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Contracts - Interpretation - Presumption of Consistent Expression

. Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C.

In Baffinland Iron Mines LP v. Tower-EBC G.P./S.E.N.C. (Ont CA, 2023) the Court of Appeal considered the contractual interpretation principle of 'presumption of consistent expression':

(1) The Presumption of Consistent Expression

[34] BIM argues that the application judge failed to properly apply the contractual principle known as the presumption of consistent expression. According to that principle, it is presumed that language in a contract is used consistently, with the same words meaning the same thing and, by corollary, the use of different words indicating an intention to refer to different things: Healy v. Gregory (2009), 75 C.C.P.B. 178 (Ont. S.C.), at para. 79; Kim Lewison, The Interpretation of Contracts, 4th ed. (London, U.K.: Smith & Maxwell, 2007), at pp. 244-45.

[35] BIM submits that the contracts used the phrase “final and binding” in relation to some decisions of the DAB but did not use that exact phrase for arbitration decisions, instead using “finally settled”. “Final and binding” is terminology which has been held to preclude appeals from an arbitration award: Labourers' International Union of North America, Local 183 v. Carpenters and Allied Workers Local 27 (1997), 1997 CanLII 1429 (ON CA), 34 O.R. (3d) 472 (C.A.), at pp. 479-80. Therefore, BIM submits that applying the presumption of consistent expression requires giving “finally settled” a different meaning.

[36] To consider this argument, it is useful to begin with the Supreme Court’s recognition that “the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction”: Sattva, at para. 47. The primary concern of contractual interpretation is to give effect to the intent of the parties by reading the contract as a whole, giving the words used their ordinary and grammatical meaning, in light of the factual matrix where that is relevant: Sattva, at paras. 47, 57.[5]

[37] Accordingly, although the presumption of consistent expression may in some cases be helpful in illuminating the parties’ intention, it is important not to treat the presumption as a dominating technical rule of construction that overwhelms the interpretation of a contract based on the ordinary and grammatical meaning of its text.

[38] The presumption of consistent expression should not, therefore, be seen to bar the use of differently worded but mutually reinforcing phrases which can only be understood to have the same meaning. A contractual draftsperson may use multiple expressions that mean the same thing to ensure that there is no doubt about a point. As the English Court of Appeal has noted, a draftsperson may “try to obliterate the conceptual target by using a number of phrases expressing more or less the same idea": Interactive E-Solutions JLT & Anor v. O3b Africa Ltd., [2018] EWCA Civ 62, [2018] B.L.R. 167, at para. 24. There can be more than one way to say appeals are precluded. Indeed, as BIM fairly concedes, ICC Rule 35(6) precludes appeals. Yet it does not use the exact phrase “final and binding”. Where the ordinary meaning of different words or phrases is clearly the same, the presumption cannot be applied to force a different meaning on one set of the words or phrases.

[39] I agree with the application judge that the presumption does not require “finally settled” to have a different meaning from “final and binding”. The ordinary and grammatical meaning of “finally settled” by arbitration, when situated in the context of the contracts’ dispute resolution provisions, clearly means no further recourse by way of appeal, in the same way as “final and binding” would.

[40] Indeed, the interpretive assistance that comes from the presumption of consistent expression in this case leads to that exact conclusion. It is important to recall that the presumption has two aspects − the same words are to be given the same meaning while different words are to be given different meanings. Here, the two phrases “final and binding” and “finally settled” contain the same word − “final” or “finally” − accompanied by an additional word − “binding” in one case and “settled” in another. In these circumstances the presumption pulls toward giving the word “final” or “finally” the same meaning, unless the additional word suggests a material modification to the meaning. For example, in Healy, the court rejected an argument that different meanings had to be given to contractual references to the “commuted value of benefits” and the “commuted value of any contracts”, with only the former referring to the present value of retirement benefits payable. The court focussed on the consistent use, in the documents to be interpreted, of the words “commuted value” even though they appeared in different phrases. The consistent use of those words conveyed the meaning of a pension based methodology: at paras. 80-81. The use of additional words in the two phrases did not materially modify that meaning.

[41] The same approach applies here. It is apparent from the reasoning in LIUNA that the phrase “final and binding” in an arbitration agreement precludes appeals because of the word “final”, and that a different phrase that contains “final” will convey the same meaning as long as the additional words do not materially modify it. The court in LIUNA, at p. 480, relied on Yorkville North Development Ltd. v. North York (City) (1988), 1988 CanLII 4701 (ON CA), 64 O.R. (2d) 225 (C.A.), where, at p. 227, this court surveyed how courts in other Commonwealth jurisdictions have interpreted analogous expressions and excerpted the following passages:

The words here are "final and binding", but I am unable to perceive any material difference between those words and the words "final and conclusive". In my view the important word for present purposes is "final", and I think it is intended to mean, and should be construed as meaning, final in the sense of admitting of no further disputation [Re McCosh's Application, [1958] N.Z.L.R. 731 at p. 734 (Sup. Ct.)].

This case [Cushing v. Dupuy, [(1880), 5 App. Cas. 409]] appears to me to be clear authority for the view that where a decision of a court is made "final", this excludes any right of appeal which would otherwise have existed. [Emphasis added.]

[42] The same point is made in J. Brian Casey, Arbitration Law of Canada: Practice and Procedure, 3rd ed. (Huntington, N.Y.: JurisNet, 2017), at p. 483:

By using the word “final” the implication is that the parties intended to oust all rights of appeal. It is difficult to understand what those words could otherwise mean in the arbitration context. It is also difficult to understand how parties could have consciously chosen those words, yet at the same time intended there to be appeal rights. By making the process “final and binding,” the parties must be taken to have intended to oust the jurisdiction in the court insofar as an appellate function is concerned. [Emphasis added.]

[43] As an interpretative aid, the presumption of consistent expression in this case pulled in favour of exactly what the application judge did − give a consistent meaning to the repeated word “final” (or “finally”) when it was used with “binding” and when it was used with “settled”. In each phrase it carried the meaning of “admitting of no further disputation”, “exclud[ing] any right of appeal which would otherwise have existed”, or “oust[ing] all rights of appeal”. Just as in Re McCosh’s Application where a proper consideration of the meaning of “final” led the court to interpret “final and binding” as having the same meaning as “final and conclusive” in terms of precluding appeals, the same result follows with regard to the phrase “finally settled” in the case at bar. Settled, like conclusive or binding, reinforces the meaning of final − it does not alter it.

[44] This is especially so since the presumption pulled in favour of consistent meaning being given to the word “settled”. Section 20.6 states that “[u]nless settled amicably” the parties can bring a dispute (that is not the subject of a final and binding DAB decision) to arbitration, where it will be “finally settled”. The meaning conveyed is that amicably settled disputes have been resolved such that further recourse beyond the settlement is not available. When the word is used in the context of a dispute being finally settled by arbitration, the word settled reinforces the same intent − that no further recourse regarding the dispute, beyond the arbitration award, is available.