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Contracts - Contra Proferentum

. HSBC Bank Canada v. 1481396 Ontario Inc.

In HSBC Bank Canada v. 1481396 Ontario Inc. (Ont CA, 2023) the Court of Appeal considered a contra proferentum argument:
[5] As the motion judge properly noted, the words of the 2019 release “plainly do not refer to, or release, the 2009 Action or the Default Judgment.” We agree with the motion judge that if the release was intended to apply to the 2009 action and default judgment, it would at the very least had made reference to them. The appellants argue that the motion judge should have invoked the contra proferentem principle to interpret the release in their favour. However, contra proferentem only applies as a tool of last resort in the interpretation of a truly ambiguous contract: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 51. The motion judge found that this release was not ambiguous, and we agree. Contra proferentem therefore cannot apply.
. Jakab v. Clean Harbors Canada, Inc.

In Jakab v. Clean Harbors Canada, Inc. (Ont CA, 2023) the Court of Appeal considered principles of contractual interpretation, including the interaction between 'ambiguity' and 'contra proferentum':

[11] Contractual interpretation is an exercise in discovering the “objective intentions of the parties as expressed in the words of the contract”: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, a para. 57. This “fact-specific goal” requires a trial court to “read 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; Ledcor, at para. 27. When a contract is read as a whole, it should be interpreted “in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective”: 2249778 Ontario Inc. v. Smith (Fratburger), 2014 ONCA 788, at para. 19; Meridian C C Intl Inc. v. 2745206 Ontario Inc., 2022 ONCA 12, at para. 7. The exercise of interpretation should also reflect the factual matrix underlying the contract and accord with sound commercial principles and good business sense, while avoiding commercially absurd interpretations: 2249778 Ontario Inc., at para. 19. However, “the [surrounding circumstances] should never be allowed to overwhelm the words of [the] agreement”: Sattva, at para. 57.

[12] If ambiguity in contract terms still remains after the above principles are applied, the rule of contra proferentem can be applied: Ledcor, at para. 51. Its role is to give effect to an ambiguous clause by preferring the reasonable interpretation that favours the party that did not have control over its drafting: Manulife Bank of Canada v. Conlin, 1996 CanLII 182 (SCC), [1996] 3 S.C.R. 415, at para. 9; 2249778 Ontario Inc., at para. 22.


[20] Moreover, the rule of contra proferentem applies in cases where contractual clauses are ambiguous: 2249778 Ontario Inc., at para. 22. A determination of ambiguity cannot be arrived at until after the material clause has been interpreted in the context of the contract as a whole. No ambiguity exists unless, after the principles of construction have been applied, more than one reasonable construction remains. ...
. Black & McDonald Limited v. Eiffage Innovative Canada Inc.

In Black & McDonald Limited v. Eiffage Innovative Canada Inc. (Ont CA, 2023) the Court of Appeal engages in an interesting variation of the contra proferentum interpretation rule, here in the determination of the forum non conveniens analysis to decide geographical venue:
[32] In our view, any ambiguity in this term of the Payment Bond should be resolved against Liberty Mutual. It is Liberty Mutual that is relying on the standard form contract and who is imposing the requirements of that standard form contract on the appellant. While the principle of contra proferentem may not technically apply to this situation, since there is no evidence that Liberty Mutual drafted the standard form contract, the rationale for the principle ought to still drive the proper interpretation. If it is fair to resolve ambiguities against the party who prepares the document, it would seem equally fair to resolve ambiguities against the party who imposes a standard form contract on others: Bank of Montreal v. Korico Enterprises Ltd. (2000), 2000 CanLII 16833 (ON CA), 50 O.R. (3d) 520, 190 D.L.R. (4th) 706 (C.A.), at para. 16. If Liberty Mutual wishes to avail itself of this exclusive jurisdiction clause, then it bears the onus of bringing itself within its express terms. Once again, had Liberty Mutual wished to confine actions under the Payment Bond to a particular province, it could have clearly so stipulated in the Payment Bond. It did not do so.
. Dunbar et al v. Ontario Gaming West GTA Limited Partnership

In Dunbar et al v. Ontario Gaming West GTA Limited Partnership (Div Ct, 2022) the Divisional Court (single judge) refers to doctrine on contra proferentum, though in not applying it in a Small Claims Court appeal:
[49] The principle of contra proferentem was applied by the Deputy Judge. I do not find that principle needs to be utilized in the circumstances of this case. I refer to the Court of Appeal for Ontario in Dunn v. Chubb Insurance Company of Canada, 2009 ONCA 538, 97 O.R. (3d) 701 at para. 36:
…Contra proferentem is a rule of last resort and will only apply “when all other rules of construction fail”: Canadian National Railway Co. v. Royal and Sun Alliance Insurance Co. of Canada, 2008 SCC 66 (CanLII), [2008] 3 S.C.R. 453, [2008] S.C.J. No. 67, at para. 33, citing Stevenson v. Reliance Petroleum Ltd., 1956 CanLII 27 (SCC), [1956] S.C.R. 936, [1956] S.C.J. No. 68, at p. 953 S.C.R. [page 712]
. 2041219 Ontario Limited v. The Business Risk Management Review Committee

In 2041219 Ontario Limited v. The Business Risk Management Review Committee (Div Ct, 2021) the Divisional Court addressed an attempt to import the contractual doctrine of contra proferentum into an administrative context (it failed):
[48] I also do not accept the applicant’s argument in its factum that the doctrine of contra proferentum applies. Again, the Court’s role is not to consider this argument afresh but to decide whether the decision below was reasonable. In this case, the Commission considered this argument and found that the doctrine did not apply because the Program was not established by contract but rather by the OIC. As stated by the Committee and accepted by Agricorp, “contra proferentum is a principle of contract interpretation and is not a principle applicable to the interpretation of an Order-in-Council”. This conclusion is consistent with the case law on this issue (see McClelland & Stewart Ltd. v. Mutual Life, 1981 CanLII 53 (SCC), [1981] 2 SCR 6, at p. 15), and is therefore reasonable.
. 2249778 Ontario Inc. v Smith (Fratburger)

In 2249778 Ontario Inc. v Smith (Fratburger) (Ont CA, 2014) the Court of Appeal stated with respect to the rule that an ambiguous contract provision shall be read against the one who drafted it:
[22] Finally, the rule of contra proferentum applies in cases where the contractual terms are ambiguous: Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888, at p. 900 and Manulife Bank of Canada v. Conlin, 1996 CanLII 182 (SCC), [1996] 3 S.C.R. 415, at pp. 425-426.


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Last modified: 16-11-23
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