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Contract - Appeals - SOR - General (Custom). Surefire Dividend Capture, LP v. National Liability & Fire Insurance Company (Berkshire Hathaway Specialty Insurance)
In Surefire Dividend Capture, LP v. National Liability & Fire Insurance Company (Berkshire Hathaway Specialty Insurance) (Ont CA, 2025) the Ontario Court of Appeal dismissed a civil appeal, this from a dismissed action by an investor on an investment security (fidelity) bond brought after a Ponzi scheme operated by the CEO of the corporate borrower.
Here the court reviews basics of contractual interpretation:i. The Standard of Review
[41] As a general rule, a trial judge’s interpretation of a contract is a question of mixed fact and law because it involves the application of the principles of contractual interpretation to the words of the contract considered in light of the factual matrix. Accordingly, as a general rule the palpable and overriding error standard of appellate review applies: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 52, [2014] 2 S.C.R. 633, at para. 50; Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, [2016] 1 S.C.R. 306, at paras. 21-24; Ledcor, at para. 21.
[42] In rare cases, a correctness standard will apply to extricable questions of law that arise in the interpretation process, such as the application of an incorrect principle. Appellate courts must be cautious, however, in determining that such an error has occurred: Sattva, at paras. 53, 55.
[43] An exception to the general rule of appellate deference to a trial judge’s contractual interpretation also applies where “an appeal involves a standard form contract, the interpretation at issue is of precedential value, and there is no meaningful factual matrix that is specific to the parties to assist the interpretation process”. In such cases, the “interpretation is better characterized as a question of law subject to correctness review”: Ledcor, at para. 24
[44] In this case, the Ledcor exception does not apply. There is a factual matrix specific to the parties, and elements of the Bond, such as Rider 13, are not standard form.
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[60] As explained in Sattva, at para. 47, the interpretation of contracts has evolved toward “a practical common-sense approach not dominated by technical rules of construction”; the goal is to determine the intent of the parties, which requires the words of the contract to be considered in light of the surrounding circumstances known at the time of contracting. .... . ALYU Inc. v. Deca-Yorkville Building Group Inc.
In ALYU Inc. v. Deca-Yorkville Building Group Inc. (Ont CA, 2022) the Court of Appeal stated briefly the Sattva standard of review for contractual interpretation:[3] We see no basis for interfering with the application judge’s findings for a number of reasons. It is common ground that contract interpretation is a matter of mixed fact and law and is governed by Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633, at para. 50. In the absence of an extricable error of law, the standard of review is that of palpable and overriding error: Corner Brook (City) v. Bailey, 2021 SCC 29, 460 DLR (4th) 169, at para. 4. We see none. . Sternberg v. Cresford Capital Corporation
In Sternberg v. Cresford Capital Corporation (Ont CA, 2024) the Ontario Court of Appeal considered SOR, here in a contract context:[6] We start with the well-established standard of review – the motion judge’s interpretation of the parties’ non-standard agreements is entitled to significant deference on appeal, absent an extricable error of law or palpable or overriding error of fact: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-55. We also note this court’s observation in Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592, at para. 64, that cases where a question of law can be extricated from the interpretation process are rare or uncommon. The appellant has not met this high bar for appellate intervention. . Pinnacle International (One Yonge) Ltd. v. Torstar Corporation
In Pinnacle International (One Yonge) Ltd. v. Torstar Corporation (Ont CA, 2024) the Ontario Court of Appeal allowed an appeal, here in a sublease profit-sharing dispute.
The court considers the appellate SOR applicable to this lease-contract dispute, here involving a customized sub-lease:V. Standard of Review
[51] The first, second, and fourth issues involve the interpretation of the Lease and the Boreal Sublease. As neither document is a standard form contract, this court must review the motion judge’s interpretation of those contracts in accordance with the dictates of Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 52-53. In Sattva, the Supreme Court of Canada explained that because the interpretation of a contract involves questions of mixed fact and law, absent an extricable question of law which attracts a correctness standard, the standard of review is palpable and overriding error: at paras. 50, 53. See also Earthco Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20, 492 D.L.R. (4th) 389, at paras. 27-28.
[52] Extricable errors of law in contract interpretation include the application of an incorrect legal principle, the failure to consider a required element of a legal test, and the failure to consider a relevant factor: Sattva, at para. 53. This court has identified other extricable errors of law, such as the failure to properly, accurately, and fully consider the context in which a contract was made, and the failure to consider the contract as a whole by focusing on one provision without giving proper consideration to other relevant provisions: Fuller v. Aphria Inc., 2020 ONCA 403, 4 B.L.R. (6th) 161, at para. 50.
[53] The standard of review on the third issue, however, is correctness, because the question of which limitation period applies is a pure question of law: Northwinds Brewery Ltd. v. Caralyse Inc., 2023 ONCA 17, 53 R.P.R. (6th) 29, at para. 22. Thus, the motion judge must have correctly decided that the RPLA applies to the Claim. If not correct, this court must intervene and apply the correct limitation period. . Hemlow Estate v. Co-operators General Insurance Company
In Hemlow Estate v. Co-operators General Insurance Company (Ont CA, 2021) the Court of Appeal considered the appellate standard of review for contract interpretation:[13] The law on the standard of review for contract interpretation is well-established. Questions of mixed fact and law are entitled to deference unless the trial judge made a palpable and overriding error. Extricable questions of law are subject to a correctness standard of review: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at para. 53. Sattva, at para. 54, specifies that courts should be cautious in identifying questions of law in disputes involving contractual interpretation.
[14] For a particular category of contract – namely, standard form contracts – the standard of review is correctness: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37. This is because there is no meaningful factual matrix specific to the particular parties to assist in the interpretation process: see Ledcor, at para. 4. . OMJ Mortgage Capital Inc. v. King Square Limited
In OMJ Mortgage Capital Inc. v. King Square Limited (Ont CA, 2021) the Court of Appeal considered the appellate standard of review applicable to customized contracts:[11] KSL’s grounds of appeal face a major obstacle in the standard of review now applicable to issues of contract interpretation. In Corner Brook (City) v. Bailey, 2021 SCC 29, 460 D.L.R. (4th) 169, the Supreme Court of Canada repeated the deferential standard of review applicable to most issues of contract interpretation stating, at para. 44:In Sattva, this Court also explained that contractual interpretation is a fact specific exercise, and should be treated as a mixed question of fact and law for the purpose of appellate review, unless there is an “extricable question of law”. The exception is standard form contracts, which is not relevant here: see Ledcor Construction. Extricable questions of law in the context of contractual interpretation include “the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor”: Sattva, at para. 53, quoting King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80, 270 Man. R. (2d) 63, at para. 21. The circumstances in which a question of law can be extracted will be uncommon. Whether something was or should have been within the common knowledge of the parties at the time the contract was entered into is a question of fact: Sattva, at paras. 49-55 and 58. . Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation
In Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation (Ont CA, 2021) the Court of Appeal considered the contract appellate standard of review:[41] In Corner Brook (City) v. Bailey, 2021 SCC 29, 17 B.L.R. (6th) 1, per Rowe J., the Supreme Court affirmed the direction from Sattva that a deferential standard of review applies to questions of mixed fact and law involving the interpretation of a contract. The court in Corner Brook underscored that “contractual interpretation is a fact specific exercise, and should be treated as a mixed question of fact and law for the purpose of appellate review, unless there is an ‘extricable question of law’”: at para. 44. As the court explained, “[e]xtricable questions of law in the context of contractual interpretation include ‘the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor’”: at para. 44 (citations omitted). The court also cautioned that “[t]he circumstances in which a question of law can be extracted will be uncommon. Whether something was or should have been within the common knowledge of the parties at the time the contract was entered into is a question of fact”: at para. 44 (citations omitted); see, to the same effect, Sattva, at paras. 50, 55; Teal Cedar, at paras. 47, 57. . Conseil Scolaire Catholique Franco-Nord v. Nipissing
In Conseil Scolaire Catholique Franco-Nord v. Nipissing (Ont CA, 2021) the Court of Appeal set out the standards of review for contractual interpretation:[23] The interpretation of a contract that is not a standard form contract or contract of adhesion involves questions of mixed fact and law. An appellate court will only intervene if the decision below is tainted by palpable and overriding error: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 4, 55-56, and 69-71.
[24] As this court explained in Thunder Bay, at para. 30, “the overriding principle is that the meaning of an agreement and the intent of the parties in entering into it must be derived from the words the parties used and the context in which they used those words”. . Zhang v. Shenglin Financial Group Inc.
In Zhang v. Shenglin Financial Group Inc. (Ont CA, 2020) the Court of Appeal considered the standard of review that applied to issues of contractual interpretation:[6] The exercise of interpreting a contract is one of mixed fact and law. The standard of review is consequently one of palpable and overriding error: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. On this point, we reject the appellant’s argument that this is a standard form contract of the type that would attract a standard of review of correctness under the principles set out in Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23. . Guru Eak Transport Ltd. v. Eagle Truck Sales Inc. et al.
In Guru Eak Transport Ltd. v. Eagle Truck Sales Inc. et al. (Div Ct, 2022) the Divisional Court considers standards of review for contract interpretation:[7] The issues raised by the appellants pertain to the trial judge’s findings of fact, based largely on his assessment of credibility of the appellant Bill Sekhon. Findings of fact are treated deferentially on appeal and are reviewed on a standard of palpable and overriding error, see Housen v. Nikolaisen, 2002 SCC 33 (CanLII), [2002] 2 S.C.R. 235. To the extent an issue of contractual interpretation arises, this is characterized as a question of mixed fact and law and is also reviewable on a standard of palpable and overriding error, see Sattva Capital Corp v.Creston Moly Corp., 2014 SCC 53.
[8] The Supreme Court explained the rationale for the deferential approach to trial rulings on issues of contractual interpretation in Heritage Capital Corporation v. Equitable Trust Co., 2016 SCC 19 at para 21:“contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix”. In this context, deference to fact finders furthers the goals of limiting the number, length and cost of appeals, and of promoting the autonomy and integrity of trial proceedings. These principles weigh in favour of showing deference to first-instance decision makers on points of contractual interpretation, and treating contractual interpretation as a question of mixed fact and law. . 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc. [SOR exception for standard form contracts]
In 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc. (Ont CA, 2022) the Court of Appeal considered the general standard of review for contractual interpretation:[29] Contractual interpretation involves issues of mixed fact and law and is subject to appellate deference, unless there is an extricable question of law: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 52-53. The exception is standard form contracts, which is not relevant here: Corner Brook (City) v. Bailey, 2021 SCC 29, 460 D.L.R. (4th) 169, at para. 44.
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