Badesha v. Snowland Sporting Goods Ltd., 2015 BCSC 1229

Commercial Contracts – Enforceability – Essential Terms – Enforcement of Penalty Clause – We succeeded at trial in obtaining a $1,000,000.00 judgment for our client based on penalty clauses of $500,000.00 in each of two contracts for the purchase and sale of commercial properties. Under what came to be known as the Swap Agreement, our client was to sell a commercial building in Chilliwack and purchase a hotel in Williams Lake. The other party to the Swap Agreement failed to meet several pre-conditions to the swap of properties and ultimately failed to complete. Our client sued. The other party counterclaimed for damages it alleged it had sustained when our client was in possession of the hotel for approximately 6 months. The defendants alleged the contract, which was admittedly poorly drawn, was not clear and did not properly describe the parties to the contracts. The court accepted our argument that all the parties knew who the contracting parties were and the contract was enforceable. The court found the $500,000 penalty clause in each of the contracts was reasonable and akin to a real estate deposit. The court determined that based on all the facts, even if the clauses were penalties, the defendant was not entitled to equitable relief. The court awarded our client $1 million dollars plus costs. View Reasons for Judgment