Case information

Insurance law — Interpretation — Contractual interpretation — Coverage — Objective intention of parties — How should courts reconcile the principle from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, that the surrounding circumstances must never be allowed to overwhelm the words of an agreement with the principle that words have no “immutable” or “absolute” meaning outside of the circumstances of a particular contract, and in particular, must the courts always consider the surrounding circumstances when interpreting a contract, or can an assumed “plain and ordinary” meaning be used to limit or preclude a consideration of the surrounding circumstances? – How should appellate courts apply the highly deferential “palpable and overriding error” standard in circumstances where there is no dispute about the applicable legal principles or the facts, and in particular, whether it is sufficient for an appellate court to identify an alternative interpretation of the contract that it prefers, or can it only intervene where the trial court’s interpretation is not available on any plausible interpretation of the language chosen by the parties in light of the surrounding circumstances?

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In the Alberta Court of King’s Bench, the summary trial judge held that insurance policies issued to the applicant insured by the respondent insurers provided coverage for losses sustained by the applicant arising from release of pollutants from a pipeline. The summary trial judge granted judgment in favour of the applicant. The Court of Appeal unanimously allowed the respondent insurers’ appeal, concluding that the respondents had been justified in denying coverage.