Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of clause 2.7 of a settlement “Transaction” governing whether Un Viger Condominiums Inc. (UVC) must reimburse a $47,350.17 deposit to Claire Zhu inc. (CZ).
• Significance of the resale of Unit 413 at a lower price than in CZ’s 2019 offer, and whether this resale satisfied or avoided the repayment mechanism in clause 2.7.
• Determination of whether the parties’ common intention was to defer, or potentially extinguish, UVC’s obligation to reimburse the deposit for Unit 413.
• Use of contextual evidence (testimony, conduct of the parties, structure of the Transaction and its annexes) to resolve apparent ambiguity in clause 2.7.
• Assessment of UVC’s argument that any sale within 12 months, even at a lower price, eliminated its repayment obligation, and whether this interpretation led to an unreasonable commercial result.
• Consideration of Quebec contract interpretation principles, including Supreme Court guidance (Uniprix) and C.c.Q. arts. 1425 et seq., to favor a reasonable, intention-based reading over a purely literal one.

Facts of the case

Claire Zhu inc. (CZ) is the corporate vehicle through which Lei Zhu, a real estate broker, carries on her brokerage activities. Un Viger Condominiums Inc. (UVC) is a real estate developer promoting a condominium project in Montréal. In order to help UVC quickly obtain funds in the early phase of the project, before the financing structure was finalized and construction began, CZ signed about ten offers to purchase condominium units and advanced the initial deposits required under those offers. While CZ appeared on paper as purchaser, her evidence was that this was a financing and marketing mechanism: UVC received deposit money sooner, and in return CZ obtained a short-term exclusive right to sell the same units and to earn brokerage commissions upon resale. The case before the Court of Québec focuses on just one of those units, Unit 413, and on a subsequent settlement agreement described as a “Transaction” between CZ and UVC. Over time, the project ran into financial difficulty and UVC incurred significant losses. CZ, for her part, had fronted substantial sums in deposits on several units. The parties negotiated the Transaction, under which UVC undertook to reimburse CZ nearly $300,000 in total, representing the various deposits CZ had advanced. Most of those reimbursement obligations were ultimately performed, albeit only after CZ commenced proceedings in the Superior Court to compel performance and then discontinued that action once payment was made. The only amount still in dispute in this case is the $47,350.17 deposit connected to Unit 413. The underlying offer to purchase for Unit 413 was signed by CZ on 4 September 2019 for a price of $315,667.82. The Transaction was signed much later, on 19 June 2023, when Unit 413 had still not been sold to a third-party buyer. Subsequently, UVC sold Unit 413 on 25 September 2023—within 12 months after the Transaction—but at a lower price of $290,000 instead of the higher 2019 price in CZ’s offer. That price difference lies at the heart of the dispute. CZ sued in the Court of Québec to obtain reimbursement of the $47,350.17 deposit she had paid for Unit 413, relying on clause 2.7 of the Transaction. UVC resisted payment, arguing that the actual resale of Unit 413 triggered a specific condition in clause 2.7 that, on its reading, meant it no longer had to reimburse CZ at all.

Contractual framework and clause 2.7

The parties’ rights and obligations turn on the wording of clause 2.7 of the Transaction. Unit 413 is expressly covered under article 2.7, which addresses the “Offer 413” and “Deposit 413” and sets out two key subparagraphs. First, under clause 2.7(i), UVC (the Seller) and CZ (identified as “CL” in the English text) agree to terminate Offer 413 without further costs and to reimburse the deposit, but “conditional on the sale of Unit 413 to an eventual subsequent buyer on the same terms and conditions as Offer 413,” and subject to that later sale having closed, been properly registered, and the sale proceeds having been received by UVC. Second, clause 2.7(ii) provides that if no sale of Unit 413 occurs “pursuant to section 2.7 i)” within twelve months of signature of the Transaction, UVC agrees to reimburse Deposit 413 to CZ. In addition, the Transaction contains other provisions relevant to the context. It sets out the reimbursement of all the other deposits that CZ had paid on different units, without any special condition tied to a subsequent resale, and provides for a potential brokerage commission for CZ in respect of Unit 413 if she herself sells that unit on the terms of the 2019 offer. If UVC or some other broker sells Unit 413, no commission is payable to CZ. In an annex headed “Summary of amounts payables,” Unit 413 is specifically listed, noting that its deposit is payable to CZ “subject to the terms and conditions” of the Transaction. Nowhere does the Transaction explicitly state that CZ might ultimately lose her deposit on Unit 413 altogether.

Parties’ competing interpretations

CZ’s position was that clause 2.7 simply postponed, but did not erase, UVC’s obligation to reimburse her deposit. She argued that UVC was given up to 12 months from the Transaction to sell Unit 413. If UVC managed to sell the unit on or around the original offer terms, the deposit would be reimbursed upon that sale; if not, UVC would still have to reimburse the deposit by the end of the 12-month period. In either scenario, according to CZ, repayment was inevitable; only timing and possibly the route to repayment differed. UVC advanced a very different reading. It argued that clause 2.7(ii) only applied if no sale of Unit 413 occurred at all within the 12-month period. Because Unit 413 was in fact sold within that period—albeit at a lower price—the condition in 2.7(ii) was never engaged. UVC contended that for clause 2.7(i) to require repayment on closing of the resale, the subsequent sale had to be on the “same terms and conditions” as CZ’s 2019 offer, including the same price. Since the resale price was lower, UVC said the condition was not met, thus the reimbursement mechanism never activated. Under this logic, any sale within 12 months at a lower price would effectively extinguish UVC’s obligation to reimburse CZ’s deposit.

Contract interpretation principles applied

The Court framed the issue as one of contractual interpretation under Quebec civil law, explicitly referencing the Supreme Court of Canada’s decision in Uniprix inc. v. Gestion Gosselin and the general rules in the Civil Code of Québec (arts. 1425 and following). The judge highlighted that contract interpretation proceeds in two stages. The first step is to determine whether the contractual text is clear, considering the words used, their syntax and agreement, and, where needed, the context and conduct of the parties. Even apparently clear wording can become ambiguous when read in context, and language that appears ambiguous on first reading may be clarified by the broader contractual scheme and the parties’ behavior. If, after this first step, the terms are clear, the court must simply apply them, respecting the autonomy of the parties’ will. Only if an ambiguity persists does the court move to a second step, seeking the parties’ common and real intention beyond the literal wording and adopting the most reasonable interpretation consistent with that intention and the economy of the contract. In this case, the court acknowledged that clause 2.7, read in isolation and without context, raises questions and could appear puzzling. However, once the evidence at trial, the parties’ conduct, and the overall structure of the Transaction were taken into account, the judge concluded that the provision was not ambiguous: it was meant as a concession by CZ to give UVC additional time before having to reimburse the deposit on Unit 413, not to create a risk that CZ might lose that deposit entirely.

Analysis of the clause and surrounding context

Several contextual elements proved decisive in the court’s reasoning. First, the Transaction as a whole dealt with all the deposits that CZ had paid under multiple offers to purchase. Every deposit was treated as reimbursable by UVC, and in fact all such deposits were ultimately reimbursed except for the one linked to Unit 413, which was subject only to a different timeline. Second, the judge noted that while the Transaction carefully distinguished between situations in which CZ would or would not be entitled to a brokerage commission on the sale of Unit 413 (for example, denying a commission if UVC or another broker sold the unit), it was entirely silent on any scenario in which CZ would simply not get her deposit back. The court reasoned that if the parties had genuinely intended to create a possibility that UVC would keep CZ’s deposit despite the Transaction, such an important concession to UVC and corresponding risk for CZ would have been clearly and expressly drafted, just as the commission provisions were. Third, Annex A, titled “Summary of amounts payables,” listed Unit 413’s deposit as an amount payable to CZ, subject only to the terms and conditions of the Transaction. That reference again supported the idea that reimbursement of the deposit was presumed, with timing and conditions governing when, but not whether, it would occur. Fourth, UVC itself admitted that if Unit 413 had not been sold within twelve months of the Transaction, CZ would have had a right to repayment. This admission underscored that both parties understood 2.7(ii) as preserving CZ’s right to reimbursement in at least one scenario. Finally, none of the sums owed under the Transaction were paid at the precise times originally agreed. CZ was only informed of the eventual sale of Unit 413 after she had instituted proceedings in the Superior Court to recover the deposits. This behavior further undermined UVC’s attempt to construe clause 2.7 as effectively cancelling its repayment obligation once a lower-priced sale had occurred.

Rejection of UVC’s interpretation and outcome

The court considered UVC’s interpretation—that CZ would lose the right to repayment if UVC sold Unit 413 within twelve months at a lower price than the 2019 offer price—to be unreasonable and unsustainable in light of the contract’s structure and the parties’ evident intentions. Under UVC’s reading, UVC had a clear incentive to sell Unit 413 at precisely $47,350.17 less than the earlier agreed price, eliminating its obligation to pay CZ back her deposit while still realizing a sale. Such an interpretation not only conflicted with the overall remedial and reimbursement-oriented nature of the Transaction (which was designed to settle claims and repay deposits), it also produced a commercially illogical result that the judge was not prepared to attribute to sophisticated parties without explicit language. Even if the judge had found genuine ambiguity in clause 2.7, the second-stage interpretive tools—the search for the common intention of the parties and the most reasonable reading in light of their conduct—would lead to the same conclusion: clause 2.7 tagged Unit 413’s deposit as reimbursable, merely allowing UVC a window of up to 12 months to complete a sale before being obliged to pay. The fact that the resale price ultimately differed from the 2019 offer price did not nullify CZ’s right to reimbursement under the Transaction. In the result, the Court of Québec held that CZ was entitled to repayment of the deposit. The judge condemned UVC to pay CZ the sum of $47,350.17, together with legal interest at the statutory rate and the additional indemnity provided for by article 1619 of the Civil Code of Québec from 11 July 2024, as well as judicial costs in CZ’s favour. Claire Zhu inc. is therefore the successful party. While the principal amount ordered is precisely $47,350.17, the total monetary recovery cannot be fully quantified from the decision because the exact quantum of accrued interest, additional indemnity and court costs is not specified and will depend on calculations and taxation of costs after judgment.