Project Freeway Inc (“PF”) sold its shares in a group of companies to ABC Technologies Inc. (“ABC”) for 165 million dollars. US26 million dollars of the purchase price was to be paid by way of an earn out if ABC hit certain performance targets.
A dispute arose between PF and ABC whether the earn out provision had been triggered.
PF asserted that a sale-leaseback arrangement entered into by ABC with a third-party meant the earn out was immediately payable because ABC had sold a “material portion of the assets” of the business purchased. ABC disagreed. ABC asserted that the impugned transaction did not constitute such a sale.
The issue was tried by Justice Jana Steele of the Superior Court of Justice. Justice Steele dismissed PF’s claim. PF appealed to the Ontario Court of Appeal (“OCA”).
