A5 Investments Inc. was retained by Pro-Pipe Service & Sales Ltd. to assist with procuring financing, as outlined in an engagement letter.
Pro-Pipe agreed to pay A5 6% of the total financing secured.
A dispute arose over whether Pro-Pipe was obligated to pay A5 a commission on a $1.3 million equipment line of credit.
Key Issues:
Whether Pro-Pipe agreed to obtain and required the $1.3 million equipment line, thus triggering A5’s entitlement to a 6% commission under the engagement agreement.
Court Findings:
Pro-Pipe did not agree to obtain the equipment line because the terms of the financing (interest rates, conditions, etc.) were not finalized.
The engagement letter required a clear agreement by Pro-Pipe to obtain the financing, which was not evident from the communications.
The court ruled that A5 is entitled to a $53,000 commission (from a different operating loan), but no commission for the equipment line.
Outcome:
A5's claim for a commission on the equipment line was dismissed.
