



COURT OF APPEAL FOR ONTARIO

CITATION: Marshallzehr Group Inc. v. Ideal
    (BC) Developments Inc., 2021 ONCA 229

DATE:  20210413

DOCKET:
C68419

Rouleau, Brown and Miller JJ.A.

BETWEEN

Marshallzehr Group Inc.

Plaintiff/Defendant
    by Counterclaim

(Respondent)

and

Ideal (BC) Developments Inc., Ideal (BC2) Developments Inc.,

2490568 Ontario Inc., 2490564 Ontario Inc. IDEAL Developments Inc.,
    and Shajiraj Nadarajalingam

Defendants/Plaintiffs
    by Counterclaim

(Appellants)

Mark A. Russell, for the appellants

Stephen Schwartz, for the respondents

Heard: March 29, 2021 by video conference

On appeal from the judgment of Justice Paul
    M. Perell of the Superior Court of Justice, dated March 11, 2020,
with reasons reported at 2020 ONSC 1547, 100 B.L.R. (5th) 66
.

BROWN J.A.:


I.        OVERVIEW

[1]

The appellants, Ideal (BC) Developments Inc.,
    Ideal (BC2) Developments Inc., 2490568 Ontario Inc., 2490564 Ontario Inc.,
    Ideal Developments Inc., and Shajiraj Nadarajalingam (hereafter collectively Ideal),
    appeal the judgment of the motion judge that ordered them to pay the
    respondent, MarshallZehr Group Inc. (MZ), the sum of $508,071.09 and
    dismissed Ideals counterclaim against MZ.

[2]

By Commitment Letter dated October 31, 2018 (the
    CL), and executed by Ideal on November 8, 2018, MZ was prepared to provide Ideal
    with financing for a residential real estate project. Two of the appellants,
    Ideal Developments Inc. and Shajiraj Nadarajalingam, were to act as guarantors
    of the indebtedness.

[3]

According to the CL: (i) MZ intended to
    syndicate the loan and lend Ideal $15.2 million (the Loan); (ii) the Loan was
    to act as a first mortgage land loan for Ideals development of the project; (iii)
    the CL stipulated that the funds for the project were to consist of the Loan plus
    $5.9 million in equity; (iv) the loan would be for a term of 13 months; (v) the
    Loan would consist of three facilities, with the facilities bearing interest
    rates ranging from Prime + 5.3% per annum (floor rate of 9.25%) on the largest
    facility to Prime + 10.05% (floor rate 14.0%) on the smallest;  (vi)
    subordinate financing was subject to MZs consent; (vii) the closing date for
    the Loan was scheduled for December 5, 2018; and (viii) MZ was not required to
    advance any funds prior to the Borrower having fulfilled to the Lenders
    satisfaction the Initial Funding Conditions specified in s. 2.1 of the CL.

[4]

By December 17, 2018 MZ had given Ideal notice that
    the syndicated lenders had started to advance funds. MZ informed Ideal on
    December 21, 2018 that interest was beginning to accrue on the Loan. Thereafter,
    in accordance with the terms of the CL, MZ advanced the syndicated funds to its
    counsel, to be held in trust pending Ideals satisfaction of the Initial
    Funding Conditions.

[5]

In the result, the Loan never closed, and no funds
    were ever advanced to Ideal. By letter dated January 23, 2019, MZ notified Ideal
    that it was ending the CL, stating, in part:

Please accept this letter as notice that the
    Lender is hereby terminating the Commitment Letter effective immediately in
    accordance with the terms thereof.

Notwithstanding the Lenders unilateral right
    to cancel the Commitment Letter at any time and as it may determine, in its
    sole and unfettered discretion, we have been advised by our client that the
    Obligors have not met the Initial Funding Conditions set out in Part II,
    Section 2.1 therein.

[6]

MZ sought payment from Ideal of $553,899.48 for
    various fees and expenses in connection with the CL.

[7]

By letter dated February 28, 2019, Ideal took
    the position that MZ did not have the right to terminate the CL without providing
    notice and giving Ideal an opportunity to cure any default.

[8]

MZ brought this action seeking payment of
    various fees and expenses described in the CL. Ideal defended and, as well,
    counter-claimed for damages caused by MZs wrongful termination of the CL. MZ
    then moved for summary judgment, which the motion judge granted.

[9]

Ideal raises two main grounds of appeal. First,
    it submits that the motion judge erred in determining that MZ was entitled to
    end the loan facility under the CLs Cancellation provision and dismissing Ideals
    counterclaim. Second, Ideal argues that the motion judge erred in calculating
    the fees and expenses to which MZ was entitled upon cancellation of the CL.

II.       FIRST GROUND OF APPEAL: MZS RIGHT TO END THECOMMITMENT
    LETTER

A.      The issue stated

[10]

Ideals first ground of appeal concerns the
    motion judges interpretation of the CL, specifically the contractual basis of
    MZs right to end the CL in the circumstances, as well as the application of
    that interpretation to the facts of the case. The applicable standard of review
    is that articulated in
Sattva Capital Corp. v.
    Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R.
    633,

and its progeny.

[11]

Ideal submits that when interpreting the CL the
    motion judge committed an error on an extricable question of law. It argues the
    motion judge failed to interpret the provisions of the contract as a whole,
    with the result that he failed to assign meaning to all the contested terms of
    the CL:
Ventas, Inc. v. Sunrise Senior Living Real
    Estate Investment Trust
(2007), 85 O.R. (3d) 254
    (C.A.), at para. 24;
Deslaurier Custom Cabinets
    Inc. v. 1728106 Ontario Inc.
, 2017 ONCA 293, 135
    O.R. (3d), at para. 58, leave to appeal refused, [2016] S.C.C.A. No. 249.

[12]

The contested terms of the CL are those that
    entitle MZ to bring its relationship with Ideal to an end. The first is found
    in Part I of the CL. Headed Cancellation, the provision states:

The Lender may on demand require immediate
    payment of all amounts outstanding or accrued in connection with this
    Commitment.
The Lender may at any
    time, for any reason and without notice, cancel the undrawn portion of the Loan
. [Emphasis added.] (Hereafter the Cancellation Provision.)

[13]

The other is contained in Part V of the CL,
    Default Provisions.

Section
    5.1 identifies events of default, which include the neglect by any Obligor (the
    named borrowers and guarantors) to observe or perform any covenant or
    obligation contained in any Document on its part to be observed or performed 
    and, such Obligor shall fail (in the case of those defaults which can be
    rectified by such Obligor) to remedy such default within a period of thirty
    (30) days after the giving of notice 

[14]

Section 5.2 provides that [u]pon the occurrence
    of any Event of Default that has not been cured within the timelines set out
    herein, the Lender by written notice to the Borrower (an Acceleration Notice)
    shall be entitled to: a) declare the Loan and the right of the Borrower to
    apply for further Advances to be terminated; and b) declare all Obligations 
    of the Borrower to the Lender (including, without limitation, the all unpaid
    fees whether or not deemed earned) to be immediately due and payable  without
    further demand

[15]

I will refer to ss. 5.1 and 5.2 collectively as
    the Default and Demand Provisions.

[16]

Before the motion judge, Ideal argued that the
    Default and Demand Provisions governed MZs ability to terminate the CL prior
    to the closing of the loan transaction. It contended that MZ had wrongfully
    terminated the CL because it had failed to give Ideal notice that it had
    committed an event of default and afford Ideal an opportunity to cure the
    default.

[17]

The motion judge did not accept that submission.
    He held that MZs January 23, 2019 letter constituted the exercise by MZ of its
    right to end the relationship with Ideal under the Cancellation Provision. He
    stated:

Read literally, the Cancellation Provision
    required MZ to have a reason for the cancellation and its expressed reason was
    that Ideal had not satisfied the Initial Funding Conditions. Section 2.1 of the
    Commitment Letter provided that MZ shall not be required to advance any funds
    prior to Ideal having fulfilled to the Lender's satisfaction the funding
    preconditions.

Although MZ speaks of Ideal defaulting with
    respect to the Initial Funding Conditions, more felicitous and legally accurate
    language is that Ideal had not satisfied the pre-conditions for the loan. More
    importantly, by January 22, 2010 [
sic
] it was apparent that Ideal
    would not or could not satisfy the pre-conditions.

[18]

Ideal advances two arguments in support of its
    position that the motion judge erred in holding that MZ was entitled, in the
    circumstances, to utilize the Cancellation Provision. First, a proper
    interpretation of the CL as a whole requires giving meaning and priority to the
    Default and Demand Provisions. Second, MZ did not have a legitimate reason to
    terminate the CL and, as a result, MZ failed to exercise its discretionary
    powers under the CL in good faith.

B.      Analysis

The interpretation of the CL

[19]

I am not persuaded that the motion judge erred
    on an extricable question of law. In my view, his interpretation gave effect to
    all the CLs terms.

[20]

The terms of the CL cover two periods of time in
    the relationship between MZ and Ideal: (i) the period from the date of
    execution of the CL to the closing of the transaction by the Initial Advance of
    funds to Ideal; and (ii) the period following the Initial Advance of funds
    through to the end of the 13-month term of the Loan. When the CL is examined in
    its entirety, the provisions relating to the pre-closing period are, roughly
    speaking, found in the following portions of the CL: (a) s. 2.1, which specifies
    the Initial Funding Conditions; and (b) Part III, which describes the security and
    documentation to be delivered by Ideal.  Those that concern the
    post-closing/post-Initial Advance period are: (c) s. 2.2, dealing with Funding
    Conditions for Borrower Draws (although the CL contemplated a single, Initial
    Advance); (d) Part IV, dealing with Borrowers Covenants; and (e) Part V, the
    Default Provisions. Parts I and VI, the General Provisions, contain terms that concern
    both periods of time.

[21]

Provisions of the CL clearly stated that MZ, as lender,
    was not required to advance any funds prior to Ideal, as borrower, fulfilling
    stipulated pre-conditions to MZs satisfaction. For example, Part VI states, in
    part: The execution of this letter does not obligate the Lender to advance any
    of the agreed funds unless all of the conditions to such advances have been
    satisfied to the satisfaction of the Lender and its solicitors.

[22]

When the motion judges reasons are read against
    that background, I am satisfied that his interpretation gave effect to the
    basic bargain agreed to by the parties and gave meaning to all the CLs terms.

[23]

Ideal contends that MZ could not use the
    Cancellation Provision because it merely permitted the Lender to cancel the
    undrawn portion of the Loan. Ideal points to the definition of Loan in the
    opening paragraph of the CL, which states:

This commitment letter confirms that
    MarshallZehr Group Inc. (the Lender) is prepared to provide financing (the
    Loan) for the Project conditional on the terms and conditions contained in
    this letter agreement (the Commitment).

[24]

In Ideals submission, the cancellation of the
    undrawn portion of the Loan would not amount to a termination of the CL or the
    Loan, which is what MZ purported to do in its January 23, 2019 letter. Instead,
    according to Ideal, any termination of the Loan required MZ to resort to the
    Default and Demand Provisions. Only if MZ gave notice of a default and an
    opportunity for Ideal to cure the default could it then proceed, under s. 5.2,
    to issue to Ideal an acceleration notice that would declare the Loan and the
    right of the Borrower to apply for further Advances to be terminated.

[25]

I do not regard the interpretation advanced by
    Ideal as a commercially reasonable one.  While I agree with the motion judges
    observation, at para. 45, that the Commitment Letter is far from plainly
    written, in my view his interpretation gave practical meaning to all the CLs
    terms and was commercially reasonable.

[26]

When MZ sent its January 23, 2019 letter, the
    parties had not closed the financing of the Loan. As a result, MZ had not
    advanced any funds to Ideal. The CL contemplated one advance of funds, the
    Initial Advance, which would comprise the entirety of the Loan. Accordingly, at
    the time of the January 23, 2019 letter the entirety of Loan remained undrawn
    because the loan transaction had not yet closed and no funds had been advanced.
    In those circumstances, the Cancellation Provision would be available to
    cancel the undrawn portion of the Loan. The effect of the cancellation would
    be to put an end to, or terminate, the CL.

[27]

By contrast, the following language of s. 5.2
    envisages a situation where the loan transaction has closed and some advance of
    funds has occurred: declare the Loan and the right of the Borrower
to apply for further Advances
to be terminated.
    [Emphasis added.] Section 5.2 of the CL contemplates circumstances where some
    portion of the Loan has been advanced, an uncured event of default has
    occurred, as a result of which the Lender can declare the Loan to be terminated
    and accelerate all obligations, with the Loan becoming immediately due and
    payable.

[28]

Is the language of the Cancellation Provision a
    perfect fit with only pre-closing circumstances? No. One could argue that its
    reference to the undrawn portion of the Loan covers a situation where the
    borrower already had made a draw and, therefore, the transaction had closed. But,
    in my view the motion judges interpretation was a more commercially reasonable
    one in the actual circumstances of this case: the Loan transaction had not
    closed; no advance had been made to Ideal; the CL contemplated a single,
    Initial Advance, not multiple draws; and MZ was under no obligation to
    advance funds before Ideal fulfilled the stipulated pre-closing conditions to
    MZs satisfaction.

[29]

I therefore conclude that the motion judge did
    not commit an error on an extricable question of law. His interpretation of the
    CL was a reasonable one, which gave practical recognition to the structure of the
    CL and meaning to all its terms. Accordingly, I see no reversible error in his interpretation
    of the Cancellation Provision and his conclusion that MZ could use the
    provision in the circumstances. Nor do I see any palpable and overriding error
    in his finding that by sending its January 23, 2019 letter MZ was purporting to
    exercise its right under the Cancellation Provision. That finding was available
    to the motion judge on the record.

The availability of the Cancellation
    Provision in the circumstances

[30]

Ideal also submits that its dispute with MZ
    about the terms of subordinate financing did not entitle MZ to exercise its
    rights under the Cancellation Provision.

[31]

Feature Corp. held an existing third mortgage on
    the project properties. Since the Subordinate Financing clause in Part I of
    the CL required MZs prior written consent to any junior mortgage, Ideal discussed
    with MZ terms for subordinating and postponing the third mortgage. The parties
    could not agree on the length of a standstill period during which the third
    mortgagee could not enforce its rights in the event of a default by Ideal: MZ
    wanted a standstill period for the entire term of its Loan; Ideal wanted only a
    90-day standstill period.

[32]

By email dated January 14, 2019, MZ repeated
    that it required a full standstill, observed that the issue had been addressed
    multiple times, and advised that the parties should move on from it. By further
    email dated January 16, 2019, MZ advised Ideal that [w]e will not limit the
    timeframe around our standstill clause.  On January 18, 2019, Ideals counsel formally
    wrote to MZ that its insistence on an indefinite standstill period was
    unreasonable as such a provision was not expressly required by the CL. Counsel
    advised that unless MZ altered its position and, as well, agreed to a $2
    million increase in the third mortgage, we will seek our clients instructions
    regarding termination of the Commitment Letter, without prejudice to their
    rights and remedies in law and equity. MZ remained firm in its position.

[33]

Ideal submits, in effect, that the language of
    the Subordinate Financing clause treats the parties inability to resolve the
    dispute over the standstill agreement as a default which, in turn, required
    MZ to resort to the Default and Demand Provisions, not the Cancellation
    Provision, to end the relationship.

[34]

I am not persuaded by that submission.

[35]

The Subordinate Financing clause uses the word
    default in two places, each involving a different circumstance. The first
    refers to a situation where Ideal obtains additional financing without MZs
    consent; the second is where an approved secondary lender issues a discharge
    certificate greater than zero without MZs consent.

[36]

Neither circumstance applied to the dispute
    between MZ and Ideal, which involved Ideals obligation to satisfy the Initial
    Funding Conditions for the Loan. Section 2.1(a) of the Initial Funding
    Conditions required the execution of all the security and ancillary loan
    agreements and documents before MZ was obligated to advance any funds. Ideals
    obligation under Part III of the CL required Ideal to deliver security in the
    form and on the terms acceptable to the Lenders solicitors, including (a) in
    s. III.j, postponements from such other creditors as the Lender may require
    upon completion of its due diligence and (b) in s. III.o, [s]uch further
    security  and ancillary documents and agreements as the Lender or its
    solicitors may, acting reasonably, deem necessary to adequately secure the Loan
    obligations and complete and perfect the Security.

[37]

The record discloses that Ideal was not prepared
    to agree to the form of subordination agreement acceptable to MZ. At para. 54
    of his reasons, the motion judge found that the negotiations over whether MZ
    would consent to the additional financing and about what would be the terms of
    the postponement, subordination and standstill agreement had reached a
    dead-end, which was a very serious impediment to going forward with the loan
    for both parties. I see no palpable and overriding error in that finding;
    ample evidence supported it.

[38]

The motion judge stated, at para. 52, that the
    Cancellation Provision required MZ to have a reason for the cancellation and
    its expressed reason was that Ideal had not satisfied the Initial Funding
    Conditions. Given the requirements of s. 2.1 regarding the Initial Funding
    Conditions and Part III regarding Security, I see no palpable and overriding
    error in the motion judges conclusion that the parties impasse over the terms
    of the Feature Corp. subordinate financing provided MZ with a legitimate reason
    to exercise its rights under the Cancellation Provision.

[39]

Ideal makes one further argument. In its
    statement of defence and counterclaim, Ideal pleaded that MZ breached its duty
    of good faith by unreasonably demanding a permanent standstill agreement from
    subordinate financiers in excess of its rights under the [CL] and by
    terminating the [CL] without proper notice of alleged default or providing a
    required cure period to remedy the same. Ideal did not advance that argument
    before the motion judge. However, during oral submissions on appeal, Ideal,
    relying on the recent decision of the Supreme Court of Canada in
Wastech
    Services Ltd. v. Greater Vancouver Sewerage and Drainage District
, 2021
    SCC 7, 454 D.L.R. (4th) 1, argued that MZ did not exercise its rights under the
    Cancellation Provision in a good faith manner.

[40]

I am not prepared to give effect to this
    submission. I put to one side the issue of whether it is open to Ideal to argue
    on appeal a pleaded defence that it elected not to pursue below in response to
    MZs motion for summary judgment. As well, the lateness of the hour at which
    Ideal has raised this issue has deprived the panel of the benefit of the
    parties considered submissions on how the principles articulated in
Wastech
would apply to a partys conduct in the pre-closing phase of a contractual
    relationship, such as in the present case. Nevertheless, I would observe that
    while
Wastech
states that contractual discretion must be exercised
    reasonably, in light of the purpose for which it was conferred, the decision
    notes that such a duty of good faith does not displace the detailed,
    negotiated bargain as the primary source of justice between the parties: at
    paras. 4 and 5.

[41]

In the present case, MZ was faced with a
    situation where: (a) Ideal had been unable to renew its existing first
    mortgage; (b) Ideal had agreed, in the CL, to use equity to source the balance
    of funds for the project but ultimately wanted to maintain and increase the
    amount of its third mortgage; (c) Ideal had agreed, in the CL, that MZs
    consent was required for any subordinate financing and relevant security  and
    ancillary documentation had to be satisfactory to MZ and its solicitors; and
    (d) Ideals counsel had put MZ on formal notice that its insistence on a total
    standstill was unreasonable and might lead Ideal to terminate the CL. Ideals
    position that its subordinate lender need only agree to a 90-day standstill on
    its enforcement rights understandably would cause MZ concern about the degree
    of additional risk it would be assuming if it were to advance funds to Ideal on
    that basis.

[42]

The agreed Initial Funding Conditions reflected
    many of the limits to the risk that MZ was prepared to assume in lending to
    Ideal. When viewed in the context of the entire agreement, the Cancellation
    Provision appeared to be designed, in part, to bring the relationship to an end
    if the borrower was unable or unwilling to satisfy the pre-conditions to
    lending. Faced with a potential borrower who was not prepared to conclude an
    agreement within the CLs agreed-upon risk limits, the Cancellation Provision was
    available for MZ to use to avoid such unbargained for risk. Again, recall that s.
    2.1 of the CL provided that MZ was not required to advance any funds until
    Ideal fulfilled the Initial Funding Conditions to MZs satisfaction. In those
    circumstances, I see nothing unreasonable about its use of the Cancellation
    Provision.

Conclusion

[43]

For those reasons, I am not persuaded by Ideals
    first ground of appeal. I see no basis to interfere with the motion judges
    conclusion that MZ was entitled to exercise the Cancellation Provision in the
    circumstances.

III.      SECOND
    GROUND OF APPEAL: THE RECOVERABLE FEES AND EXPENSES

[44]

The $508,071.09 judgment in MZs favour consists
    of awards for: (i) Standby Interest: $101,958.82; (ii) expenses consisting of
    payments by MZ for legal fees, document review, and planning advice: $60,112.27;
    and (iii) a Lender Fee of $396,000, less the $50,000 Good Faith Deposit (net
    $346,000).

[45]

Ideal submits that the motion judge erred in
    granting judgment for those amounts because none were recoverable under the
    terms of the CL in the event MZ exercised the Cancellation Provision. MZ
    submits the motion judge made no error. I will consider each item in turn.

Standby Interest

[46]

The CL stated that MZ intended to syndicate the
    Loan, which it did. Part I of the CL stipulated that if the Loan was not fully
    advanced by December 5, 2018, interest will commence on the advance date
    established herein for such advance, in the form of standby interest (Standby
    Interest) on any unadvanced portion of the Loan and will become due and
    payable on the date the Loan is advanced
or upon the
    termination of this Commitment Letter without any advances having been made
.
    [Emphasis added.]

[47]

By December 17, 2018 MZ had advised Ideal that
    it had syndicated the Loan. Over the next few weeks MZ transferred the
    syndicated funds to its counsel to be held in trust, pending closing of the
    loan transaction.

[48]

Ideal submits that the motion judge erred in
    finding that MZ was entitled to Standby Interest pursuant to the Cancellation
    Provision. Since such interest was payable only upon the termination of this
    Commitment Letter without any advances having been made, according to Ideal MZ
    was only entitled to Standby Interest if it had proceeded under the Default and
    Demand Provisions termination language.

[49]

I am not persuaded by Ideals submission. The
    practical effect of MZ proceeding under the Cancellation Provision was to
    terminate the CL without any advances having been made, the very circumstance
    contemplated by the CLs Standby Interest provision. Pursuant to that
    provision, MZ was entitled to recover from Ideal interest on the syndicated
    funds that had been put in place pending closing of the Loan. I see no error in
    the motion judge granting judgment for that amount.

Expenses and Good Faith deposit

[50]

The Expenses section in Part I of the CL stated
    that: All reasonable expenses of the Lender and the Borrower shall be paid by
    the Borrower including (but not limited to), the cost of any third-party
    reports and all legal costs
regardless of whether the
    Borrower proceeds with the transaction
 [Emphasis added.] The Good
    Faith Deposit section stated:

$50,000 non-refundable
if
    Borrower fails to proceed based on the terms of this Commitment Letter
and is full compensation to the Lender for its work and efforts in preparation
    of this Commitment Letter. The Borrower shall also be responsible for the
    Lenders legal and other, professional fees and out of pocket expenses
if the Borrower fails to proceed with the Loan
.
    [Emphasis added.]

[51]

The motion judge held that MZ was entitled to
    recover its legal fees, consultants expenses, and the Good Faith Deposit
    pursuant to the Cancellation Provision. Ideal submits that the motion judge
    erred in so holding because MZs exercise of the Cancellation Provision did not
    amount to Ideal, as borrower, failing to proceed with the transaction or Loan.

[52]

The motion judge found, at para. 53, that by
    January 22, 2019 it was apparent that Ideal would not or could not satisfy the
    pre-conditions. Ample evidence supported that finding, at least in respect of
    certain informational requirements and the terms of the subordinated financing.
    Given that conduct by Ideal, I see no error in the motion judges implicit
    conclusion that Ideal did not proceed with, or failed to proceed with, the
    transaction.

Lenders Fee

[53]

The Fees section of Part I of the CL provides
    that: $396,000, the Lender Fee, less the Good Faith Deposit
shall be deducted from the Initial Advance
. [Emphasis
    added.] Part I defines the Initial Advance, in part, as follows:

The Loan shall be advanced in one draw:

The first draw (Draw 1 or the Initial
    Advance) is anticipated to be in the principal amount of $15,200,000 and
    advanced upon satisfaction of the conditions contained herein and by the
    applicable Notices (see Appendix A, B, C and D). The Initial Advance is
    expected to be as follows:

Land Debt
    Refinancing                                $13,000,000

Lender Fee                                                  $ 
    396,000

[54]

The motion judge held that the claim for the
    Lender Fee was recoverable pursuant to the Cancellation Provision. In reaching
    that conclusion, he did not address Ideals submission that the Lender Fee was
    not payable without an advance of the Loan. On its part, MZ argues that the
    Lender Fee was earned upon its completion of due diligence and advance of the
    Loan to the Trust Account.

[55]

I am persuaded by Ideals submission. The
    language of the CL specifies that the Lender Fee shall be deducted from the
    Initial Advance and MZ did not make an Initial Advance to Ideal. The CL does
    not contain any other language of entitlement to the Lender Fee.

[56]

I do not accept MZs argument that the fee was
    earned upon the advance of the Loan to the Trust Account; the CL clearly
    distinguishes between the Lender Advance  the transfer of the syndicated funds
    to MZs trust account  and the Initial Advance, which is an advance to the
    Borrower.

[57]

Nor do I accept MZs submission that the
    decision in
Chijindu v. Prudential Property Management
, 2014 ONSC
    4759, applies to the facts of the present case. That case is distinguishable in
    two respects. First, the mortgage commitment letter did not contain the
    language found in the CL that the fee was to be deducted from an advance.
    Second, in
Chijindu
the mortgagee in fact had advanced the first draw
    under the mortgage commitment letter, and the issue was whether the mortgagee
    was entitled to the entire lenders administrative fee or only an amount
pro
    rated
to the amount of the actual advance. The application judge held that
    the language of the mortgage commitment letter entitled the mortgagee to the
    entire amount: at paras. 10 and 13.

[58]

Consequently, I conclude that the motion judge
    erred in granting judgment for the Lender Fee.

Conclusion

[59]

By way of summary, the fees and expenses to
    which MZ is entitled under the CL total $212,071.09 ($101,958.82 Standby
    Interest + $60,112.27 expenses + $50,000 Good Faith Deposit). MZ has already
    received the Good Faith Deposit. Therefore, the amount remaining payable by
    Ideal is $162,071.09.

IV.     DISPOSITION

[60]

For the reasons set out above, I would allow the
    appeal in part and vary para. 1 of the Judgment from $508,071.09 to
    $162,071.09.

[61]

If the parties are unable to agree upon the
    costs of this appeal, they may file brief (no more than 5 pages) cost
    submissions within 10 days of the release of these reasons.

Released: April 13, 2021 P.R.

David
    Brown J.A.

I
    agree. Paul Rouleau J.A.

I
    agree. B.W. Miller J.A.


