Court rules switching strategies mid-deal doesn't kill a success fee for the advisor
Sprott Asset Management must pay a success fee and $75,000 management fee tied to its acquisition of rival Central Fund of Canada.
The Ontario Court of Appeal handed down the decision on May 19, 2026, dismissing Sprott Asset Management LP's bid to overturn a Superior Court ruling in favor of Kingsdale Partners LP, the strategic shareholder advisory firm it hired more than a decade ago.
For asset managers and wealth firms that lean on outside advisors during takeovers and proxy fights, the ruling is a sharp reminder that contingent fees don't simply vanish when a deal changes shape mid-flight.
The story starts on June 15, 2015, when Sprott brought Kingsdale on board to help it gain control of Central Fund of Canada Ltd. - a competitor controlled by the Spicer family. The contract spelled out a success fee triggered by one thing only: "SPROTT becoming the Manager of CFC." It also called for a $75,000 Strategic Advisory & Proxy Solicitation Management Fee.
The first move was a hostile shareholder play known as a "meeting requisition." That route hit a wall in November 2015, when the Court of Appeal of Alberta ruled the requisition invalid. The two sides kept talking through 2016 about what to try next.
In March 2017, Sprott pivoted to a "plan of arrangement" strategy - this time without Kingsdale. By July, it had changed tack again, reached out to CFC directly, and apologized to the Spicer family for the earlier hostile tactics. A consensual deal followed, with Sprott acquiring CFC's assets through the newly created New Sprott Trust.
That's when the fight over fees began. Kingsdale's pitch was simple: Sprott became the manager of CFC, the success fee trigger was met, and the $75,000 management fee was still owed. Sprott pushed back, arguing the contract was tied only to the original takeover bid, and once that fell apart, so did any obligation to pay.
The trial judge didn't buy it. She found the contract was "goal-focused" - aimed at the outcome of controlling CFC, not at any one strategy for getting there. She also found the 2017 acquisition built on the work Kingsdale had already done in 2015.
The Court of Appeal agreed. The trial judge had observed that Sprott could have easily limited the agreement to a single strategy if that's what it wanted, and the panel underscored that Sprott could not sidestep the bargain "merely by restructuring its business affairs."
The panel, made up of Justices Paciocco, Thorburn, and Dawe, also brushed aside Sprott's other arguments - that the contract had been read piecemeal, that an earlier draft shouldn't have been weighed, that the result was commercially unreasonable, or that a notice requirement had been improperly read in.
The takeaway for wealth and investment professionals is hard to miss. Success-fee language pegged to a result, rather than a method, can outlast a change in tactics. Quietly pivoting away from an advisor doesn't end the engagement; the contract's termination clause kept running until services were "completed." And Canadian courts will look at the surrounding context when interpreting these deals, including earlier drafts and parallel agreements.
Sprott now owes $47,000 in appeal costs - on top of the $475,000 trial costs award, which stands.
