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Contracts - Interpretation - Priority of Terms Reconciliation. 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 'priority of terms reconciliation':(2) The Priority of Terms
[45] BIM also submits that the application judge erred in not applying the principle that apparently inconsistent terms in a contract are to be reconciled in accordance with the priority of terms to which the parties have expressly agreed: Fuller v. Aphria Inc., 2020 ONCA 403, at para. 62.
[46] The application judge found that ICC Rule 35(6) was part of the contracts. Although BIM concedes that its wording would preclude appeals, BIM submits that s. 1.5 of the contracts dictated the priority to be given to different documents that together formed the contracts. It provided that, for the purposes of interpretation, the “General Conditions of the Contract”, which included s. 20.6, had priority over “any other document” forming part of the contracts, such as the ICC Rules.
[47] BIM’s argument presupposes, however, that s. 20.6 of the contracts is apparently inconsistent with ICC Rule 35(6). Before the interpretive principles concerning reconciling apparently inconsistent terms are to be applied, the terms must be apparently inconsistent in the sense, for example, of one appearing to say “yes” while the other appears to say “no” to the same question: Fuller, at para. 58. The application judge, however, held the terms were not inconsistent, and there was no error in that finding. As noted above, s. 20.6 of the contracts was properly interpreted to preclude appeals, just as the wording of ICC Rule 35(6) does. To the question of whether appeals are permitted, both provisions give the same answer: no, they are precluded.
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