Friday, August 8, 2014

Contract interpretation a question of mixed fact and law

In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 the Supreme Court has changed a long held view that contractual interpretation raises a question of law. The Court does so on the basis, in part, that when the rule was created jurors were often illiterate. 

Some might wonder at how illiterate an English commercial jury of the 1700s was?  Indeed, some might suggest such juries might have greater literary expertise than a typical modern Canadian jury. 

Regardless the change has been made:

[43]                          Historically, determining the legal rights and obligations of the parties under a written contract was considered a question of law (King v. Operating Engineers Training Institute of Manitoba Inc., 2011 MBCA 80, 270 Man. R. (2d) 63, at para. 20, per Steel J.A.; K. Lewison, The Interpretation of Contracts (5th ed. 2011 & Supp. 2013), at pp. 173-76; and G. R. Hall,Canadian Contractual Interpretation Law (2nd ed. 2012), at pp. 125-26). This rule originated in England at a time when there were frequent civil jury trials and widespread illiteracy. Under those circumstances, the interpretation of written documents had to be considered questions of law because only the judge could be assured to be literate and therefore capable of reading the contract (Hall, at p. 126; and Lewison, at pp. 173-74).


[50]                          With respect for the contrary view, I am of the opinion that the historical approach should be abandoned. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.

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