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ARTICLE · 26 DECEMBER 2024

No Space For Error: Invalid Indemnity Claim In Asset Transaction Failed To Follow Notice Terms

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The latest dispute in the asset deal between Spacebridge Inc. and Baylin Technologies Inc. is a stark warning to anyone delivering a notice of indemnification claim against funds held in escrow.

CanadaLitigation, Mediation & Arbitration
Ciara Mackey
Ciara Mackey
Andrew N. Disipio
Andrew N. Disipio
Douglas Fenton
Douglas Fenton
Nicholas Heinrich
Nicholas Heinrich
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The latest dispute in the asset deal between Spacebridge Inc. and Baylin Technologies Inc.1 is a stark warning to anyone delivering a notice of indemnification claim against funds held in escrow.

In SpaceBridge Inc v Baylin Technologies Inc, 2024 ONCA 871, the Court of Appeal for Ontario upheld a strict interpretation of the notice requirements under the indemnification and escrow provisions in an Asset Purchase Agreement (APA) and Escrow Agreement. Written notice of Baylin's indemnity claim, sent to the Escrow Agent on time but by registered mail rather than courier, did not comply with the parties' agreement and was found to be invalid. The consequence was severe. Having failed to validly deliver its indemnity claim to the Escrow Agent, Baylin was ordered to return its over $1.8 million claim in full, with interest.

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