Sattva Capital Corp v Creston Moly Corp

Sattva re-categorised contract interpretation. Outside narrow exceptions, interpretation of a contract is a question of mixed fact and law reviewed on the deferential palpable-and-overriding-error standard, not the correctness standard.

Sattva and Creston disputed the date for valuing shares paid as a finder's fee. The arbitrator interpreted the agreement; the issue was the standard of review on appeal from the arbitral award.

Is contract interpretation a question of law (correctness) or mixed fact and law (deference)?

Generally mixed fact and law. Arbitral award restored.

Interpreting a contract requires reading the terms in light of the surrounding circumstances (the factual matrix) known to the parties at the time of contracting. This is a question of mixed fact and law reviewed for palpable and overriding error. Pure questions of law (e.g. extricable legal principle) attract correctness review.

Rothstein J held that the historic rule treating interpretation as a pure question of law was a relic of jury trials. Modern interpretation, anchored to the factual matrix, blends fact and law. Treating it as mixed promotes finality, respects trial judges' fact-finding role, and reduces appeals.

Reshaped appellate review of contract disputes. Subsequent cases (Ledcor, Resolute, Earthco) refine the boundary between mixed questions and extricable legal questions, especially for standard-form contracts.

Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53, [2014] 2 SCR 633.

McLachlin CJ, LeBel J, Abella J, Rothstein J, Cromwell J, Moldaver J, Karakatsanis J, Wagner J