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Contracts - Appeal - Standard of Review (3). 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. . EPRF Holdings Limited v. Fergus Bloor Inc.
In EPRF Holdings Limited v. Fergus Bloor Inc. (Ont CA, 2024) the Ontario Court of Appeal dismissed a breached commercial APS deposit appeal, here focussed on the contractual issues of fundamental and anticipatory breach.
Here the court considers the appropriate SOR for the appeal:(i) The applicable standard of review requires deference to the motion judge’s findings of fact
[13] The appellant says that the standard of review on this appeal is correctness. It contends that the APS is a standard form contract and that the motion judge’s interpretation of it is a question of law, based on Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 4, 24, and 28, and 2651171 Ontario Inc. v. Brey, 2022 ONCA 148, 468 D.L.R. (4th) 545, at paras. 2 and 13. Alternatively, if the motion judge made a mixed finding of fact and law, the appellant argues that she made an extricable error of law such that the correctness standard applies, based on Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50.
[14] Although the APS is a standard form contract, we do not agree that the motion judge’s decision should be reviewed on a correctness standard.
[15] The appellant concedes that an open building permit may constitute a valid objection to title. The question is whether it rose to this level in the specific circumstances of this case. This required the motion judge to make a mixed finding of fact and law with respect to the parties’ rights and obligations under a contract based on her assessment of the evidence, as in Himidian v. Farquharson, 2019 ONCA 575, 435 D.L.R. (4th) 480, at para. 8; Bennett Law Chambers Professional Corporation v. Camcentre Holdings Inc., 2022 ONCA 658, 164 O.R. (3d) 161, at paras. 41-43. That the dispute arose in the context of a standard form contract does not change the nature of her determination.
[16] This is not a case like 2651171 Ontario Inc., where the resolution of the parties’ dispute turned purely on the interpretation of a formula set out in a standard form contract. Nor does the motion judge’s interpretation give rise to an extricable question of law. As held in Sattva, at paras. 53 and 55, such a “rare” question arises only with “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”. As explained below, we do not agree with the appellant that the motion judge misapprehended the applicable legal test.
[17] Since the motion judge’s decision turned on a determination of mixed fact and law, this court must defer to it absent an error of principle or palpable and overriding error of fact. . Kerk-Courtney v. Security National Insurance Company (TD General Insurance Company)
In Kerk-Courtney v. Security National Insurance Company (TD General Insurance Company) (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal by defendant vendors who sought a 'duty to defend' declaration against their insurers.
Here the court sets an SOR of 'correctness' where the appeal issue is of a standard form contract:[28] While the interpretation of a contract generally is a question of mixed fact and law reviewable on a standard of palpable and overriding error, the standard is correctness where, as here, there is a standard form contract, the interpretation of which has precedential value, and there is no meaningful factual matrix specific to the parties to assist the interpretation process: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 24; MDS Inc. v. Factory Mutual Insurance Company, 2021 ONCA 594, 465 D.L.R. (4th) 294, at paras. 14-17, 21. . Spina v. Shoppers Drug Mart Inc.
In Spina v. Shoppers Drug Mart Inc. (Ont CA, 2024) the Ontario Court of Appeal considered class action franchise appeals (direct and cross) from summary judgment decisions.
Here the court considers the SOR for standardized contracts appeals (which is normally 'correctness'), but finds a further exception based on Ledcor principles to return it to the 'palpable and overriding' standard:(1) Standard of Review of the Interpretation of the Agreements
[48] The parties disagree about what standard of review applies to the interpretation of the Agreements.
[49] The Ontario Class submits that a correctness standard applies to the motion judge’s interpretation of the Agreements. It submits that this court has applied a correctness standard of review to contracts of adhesion used within a single organization. The Ontario Class claims however, that on either a correctness or a deferential standard, the errors the motion judge made are reversible.
[50] Shoppers submits that the standard of review is palpable and overriding error. It submits that there is a significant factual matrix specific to the parties and there is no precedential value to this contractual interpretation. Shoppers contends that the motion judge’s interpretation of the Agreements was not limited to the words on the page, but was informed by “extensive consideration of a voluminous factual record regarding the commercial relationships respectively between the Associates, Shoppers and generic drug manufacturers, as well as the statutory regime governing professional allowances.”
[51] The line between questions of law, which are reviewed on a correctness standard, and those where the issue involves the application of the law to a specific and distinct set of facts which attract a deferential standard of review, is not always clear.
[52] The Supreme Court has said that “in contractual interpretation, the goal of the exercise is to ascertain the objective intent of the parties — a fact-specific goal — through the application of legal principles of interpretation”: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 49.
[53] Contract interpretation is therefore generally a question of mixed fact and law subject to a deferential standard of review unless there is an extricable question of law identified or “the appeal involves the interpretation of a standard form contract, the interpretation at issue is of precedential value, and there is no meaningful factual matrix specific to the particular parties to assist the interpretation process”: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 21, 46.
[54] In Ledcor at para. 39, Wagner J., as he then was, explained why some standard form contracts are subject to review on the standard of correctness and not on a deferential standard of review citing Geoff R. Hall, Canadian Contractual Interpretation Law, 3rd ed. (Toronto: LexisNexis, 2016):[T]he interpretation of the standard form contract could affect many people, because “precedent is more likely to be controlling” in the interpretation of such contracts … It would be undesirable for courts to interpret identical or very similar standard form provisions inconsistently, without good reason. The mandate of appellate courts — “ensuring the consistency of the law” (Sattva, at para. 51) — is advanced by permitting appellate courts to review the interpretation of standard form contracts for correctness. [Emphasis added, citation omitted.] [55] Because consistency in the law is important, “[a]ppellate courts should consider whether ‘the dispute is over a general proposition’ or ‘a very particular set of circumstances that is not apt to be of much interest to judges and lawyers in the future’”: Ledcor, at para. 48, quoting Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, at para. 37.
[56] This court has also held that the absence of one of the three Ledcor factors, outlined above at para. 52, should not automatically lead to the imposition of a deferential standard of review. In Bridging Finance, for example, this court applied a correctness standard to a standard form contract that had no relevant factual matrix that informed the motion judge’s contractual analysis, but also no precedential value because there was unlikely to be litigation about the contract in the future: Ontario Securities Commission v. Bridging Finance Inc., 2023 ONCA 769, 169 O.R. (3d) 109, at paras. 8-14.
[57] On the other hand, in Canada (Attorney General) v. Fontaine, 2017 SCC 47, [2017] 2 S.C.R. 205 (“Fontaine (SCC)”), the Supreme Court held that the interpretation of the Indian Residential Schools Settlement Agreement (the “IRSSA”), a comprehensive settlement of a class action involving thousands of survivors of residential schools, was reviewable on a deferential standard of palpable and overriding error, as there was a distinct factual matrix and no significant precedential value.
[58] The settlement agreement involved two forms of financial compensation available to former students of residential schools: one based on the amount of time spent at a residential school, and another in which former students who were survivors of abuse could bring claims for compensation through a specifically designed Independent Assessment Process (“IAP”). The Supreme Court held that at para. 35 that,While the IRSSA undoubtedly has “very significant implications for Canada and our aboriginal peoples” (C.A. reasons, at para. 294), it is at root a contract, the meaning of which depends on the objective intentions of the parties. As the majority at the Court of Appeal observed, the question of impact is distinct from precedential value. While the supervising judge’s interpretation of the IRSSA will impact thousands of IAP claimants, it will have no significant precedential value outside of the IAP due to the IRSSA’s sui generis nature. And, as shall become apparent below, the factual matrix looms large in ascertaining the meaning of this particular contract. [59] This court’s reasons as referred to in the above passage with approval, address the difference between impact on the many persons involved in the litigation and the precedential value of the decision itself.
[60] Strathy C.J.O., for the majority in Fontaine v. Canada (Attorney General), 2016 ONCA 241, 149 O.R. (3d) 703, recognized at paras. 95 and 96 that:The question is not whether the decision will impact many people, but whether it will have precedential value, in the sense that it provides guidance to adjudicators or resolves an issue that could arise in future litigation. The fact that the outcome of the interpretation of the agreement will affect many – indeed many thousands – of claimants, is not, of itself, a reason to elevate the standard of review to correctness.
... There will be no future cases like this one. This is a once-and-for-all determination of the rights of all parties relating to these issues under the IRSSA. [Emphasis added.] [61] While this court and the Supreme Court considered the fact that the agreement would affect many, a deferential standard of review was applied as the factual matrix was significant in the interpretation of the agreement and there was little precedential value. As such, the need to provide guidance to others beyond the scope of the litigation at play was not significant.
[62] In this case, the Agreements are standard form contracts that govern the franchise relationship between Shoppers and the Associates across Canada, excluding Québec. While the IRSSA was not a standard form contract, in that it was “the product of extensive negotiations” among the parties (Fontaine (SCC), at para. 5), I find the directions from the Supreme Court on the meaning of precedential value relevant.
[63] I now consider the Ledcor factors as they apply in this case. First, there is no doubt that the Agreements are standard form contracts.
[64] Second, with respect to precedential value, the Agreements are not industry-wide contracts: they only govern the franchise relationship between Shoppers and the Associates, and the issues raised in this appeal regarding Professional Allowances will apply only to the Ontario Class as the Legislation applies only in Ontario. The Ontario Class did not argue that there would be any significant precedential value to the questions of contractual interpretation at issue in this appeal. I conclude that the interpretation of these provisions in this class action will not likely arise again in cases involving other parties and the precedential value is therefore not significant.
[65] Third, there is a factual matrix specific to these parties that is relevant to the interpretation of these Agreements. The 2002 Agreement was drafted by Shoppers before the Professional Allowance Regime came into existence. It was signed by Associates at various times from 2002 until the next iteration of the Agreement was drafted in or around 2010. As such, the Agreement was signed with Associates before and after the legislative changes were made. The changing legislative landscape and Shoppers’ past practices are relevant to the interpretation of the Agreements.
[66] In sum, although the Agreements are standard form contracts, there is a distinct factual matrix and no significant precedential importance, such that the analysis is not a question of law alone but rather, a question of mixed fact and law, reviewable on a palpable and overriding error standard of review. . Kestenberg Siegal Lipkus LLP v. Royal & Sun Alliance Insurance Company of Canada
In Kestenberg Siegal Lipkus LLP v. Royal & Sun Alliance Insurance Company of Canada (Ont CA, 2024) the Ontario Court of Appeal considered the SOR for a 'standard form' contract appeal:[19] The parties agree that the standard of review on these issues is correctness. The interpretation of the Second Excess Policy is reviewed on a correctness standard because it is a standard form insurance policy: Ledcor Construction Ltd. v. Northbridge, 2016 SCC 37, [2016] 2 S.C.R. 23, at paras. 24 and 34-39. The question of whether the application judge erred with respect to the legal principles applicable to the availability of relief from forfeiture[2] is reviewable on a correctness standard because it is a question of law: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8.
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