An individual sold back her shares in a company called Applied Consumer & Clinical Evaluations Inc. ("ACCE"), which was controlled by her ex-husband. Part of the purchase price was paid by a Vendor Take Back Note ("VTB") for $1.85 million. The VTB contained an acceleration clause which provided that if the buyer defaulted on two quarterly payments, received a notice of default and failed to remedy the default within 30 days, the entire balance would come due. After some payments were made, ACCE defaulted on two payments and the respondent sent a letter informing them that they were in default. ACCE subsequently made one payment.
ACCE argued that while quarterly instalments were due, not all monies were due on the first day of each quarter. The application judge rejected this argument and found that the payments were due on the first day of the quarter. ACCE also argued that the written notice of default was insufficient as the letter did not specifically reference the VTB but referred to a default provision in an associated share pledge agreement. The application judge held that the letter sufficiently communicated that ACCE was in default and in any event, ACCE's counsel responded and referred specifically to the VTB. Finally, the application judge found that ACCE failed to cure its default as while it made a partial payment, it did not remedy the default in its entirety as required by the VTB.
The Court of Appeal found that the application judge's finding s were reasonable based on the evidence before him. Read the full decision here.