You have probably seen the words, "for greater
clarity", hundreds of times in loan and security documents,
and wondered if they were really necessary. A recent Ontario
decision has shown that using these simple words may clearly come
in handy in the event of a dispute over a fundamental contractual
In GolfNorth Properties,1 GolfNorth
Properties Inc. ("GolfNorth") purchased
agricultural lands intended to be rezoned as a golf course (the
"Property") for $1,600,000 from Diana
Vacca and her father, Vittorio Vacca (the
"Vaccas"), by paying $800,000 in cash
and the balance secured by a vendor take-back mortgage in favour of
the Vaccas (the "VTB"). The
VTB provided that if approval for rezoning as a golf course was not
obtained by GolfNorth by a certain date and GolfNorth notified the
Vaccas that it would not be paying the VTB, the Vaccas could elect
to re-purchase the Property from GolfNorth. The relevant
provision of the VTB is set out below:
"If [GolfNorth] notifies [the Vaccas] that it does not
intend to pay out the Mortgage, [the Vaccas] shall have the option
(the "Option") to purchase the Property from [GolfNorth]
for $1,200,000.00 free of liens and encumbrances with the exception
of the Mortgage. For greater clarity and in conjunction with
the Option described above, [the Vaccas] shall upon exercising the
Option, purchase the Property by paying to [GolfNorth] the sum of
$1,200,000.00 whereupon [GolfNorth] shall be deemed to have
satisfied the Mortgage in full."
As it turned out, approval for rezoning was not obtained and
GolfNorth notified the Vaccas that it would not be paying the
VTB. The Vaccas elected to re-purchase the Property, but the
parties disputed the re-purchase price. The Vaccas
argued that the price was $400,000, being $1,200,000 less the
$800,000 VTB. GolfNorth disagreed and argued that the price
was clearly set out in the Mortgage as $1,200,000. GolfNorth
stated that it agreed to purchase the Property for $800,000 with an
agreement to pay an additional $800,000 under the VTB if rezoning
was obtained. Under GolfNorth's interpretation, if
rezoning was not obtained, GolfNorth could elect to not satisfy the
VTB and the Vaccas could re-purchase the Property for $1,200,000,
representing the original $800,000 paid by GolfNorth and the costs
of the application for rezoning and other expenses incurred by
GolfNorth in respect of the Property. According to the
Vaccas, this interpretation made no commercial sense, as it would
in effect reward GolfNorth for failing to obtain rezoning
The issue was left to the courts to decide. In determining
the price to be paid by the Vaccas, the second sentence in the
excerpt of the Mortgage above proved to be decisive. The
court held that without this second sentence, there may have been
some ambiguity as to the amount to be paid by the Vaccas to
re-purchase the Property, and in particular, if the VTB was to be
satisfied by GolfNorth on the transfer of the Property to the
Vaccas. The second sentence commencing with the words
"For greater clarity" removed that ambiguity; the Vaccas
must pay $1,200,000 to re-purchase the Property, and in doing so,
the VTB would be satisfied in full. GolfNorth's
interpretation of the contentious provision ultimately prevailed,
showing that the addition of those three words "for
greater clarity" may come in handy when complex contractual
terms come under the judicial microscope.
1 457351 Ontario Inc. v GolfNorth Properties
Inc, 2013 ONSC 5298 [GolfNorth
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