Canadian Lawyer InHouse

21 CANADIANLAWYERMAG.COM/INHOUSE MARCH/APRIL 2019 "The province wanted to protect Dryden's economy and encouraged Great Lakes to continue the pulp and paper op- eration in Dryden and to invest a great deal of money in upgrading the operation. It was well known that the disposal site posed a serious environmental liability," the judge wrote. "Under the circumstances, it would be commercially absurd to conclude that the parties contemplated that the province could at any time withdraw its commitment to protect Great Lakes and its successors from environmental liability arising from the disposal site," he added. The province appealed that decision and, in a 2-1 ruling, the Court of Appeal upheld the fi nding that the indemnity applied to direct claims. However, the majority also ruled that the predecessor company to Resolute had assigned its benefi t to Wey- erhaeuser in1998. It also concluded that the motions judge should determine if Weyer- haeuser transferred its benefi t when it sold the Dryden mill and other assets in 2007 to another company. On the fi rst issue of whether the 1985 indemnity was restricted to third-party claims, all three judges referred to the Su- preme Court's decision in Sattva and the instruction to consider the "factual matrix" when deciding the intent of the parties in a contract. Justice David Brown, with Justice Pe- ter Lauwers concurring, also highlighted this section of the Supreme Court ruling. "While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of that agreement," noted Brown. "I see no legal error in the motion judge's statement that the interpretation of a con- tract should start with the language of the contract. That is the logical place to start, especially since the jurisprudence requires the interpreter of a contract to determine the parties' intention in accordance with the language they use," wrote Brown. The majority found that Hainey did not commit a "palpable and overriding error" in his interpretation of the contract and that, depending on the language used, an indemnity can cover direct claims. Justice John Laskin issued a dissent- ing judgment and suggested that Hainey's analysis was in error. "The motion judge's starting point for interpreting the 1985 indemnity was to look at the words of the document in isola- tion, and then only secondarily at the 'sur- rounding circumstances.' His two-stage approach to the interpretation of the 1985 indemnity is not the proper approach. Con- text controls meaning," wrote Laskin, who ruled in favour of Ontario on whether the indemnity applied to direct claims. Ontario and the two companies all sought leave to appeal different aspects of the Ontario Court of Appeal decision. No two businesses are alike. We get that. You want a law firm that is flexible and can adapt to your particular business needs without compromising service or quality. At Pallett Valo LLP we provide forward-thinking legal counsel designed to respond to each client's unique legal challenges. That's what we call Right-sized Thinking®. Want a legal solution that's the right fit for you? Call us today to find out more. 2019-20 TOP 10 O N TA R I O R E G I O N A L F I R M Legal Service That Fits Any Occasion Right-sized Thinking® • 1-800-323-3781 • pallettvalo.com Your Authority For: Business Law • Commercial Litigation • Commercial Real Estate Construction • Insolvency & Corporate Restructuring Employment & Labour • Wills, Estates & Trusts Untitled-3 1 2019-03-04 4:14 PM

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