Interpretation of Contracts

S.N.S. Industrial Products Limited v. Bank of Montreal, 2010 ONCA 500 gives a useful summary of the principles of contract interpretation, especially as respects contra preferentem. The Court writes:

[8]              The applicable principles of contractual interpretation are well-established.  As this court recently stated in Dunn v. Chubb Insurance Company of Canada (2009), 97 O.R. (3d) 701 (C.A.), at para. 32, "The primary goal of contractual interpretation is to give effect to the intentions of the parties."  See also Bell Canada v. The Plan Group (2009), 96 O.R. (3d) 81 (C.A.), at para. 37.  In accordance with the normal rules of construction, the court searches for an interpretation of a disputed contract which, from the whole of the document, "would appear to promote or advance the true intent of the parties at the time of entry into the contract": Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance, [1980] 1 S.C.R. 888, at p. 901.  In this interpretive inquiry, the context or factual matrix surrounding the contract is relevant.  As this court has indicated, commercial contracts are to be interpreted, "with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties": Dunn, at para. 34, note 4 (citations omitted).
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[14]         Verification of account clauses of the type at issue here form part of the Bank's standard form account documents prepared by the Bank to govern its relations with its customers.  We agree with SNS that clauses of this kind are to be construed strictly and, in the event of any ambiguity, against the Bank, as the author of the clause, in accordance with the doctrine of contra preferentem: see Dunn, at para. 36.