The Supreme Court of Canada's (SCC) decision in Sattva
Capital Corp. v. Creston Moly
Corp.1 established that contractual
interpretation will no longer be considered a question of law, but
rather a question of mixed fact and law, wherein the principles of
contractual interpretation are applied to the words of the written
contract in light of the factual context of the contract. The SCC
also established that in the context of commercial arbitration, a
question of law on review will be considered on a reasonableness
standard unless it is a constitutional question or a question of
law of central importance to the legal system as a whole and
outside the adjudicator's expertise, which will attract a
In this case, by agreement, Creston
was required to pay Sattva a finder's fee in relation to the
acquisition of a molybdenum mining property. The agreement
stipulated the finder's fee was to be capped at a maximum value
of U.S. $1.5 million. Payment would be given in Creston's
shares since Sattva had not elected to be paid in cash. A dispute
arose as to the date used to price the shares and therefore to the
number of shares to which Sattva was entitled. Sattva asserted that
the date was set out in the "Market Price" definition in
the agreement. This definition would use the value of the shares as
of the close of the business day before the press release
announcing the acquisition was made. However, the value of the
shares substantially increased thereafter, and Creston argued the
agreement's "maximum amount" proviso prevented
Sattva from receiving shares valued at more than U.S. $1.5 million
on the payout date.
The parties entered into
arbitration pursuant to B.C.'s Arbitration Act
("AA"). The arbitrator found in favour of Sattva
based on the definition of "Market Price" in the
agreement. After a series of appeals – notably, under the AA,
leave to appeal an arbitrator's decision is generally available
only for questions of law – the B.C. Court of Appeal (BCCA)
allowed Creston's appeal, holding the arbitrator's
interpretation absurd. Sattva appealed the decisions of the
In allowing the appeal and
reinstating the arbitrator's decision, the SCC fundamentally
changed how contractual interpretation is to be approached. The SCC
stated the historical approach to contractual interpretation, which
was considered a question of law, should be abandoned as the aim of
contractual interpretation is to "ascertain the objective
intent of the parties — a fact-specific goal — through
the application of legal principles of
interpretation"2. "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."3 Further, "the parol evidence
rule does not apply to preclude evidence of surrounding
circumstances when interpreting the words of a written
It may be possible to identify
extricable questions of law from questions that are characterized
as mixed fact and law, including "the application of an
incorrect principle, the failure to consider a required element of
a legal test, or the failure to consider a relevant factor" in
addition to "the requirements for the formation of the
contract, the capacity of the parties, the requirement that certain
contracts be evidenced in writing, and so on"5.
The standard of review will nearly
always be reasonableness for commercial arbitration appeals. To be
reasonable, the decision must be justifiable, transparent and
intelligible.6 Constitutional questions and questions of
law of central importance to the legal system as a whole which are
outside an adjudicator's expertise are reviewable on a
On the facts of the case, the SCC
held that Creston's application for leave to appeal the
arbitrator's decision raised no issue of law. Further, the SCC
stated the arbitrator implicitly considered how the "maximum
amount" clause interacted with the definition of Market Price
in a reasonable manner in his decision. Thus, leave to appeal the
arbitrator's decision should have been denied even if a
question of law were identified, as the "requirement that
there be arguable merit that the arbitrator's decision was
unreasonable is not met and the miscarriage of justice threshold
was not satisfied"7.
1 2014 SCC 53.
2 Ibid at para 49.
3 Ibid at para 50.
4 Ibid at para 61.
5 Ibid at para 53.
6 Ibid at para 119.
7 Ibid at para 84.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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