of the
    Extended First Set Option Period. All of these words and titles  especially
    the words further and [a]dditional and the explicit link to the expiration
    of the third-year extension in s. 2.3  support the conclusion that, against
    the backdrop of a major new development in year three (a production order), s.
    2.3B allows an extension of the Option Agreement for a fourth year.

[58]

Finally,
    I think there is commercial sense in the above interpretation. Section 2.3
    deals with a commercial scenario in which, after two years under the Option
    Agreement, the Producer has engaged in genuine active development of the
    project but has not obtained a production order. Section 2.3 gives the Producer
    a third year to try to fulfil its contractual obligations to the Owner. Section
    2.3B deals with a different factual scenario  one in which, by the end of the
    third year, the Producer has obtained a production order for a movie relating
    to one of the two books. In other words, the Producer has achieved a huge
    success, not only for itself but also for the Owner. Section 2.3B, as
    interpreted above, recognizes this success and grants the Producer a second
    (and final) extension to try to obtain a production order for a movie relating
    to the second book. This strikes me as commercially reasonable and fair.

[59]

For
    these reasons, my answer to the clear and succinct question posed by the
    appellants in their factum is: PDM was permitted to extend the Option Agreement
    pursuant to s. 2.3 and s. 2.3B, cumulatively. The application judge correctly
    interpreted the Option Agreement.

(3)

Relief from forfeiture

[60]

PDM
    now admits that it erred in citing s. 2.3B as the basis for the first extension
    of the Option Agreement. It sought relief from forfeiture to avoid the harsh
    consequences of this error. The application judge exercised his equitable
    discretion to grant that request.

[61]

The
    appellants submit that, in doing so, he erred. They say that the application
    judge did not have jurisdiction to grant relief from forfeiture because this
    remedy can only be granted where the party seeking relief has breached a
    contract and the breach gives rise to a right to forfeiture essentially to
    secure payment of money. PDM did not breach the Option Agreement; it chose to
    extend the option under a contractual provision (s. 2.3B) which caused it to
    lose its extension right a year earlier than if it had extended the option
    under a different provision (s. 2.3).

[62]

I
    do not accept this essentially technical argument. A court has a broad
    discretion to award relief from forfeiture under s. 98 of the
Courts of
    Justice Act
, R.S.O. 1990, c. C.43:

A court may grant relief against penalties and
    forfeitures, on such terms as to compensation or otherwise as are considered
    just.

[63]

Relief
    from forfeiture is available in a wide range of cases, including cases
    involving a failure to renew a lease: see, for example,
120 Adelaide
    Leaseholds Inc. v. Oxford Properties Canada Ltd.
, [1993] O.J. 2801 (C.A.),
    at para. 9;
1383421 Ontario Inc. v. Ole Miss Place Inc.
(2003), 67
    O.R. (3d) 161 (C.A.), at para. 80. I am not prepared to draw a bright line
    distinction between breach and loss to avoid considering the merits of
    granting relief from forfeiture in this case.

[64]

The
    appellant contends that, even if the application judge had the jurisdiction to
    grant relief from forfeiture, he erred in doing so.

[65]

The
    test for granting relief from forfeiture was recently restated by LaForme J.A.
    in
Kozel v. Personal Insurance Co.
, 2014 ONCA 130, 119 O.R. (3d) 55, at
    para. 31:

In exercising its discretion to grant relief from forfeiture, a
    court must consider three factors: (i) the conduct of the applicant, (ii) the
    gravity of the breach, and (iii) the disparity between the value of the
    property forfeited and the damage caused by the breach.

[66]

Although
    his reasons are brief, the application judge touched on all of these factors.
    He found that PDM acted in good faith in the contract extension process; that
    its breach (mistake)  the payment of $4,000 instead of $8,000  was trivial in
    relation to a contract on which it had already paid well over $100,000; and
    that forfeiture would be a grossly disproportionate outcome in light of PDMs
    mistake  namely, the loss of opportunity to create and produce a very
    valuable and successful film property.

[67]

Relief
    from forfeiture is a discretionary equitable remedy. A judges decision in this
    domain is entitled to considerable deference. I see no basis for interfering
    with the application judges exercise of discretion in this case.

E.

Disposition

[68]

I
    would dismiss the appeal. The respondent is entitled to its costs of the appeal,
    which I would fix at $20,000, inclusive of disbursements and HST.

Released: June 29, 2015 JCM

J.C.
    MacPherson J.A.

I
    agree Gloria Epstein J.A.

I
    agree L. B. Roberts J.A.





[1]
In its September 2013 email to Ms. Pennys agent, set out above, PDM actually
    stated that it was extending the Option Agreement pursuant to s. 2.3B, not s.
    2.3. PDM now acknowledges that this was an error. This is the basis for PDMs claim
    for relief from forfeiture.

