The Newfoundland and Labrador Court of Appeal has ruled in favour of Nova Fish Farms Inc. in a commercial dispute over the sale of several trout farms, overturning a lower court decision that allowed Cold Ocean Salmon Inc. to terminate the agreement. In the case of Nova Fish Farms Inc. v Cold Ocean Salmon Inc., 2025 NLCA 28, the appeal court found that while Nova Fish had breached certain contractual obligations, Cold Ocean was not entitled to end the deal, and specific performance of the agreement should be granted.
The case arose from a February 2020 Agreement of Purchase and Sale between the two companies for the transfer of multiple trout farms located on provincial Crown land. The properties were subject to federal and provincial regulation, meaning that completion of the sale depended on government approval. The agreement did not set a fixed or outside closing date, instead requiring that closing occur seven days after all conditions precedent, including regulatory approval, were met.
The contract obligated each party to take steps “as promptly as practicable” and to use “commercially reasonable efforts” to obtain the necessary approvals. It also included a “time is of the essence” (TOE) clause. However, neither side took action to advance the approvals process until June 2021, when Nova Fish submitted transfer applications to the provincial government. Approval was granted in October 2021, and Nova Fish indicated in December 2021 that it was ready to close. Discussions between the parties continued into the spring of 2022, but in May 2022 Cold Ocean advised that it would not proceed with the sale.
Nova Fish filed suit seeking specific performance of the agreement. Cold Ocean argued that Nova Fish’s 16-month delay in seeking approvals breached the agreement and entitled it to terminate. The matter proceeded to summary trial, where the judge found that Nova Fish had failed to act promptly or use commercially reasonable efforts as required under Sections 8.1 and 8.4 of the contract. The judge held that the TOE clause applied to those provisions, permitting Cold Ocean to terminate, and dismissed Nova Fish’s claim for specific performance.
On appeal, Nova Fish challenged three aspects of the decision: the finding of breach, the application of the TOE clause to the provisions in question, and the refusal to order specific performance. Justice D.M. Boone, writing for a unanimous three-judge panel, upheld the trial judge’s determination that Nova Fish had breached Sections 8.1 and 8.4 by taking no steps for 16 months. The court accepted that such a delay was outside the contemplation of the parties when the agreement was signed.
However, the appeal turned on whether the TOE clause applied to the breached provisions. The Court of Appeal found that as a matter of law, TOE clauses do not apply to indefinite time provisions. Such clauses are intended to give certainty where a contract specifies precise deadlines, not where performance is tied to open-ended standards like “promptly” or “commercially reasonable efforts.” Applying a TOE clause to indefinite time requirements, the court reasoned, would create uncertainty about compliance, breach, and waiver.
The court concluded that the summary trial judge erred in law by applying the TOE clause to Sections 8.1 and 8.4. Without the TOE clause operating in those circumstances, Cold Ocean was not entitled to terminate the agreement solely on the basis of Nova Fish’s delay.
Because the trial judge’s refusal to grant specific performance rested entirely on the conclusion that Cold Ocean could terminate under the TOE clause, and no other grounds for refusal were advanced, the Court of Appeal held that Nova Fish was entitled to specific performance of the agreement. The court allowed the appeal, ordered that the sale proceed according to its terms, and awarded Nova Fish its costs in both the trial court and the appeal.
The decision, released August 4, 2025, reinforces that while parties can agree that time is of the essence for particular contractual obligations, such clauses will not be extended to cover obligations that lack a fixed time frame.
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