Date: Wed, 28 Mar 2007 16:18

From: David Cheifetz

Subject: The Golden Victory

Acknowledging that I've not yet had a change to read Golden Victory, I suspect that the recent decision of the Ontario CA in Dumbrell v Regional Group is worth reading as part of the discussion on the proper approach to the interpretation of contracts and the appropriate measure of damages from breach.

Not the least worth mentioning is that it contains the first reported citation (of which I'm aware) and adoption of John Swan's Canadian Contract Law, at para. 52:

Professor John Swan puts it well in Canadian Contract Law (Markham, Ont.: Butterworths, 2006) at 493: There are a number of inherent features of language that need to be noted. Few, if any words, can be understood apart from their context and no contractual language can be understood without some knowledge of its context and the purpose of the contract. Words, taken individually, have an inherent vagueness that will often require courts to determine their meaning by looking at their context and the expectations that the parties may have had.

The Ontario CA also discusses and adopts House of Lords authority. For example,

[56] I would adopt the description of the interpretative process provided by Lord Justice Steyn, "The Intractable Problem of the Interpretation of Legal Texts", supra, at 8: In sharp contrast with civil legal systems the common law adopts a largely objective theory to the interpretation of contracts. The purpose of the interpretation of a contract is not to discover how the parties understood the language of the text, which they adopted. The aim is to determine the meaning of the contract against its objective contextual scene. By and large the objective approach to the question of construction serves the needs of commerce. [fn 2] [Emphasis added.]

2 Lord Steyn has taken the same approach in his judgments: see Pagnan SpA v. Tradax Ocean Transportation SA, [1987] 1 All E.R. 81 (Q.B.), Steyn J., aff’d [1987] 3 All E.R. 565 (C.A.). See also Toronto-Dominion Bank v. Leigh Instruments Ltd. (1999), 178 D.L.R. (4th) 634 at 639 (Ont. C.A.); Lewison, The Interpretation of Contracts, supra, at 5, 22-24; Mount Joy Farms Limited v. Kiwi South Island Co-operative Dairies Ltd., [2001] NZCA 372 at para. 38.

(Now I need to get back to work)

David Cheifetz

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From: Jason Neyers
Sent: March 28, 2007 10:47 AM
Subject: Re: ODG: Golden Victory

Having read the judgments, I have to say that I am more inclined to the view of the majority. Why would one ignore what actually happened when the case is still being adjudicated? The dissenters seem to want to carve out an exception for commercial contracts in an available market for certainty reasons but as Lord Scott notes:

The argued justification for thus offending the compensatory principle is that priority should be given to the so-called principle of certainty. My Lords there is, in my opinion, no such principle. Certainty is a desideratum and a very important one, particularly in commercial contracts. But it is not a principle and must give way to principle. Otherwise incoherence of principle is the likely result. The achievement of certainty in relation to commercial contracts depends, I would suggest, on firm and settled principles of the law of contract rather than on the tailoring of principle in order to frustrate tactics of delay ...

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