|
Contract - Interpretation - General (pre-Sattva). De Beers Canada Inc. v Ootahpan Company Limited
In De Beers Canada Inc. v Ootahpan Company Limited (Ont CA, 2014) the Court of Appeal stated as follows on principles of interpretation applicable to business contracts, here involving insurance arrangements between the parties:[3] In interpreting the contractual arrangements between the parties, including their arrangements for insurance, we apply the principles of contract interpretation set out in Bell Canada v. The Plan Group, 2009 ONCA 548 (CanLII), 96 O.R. (3d) 81 at paras. 37-38. These include: (a) interpreting the contract as a whole, with a view to giving meaning to all its terms; (b) determining the intentions of the parties in accordance with the words they have used; (c) having regard to the factual matrix; and (d) interpreting the contract in a manner that accords with sound commercial principles and good business sense. . Unique Broadband Systems, Inc. (Re)
In Unique Broadband Systems, Inc. (Re) (Ont CA, 2014) the Court of Appeal elaborated on current principles of contractual interpretation, as follows:[84] In Manulife Bank of Canada v. Conlin, 1996 CanLII 182 (SCC), [1996] 3 S.C.R. 415, at pp. 439-40, quoting Ruth Sullivan, Driedger on the Construction of Statutes, 3d. ed. (Toronto: Butterworths, 1994), at p. 131, L’Heureux-Dubé J., dissenting, described the interpretation of statutes in the following way that applies equally to contractual interpretation:There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of [that which is to be judicially interpreted] in its total context, having regard to [its] purpose …, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of […] meaning. After taking these into account, the court must then adopt an interpretation that is appropriate. An appropriate interpretation is one that can be justified in terms of (a) its plausibility, that is, its compliance with the […] text; (b) its efficacy, that is, its promotion of the […] purpose; and (c) its acceptability, that is, the outcome is reasonable and just. [Emphasis added by L’Heureux-Dubé J.] [85] The subjective intent of one party to a contract “has no independent place” in interpreting contractual provisions: Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, at para. 54.
[86] While the plain meaning of the words used by the contracting parties is important, the contract must be read as a whole and in the context of the circumstances as they existed when the contract was created: Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59 (CanLII), 2007 ONCA 59, 85 O.R. (3d) 616, at para. 52.
[87] Courts will avoid a contractual interpretation which results in rendering the agreement unlawful. As Blair J.A. discussed in Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205 (CanLII), 2007 ONCA 205, 85 O.R. (3d) 254, at para. 57, quoting John D. McCamus, The Law of Contracts (Toronto: Irwin Law, 2005), at p. 729,[3] “where an agreement admits of two possible constructions, one of which renders the agreement lawful and the other of which renders it unlawful, courts will give preference to the former interpretation”; see also Cantor Art Services Ltd. v. Kenneth Bieber Photography Ltd., [1969] 1 W.L.R. 1226 (C.A.).
[88] A commercial contract will be interpreted in a manner that is consistent with commercial principles and that avoids a commercial absurdity. In Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888, at p. 901, Estey J. stated:[w]here words may bear two constructions, the more reasonable one, that which produces a fair result, must certainly be taken as the interpretation which would promote the intention of the parties. Similarly, an interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an interpretation of the policy which promotes a sensible commercial result. [89] As stated by the House of Lords in Mannai Investment Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., [1997] 2 W.L.R. 945, at p. 964 (H.L.), commercial contracts should be “interpreted in the way in which a reasonable commercial person would construe them. And the standard of the reasonable commercial person is hostile to technical interpretations and undue emphasis on niceties of language”.
[90] The interpretation of a contract is a question of law. Accordingly, the standard of review by an appellate court is correctness: Bell Canada v. The Plan Group, 2009 ONCA 548 (CanLII), 2009 ONCA 548, 96 O.R. (3d) 81.
|
