Key Issues

1. Whether 427703 B.C. Ltd. established a strong prima facie case of fraud to justify an injunction restraining payment under a Letter of Credit (LOC).
2. Whether the court should order any payment under the LOC to be paid into court pending the litigation.

Background Facts

• The plaintiff (part of the Emterra Group) and Mu3 entered into a Consulting Services Agreement (CSA). A LOC was issued by Canadian Western Bank (CWB) to secure payments to Mu3.
• The plaintiff alleged it terminated the agreement in October 2024 due to Mu3’s breach, while Mu3 claimed the plaintiff repudiated the contract in July 2024.
• On January 22, 2025, Mu3 demanded $1,252,298.14 under the LOC. The plaintiff sought to restrain payment, arguing the demand was fraudulent.
• The court found the dispute to be a legitimate disagreement over contract interpretation rather than fraud.

Decision

• Injunction Denied: The plaintiff failed to establish strong prima facie fraud.
• Payment Into Court Denied: The LOC’s purpose is to ensure prompt payment.
• Outcome: The injunction was lifted, and the application was dismissed with costs to Mu3. Exact amount was not specified.