The BFF Is Your BFF For Contractual Interpretation

In Prism Resources Inc. v. Detour Gold Corporation, the Court of Appeal for Ontario considered a motion judge's approach to summary judgment about a royalty interest in mining claims and leases. Justice Lauwers, writing for a unanimous Court of Appeal, did not purport to change the law, but his brief decision highlights and summarizes several principles of contract interpretation.

The plaintiff asserted that by having a 2004 contractual right to a "carried interest in the project's net profits," it had a royalty interest that was an enforceable interest in land. The plaintiff successfully moved for summary judgment; at that, before even discoveries had taken place.

Justice Lauwers found no fault with the motion judge's substantive reasoning. The appellant/defendant complained that the motion judge relied inappropriately on the parties' conduct and subsequent conduct to resolve a latent ambiguity in their contractual language.