Background

• Appellants (Vendors): Yuhan Song, Jeremy Song, and Heilongjiang Xinguangyuan Realty Development Ltd.
• Respondent (Purchaser): 2083878 Alberta Ltd.
• The Vendors incorporated SanLing Energy Ltd. in 2015 to invest in Alberta’s oil and gas industry.
• In November 2017, Insignia Energy Ltd. acquired SanLing’s Valhalla-Dixonville assets for $226.5 million, paid via loan cancellations and promissory notes.
• The Purchaser bought SanLing through a share purchase agreement effective January 1, 2018, with the Vendors warranting no material adverse change in financial condition from June 30, 2017, to January 1, 2018.
• After closing, the Purchaser sued, claiming the Vendors failed to disclose SanLing’s financial deterioration and sought $12 million.

Lower Court Decision (2023 ABKB 166)

• Summary judgment denied: The chambers judge found a genuine issue for trial regarding whether a material adverse change occurred and whether it was disclosed.
• Counterclaim dismissal upheld: Vendors’ claim for $6.8 million in unpaid purchase price was linked to the Purchaser’s rescission claim.
• Security for costs denied: Given the Purchaser’s financial situation and claim’s reasonableness.

Appeal Decision

• The appeal was dismissed as the chambers judge’s findings warranted deference.
• Summary judgment was inappropriate as material disputes remained.
• The Purchaser was not adequately notified about SanLing’s financial decline.
• Security for costs was properly denied.
• No monetary award, damages, or costs were granted at this stage.