Article

Refund of proceeds

Note: Under the terms of an agreement to purchase 164 lots of a subdivision from beneficiary, applicant caused an LC for CAD745,700 to be issued with an expiry date that the applicant could extend. The LC was to be drawn when the "Plan of Subdivision has received draft plan approval in final and binding form." When the subdivision was given preliminary approval contingent on certain changes, the beneficiary drew on the LC, which the applicant did not extend, three days prior to the expiry date and was paid.

The applicant then sued the beneficiary for the return of the proceeds paid on the LC. The applicant contended that the approval was not "final and binding" and that the LC terminated on the expiry date. In its defense, the beneficiary argued that the approval was final and binding and that, under the terms of the agreement, the LC would be extended and not terminated if no notice were given prior to the expiry date.

The trial court ordered the funds returned. The trial court, therefore, found for the applicant. On appeal, affirmed. The appellate court affirmed because up to and including the date of termination of the underlying agreement no final approval had been given nor was any alleged in the drawing documents.

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