Can-Euro Investments Ltd. v. Industrial Alliance Insurance

Can-Euro Investments Ltd. v. Industrial Alliance Insurance Court Supreme Court Date 2009-01-23 Citation 2009 NSSC 20 Docket Hfx 298970 Judge/Registrar/Adjudicator Beveridge, Duncan R. (Honourable Justice) (SC) Document Type Decision Relations Library Sheet - Can-Euro Investments Ltd. v. Industrial Alliance Insurance - 2009 NSSC 20 - 2009-01-23 - Library Sheet Decision Content SUPREME COURT OF NOVA SCOTIA Citation: Can-Euro Investments Ltd. v. Industrial Alliance Insurance, 2009 NSSC 20 Date: 20090123 Docket: Hfx No. 298970 Registry: Halifax Between: Can-Euro Investments Limited, a body corporate Plaintiff and Industrial Alliance Insurance and Financial Services Inc., a body corporate Defendant Judge: The Honourable Justice Duncan R. Beveridge Heard: October 9 and 24, 2008, at Halifax, Nova Scotia Written Decision: January 23, 2009 Counsel: David Coles, Q.C. for the Plaintiff Peter Bryson, Q.C., for the Defendant By the Court: INTRODUCTION [1] Industrial Alliance Insurance and Financial Services made an offer to provide mortgage financing in the amount of approximately $12.5M to Can-Euro Investments Ltd. The offer was set out in a detailed Commitment Letter dated April 4, 2008. The offer was accepted. Can-Euro paid the commitment fee of 1% of the principal amount of the mortgage. [2] The Commitment Letter provided for a detailed mechanism for setting the interest rate three days prior to the date of disbursement of funds. May 31, 2008 was stipulated as the latest date to disburse funds. Can-Euro had the option of fixing the interest rate earlier. It exercised that option. The interest rate became fixed at 4.08% provided the funds were disbursed by May 19, 2008. [3] For reasons that will be detailed later, the funds were not disbursed by May 19, 2008. Attempts were made to close the mortgage transaction by May 23, 2008. Can-Euro could not satisfy a variety of pre-funding conditions by that date. Industrial Alliance then took the position that once Can-Euro satisfied the requisite funding pre-conditions, it would advance funds, but at the rate dictated by the mechanism set out in the Commitment Letter which would be significantly higher than 4.08%. Can-Euro set out to complete the pre-funding conditions, but refused to close at any rate higher than 4.08%. [4] On July 17, 2008 Can-Euro brought an application pursuant to Civil Procedure Rule 9.02 seeking an order for specific performance to compel Industrial Alliance to advance the mortgage funds at 4.08% or for an order that Industrial Alliance must return the commitment and other fees and pay damages. The parties have since agreed that the only issue they ask the court to determine is whether Industrial Alliance breached its contract in refusing to advance funds at the interest rate of 4.08%. PROCEDURAL BACKGROUND [5] This application was scheduled for October 9, 2008. Extensive affidavits were filed from representatives of the plaintiff and the defendant, and from the solicitors that had acted for them on the transaction. The plaintiff cross-examined both of the two solicitors that acted on behalf of Industrial Alliance, Brian Tabor Q.C. and Douglas Mathews Q.C. [6] On October 9, 2008 concern was expressed by counsel for Industrial Alliance that the plaintiff was raising issues of promissory estoppel and the exercise of contractual rights otherwise than in good faith. This concern was triggered by the submission by the plaintiff of additional case law on October 8 2008. It was agreed that the defendant was free to supplement the record by further evidence and submissions. [7] The parties also agreed that despite the complexity of the transaction, the number of actors involved, and the many developments, this was nonetheless a case that should be decided by way of an application under C.P.R. 9.02. They anticipated little dispute as to the primary facts. Their dispute centred on interpretation of the contractual and other documents, the legal affect of the communications between the parties and of course the application of the law to the primary facts. I would be at liberty to make the necessary findings of fact from the materials and evidence presented. FACTS [8] It is obvious that Can-Euro and Industrial Alliance are both sophisticated and knowledgeable parties. They were represented by competent and very experienced lawyers. Nonetheless at a crucial juncture, it is suggested that they failed to communicate effectively, which led to different expectations as to the appropriate interest rate, and ultimately to the collapse of the mortgage transaction. [9] In March of 2008, Industrial Alliance was contacted by Matthew Pendlebury of Montrose Mortgage. Montrose was a mortgage broker acting for Can-Euro. Mr. Pendlebury indicated that Can-Euro was seeking first mortgage financing for its property “the Summit” located in Dartmouth, Nova Scotia. [10] Denis Lebrun is a senior real estate financing representative for Industrial Alliance. He wrote to Mr. Pendlebury on March 13, 2008 setting out the framework for obtaining a Commitment Letter from Industrial Alliance. Once a letter of intention was received by Industrial Alliance on behalf of Can-Euro, Industrial Alliance would agree to set the interest rate at 95 basis points over the bid side yield of the corresponding Government of Canada benchmark bonds. The 95 BPS spread would be guaranteed for the next 90 days. Mr. Lebrun wrote: Once the Commitment Letter is signed, with the Processing fee and 1% Commitment fee paid, the Interest rate could be fixed in advance, or the client could also wait to fix the rate according to the normal process, which is 3 days before disbursement. The hedge cost to fix up to 40 days in advance would be ` additional bps, plus an additional 1% deposit. As of this morning, with the current Canada Bonds Yield (which is 2.99 for 5 years), the Interest Rate would be 3.94%, or 3.95% if the 1 bps hedge cost is added. [11] On April 4, 2008 Industrial Alliance offered to provide mortgage financing to Can-Euro by issuing a Commitment Letter, for a CMHC insured loan in the amount of $12,504,725.00. Including appendices, the letter is 25 pages. It was open for acceptance until 5:00 p.m. local time, April 9, 2008. [12] The Commitment Letter was revised by hand by Dr. Otto Gaspar, President of Can-Euro, signed by him and returned to Industrial Alliance on April 8, 2008. [13] During the month of April, 2008 the parties negotiated over the handwritten changes made by Dr. Gaspar to the Commitment Letter. On April 22, 2008 Dr. Gaspar wrote to Mr. Pendlebury as follows: The lender received all the documents requested and there is nothing more we could supply other than Doug Livingstone will finalize the cost sharing agreement. The lender should tell me that he is satisfied with whatever he received and that there are no obstacles to the funding of the mortgage. [14] Mr. Pendlebury then wrote to Mr. Lebrun on April 22, 2008. He indicated that Can-Euro required direct confirmation from Industrial Alliance that the handwritten changes were accepted. Later that same day Mr. Lebrun emailed Matthew Pendlebury confirming Industrial Alliance’s position with respect to the handwritten changes. [15] Mr. Pendlebury duly reported to Dr. Gaspar by way of a facsimile transmission to him dated April 23, 2008. Mr. Pendlebury also reported on a number of other issues including the status of what was happening in the market with respect to interest rates. [16] I will set out separately the details surrounding the interest rate provisions and how the rate was ultimately set. [17] On April 24, 2008 Dr. Gaspar responded, to Mr. Pendlebury, also by facsimile transmission and noted “...my changes have been accepted only as of today - but only partially...”. [18] On April 29, 2008, Douglas Livingstone, solicitor for Can-Euro wrote to Douglas Mathews, Q.C., the solicitor for Industrial. Mr. Livingstone referred to the current state of negotiations between Can-Euro and Industrial Alliance and commented: “...it appears that an agreement for this proposed mortgage transaction has still not been reached, but may be close.” [19] The parties finally completed any remaining uncertainty when Mr. Lebrun wrote to Dr. Gaspar on April 29, 2008 and confirmed Industrial Alliance’s position to the remaining changes requested by Can-Euro. These changes involved confirmation that audited financial statements from the borrower would not be required and that Industrial Alliance approved the placement by Can-Euro of a second mortgage to secure a line of credit not exceeding $200,000.00. [20] Some of the more salient features of the Commitment Letter are as follows. The principal loan of $12,504.725.00 was to be made in a single advance. If all of the conditions, both pre-funding and special set out in the Commitment Letter were not fulfilled five days prior to the “Close Out Date” then Industrial Alliance may declare the Commitment Letter null and void and keep the commitment fee as a genuine pre-estimate of liquidated damages and not as a penalty. The Close Out Date for the loan was set as May 31, 2008. The interest adjustment date would be no later than May 1, 2008. The loan would be for a period of 60 months, maturing May 1, 2013. [21] Can-Euro was required to pay to Industrial Alliance $12,500.00 as a non-refundable processing fee. As noted earlier Can-Euro also was to provide $125,000.00 as the commitment fee to be held by Industrial Alliance pending the total disbursement of the loan. This commitment fee would be returned without interest to Can-Euro on the disbursement of the loan. However, if the loan was not disbursed in full on or before the Close Out Date then Industrial Alliance could declare the Commitment Letter null and void and the commitment fee would be kept by it as a genuine pre-estimate of liquidated damages and not as a penalty (Clause 4.16). [22] There were a variety of pre-funding and special conditions. Not all need to be reviewed. They included the fundamental requirement that a satisfactory report from its solicitors confirming title to the property will be acceptable to the lender upon registration of the security. Also required was a shared facilities agreement to govern the shared use of a private road, heating system and share of operating costs between three properties owned by Can-Euro, Horizon Estates, Gardenstone Estates and the Summit. The agreement was required to be satisfactory to the lender and its solicitor. [23] In addition Can-Euro was required to provide to the lender confirmation that the project was complete and that the work was in compliance with the plans and specifications, all applicable laws, regulations and codes, an occupancy permit in place and a reported project cost as accurate and no less than $19,084.460.00. Interest Rate [24] The interest rate was not specifically set by the terms of the Commitment Letter. However, the Commitment Letter did set out in detail how the interest rate would be determined. It reflected the same information set out in Mr. Lebrun’s earlier letter of March 13, 2008. Clause 1.4 of the Commitment Letter provided: 1.4 Interest Rate The outstanding Loan Amount will bear interest at an interest rate to be established by the Lender at ninety-five (95) basis points over the bid side yield of the corresponding Government of Canada benchmark bonds, as determined solely by the Lender, interpolated to match a maturity date corresponding to a term of 5 years. ... The interest rate shall be fixed three (3) business days prior to the date of the first disbursement of the Loan and provided there is no default herein. The Borrower will also have the option of fixing the said interest rate earlier than three business days prior to disbursement, provided that appropriated hedge cost, as calculated by the Lender, is added to the interest rate after signing and returning this Commitment Letter together with all applicable processing fees, commitment fees and additional deposit. A failure by the Borrower to exercise this option will result in the Borrower being deemed to have selected to fix the interest rate three (3) business days prior to the date of the first disbursement of the Loan. The Borrower shall advise the Lender in writing of the date at which the funds will be required. If such written request is received by the Lender on or before 12:00 noon, Toronto time, on a date on which the Lender’s Head Office is opened to the public for business, then the fixing of the interest rate shall be effected by the Lender at 2:00 p.m., Toronto time, on the date of receipt of such request. If the Lender receives such written request after 12:00 noon, Toronto time, then the Lender shall be deemed to have received such request prior to 12:00 noon on the next day on which the Lender’s Head Office is open to the public for business. Such rate shall come into effect immediately. Without prejudice to the rights of the Lender, in the event that the first disbursement of the Loan cannot take place on the requested date, a new written request shall be sent to the Lender to fix again the interest rate in accordance with the method provided as aforesaid. In ths case, the new interest rate then fixed, shall not be lower than the interest rate initially set. [25] Dr. Gaspar was the President of Can-Euro. It is obvious that Dr. Gaspar was well acquainted with all of the myriad terms of the contract set out in the Commitment Letter, in particular the provisions with respect to the setting of the interest rate. On April 5, 2008 Dr. Gaspar wrote to Mr. Pendlebury as follows: I would kindly ask you as already discussed to send me one fax every day at 10 a.m. Atlantic Time at latest indicating the 5 year Government Bond Rate and if ever possible also the exchange rate CAN$ to US$ valid at the time of your communication and in addition also the rates at the end of the previous day and please fax this information directly to my home. ... ...Once I have the information that the lender is satisfied we have to decide the disbursement date and for the moment I would suggest May 19th 2008 which is a Monday. [26] On April 22, 2008 Dr. Gaspar wrote to Mr. Pendlebury again: The interest rate should be fixed right from the beginning and the rate should be 4.10%. This is more or less the average of the interest rates of the last six or eight weeks. The system originally intended may work if I were a resident of Canada or North America but it cannot work as long as I am here in Europe. The lender is in a much better position to take advantage of market fluctuations. The date of disbursement should be May 19th, but this is basically up to the lender. I do not need the funds. If the lender decides at later date it should not be before the end of June because I will be on vacation in the meantime. Nobody knows what interest rates will do in the future but this crisis is definitely not over. [27] I have already referred to the facsimile transmission of Mr. Pendlebury to Dr. Gaspar of April 23, 2008. It included the following information with respect to interest rates: 5. Interest Rate: As stated in the commitment, the interest rate will continue to float until such time as you provide written confirmation to Industrial Alliance that you wish to fix the interest rate. Bond yields have been slowly decreasing since last weeks sharp increase and if this trend continues in the days to come you may be able to achieve the 4.10% interest rate that you desire. Based on current bond yields, you are almost there. You should know that in the time since you fixed the credit spread at 95 basis points the lender’s credit spread has increased by 20 basis points to 115 basis points for new transactions. [28] On April 24, 2008 Dr. Gaspar faxed back Mr. Pendlebury the letter of April 23, 2008 and his previous letter of April 5, 2008. Both contained handwritten notations by Dr. Gaspar. First was Dr. Gaspar’s note that no one objected to his suggested date of May 19, 2008 as the disbursement date. He also instructed Mr. Pendlebury: “You are authorized to fix the rate at 4.10% at any time.” [29] Mr. Pendlebury acted on this instruction. On May 1, 2008 Mr. Pendlebury, in an exchange of emails with Denis Lebrun of Industrial Alliance, requested that the interest rate be fixed. Mr. Lebrun sent an email to Frederick Lessard, an asset and liability matching and pricing analyst for Industrial Alliance, requesting him to fix the interest rate for the mortgage based on the requested funding date not to exceed May 19, 2008. Lebrun sent a letter to Mr. Pendlebury later on May 1, 2008, via email. The letter provided: Sir, Following your request to fix in advance the interest rate accordingly to the conditions of the Commitment Letter, we wish to inform you that the interest rate has been fixed today at 14 h 00 at four point zero eight (4.08%). The interest rate has been calculated in consideration of a disbursement date that shall not exceed May 19, 2008. [30] There was an execution line for signature by the borrower. It provided: “The Borrower agrees to the present letter.”. This was signed by Stefan Gaspar, Vice President and Director of Can-Euro and returned the same day to Industrial Alliance. Efforts to close May 19, 2008 [31] Obviously the mortgage transaction did not close on May 19, 2008. The reasons for failing to meet that date and what happened following that failure are central to determining the outcome of the plaintiff’s claim. [32] There is little evidence as to the extent of the efforts being made by the parties to ready themselves for the closing. The affidavit of Douglas Livingstone, solicitor for Can-Euro, is a scant six paragraphs. He deposes that he recalls having a discussion on May 12th with Brian Tabor, the acting solicitor for Industrial Alliance, due to the vacation leave of Doug Mathews. Mr. Livingstone recalls expressing concern to Mr. Tabor that if May 19 was to be achieved that he would need to have the proposed closing documents sufficiently in advance to allow review by Can-Euro and to enable arrangements for Stefan Gaspar, who resided in Nebraska, to execute the documents. Mr. Livingstone says that he recalls Mr. Tabor’s reply that he would try to get the documentation to him as soon as possible but it first had to be reviewed by Industrial Alliance. [33] Mr. Livingstone’s affidavit refers to a further discussion with Mr. Tabor of May 15, 2008 regarding the shared facilities agreement and other matters. He says he again expressed to Mr. Tabor his concerns that the May 19 date could not be met if they did not have the documentation in time. Mr. Livingstone says that Mr. Tabor apologized for the delay, but the documentation had not yet been approved by Mr. Tabor’s client. [34] Douglas J. Mathews, Q.C. was retained on April 11, 2008 to represent Industrial Alliance for the pending mortgage transaction between Industrial and Can-Euro. [35] On April 11, 2008 he was forwarded a copy of a memorandum that Mr. Pendlebury had sent to Dr. Gaspar discussing some of the requirements that needed to be satisfied. One of those was the shared facilities agreement. Mr. Pendlebury noted that Dr. Gaspar had earlier advised him that Dr. Gaspar would draft such an agreement and have it reviewed by Can-Euro’s solicitor. [36] Dr. Gaspar subsequently drafted a “cost sharing agreement” dated April 14, 2008. This was forwarded electronically on April 16 by Mr. Pendlebury to Mr. Mathews and to Denis Lebrun. Mr. Mathews emailed Mr. Pendlebury the same day that the cost sharing agreement was not satisfactory and he would be notifying Can-Euro’s lawyer, requesting a more formal agreement. Dr. Gaspar specifically acknowledged in a memorandum of April 22, 2008 that Mr. Livingstone would finalize the cost sharing agreement. [37] Mr. Mathews had nothing further to do with the mortgage transaction until his return from vacation on May 26, 2008. [38] As noted earlier, Brian A. Tabor, Q.C. assumed responsibility for the closing. He reviewed the file and spoke to Mr. Mathews. As of May 8, 2008 he noted several outstanding matters to be addressed by Can-Euro prior to disbursement of funds by Industrial. These included the following: · The discharge of an existing first mortgage on the property held by the Royal Bank of Canada. · The discharge of three builder’s liens that had been placed against the property. · The execution of a shared facilities agreement. [39] Mr. Tabor viewed Matthew Pendlebury as the prime contact for Can-Euro with respect to the mortgage transaction. He spoke with Pendlebury on May 9 with respect to the existing RBC first mortgage, the three liens and of the need for the shared facilities agreement. Mr. Tabor again spoke with Pendlebury on May 13 regarding the assembly of documents that were needed in order to comply with the pre-funding conditions set out in the Commitment Letter. Mr. Tabor recollects discussing the possibility of an extension of the “threshold funding date” to May 21, 2008, if required, in recognition of the short time frame and the number of outstanding matters. Mr. Tabor specifically recalls saying to Mr. Pendlebury that any change in the threshold funding date would be subject to the approval of Industrial Alliance. [40] On May 13, 2008 Mr. Tabor wrote to Mr. Livingstone. He enclosed an agenda setting out the documentation needed to close the mortgage transaction and assigned responsibility to himself, Mr. Livingstone or Can-Euro for some 27 items that needed to be addressed. He also noted the status of these various items. Of the 27, two were complete. Not included in the agenda, but stressed in his letter of May 13, 2008 was the importance of the shared facilities agreement. [41] Mr. Tabor also spoke with Mr. Livingstone on May 13, 2008. Mr. Livingstone would prepare and forward a redraft of the shared facilities agreement. They discussed the possibility that the RBC first mortgage could be postponed so as to avoid Can-Euro having to go through approval requirements for a new loan. They also canvassed the possibility that the “threshold funding date” could possibly be changed from May 19, 2008 to May 20, 2008 in light of the fact that May 19 was a holiday. [42] When Mr. Tabor was cross-examined he testified that he made it clear in his discussions with Mr. Livingstone, movement of the “threshold funding date” was purely a conceptual discussion - he did not advise Mr. Livingstone that Industrial Alliance would move the date to May 20. Their discussions centred around the logistics of getting all the requirements satisfied. [43] On May 14, 2008 Mr. Tabor received a redraft of the shared facilities agreement from Mr. Livingstone. When Mr. Tabor reviewed it he concluded that it was substantially the same as a previous draft already advanced by Mr. Livingstone and was not adequate. Mr. Tabor spoke with Mr. Livingstone on May 14 and told him so. Mr. Tabor agreed to prepare another draft to address the outstanding issues. [44] Mr. Tabor wrote a number of letters on May 16, 2008 to Mr. Livingstone. He sent a letter in the morning by facsimile transmission (copied to M. Pendlebury and Industrial Alliance), advising that as a condition to advance funds the liens and lis pendens must be discharged. In addition, the 1.5 million dollar collateral mortgage in favour of the Royal Bank needed to be reduced to the limit set out in the Commitment Letter of $200,000.00 and postponed in favour of the mortgage to be placed with Industrial Alliance. Mr. Livingstone was to prepare a draft of the amendment and postponement agreement for Mr. Tabor’s review and comment. [45] Mr. Tabor also sent a letter to Mr. Livingstone on May 16, 2008, early in the afternoon via email, attaching a further draft of the shared facilities agreement. Mr. Tabor invited Mr. Livingstone’s comments. He reminded Mr. Livingstone that the postponement of the Royal Bank mortgage would also have to be postponed to the shared facilities agreement. [46] In the meantime Stefan Gaspar on behalf of Can-Euro sent an email at 10:29 a.m. to Denis Lebrun at Industrial Alliance, copied to Matthew Pendlebury and Mr. Livingstone. Mr. Gaspar expressed concern that they had not yet received any documents to review with regards to the mortgage transaction then scheduled for Monday May 19, 2008. He set out his and his father’s vacation schedules, and cautioned that if Can-Euro did not get documents today, or Monday at the latest, he foresaw that this loan would close in July. Mr. Gaspar expressed some frustration and did not understand what the holdup was. [47] Mr. Pendlebury forwarded this email to Mr. Tabor at 2:12 p.m. on May 16, 2008. [48] It appears that at this juncture Mr. Tabor spoke with Matthew Pendlebury and advised him that Industrial Alliance was prepared to extend the “threshold funding date” for the mortgage until May 23, 2008 to allow Can-Euro additional time to finalize the matters that were outstanding. Mr. Tabor deposed that he had this conversation with Mr. Pendlebury. Mr. Tabor was not challenged in cross-examination on this. [49] In light of the exchange of emails between Mr. Tabor and Matthew Pendlebury on May 16, 2008 I find that between 2:12 p.m. and 2:47 p.m. Mr. Tabor communicated the position of Industrial Alliance to Matthew Pendlebury concerning the extension of the threshold funding date from May 19, 2008 to May 23, 2008. [50] Mr. Tabor, in reply to Stefan Gaspar’s email, emailed Mr. Pendlebury at 2:47 p.m. inquiring “Do you want to reply to this based on our t/c?”. The “this” is obviously Mr. Gaspar’s earlier email expressing his concern about not having received mortgage documentation for review. Mr. Tabor followed up with Mr. Pendlebury at 4:39 p.m.: “Thanks Matthew. I was aware that they wanted to review and assumed delivery today for a Friday close would provide adequate time. I think where things might have fallen through the cracks is that he was not apprised of the revised advance date.” Mr. Pendlebury replied at 4:41 p.m. to Mr. Tabor: “I agree, he wasn’t aware of the Friday funding date until today. Thanks Brian, have a good long weekend and we’ll talk next week.” [51] No evidence was tendered on behalf of Can-Euro from Mr. Pendlebury nor from Stefan Gaspar disputing that Mr. Tabor had advised that Industrial Alliance had agreed to extend the threshold funding date from May 19 to May 23, 2008. [52] Mr. Tabor sent an email to Doug Livingstone at 4:24 p.m. on May 16, 2008 with nine attachments. Eight attachments were the mortgage and other security documentation for execution by Can-Euro. The ninth attachment was his covering letter dated May 16, 2008. Can-Euro places great reliance on the language used by Mr. Tabor in this letter. In particular the following: Our client has advanced a closing date or disbursement date of May 23, 2008. Please let me know if this date is possible from your client’s perspective. On the matter of off-title inquiries, I think all the [sic] remains is securing of the fire-code compliance or certificate; the surveyor’s location certificate and finalization of the Shared Facilities Agreement. [Emphasis Added] [53] At some point Mr. Pendlebury requested a copy of Mr. Tabor’s letter of May 16, 2008 with the security documentation that he had sent to Mr. Livingstone. A further email was sent by Mr. Tabor’s office to Mr. Pendlebury at 4:50 p.m. with the nine attachments. Mr. Tabor did this at the request of Mr. Pendlebury in order for Pendlebury to forward the documents electronically to Stefan Gaspar. Week of May 19-23, 2008 [54] The week of May 19-23, 2008 was no less filled with telephone discussions, correspondence via facsimile, and email between the various actors that had a role in trying to close the mortgage transaction. In addition to the actors already mentioned, Christopher Thompson of the Royal Bank of Canada is introduced. [55] Mr. Tabor received a voice mail from Mr. Livingstone on May 20, 2008. He indicated that it was doubtful the mortgage could be funded by May 23, 2008. He also indicated that he had spoken with Stefan Gaspar on May 19, 2008 and that comments on the draft shared facilities agreement would be forthcoming. He also undertook to check on the status of the outstanding liens. [56] Christopher Thompson of the Royal Bank also called Mr. Tabor on May 20, 2008. He advised Mr. Tabor that the bank would not be able to make arrangements to postpone its first charge security on the property by May 23, 2008 since they had only recently become aware that its security was an impediment to the mortgage transaction with Industrial Alliance. Mr. Thompson further advised Mr. Tabor that formal approval was required and this would require a week or more. Mr. Thompson suggested that June 6, 2008 would be a more realistic date to achieve the required internal approvals within the Royal Bank. [57] As of May 20, 2008 Mr. Tabor’s firm Stewart McKelvey was retained by the Royal Bank with respect to Can-Euro’s request to restructure some of its financing and security arrangements, in particular those that were causing an impediment to Can-Euro’s mortgage transaction with Industrial Alliance. [58] Mr. Livingstone wrote to Mr. Tabor via facsimile transmission on May 21, 2008. Mr. Livingstone confirmed that arrangements with the Royal Bank for a postponement of its existing mortgage were still in process and that Mr. Thompson had emailed Stefan Gaspar advising that RBC would begin the formal approval process for the restructured operating loan. Mr. Livingstone set out 14 comments with respect to a variety of provisions in the draft mortgage documentation. It is unnecessary to set these out in detail or discuss them. Mr. Livingstone wrote: As there are still a number of details to be arranged before Stefan Gaspar can arrange an appropriate time for execution of the documents on behalf of Can-Euro it appears unlikely that May 23, 2008 is a workable funding date. It appears to me that it will take longer than that to have everything in place. [59] Denis Lebrun and Matthew Pendlebury exchanged emails on May 21, 2008. Mr. Lebrun wrote that Industrial Alliance were missing a number of items to have the funding close on Friday. He asked for Mr. Pendlebury’s help to push Mr. Gaspar. He reattached Mr. Tabor’s closing agenda itemizing the documents needed for the funding to occur. He specifically referenced the existing second mortgage that would have to be reduced to $200,000.00 and be postponed to Industrial’s security. Also mentioned were the shared facilities agreement and the outstanding liens. In bold Mr. Lebrun wrote: These issues will have to be completed tomorrow afternoon in order to be able to have a disbursement Friday. PLEASE LET ME KNOW HOW WE CAN SPEED THE PROCESS. Best regards. [60] Mr. Pendlebury responded promptly that, based on his conversation with Stefan Gaspar the second mortgage would be a non-issue as Can-Euro has opted not to proceed with the financing against the subject property; the shared facilities agreement had been sent to Dr. Gaspar in Europe for his signature and it would be returned via FedEx Courier. The two largest liens were in the process of being discharged and the smallest was being dealt with by way of Can-Euro issuing a cheque to Geoff Saunders of Wickwire Holm who will be paying the money into court. [61] Mr. Tabor was copied with this email exchange. He then believed the Royal Bank security was no longer an issue. He forwarded Mr. Livingstone’s facsimile transmission of May 21, 2008 which sought a variety of relief from various provisions in the draft mortgage documentation to Sylvie Tardif of Industrial Alliance. He wrote: Attached is a copy of correspondence received this afternoon from counsel for the borrower. I invite your comments but my initial reaction (and recommendation) is that the rights accorded to Industrial Alliance which are sought to be “relaxed” by Can-Euro’s counsel be resisted. You will note, as well, the suggestion that May 23, 2008 does not stand as a workable funding date. Give some thought to an outside date for discussion purposes around any extension... [62] Ms. Tardiff replied: Hi, We do agree with you. As for the funding date to be postponed, we are looking at the possibilities. We do know yet if the rate fixed can be kept. I will come back to you on this. [63] Obviously Mr. Tardiff’s email contains a typographical error. It should read: “we do not know yet if the rate fixed can be kept.” Both of these email communications were copied to Mr. Pendlebury. [64] Mr. Livingstone sent a further facsimile transmission to Brian Tabor on May 22, 2008. He had instructions from Dr. Gaspar raising further and additional comments or concerns about the draft mortgage documentation. In addition Dr. Gaspar pointed out that the provisions set out in the shared facilities agreement drafted by Mr. Tabor did not accurately reflect the terms of the actual agreement between the various complexes with respect to hot water for heating purposes and for domestic hot water. [65] Mr. Tabor testified that he spoke with Mr. Livingstone on May 22 with respect to all of the comments or concerns advanced in Mr. Livingstone’s facsimile transmissions of May 21 and 22, 2008. He says he provided to Mr. Livingstone an explanation as to why the mortgage documentation could not be amended as requested. He also reviewed with Mr. Livingstone the need for clarification regarding a number of details in the shared facilities agreement. Mr. Tabor promised he would get back to him more formally on the points raised. [66] Mr. Tabor wrote to Mr. Livingstone via facsimile transmission on May 23, 2008 confirming that the majority of the comments or concerns advanced by him on behalf of Can-Euro with respect to the mortgage documentation were either inconsistent with the Commitment Letter or the special conditions forming part of the CMHC certificate of insurance. [67] As promised, Mr. Tabor did follow up on his discussions with Livingstone about the shared facilities agreement by way of a letter dated May 26, 2008 ( sent electronically). [68] In the meantime, Mr. Tabor spoke with Mr. Thompson on May 22, 2008. Mr. Thompson advised him that RBC had not agreed to postpone its security. A number of options were currently being considered, including alternative security, payment of the RBC’s collateral mortgage from the mortgage advanced by Industrial, or for a new mortgage to be placed on the property. [69] Mr. Tabor was subsequently sent a copy of an email exchange between Mr. Thompson and Stefan Gaspar of May 22, 2008. Mr. Thompson wrote “My understanding is that the Industrial Alliance financing will close as early as tomorrow, May 23rd and by May 31st at the latest. This will not allow sufficient time to enact the required new collateral mortgage and personal guarantee, particular with Otto and Annelies in Europe.” Mr. Thompson set out some short term options for Mr. Gaspar involving a restructured operating loan in the amount of $400,000.00. [70] There was a further email exchange between Stefan Gaspar and Mr. Thompson on May 23, 2008. Mr. Gaspar wrote about the outstanding issues of a guarantee and a $400,000.00 operating loan to be secured by other properties and that “we need to get this solved today”. Mr. Thompson responded that they were satisfied that Stefan Gaspar could sign the amendment to the collateral mortgage replacing the charge on The Summit with a second charge to RBC on other properties. Mr. Thompson would be in touch with Mr. Tabor regarding the logistics in executing the amendment to the collateral mortgage. [71] It was obvious to all the parties that there would be no closing on May 23, 2008. The mortgage documents were not executed. The issue of the existing mortgage in favour of RBC was outstanding. The shared facilities agreement was not resolved to the satisfaction of Industrial Alliance or its solicitor. [72] At 14:25 on May 23, 2008 Mr. Lebrun sent an email to Mr. Pendlebury. He wrote: This morning we had a big discussion with everybody involved with the Can-Euro loan at our head office, including our Mortgage Vice-President and the manager of the interest rates on the investment side. Here is the position we have decided to take, in consideration of all the different aspects of this file. • The 4.08% rate was fixed with the acknowledgment of the fact that the disbursement of the loan was to occur no later than May 19, which was the date proposed by the Borrower; • We agreed to give an extension on that delay for one additional week, which is ending today May 23, 2008; • It will be impossible for us to give an additional delay in this matter, meaning that a new interest rate will have to be fixed, based on the current Yields, at the same spread of 95 bps; • The Closing date specified in the Commitment Letter is May 31. The Letter of Intention specified that the 95 bps spread was guaranteed until June 5, 2008. • So, based on those 2 dates, if the disbursement does not take place before June 5, the 95 bps won’t apply, and our current spread will be applicable. At the present time, our spread is 135 bps. • The appropriated hedge cost would be added, if the Borrower was to fix the rate in advance for a disbursement no later than June 5, 2008; • The Borrower will have the option to fix the rate 3 days prior to disbursement, without any hedge cost, with a disbursement date no later than June 5, 2008 at 95 bps, or after June 5 at our current spread at that time. Please let me know the decision of the Borrower about the option he wants to choose to fix the new interest rate. [73] At 2:18 p.m. AST on May 23, 2008 Mr. Pendlebury forwarded this information to Stefan Gaspar. Mr. Pendlebury expressed disappointment with the lender’s position and the attempts he made to dissuade Industrial Alliance but noted it appeared there simply had been too much market adjustment for them to keep the interest rate at 4.08%. [74] The plaintiff did not tender an affidavit from Stefan Gaspar nor from Matthew Pendlebury. The affidavit from Dr. Otto Gaspar is that he had been informed by Stefan Gaspar, and verily believes that following this email Stefan Gaspar requested, and then participated in a telephone discussion with Mr. Pendlebury and Denis Lebrun. The upshot of which was simply a confirmation that Industrial Alliance no longer considered Can-Euro to be entitled to obtain the loan at an interest rate of 4.08% as a consequence of the loan disbursement not having occurred by May 23, 2008. Communications post May 23, 2008 [75] There are a variety of further written communications between the parties after May 23, 2008. Many of them are self-serving. They mostly set out arguments by Can-Euro as to why the interest rate should remain at 4.08%. [76] What is clear from the communications between the parties is that Can-Euro immediately dropped any objection it had to the mortgage documentation. Stefan Gaspar emailed Denis Lebrun on May 24, 2008, with the signed mortgage documentation without attestation or witness signature and indicated that he would be in Halifax ready to sign all the documents in the presence of witnesses on Monday May 26, 2008. [77] At some point on Monday May 26, 2008 the issues with respect to the outstanding lien and the Royal Bank collateral mortgage were resolved. A shared facilities agreement satisfactory to the lender and its solicitor was yet to be completed. Mr. Gaspar had executed not only the mortgage documentation but also the shared facilities agreement in the form that had been drafted by Mr. Tabor and sent to Mr. Livingstone on May 16, 2008. However, in light of information learned from Can-Euro, further amendments to the agreement were required. [78] By May 28, 2008 all concerns regarding the shared facilities agreement were resolved. Nonetheless Industrial Alliance maintained its position that it would not advance funds at 4.08%. On May 27, 2008 Mr. Lebrun had sent an email to the various actors involved in the transaction indicating that if the interest rate was fixed as of May 27, 2008 it would be 4.245%. If the shared facilities agreement issues were to be resolved by May 28, 2008, the interest rate would then be fixed as of May 28, with a disbursement for Monday June 2, 2008. [79] Industrial Alliance then formally offered to close the mortgage transaction on June 2, 2008, but at the rate of 4.334% as calculated pursuant to the provisions of the Commitment Letter. This offer extended the Close Out Date to June 2, 2008. If the mortgage was not closed on that date then, unless Industrial Alliance agreed otherwise, the interest rate would be recalculated using the current spread by Industrial Alliance of 135 basis points above the Canada Bonds yield. [80] Can-Euro refused to close. Industrial Alliance has kept the commitment fee of $125,000.00 as liquidated damages. ISSUE [81] As noted earlier the parties have stipulated that the only question for me to resolve is whether or not Industrial Alliance breached its contractual obligations by refusing to fund the mortgage at an interest rate of 4.08%. Although simply stated, the positions of the parties generate a host of issues to be resolved in answering this simple question. OVERVIEW OF THE PARTIES’ POSITIONS [82] The plaintiff Can-Euro argues that the defendant Industrial Alliance was entirely responsible for the delay in providing the mortgage documents between May 1, 2008, when the interest rate was fixed at 4.08% and May 16, 2008 when Mr. Tabor after 4:00 p.m. on Friday May 16, 2008 sent the documents to Mr. Livingstone. Industrial is therefore not entitled to insist that the mortgage transaction close on May 19. In other words, Industrial Alliance cannot rely on the time being of the essence to close on May 19 as not only was it not ready, willing and able to fulfil the agreement on that date, but was the cause of the parties being unable to close on that day. [83] Furthermore the plaintiff contends that Industrial Alliance could not insist on May 23 as being the final deadline to close at the interest rate of 4.08% for two reasons. The first is that Mr. Tabor’s correspondence of May 16, 2008 only suggested or proposed May 23 as an alternate date for the closing of the transaction. It in no way gave notice that this date was the new deadline. Secondly, even if it could be interpreted that May 23 was a “drop dead date” to close at 4.08%, such a date was not a reasonable one in the circumstances. [84] The plaintiff asserts that the May 16 letter was an assurance that had the effect of leading Can-Euro to believe that the strict rights under the contract would not be enforced, or kept in suspense or held in abeyance and that Industrial Alliance, who might otherwise have enforced those rights will not be allowed to enforce them as it would be inequitable. It is described, not as a situation of waiver, but one of promissory estoppel. It also says Industrial Alliance failed to exercise its contractual rights in good faith. [85] The defendant Industrial Alliance takes the position that the plaintiff’s claim begins and ends with the contract as signed between the parties - the Commitment Letter of April 4, 2008. This contract gave to Can-Euro the option of fixing the interest rate prior to closing. The agreement by Industrial Alliance to fund the mortgage at 4.08% was specifically time limited to the date of May 19, 2008 - the date that had been requested by Can-Euro. Can-Euro failed (or even use its best efforts to do so) to satisfy the pre-funding conditions and therefore cannot claim that Industrial had any obligation to fund the mortgage by the initial threshold date of May 19, 2008. [86] Furthermore, although Industrial Alliance had no obligation to extend the initial threshold funding date of May 19, it communicated to Can-Euro its willingness to keep the interest rate to May 23. When a number of the pre-funding conditions was still not satisfied by that date, it was perfectly within Industrial Alliance’s contractual rights, all of which they exercised in good faith, to call for the re-calculation of the interest rate for the mortgage utilizing the mechanisms specifically provided for in the Commitment Letter of April 4, 2008. Promissory estoppel has no application in these circumstances. ANALYSIS AND DECISION [87] The Commitment Letter of April 4, 2008, as amended, constituted a valid binding contract between Can-Euro and Industrial Alliance. Can-Euro paid a commitment fee to secure Industrial Alliance’s promise to fund the $12.5M mortgage provided the detailed pre-conditions and special conditions were fulfilled. [88] The interest rate to be charged a borrower, and to be received by a lender is of fundamental importance to both parties. Here no specific interest rate was agreed on. Instead a detailed mechanism was provided by which the lender and borrower could calculate what the interest rate might be on any given day. [89] Industrial Alliance agreed to fund the mortgage at an interest rate 95 basis points above the bid side yield of the Government of Canada benchmark bonds. The calculation to be done by Industrial was stipulated to be determinative. The calculation would occur three business days in advance of the disbursement of the mortgage funds. [90] The borrower was also given the option of fixing the interest rate earlier than three business days prior to disbursement of funds by following the detailed process set out in the Commitment Letter. The borrower agreed to add the hedge cost to the interest rate, which the parties had agreed would be one additional bps, plus an additional deposit of $125,000.00. In the event that the disbursement of the loan did not take place on the date requested by the borrower, the Commitment Letter called for a new written request to be sent to the lender to again fix the interest rate. [91] The agreement by Industrial to fund the mortgage using this formula was time limited. The disbursement had to occur no later than May 31, 2008. Clause 1.8 of the Commitment Letter provided: 1.8 Close Out Date The estimated funding date of the Loan is May 1, 2008 however in no event shall funding of the Loan take place later than May 31, 2008 ( the “Close Out Date”). [92] Clause 3 of the Commitment Letter gave a discretion to the lender to declare the Commitment Letter null and void if all pre-conditions to the funding had not been fulfilled five days prior to the Close Out Date. It provided: If all conditions ( pre-funding and special) set out in this Commitment Letter have not been fulfilled on or before the date which is five (5) days prior to the Close Out Date, the Lender may declare this Commitment Letter null and void and keep the Commitment Fee as a genuine pre estimate of liquidated damages and not as a penalty. [93] There are two appendices that formed part of the terms and conditions of the Commitment Letter. Appendix “A” set out 16 standard clauses and terms of the Commitment Letter. Of relevance are the following: 13. WAIVER The Lender’s failure to insist upon strict performance of any obligation or covenant of this Commitment Letter or to [sic] exercise [sic] any option or right herein shall not be a waiver of any future performance or obligation or covenant but the same shall remain in full force and effect and the Lender shall have the right to insist upon strict performance of any and all of the terms of this Commitment Letter and the Security. 16. AMENDMENT TO THIS COMMITMENT LETTER Neither this Commitment Letter nor any provision hereof shall be changed, waived, discharged or terminated orally by any officer, employee or agent of the Lender. Any amendment to this Commitment Letter must be in writing and signed by an officer of the Lender, duly authorized for this purpose. [94] With respect to time of performance, Clause 14 provided: 14. TIME OF ESSENCE Time shall be of the essence in all respects. The Borrower and /or the Covenantors shall be in default by the mere lapse of time without the need of any prior notice or letter of demand. [95] The conclusion is inescapable that time was of the essence for the performance of this contract. Not only did the parties specifically agree that time would be of the essence in all respects, but that given all of the surrounding circumstances, time of the essence applies by necessary implication. [96] There is no shortage of texts, articles and case law that discuss the issue of when time is or is not of the essence; and the more vexing and disputed issue, when it is of the essence, the consequences of one or both parties not performing their obligations within the time specified in the contract. [97] Traditionally, contractual terms were classified as being either warranties or conditions. Where time is of the essence, a time stipulation is a condition. If a party fails to perform within the time specified then the other party has the right to treat the contract at an end and to sue for damages. The innocent party may also elect to sue for specific performance. [98] The common law rule was that a time stipulation was considered to be one of essence and was a condition of the contract or a condition precedent to the effectiveness or performance of a contract. Courts of equity were more prepared to be flexible with respect to time of performance. Nonetheless time may be of the essence in equity where it is made so by the parties or by reason of the nature of the property or by the circumstances of the contract. ( See Fridman, The Law of Contract 5th Ed. pp. 541-7; Waddams, The Law of Contracts 5th Ed. para. 593; Perell, Paul M. “Putting Together the Puzzle of Time of the Essence” (1990), 69 C.B.R. 417 ) [99] The plaintiff, as I understand its position, does not dispute that time was of the essence. Rather it says that time ceased to be of the essence by reason of the conduct of Industrial Alliance in failing to provide mortgage documentation in a timely fashion to Can-Euro to permit the transaction to close on May 19, 2008; nor could the transaction close until Industrial Alliance provided what it calls the “fine print” by way of clarification of the terms of the Commitment Letter on May 26, 2008. It relies on the decision in Meadowland v Haverstock ( 1990), 96 N.S.R. (2d) 214 where Kelly J. adopted the following from Di Castri, The Law of Vendor and Purchaser (at para 42): The general rule, where time is made of the essence of the contract in relation to the sale of land, is that default in performance by one party entitles the other, in the absence of an estoppel, or a waiver of the default or an acquiescence in such default, to cancel or determine the contract and to resist its specific performance. “Time can only be insisted upon as of the essence of the agreement by a litigant who: (a) has shown himself ready, willing and able to fulfil his agreement; (b) has not been himself in default or the cause of the delay; and (c) has not waived his right by subsequently recognizing the agreement as subsisting. The contract is not, ipso facto, terminated by the failure of either party to complete. The party not in default has his option: he may elect to continue the contract or terminate it; in either case the question is, has there been a binding election? If he elects to keep it in force, he cannot afterwards say that it terminated on the expiration of the stipulated time. That is not because he has effected any variation of the contract or because he has waived any right to terminate it. He has simply exercised the right which he had under it. If this is so, the Statute of Frauds has no possible application. The question is not one of enforcing a written contract with a variation; it is merely a question of finding upon the evidence whether there has or has not been an election. Thus, where a vendor pressed his purchaser to close on the stipulated date, but never gave him any intimation the contract would be terminated if he failed to do so, there was no variation; simply one party agreeing to accept a delay in performance. Neither is the contract terminated where both parties are unable to close on the contractual date for closing. Either party can apply for specific performance. The rule requiring a plaintiff seeking specific performance to show his willingness and ability to perform on the designated day does not apply in these circumstances. If either party wishes to reinstate time as of the essence, he must serve a notice on the other party fixing a new date for closing, which must be reasonable, and stating that time is to be of the essence with respect to the new date. A notice calling off the contract without giving the purchaser time to perform does not put the purchaser in default.” [100] Can-Euro cites the decision of the Ontario Court of Appeal in King et al. v. Urban & County Transport Ltd. et. al. ( 1973), 1 O.R. ( 2d) 449, in support of its position that time may not be insisted upon as being of the essence by a party who has not shown that it is ready and desirous of carrying out the agreement and that any new date for completion must be reasonable. [101] Industrial Alliance submits that the setting of the interest rate provision in the Commitment Letter constituted a unilateral option contract distinct from the bilateral contract set out in the Commitment Letter. Can-Euro did not promise to draw down funds by the initial threshold date of May 19. It was under no obligation to do so. The interest rate was only available if the mortgage transaction closed on the stipulated date of May 19. It was, they argue, a condition precedent to the exercise of the option and must be strictly performed. [102] Some of the important principles surrounding the consequences of a failure by a party to perform its contractual obligations in the time stipulated were set out by the Supreme Court of Canada in Sail Labrador Ltd. v. Challenge One (The), [1999] 1 S.C.R. 265. The appellant had entered into a five-year charter party agreement with the respondent to charter a vessel, the Challenge One. The agreement provided an option to the appellant to purchase the vessel at the end of the five-year period subject to the full performance of all of its obligations under the charter party. The charter party stipulated an annual payment of $85,000.00 by seven monthly payments by way of cash, Bank Transfer and/or certified cheques. If any of the payments were not made as required, then the respondent could withdraw the vessel from service without prejudice to any other claim it may have against the appellant. [103] The accepted practice was for the appellant to provide seven post-dated cheques at the beginning of each operating season. There were no problems for the first four years. The cheque for the first payment of the fifth year was returned for insufficient funds due to a bank error. The respondent notified the appellant of the problem with the cheque and that as a consequence the option to purchase was void. However, in the same letter, the respondent gave instructions as to how it could remedy the late payment. The appellant promptly made the payment with interest. All subsequent payments were made on time. Correspondence was exchanged between the parties about other conditions in the charter party. The respondent refused to complete the sale under the option due to the late payment and other alleged breaches of timely performance by the appellant. [104] The majority judgment was given by Bastarache J. He observed that much of the argument before the court had to deal with the issue whether the option was an independent contract distinct from the charter party or simply part of it. The reason for this focus was that if it was an option distinct from the charter party, then its terms must be complied with strictly, but if part of the charter party, then deficiency in performance must be serious enough to justify rescission by the non-offending party. Bastarache J. wrote: [39] The apparent rationale for the inapplicability of the doctrine of substantial non‑performance to the conditions precedent for the exercise of options is the absence of mutual promises in unilateral contracts. That is, since the optionee has made no counter‑promise, the optionor has no remedy if the performance is deficient except to refuse to honour its promise. The unavailability of the substantial non‑performance doctrine is thus not based on a requirement for certainty (Treitel, at p. 723). The end result is that deficient performance of a condition precedent to the exercise of an option will allow the optionor to refuse to honour the option without showing that there was substantial non‑performance. On the other hand, if the performance in question is a promised term of a bilateral contract, like a charter party, the substantial non‑performance doctrine would apply to limit the non‑offending party's right to rescind. In this way, it appears that the current law prevents the substantial non‑performance doctrine from relieving deficient performance of conditions precedent in option contracts because it automatically categorizes them as unilateral in nature. [40] It thus becomes clear why the respondent urges this Court to find that the option is a separate contract from the underlying, bilateral charter party. It seeks to have the option categorised as an independent, unilateral contract to prevent the appellant from relying on the argument that it has substantially performed the contract. However, while an option may be a unilateral contract, not all options are unilateral contracts. Pierce, supra, has been interpreted as establishing that all options are unilateral contracts. I disagree and would add that any previous case law which restricts the interpretation of options in this way must not be followed. That an option may be an element of a bilateral contract in which it is contained rather than an independent, unilateral contract is supported by this Court's decision in Monk Corp. v. Island Fertilizers Ltd., [1991] 1 S.C.R. 779, where it was recognized that a single contract can contain terms which relate to different subject matters. [41] Whether a contract which contains an option clause establishes a single, bilateral contract or two separate contracts, one bilateral and the other unilateral, is a matter of construction. Courts must examine the text of the contract and the context surrounding it in order to determine the intention of the parties, keeping in mind that this Court has previously approved of the tendency by courts to treat offers as calling for bilateral rather than unilateral performance whenever a contract can fairly be so construed: Dawson v. Helicopter Exploration Co., [1955] S.C.R. 868, at p. 874, per Rand J. [105] In my opinion, clause 1.4 of the Commitment Letter is not an option set out in the form of a unilateral contract. The option to fix the interest rate more than three days in advance of the disbursement date is intimately connected to the rest of the contract. It provided to the borrower a mechanism to fix the interest rate. Can-Euro could do so by specific request and by payment of a further deposit of $125,000.00. [106] As noted above, the Supreme Court of Canada in Sail Labrador, supra, reviewed many of the basic principles about the issue of the timely performance of contractual obligations. In determining if time is of the essence and the potential consequences if it is, Bastarache J., stressed the importance of courts interpreting the terms of the contract in issue. He wrote: [50] Having found that the option in the present case is a clause of the bilateral charter party, it must next be determined whether the parties have expressly provided for literal and strict enforcement of any or all of the terms of this contract. Courts will generally give effect to the parties' intentions by upholding any clear contractual provisions which provide that the breach of a certain term, no matter how slight, will justify rescission of the entire contract by the non‑offending party (Waddams, supra, pp. 400‑401; Treitel, supra, pp. 694‑95; Lombard North Central Plc. v. Butterworth, [1987] Q.B. 527 (C.A.)). If the parties have made no such provisions, the bilateral nature of the contract in the present case will require that this Court apply the substantial non‑performance doctrine. [51] One element of performance which parties to a contract may wish to have strictly interpreted is the timing of performance. In United Scientific Holdings Ltd. v. Burnley Borough Council, [1978] A.C. 904, the House of Lords traced the legal and equitable treatment of the timing of performance. Generally, at common law at the time of the Judicature Acts, time was presumed to be of the essence in all contracts. However, as Lords Diplock and Simon of Glaisdale point out in United Scientific, at pp. 927‑28 and pp. 940‑41 respectively, even at that time exceptions to this strict common law approach were being recognized and developed. At the same time, in equity, time was generally presumed not to be of the essence. In Parkin v. Thorold (1852), 16 Beav. 59, 51 E.R. 698, Lord Romilly M.R. noted that "time is held to be of the essence of the contract in equity, only in cases of direct stipulation, or of necessary implication" (p. 65). Similarly, in Stickney v. Keeble, [1915] A.C. 386 (H.L.), Lord Parker of Waddington said, at pp. 415‑16: Where it [equity] could do so without injustice to the contracting parties it decreed specific performance notwithstanding failure to observe the time fixed by the contract for completion, and as an incident of specific performance relieved the party in default by restraining proceedings at law based on such failure. This is really all that is meant by and involved in the maxim that in equity the time fixed for completion is not of the essence of the contract, but this maxim never had any application to cases in which the stipulation as to time could not be disregarded without injustice to the parties, when, for example, the parties, for reasons best known to themselves, had stipulated that the time fixed should be essential, or where there was something in the nature of the property or the surrounding circumstances which would render it inequitable to treat it as a non‑essential term of the contract. ... [54] This Court must therefore begin from the presumption that time is not of the essence in the contract in the present case. However, keeping in mind that parties to commercial contracts are free to make time of the essence in relation to the performance of any contractual obligations(United Scientific, at p. 923; Scandinavian Trading Tanker Co AB v. Flota Petrolera Ecuatoriana‑ The Scaptrade, [1983] 2 All E.R. 763 (H.L.), at p. 768), I must assess whether these partieshave expressly made time the essence of this contract through the incorporation of a "time of the essence" clause. If they have not, this Court may still conclude that time is of the essence if the nature of the property involved or the circumstance of this case call for such an interpretation. [107] To determine the intention of the parties the actual language of the contract guides the court. As noted by Bastarache J.: [55] This Court must look to the actual language used by these parties in clause 30, the option clause, to determine whether it was their intention to expressly make time of the essence. The respondent submits that since this is a commercial contract entered into by equal parties, the wording of clause 30 must be strictly construed. The respondent further submits that the words "promptly and in accordance with the schedule" make time of the essence in relation to the lease payments. Accordingly, the argument goes, the appellant's single late payment, even though it was caused by a bank error and quickly remedied with interest, allows the respondent to put an end to the option. [56] Before discussing the strict interpretation urged by the respondent, I would point out that commercial parties should be familiar enough with the applicable law to know that they must use very precise words if their intention is to make time the essence of a contract. This is self‑evident given that the reason for the inclusion of a clause of this nature in the first place is to provide certainty about the consequences of breach which the substantial non‑performance doctrine cannot provide. Furthermore, because of the real possibility of an unjust enrichment, courts must be certain that it was the parties' intention to allow any breach of the timing of performance, no matter how minor or non‑prejudicial, to justify rescission of the entire contract. [108] In Sail Labrador, the court concluded that the language the parties used failed to demonstrate any intention to make time of the essence. Neither could the court imply that time was of the essence based on the property involved or that the circumstances surrounding the contract would make it inequitable to presume that time was not of the essence. [109] Unlike the parties in Sail Labrador, here the parties did specifically make time to be of the essence. Furthermore, the clause of the contract that gave to Can-Euro the option to set the interest rate more than three days in advance of the disbursement of the loan, specifically provided what would happen if the loan disbursement did not occur on the requested date. It provided: Without prejudice to the rights of the Lender, in the event that the first disbursement of the Loan cannot take place on the requested date, a new written request shall be sent to the Lender to fix again the interest rate in accordance with the method provided as aforesaid. In this case, the new interest rate then fixed, shall not be lower than the interest rate initially set. [110] The overall commercial lending contract was not at an end when the closing did not take place on May 19. Can-Euro had in fact no obligation to close by May 19, 2008. In order to call upon Industrial Alliance to advance the mortgage funds, Can-Euro had to fulfill all of the pre-funding and special conditions no later than five days prior to May 31, 2008. Can-Euro still had until May 26 to fulfill the conditions set out in the Commitment Letter. The only thing possibly lost by Can-Euro by the failure of the mortgage to be disbursed by May 19 was their right to borrow the funds at the rate of 4.08%. [111] Although Industrial Alliance’s principal obligation was to advance the mortgage funds should the pre-funding and special conditions be satisfied by Can-Euro, in my opinion, it had a number of other obligations that it had to fulfill. First of all it had an implied obligation to retain solicitors in order for a satisfactory preliminary report on the title to the property be prepared by its solicitor (clause 4.9 of the Commitment Letter), not to mention the requirement for an opinion attesting to good and marketable title (clause 6 of the standard conditions). The lender’s counsel was also required to draft the security documentation and to disburse advances (clause 6 of the standard conditions). [112] Can-Euro says, in effect, that Industrial Alliance breached its implied obligations by failing to provide to Can-Euro the security documentation in a sufficiently timely manner in order for it to be able to close the mortgage transaction by May 19, 2008. I agree. Not providing the mortgage and related documentation until after 4:00 p.m. on May 16 was a failure to fulfill this obligation. However, in my opinion, the failure to provide the draft mortgage and related documents was meaningless in terms of the ability, or claimed inability of Can-Euro to close the transaction on May 19. [113] On the evidence before me, Can-Euro apparently did little or nothing to realistically put itself in a position to close the mortgage transaction on May 19. There were liens registered against the property. They were not released. There was a collateral mortgage in favour of the Royal Bank. The documents tendered on this application clearly suggest that Can-Euro did not even contact the Royal Bank until on or about May 16, 2008 to have this mortgage released or postponed to the proposed first mortgage in favour of Industrial Alliance. The formal process necessary to re-finance or restructure Can-Euro’s indebtedness to the Royal Bank did not commence until May 21, 2008. [114] When the mortgage transaction could not close on May 19, Industrial Alliance agreed not to insist on a re-calculation of the interest rate, but to keep it at 4.08% until May 23, 2008. There is much to be said for the position of Can-Euro that the letter by Mr. Tabor to Mr. Livingstone of May 16, 2008 is open to interpretation. He wrote: “Our client has advanced a closing date or disbursement date of May 23, 2008. Please let me know if this date is possible from your client’s perspective.” Mr. Coles argues that “advanced” must mean that this date is being suggested, particularly coupled with the question if the date of May 23 is possible from Can-Euro’s perspective. Hence it was not a drop dead date. [115] However, Industrial Alliance had no right to set May 23 as a drop dead date to close the mortgage transaction. May 31 was the drop dead date set by the Commitment Letter. Furthermore, Mr. Tabor’s letter of May 16 was not the only communication concerning a new closing date. The uncontradicted evidence of Mr. Tabor is that he spoke with Matthew Pendlebury and told him that Industrial Alliance was prepared to extend the “threshold funding date” to May 23, 2008. In light of their earlier communications, and Mr. Pendlebury’s intimate knowledge of the details of this transaction, this could only mean one thing, that the rate of 4.08% set for the stipulated funding date would be held, at least until May 23, 2008. [116] It is obvious that Matthew Pendlebury also spoke with Stefan Gaspar on May 16. Mr. Pendlebury was not an employee of Can-Euro, but was at a minimum an agent of Can-Euro for some limited purposes, including as a conduit of important information. Although I do not have any direct evidence about what was said between Pendlebury and Gaspar, the respondent did not tender any evidence from Mr. Pendlebury or Mr. Gaspar denying communication of this information. [117] I have no doubt that it might have been better if Mr. Tabor had clearly stated in his letter to Mr. Livingstone of May 16 that the interest rate of 4.08% would no longer be available to Can-Euro if the mortgage did not close on May 23. However, I find he did not have the necessary instructions from Industrial Alliance to take that position. As noted earlier, Industrial Alliance did not decide that it would no longer fund the mortgage at 4.08% until May 23, 2008. [118] Clause 1.4 of the Commitment Letter calls for a re-calculation of the interest rate in the event that the first disbursement of the loan “cannot take place on the requested date”. For the reasons already detailed, it could not take place. The contract does not refer to different consequences depending on whose fault may have triggered the prevention of the disbursement. If it was the action or inaction of Industrial Alliance that operated to prevent the closing of the mortgage transaction by the initial threshold funding date of May 19, then equity may well prevent it from benefiting from its own wrong. It is this principle that animates the concepts of waiver, promissory estoppel and variation. I have already concluded that the actions of Industrial Alliance were not an operative cause of the failure to close the transaction by May 19. [119] In any event, by the end of the day on May 16, 2008, Industrial Alliance had satisfied its obligation to provide the mortgage documentation for a closing. I do not find anything unreasonable by the position communicated to Can-Euro to extend the threshold funding date to May 23, 2008. [120] As noted earlier, Can-Euro says that May 23 was not a reasonable date given the short time frame and because Industrial Alliance failed to provide or confirm which documents formed part of the ‘commitment package’ and therefore took precedence over the mortgage documentation in the event of an inconsistency between the two. The confirmation did not occur until May 26, 2008. [121] With all due respect to counsel for Can-Euro, I do not accept these contentions. There was nothing remarkable about the terms of the mortgage documentation. No suggestion has been made that Mr. Tabor’s explanation as to why the terms could not be amended was in any way unreasonable or incorrect. [122] The request for what it calls the “complete commitment package” only came at 16:42 on May 23, 2008, after Can-Euro had been notified that the interest rate would have to be re-calculated as stipulated in the contract. Further, the documents governing the commitment agreement were well known to Dr. Gaspar and presumably Can-Euro’s solicitor. Besides the Commitment Letter of April 4, 2008, there were Mr. Lebrun’s email of April 22 and his letter of April 29, 2008. Both of these were sent at Dr. Gaspar’s request by Industrial Alliance to confirm acceptance of the details of the agreement. There is no dispute that Dr. Gaspar had them in his possession. No further confirmation was requested until after Industrial Alliance advised Can-Euro that the interest rate would have to be re-calculated. [123] I also take the submissions of Can-Euro to be that it was really Industrial Alliance’s obligation to prepare a suitable shared facilities agreement and hence the delay associated with satisfying that pre-condition prevents Industrial from being able to insist on a threshold funding date of May 23. Clause 6 of the Commitment Letter does provide that it is the lender’s legal counsel that is to draft the “security documentation and any other documents related to the transaction”. However, there are two specific terms in the Commitment Letter that compel the conclusion that responsibility to prepare the shared facilities agreement was on the borrower. [124] Clause 5.2 of the Commitment letter provides: 5.2 Prior to funding, a Shared Facilities Agreement must be in place to govern the shared use of the private road, heating system and share of operating costs of the shared amenities between Horizon Estates, Gardenstone Estates and The Summit. This agreement shall be satisfactory to the Lender and his solicitor. [125] Forming part of the Commitment Letter was Appendix B, the Certificate of CMHC Loan Insurance. Clause 14.1 provides: 14.1 Prior to funding, a Shared Facilities Agreement must be in place to govern the shared use of the private road, heating system and share of operating costs of the shared amenities between the three (3) multi-residential buildings owned by Can-Euro Investments Ltd.: Horizon Estates, Gardenstone Estates and the subject known as The Summit. It is the responsibility of the Approved Lender to review the contents, efficacy and enforceability of this Agreement. The Approved Lender must also obtain from its solicitor, an opinion confirming that the Shared Facilities Agreement is adequate to ensure access, in the event of default and possession / sale by Approved Lender, and a workable arrangement governing easements and sharing of operating costs of the shared amenities. [ Emphasis added] [126] In my opinion, the only reasonable interpretation of these provisions is that it was Can-Euro’s responsibility to draft the shared facilities agreement. It would then fall on Industrial Alliance and its solicitors to assess whether the agreement was adequate to protect the lender in the event of a default. [127] Indeed, this is how the parties appear to have accepted their roles. Can-Euro did draft a shared facilities agreement. As of April 23, 2008 Can-Euro was advised it was not acceptable. Can-Euro’s solicitor then needed input from Dr. Gaspar to re-draft the agreement. The only documentation produced before me shows that Doug Livingstone sent a draft agreement to Mr. Tabor on May 14, 2008. Tabor suggested it was substantially the same as a previous draft. It was at that point Tabor offered to prepare another draft. This draft agreement was sent to Mr. Livingstone on May 16, 2008. As it turned out, the draft agreement did not accurately reflect the terms of the actual arrangement between the three complexes. The actual terms of the arrangement were uniquely within the knowledge of Can-Euro. [128] It was not until May 28 that the shared facilities agreement was satisfactory in form and content. There has been no suggestion that the objections by Industrial Alliance’s solicitors were in any way invalid or unreasonable. [129] I find there was nothing that Industrial Alliance did or did not do that prevented or hindered Can-Euro from being in a position to satisfy the pre-funding and special conditions by May 23, 2008. I also find that there was nothing unreasonable about the time frame that was allowed for Can-Euro to satisfy the pre-funding and special conditions. That time frame cannot simply be viewed as from May 16th or 19th to the 23rd, but from the perspective of the overall time frame for the transaction. It must also be kept in mind that May 19th was the date requested by Can-Euro as the initial threshold funding date. [130] Most frequently cases that consider the consequences of a party failing to perform its contractual obligations within the time specified involve actions for specific performance or other equitable remedies such as relief from forfeiture. It is well recognized that there are limits to the jurisdiction of a court to provide such equitable relief in the absence of conduct amounting to waiver or estoppel. ( See Union Eagle Ltd. v. Golden Achievement Ltd., [1997] 2 All E.R. 215 ( J.C.P.C.). [131] Even if the issue of the interest rate available to Can-Euro could be viewed as a separate contract, and Industrial Alliance could not insist that the rate of 4.08% was lost due to its dilatory performance in getting the mortgage documentation to Can-Euro for a May 19 closing, it is difficult to see how time ceased to be of the essence. In my view, when time is of the essence in a contract, but a new date is set for the performance of the contract, time may still be of the essence. The law on this issue was canvassed by Hetherington J., as she then was, in Landbank Minerals Ltd. v. Wesgeo Enterprises Ltd., [1981] 5 W.W.R. 524, [1981] A.J. No. 531. She concluded: [34] I think that where time is of the essence of an agreement and there is an extension of time for performance of an obligation under the agreement to a specified date, the effect of the extension on the essentiality of time must be determined in the context of the circumstances of the case. If there are circumstances which make it unjust or inequitable for a party to insist that time is of the essence, the Court may refuse to give effect to this provision in the agreement. In the absence of such circumstances, however, the extension of time simply results in the substitution of a later date for the one stipulated in the agreement. I do not think that it in any way affects the provision in the agreement that time is of the essence. [35] In the case before me there was no evidence of any agreement to alter the provision in the written agreement that time is of the essence. There was no evidence of an express waiver of this provision and no evidence of any fact from which a waiver can be implied. I do not think that such a waiver can be implied from a postponement of closing to a specified time without more. There was nothing in the evidence to indicate that the plaintiff by its conduct misled the defendants in any way. In accordance with the agreement it gave notice to the defendants of the defects and missing documents which it required to be remedied or furnished before it would accept the title of the defendants to the assets in question. It agreed to postpone the closing, but it did nothing to indicate to the defendants that it would not insist upon the provision in the agreement making time of the essence. In addition, the plaintiff was ready to carry out its obligations under the agreement on the closing date. The defendants have not sought specific performance of their agreement with the plaintiff. They have simply refused to return the deposit paid by the plaintiff. [36] There is nothing in these circumstances which makes it unjust or inequitable for the plaintiff to insist that time is of the essence. In my view the postponement of the closing simply had the effect of substituting a later time for the one stipulated in the agreement. It did not in any way affect the provision that time is of the essence of the agreement. ( See also Salama Enterprises ( 1988) Inc. v. Grewal (1992), 90 D.L.R. (4th) 146, [1992] B.C.J. No. 703 ( B.C.C.A.); Bowlen v. Digger Excavating (1983) Ltd., 2001 ABCA 214, [2001] A.J. No. 1125) [132] In my opinion, there is nothing inequitable or unjust that precludes Industrial Alliance from being able to rely on the terms of the contract when it agreed to extend the threshold funding date to May 23, 2008, but not beyond that date. [133] In essence, what happened was Industrial communicated to Can-Euro an informal waiver of the application of the detailed mechanism for determining the interest rate set out in Clause 1.4 of the Commitment Letter. The only legal or equitable principle identified by Can-Euro that converts that informal waiver into a potential ground of relief is that of promissory estoppel. Promissory Estoppel [134] There appears to be a close affinity between the doctrines of waiver, promissory estoppel and variation. Can-Euro chose to frame its argument not on waiver, but solely on promissory estoppel. [135] A good example of the operation of the doctrine of promissory estoppel is the case of Re Tudale Explorations Ltd. and Bruce et. al. ( 1978), 20 O.R. ( 2d) 593 ( Ont.C.A.). The respondent, Tudale owned mining claims. By a written agreement it granted to Tech Mining Group the right to explore and develop the claims for three years with an option to require the claims to be transferred to a company to be incorporated, the shares of which would be divided between Tudale and Tech. The agreement could only be modified by a signed written instrument. The time to exercise the option was extended by written agreement to the end of May and then June 1975. [136] The trier of fact determined that on June 25, 1975 the president of Tudale gave Tech his personal assurance that an extension of at least 30 days would be forthcoming. On June 25, 1975Tech sent to Tudale copies of an agreement extending the time for 60 days. Tech encouraged Tudale to agree to a 60 day extension. In early July, Tudale notified Tech that the Board of Directors had decided not to extend the agreement and it was terminated. Tech sought to exercise the option. It was rebuffed. The Ontario Divisional Court concluded that promissory estoppel applied on the basis Tudale had agreed to extend the time for Tech to exercise the option and then repudiated that agreement upon the ground that time had expired. Tech clearly relied on Tudale’s representation to its detriment. Griffiths J., as he then was, wrote the reasons for judgment for the court. In terms of the principles that govern the applicability of the doctrine, he wrote: It is my view that the doctrine to be applied whether it be called waiver or promissory estoppel or variation of the contract or simply binding promises, stems from the words of Lord Cairns in Hughes v. Metropolitan R. Co. (1877), 2 App. Cas. 439 at p. 448: ... it is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results‑‑certain penalties or legal forfeiture‑‑afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties. That principle was accepted by the Supreme Court of Canada in Conwest Exploration Co. Ltd. et al. v. Letain, [1964] S.C.R. 20 at p. 28, 41 D.L.R. (2d) 198 at p. 206, and in numerous other Canadian cases. In Central London Property Trust Ltd. v. High Trees House Ltd., [1947] 1 K.B. 130, Denning, J., traced the principle first to justify an oral variation of a written contract including one required to be in writing to a representation without consideration and to a representation not just of an existing fact but to one as to the future. The essential features are an unambiguous representation which was intended to be acted upon and indeed was acted upon. The present rule is now expressed by Snell in his work Snell's Principles of Equity, 27th ed. (1973), p. 563, as follows: Where by his words or conduct one party to a transaction makes to the other an unambiguous promise or assurance which is intended to affect the legal relations between them (whether contractual or otherwise), and the other party acts upon it, altering his position to his detriment, the party making the promise or assurance will not be permitted to act inconsistently with it. [137] The doctrine of promissory estoppel was more recently revisited by the Supreme Court of Canada in Maracle v. Travellers Indemnity Company of Canada, [ 1991] 2 S.C.R. 50. Sopinka J., in delivering the unanimous judgement of the court commented: [13] The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., [1968] S.C.R. 607, Ritchie J. stated, at p. 615: It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations. This passage was cited with approval by McIntyre J. in Engineered Homes Ltd. v. Mason, [1983] 1 S.C.R. 641, at p. 647. McIntyre J. stated that the promise must be unambiguous but could be inferred from circumstances. [138] The only promise or assurance made by Industrial Alliance was that it would extend the threshold funding date to May 23, 2008. It lived up that assurance. There is no direct evidence of any other promise or assurance, nor can one be inferred. [139] Mr. Tabor’s letter of May 16, 2008 that his client has “advanced a closing date of May 23, 2008” may not have been a model of clarity in terms of what may or may not happen if the closing did not occur on that date, but it cannot be construed as a promise or assurance that the strict rights under the contract would not be enforced. Moreover, there is no basis to conclude that Can-Euro in any way changed or altered its position to its detriment as a result of the letter of May 16, 2008. Good Faith [140] The last issue to be considered is the suggestion by Can-Euro that Industrial failed to exercise its contractual rights in good faith. In Gateway Realty Ltd. v. Arton Holdings Ltd. (1991), 106 N.S.R. (2d) 180, affirmed 112 N.S.R. (2d) 180, Kelly J., of this court, reviewed the history and principles behind the concept that discretionary powers bestowed on contractual parties must be exercised honestly and in good faith. He found that there is such an obligation, and it is breached when a party to a contract acts in a manner that is contrary to community standards of honesty, reasonableness or fairness. This can be measured by a consideration of whether the complained of conduct amounts to bad faith. Kelly J. expressed the test to be: [60] What will constitute bad faith or breach of the conduct described above will depend on the terms of contract and the circumstances of each case. In most cases, bad faith can be said to occur when one party, without reasonable justification, acts in relation to the contracts in a manner where the result would be to substantially nullify the bargained objective or benefit contracted for by the other, or to cause significant harm to the other, contrary to the original purpose and expectation of the parties. [141] Kelly J., expressed caution that courts must tread carefully in light of the competency of most parties to negotiate their own bargains. It would be rare that court imposed moral standards would override express contractual provisions. In Gateway, the defendant had expressly contracted that it would use its “best efforts” to lease to tenants suitable to maintain the existing viability of the shopping centre. He found as a fact that not only had Arton Holdings not used its contracted for best efforts to secure new tenants for Gateway, but its efforts were so insignificant he inferred it acted in bad faith. [142] Counsel for Can-Euro has not identified any particular contractual rights it says Industrial exercised in bad faith. The contract expressly provided the mechanism for how the interest rate was to be set. It was Can-Euro that opted to lock in the interest rate more than 3 days before the disbursement date. It was Can-Euro that selected the initial closing date of May 19. [143] Can-Euro was a sophisticated and knowledgeable borrower. It must have known full well what the terms of the contract were and what was to happen if the mortgage was not disbursed on May 19. I have already found that Industrial breached its implied obligation to provide the draft mortgage documentation in a sufficiently timely manner for a May 19 closing. However, that delay was not the operative cause of the postponement of the closing date. [144] For reasons that only Can-Euro can provide, it was not even close to being ready to fulfill the pre-funding and special conditions set out in the Commitment Letter for a closing by May 19, 2008. I find that Dr. Gaspar was well aware of the volatility of the bond market and hence the interest rate. It was not unreasonable for Industrial Alliance to agree to extend the May 19 disbursement date to May 23 and thereafter to insist that the interest rate be set as expressly provided for in the Commitment Letter. It could hardly be said to have nullified the bargain or to have caused significant harm to Can-Euro, contrary to the original purpose and expectation of the parties. [145] The only “evidence” of bad faith is the allegation in Dr. Gaspar’s affidavit that he believes “ Industrial has acted in bad faith and in refusing to ‘close’ the loan and advance monies at the agreed upon interest rate prior to May 31st , 2008", and that Industrial is attempting to gain advantage through its own delay. I put evidence in quotation marks because there is no basis set out for Dr. Gaspar’s belief. These assertions are really nothing more than argument contained in an affidavit. [146] The only evidence is that Industrial Alliance wanted the transaction to close. Its counsel took on work to draft the shared facilities agreement. On May 21, 2008, Mr. Lebrun implored Matt Pendlebury, the person he had the most contact with on behalf of Can-Euro, to deal with what he understood were the outstanding issues by the next afternoon so they could close on Friday. He requested Pendlebury’s assistance in pushing Can-Euro. He asked Pendlebury to let him know how Industrial could do anything to speed up the process. There is no basis to suggest that Industrial tried to, or did take advantage of its own delay, nor in any way acted in bad faith. SUMMARY AND CONCLUSION [147] Industrial Alliance entered into a contract with Can-Euro. Its principal obligation was to disburse funds to Can-Euro. This obligation would only be triggered by Can-Euro satisfying all of the conditions set out in the Commitment Letter. Industrial Alliance also had a number of implied obligations. One of those was to provide draft mortgage documentation to the borrower in a timely fashion before the date the mortgage was scheduled to close. [148] Absent a variation in the Commitment Letter, the latest date the mortgage could close was May 31, 2008. The Commitment Letter did not stipulate the interest rate. It provided a mechanism by which it would be calculated three days in advance of the closing date. The borrower exercised the option in the Commitment Letter of setting the rate in advance by a request to do so, coupled with a deposit of $125,000. The rate set was 4.08% provided the closing date was May 19, 2008. [149] Can-Euro had not satisfied a number of important conditions before Industrial Alliance could be required to disburse funds. In addition, Industrial Alliance had not provided draft mortgage documentation until late in the day on May 16, 2008. Industrial Alliance communicated its agreement to Can-Euro to extend the closing date to May 23, 2008 with the interest rate to be 4.08%. When Can-Euro had still not satisfied a number of important funding conditions by May 23, Industrial advised that it would no longer advance funds at 4.08%, but would require the interest rate to be re-calculated as specified in the Commitment Letter. [150] Industrial Alliance committed no breach of its contractual obligations in refusing to advance funds at the interest rate of 4.08%. To be in breach of its contractual obligations, there must have been a legally enforceable obligation to close at 4.08% beyond May 23, 2008. In my opinion, there was not. [151] The requirements of promissory estoppel are not made out, nor is there any basis to suggest a lack of good faith on behalf of Industrial Alliance. [152] The application by Can-Euro is dismissed with costs to the defendant. If the parties cannot agree on quantum they are invited to contact the court to arrange a hearing on the issue. _____________________________ Beveridge, J.