|
Contract - Interpretation - Sattva (3). 1797472 Ontario Inc. v. Independent Electricity System Operator
In 1797472 Ontario Inc. v. Independent Electricity System Operator (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal, here engaging contract interpretation issues in an electricity supply context.
Here the court considers some basics of contract interpretation:[11] The correctness standard applies in the of review of the application judge’s interpretation of s. 2.1(b) of standard form FIT 1 Contracts: Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 S.C.R. 23, at para. 4.
....
[13] The application judge set out the relevant principles of contract interpretation in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 47-48; Prism Resources Inc. v. Detour Gold Corporation, 2022 ONCA 326, 162 O.R. (3d) 200, at para. 16; Ledcor Construction, at paras. 31-32; and EPCOR Electricity Distribution Ontario Inc. v. Municipal Electric Association Reciprocal Insurance Exchange, 2022 ONCA 514, at para. 55. She noted that the contractual provisions at issue must not be read in isolation but considered “in harmony with the rest of the contract in light of its purposes and commercial context.” As she correctly observed, the “relevant surrounding context is generally considered to be that which was present at the time the contract was made, not subsequently”: Prism Resources, at para. 16(iii). . Preston v. Cervus Equipment Corporation
In Preston v. Cervus Equipment Corporation (Ont CA, 2024) the Ontario Court of Appeal allowed an appeal, here involving the interpretation of a settlement release and agreement emanating from a wrongful dismissal claim:[12] In regard to the interpretation of the Settlement Documents, the motion judge relied on Corner Brook (City) v. Bailey, 2021 SCC 29, [2021] 2 S.C.R. 540, at para. 20, as follows:As noted in Corner Brook, a release is an agreement and is to be interpreted in accordance with the rules of contractual interpretation. Like any agreement, the goal of contractual interpretation is to ascertain the objective, mutual intentions of the parties at the time of the formation of the Release. This includes having regard to the factual matrix or surrounding circumstances. Of course, the surrounding circumstances are intended as an interpretative aid and are not to overwhelm the words of the Release. The surrounding circumstances are also not to be used to deviate from the text to effectively create a new agreement ... . [13] The motion judge also cited Corner Brook, at para. 35, for the proposition, “[s]ometimes the ordinary meaning of the words and the surrounding circumstances come into tension, and courts must decide whether to rely on the surrounding circumstances to refine the meaning of the words, or whether doing so would impermissibly overwhelm the words of the agreements, in which case the words must override.”
[14] Further, he took guidance from the following statement in Corner Brook, at para. 38:For these reasons, releases may tend to lead to dissonance between the words of the agreement on their face and what the parties seem to have objectively intended based on the surrounding circumstances, with greater regularity than other types of contracts… In resolving this tension, courts can be persuaded to interpret releases narrowly more so than other types of contracts, not because there is any special rule of interpretation that applies to releases, but simply because the broad wording of releases can conflict with the circumstances, especially for claims not in contemplation at the time of the release. The broader the wording of the release, the more likely this is to be so. ....
Analysis
[20] The motion judge correctly cited the applicable law, noting that pursuant to Corner Brook, releases are to be interpreted in the same manner mandated by Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633. He also correctly observed that the factual matrix of the case could not overwhelm the ordinary meaning of the words used in the release.
....
[23] In our view, the motion judge made three extricable legal errors in his analysis. First, he allowed his interpretation of the factual matrix to overwhelm the actual wording of Settlement Documents and effectively rewrote the contract between the parties. In this regard, we do not accept his conclusion that the statement that the release of stock units applied only to stock or share awards which have either not been awarded or not been redeemed. The parties could have specified this result but chose not to do so. Instead, they used the following specific language: “I further declare that I have no entitlement under or from, or any claim of any nature or kind against the Releasees in respect of, any bonus, share award, stock option, deferred share or similar incentive plan offered by or on behalf of the Releasees.”
[24] Second, we find that the motion judge’s reliance on the Supreme Court’s guidance in Corner Brook to the effect that broad releases may be narrowly construed was misplaced in the circumstances of the case at bar. While it is true that the Settlement Documents included a broad release of claims, the language regarding the release to claims for stock options and other share awards was specific.
[25] Third, it is not the province of a judge interpreting minutes of settlement to evaluate the economic benefits conferred under the settlement, absent a party being under disability.
[26] In our view, the words of the Settlement Documents should be given their ordinary meaning, which included a release of any payments to be made under the Plan. In this regard we note the following from the Minutes of Settlement:The entitlements set out in these Minutes of Settlement, including the Settlement Payment, are inclusive of any and all entitlements whatsoever that Cervus may owe, or which may have accrued, to Mr. Preston pursuant to statute, contract, common law or otherwise. [27] Clearly the payment of the settlement funds was intended to cover, among other things, all claims and entitlements owed or accrued pursuant to any contract, including Mr. Preston’s employment contract and the Plan. It is evident looking at the Settlement Documents that they were intended to be final and bring an end to the parties’ relationship and obligations.
|
