The Ontario Court of Appeal recently held that the standard of
appellate review for the interpretation of a standard form title
insurance policy is correctness. On December 3, 2015, the Court of
Appeal released its decision in MacDonald v. Chicago Title
Insurance Company of Canada, 2015 ONCA 842. Justices Cronk,
Hourigan and Benotto held in a unanimous decision that the Supreme
Court of Canada's recent decision in Sattva Capital Corp.
v. Creston Moly Corp.,  2 S.C.R. 633 does not apply to
standard form title insurance contracts, which are not negotiated
and are presented to receiving parties on a
In Sattva, the Supreme Court held that the traditional
view that contract interpretation must be reviewed on a correctness
standard should be abandoned, because the interpretation of
contracts is an issue of mixed fact and law, reviewable on a
spectrum. Where the factual matrix or surrounding circumstances at
the time an agreement was entered into are relevant to its
interpretation, it will be reviewable on a more deferential
standard (the "palpable and overriding error" standard).
The interpretation of an "extricable question of law",
such as a legal principle or test, is reviewable with less
deference to the judge of first instance (the
In MacDonald , the Ontario Court of Appeal
distinguished Sattva and held that the standard of review
for the interpretation of standard form contracts such as the title
insurance contract at issue is correctness. The Court of Appeal
held that the two justifications relied on by the Supreme Court in
Sattva in support of the proposition that contractual
interpretation is an issue of mixed fact and law did not apply in
the particular context at issue in MacDonald, i.e.,
standard form contracts where the parties did not negotiate their
terms. First, the Court held, factual circumstances surrounding
entry into an agreement are not relevant in the context of standard
form contracts that are not negotiated. Second, the interpretation
of a standard form contract may in certain circumstances be of
general importance beyond the parties to a particular lawsuit; in
the view of the Court of Appeal, in order to ensure consistency in
interpreting identical standard form agreements, appellate courts
should have the power to review decisions without significant
deference to original triers of fact.
It is difficult to predict whether the issues in
MacDonald are of sufficient national importance to obtain
leave to appeal to the Supreme Court of Canada, or indeed if leave
to appeal will be sought by the defendant title insurer. Stay
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