to the agreed facts and to the inferences which he drew from
 I would take a different approach to the standard of
review in this case. The exercise of equitable authority under
s. 98 of the Courts of Justice Act is discretionary and ordinarily
attracts this court’s deference, except where it is demonstrated
the application judge made a legal error or an error in principle
or a palpable and overriding error of fact. The application of
this general standard assumes the application judge explained
his reasons for exercising the discretion. However, in this case,
those reasons are sparse and do not permit meaningful appellate review. Consequently, it is open to this court to substitute
its own decision on the basis of the facts found by the application judge.
 Section 98 of the Courts of Justice Act provides simply
that “[a] court may grant relief against penalties and forfeitures,
on such terms as to compensation or otherwise as are considered
just.” The application judge referred to Varajao in specifying the
two steps of the test as
(1) whether the forfeited deposit was out of all proportion to the
damages suffered; and
(2) whether it would be unconscionable for the seller to retain
This is sometimes referred to as the test in Stockloser v. Johnson,  1 Q.B. 476,  1 All E.R. 630 (C.A.). I will address
each element in turn.
(1) Is the deposit disproportionate?
 The respondent points out accurately that the “record
contained no evidence” that the appellant had suffered any loss
as a result of the respondent’s breach of the agreement. The
respondent submits the application judge accordingly came to
the correct conclusion that the additional deposit of $450,000
to obtain the six-month extension of the closing date was disproportionate and therefore unconscionable, and rightly reduced
it by $400,000, so that the total amount forfeited by the
respondent was $350,000. Another way of seeing it is that the
application judge thought the six-month extension was worth
no more than $50,000.