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Trusts - Liability Allocation. Singh v. Persaud
In Singh v. Persaud (Ont CA, 2026) the Ontario Court of Appeal dismissed an appeal, here brought against an order vesting title to real estate in the respondent.
The court interprets a contractual disclaimer of liability ('exculpatory' clause), here in a trust deed:[36] The appellant places heavy reliance on what she refers to as an exculpatory clause in the Statutory Declaration. It provides that the appellant, as trustee, is indemnified and saved harmless by “the beneficial owner” (the respondent) from “all claims, charges, encumbrances, obligations, responsibilities, acts or omissions during the entire period of time that the land was or will be vested in the said trustee”.
[37] The respondent submits that the intention of the parties reflected by the clear language of the provision was to protect the appellant, as a bare trustee, from claims brought by third parties. I agree.
[38] In any event, I reject the appellant’s submission that this provision ought properly to be interpreted so broadly as to have the effect of barring the claim of the respondent for title to the property.
[39] When interpreting a contract, the court should follow a practical, common sense approach focused on the contractual intent of the parties: Sattva, at para. 47; and Seelster Farms et al v. Her Majesty the Queen and OLG, 2020 ONSC 4013, at para. 163.
[40] The court’s overriding concern is to determine “the intent of the parties and the scope of their understanding”: Sattva, at para. 47, citing Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27.
[41] The court does this by “read[ing] the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract:” Sattva, at para. 47.
[42] Applying these principles of contractual interpretation, the so-called exculpatory clause cannot be read as an agreement between the parties that the appellant could simply ignore the Acknowledgement of Trust and take beneficial ownership of the property for herself while barring any claim by the respondent. That would be an absurd result.
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