The facility commission was not a penalty clause, but a enjoyment for immediate and complete payment. The fact that it was a large sum did not affect the proper construction of the clause. This is one of the issues that the High Court had to deal with in Aodhcon LLP/Bridgeco Ltd. in which the applicant entered into a bridge credit with the defendant relating to its real estate development activities. At the end of the term of the bridge loan, the property was to be sold by the defendant as a mortgage in its possession. The applicant opened proceedings in which he stated, among other things, that the commission of the loan intermediation facility was a penalty. The corresponding provision of the offer provided that a facility fee of 1.25% per month, calculated on the balance of the outstanding, would be debited from the account on each day of the year of the year of the draw and due in case of repayment. However, it also provided that the defendant would waive its right to recover the facility tax in the absence of late interest or other breaches of the terms of the offer, including the applicant`s non-repayment of the loan, at the end of the period. Installation costs for the period December 2010 to May 2011 were approximately $49,991.98.

The court held that the question of whether a provision is a sanction is a construction issue by asking whether, at the time of the contract`s conclusion, the predominant contractual function of the provision was to deter a party from breaking the contract or to compensate the innocent for the breach. In this case, there was no indication that the predominant contractual function of the facility pricing system was to deter the applicant from breaching the bridge credit contract. The court found that this was not a sanction. At all times, the applicant was contractually required to pay the installation fee, but an indulgence was granted without delay to the defendant. The Facility Commission did not issue any additional liability in the event of a delay. “I find news feeds very useful and relevant to my field of practice and the problems my company faces. As I am very satisfied with the News Feed (this is one of the best I get), I have no suggestions for improvement at this time. If you want to know how lexology can advance your content marketing strategy, please email enquiries@lexology.com.