Canadian Contractual Interpretation Just Got More Difficult

By Scott H.D. Bower, Russell J. Kruger and Jonathan McDaniel

There is a new exception to the new Canadian approach for reviewing the interpretation of contracts: a trial court's interpretation of a standard form contract may be reviewed on appeal on the standard of correctness, rather than the usual standard of palpable and overriding error, the Supreme Court of Canada recently held in Ledcor Construction Ltd v Northbridge Indemnity Insurance Co, 2016 SCC 37 [Ledcor]. The Court stated that in most circumstances, the interpretation of a standard form contract will be a question of law, rather than a question of mixed law and fact, thus attracting a less deferential standard.

As discussed in a previous blog, the Supreme Court of Canada in Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 [Sattva], a ground breaking 2014 decision, held that "contractual interpretation is a question of mixed fact and law subject to deferential review on appeal," unless there is