Court of Appeal for Saskatchewan  
Citation: Mosten Investments LP v The  
Manufacturers Life Insurance Company  
(Manulife Financial), 2021 SKCA 36  
Date: 2021-03-10  
Docket: CACV3407  
Between:  
Mosten Investment LP  
Appellant/Respondent on Cross-Appeal  
(Applicant)  
And  
The Manufacturers Life Insurance Company o/a Manulife Financial  
Respondent/Appellant on Cross-Appeal  
(Respondent)  
Docket: CACV3408  
Between:  
Atwater Investment LP  
Appellant/Respondent on Cross-Appeal  
(Applicant)  
And  
BMO Life Assurance Company  
Respondent/Appellant on Cross-Appeal  
(Respondent)  
Docket: CACV3409  
Between:  
Ituna Investment LP  
Appellant/Respondent on Cross-Appeal  
(Applicant)  
And  
Industrial Alliance Insurance and Financial Services Inc.  
Respondent/Appellant on Cross-Appeal  
(Respondent)  
Before:  
Caldwell, Barrington-Foote and Tholl JJ.A.  
Disposition:  
Appeals allowed in CACV3407 and CACV3408; Appeal dismissed in  
CACV3409; Cross-Appeals allowed in part  
Written reasons by:  
The Court  
On appeal from:  
Appeals heard:  
2019 SKQB 75, 2019 SKQB 76, 2019 SKQB 77, Saskatoon  
January 15, 16 and 17, 2020  
Counsel:  
Ronald Miller, Q.C. and Amanda Quayle, Q.C. for Mosten Investment LP  
Linda Plumpton, Toshach Weyman and Winston Gee for The  
Manufacturers Life Insurance Company o/a Manulife Financial  
Gordon Kuski, Q.C., Amanda Quayle, Q.C. and William Lane for Atwater  
Investment LP  
Munaf Mohamed, Q.C. and Christine Viney for BMO Life Assurance  
Company  
Shaunt Parthev, Q.C. and Janelle Souter for Ituna Investment LP  
Patricia Jackson, David Outerbridge, Lara Guest and Shalom Cumbo-  
Steinmetz for Industrial Alliance Insurance and Financial Services Inc.  
i
TABLE OF CONTENTS  
I. INTRODUCTION .................................................................................................................. 1  
II. INTERPRETATION............................................................................................................... 3  
A. The Parties and their Appeals and Cross-appeals............................................................... 3  
B. Reference Points ................................................................................................................. 3  
C. The Nature of a ULP........................................................................................................... 5  
D. The Dispute that Underpins the Appeals ............................................................................ 7  
III.  
ISSUES ............................................................................................................................... 8  
A. CACV3407 Mosten Appeal............................................................................................. 8  
B. CACV3407 Manulife Cross-appeal................................................................................. 8  
C. CACV3408 Atwater Appeal............................................................................................ 9  
D. CACV3408 BMO Life Cross-appeal............................................................................... 9  
E. CACV3409 Ituna Appeal................................................................................................. 9  
F. CACV3409 Industrial Alliance Cross-appeal................................................................ 10  
IV.  
STANDARDS OF REVIEW............................................................................................ 10  
A. In General.......................................................................................................................... 10  
B. In Contract Interpretation.................................................................................................. 11  
1.  
2.  
3.  
The Parties’ Positions................................................................................................. 11  
The Supreme Court Jurisprudence ............................................................................. 12  
Precedential Value...................................................................................................... 14  
C. In the Exercise of Judicial Discretion ............................................................................... 24  
D. In Evidentiary Matters ...................................................................................................... 25  
V. THE SATTVA APPROACH.................................................................................................. 25  
A. Consensus Ad Idem........................................................................................................... 25  
B. The Factual Matrix............................................................................................................ 30  
C. Legislation and Terms of Art............................................................................................ 35  
VI.  
ANALYSIS....................................................................................................................... 40  
A. Introduction....................................................................................................................... 40  
B. Issues Common to All Three Matters ............................................................................... 41  
1.  
2.  
3.  
4.  
Evidentiary Issues....................................................................................................... 41  
Case Law Interpreting ULPs ...................................................................................... 43  
Terms of Art: Premium and Payment of Premiums ................................................... 48  
The Sattva Approach and Insurance Law Principles.................................................. 54  
C. Application of the Law in Each Appeal............................................................................ 55  
1. CACV3407 Mosten v Manulife............................................................................... 55  
ii  
a.  
b.  
c.  
d.  
e.  
f.  
Relief Sought at the Court of Queen’s Bench......................................................... 55  
Relief Denied by the Judge..................................................................................... 57  
The de Bruin ULP................................................................................................... 62  
Interpretation of the de Bruin ULP ......................................................................... 63  
Interpretation as a Harmonious Whole ................................................................... 71  
Declarations Granted by this Court......................................................................... 76  
CACV3408 Atwater v BMO Life............................................................................. 77  
Relief Sought at the Court of Queen’s Bench......................................................... 77  
Relief Denied by the Judge..................................................................................... 79  
The Walkom ULP................................................................................................... 81  
Interpretation of the Walkom ULP ......................................................................... 92  
Declarations Granted by this Court......................................................................... 94  
CACV3409 Ituna v Industrial Alliance................................................................... 95  
Relief Sought at the Court of Queen’s Bench......................................................... 95  
The Term Allocation Contravention....................................................................... 97  
The Zinkhan ULP and its Interpretation ............................................................... 101  
Disposition by this Court ...................................................................................... 114  
2.  
3.  
a.  
b.  
c.  
d.  
e.  
a.  
b.  
c.  
d.  
D. The Cross-Appeals on the Regulation ............................................................................ 114  
1.  
Background............................................................................................................... 114  
Context.................................................................................................................. 114  
The Regulation, Insurance Act and Interpretation Legislation............................. 119  
Principles of Statutory Interpretation.................................................................... 120  
Decisions............................................................................................................... 123  
Common Error in the Decisions............................................................................... 125  
Vires...................................................................................................................... 125  
Interpretation......................................................................................................... 127  
Interpretation of the 2018 Regulation....................................................................... 131  
Not Declaratory..................................................................................................... 133  
Not Retroactive or Retrospective.......................................................................... 135  
Interpretation......................................................................................................... 135  
Statement of Interpretation2018 Regulation..................................................... 152  
Interpretation of the 2020 Regulation....................................................................... 152  
Consequential Amendments ................................................................................. 153  
Interpretation......................................................................................................... 153  
Statement of Interpretation2020 Regulation..................................................... 156  
a.  
b.  
c.  
d.  
2.  
3.  
a.  
b.  
a.  
b.  
c.  
d.  
4.  
a.  
b.  
c.  
VII. CONCLUSION............................................................................................................... 156  
ii  
Page 1  
The Court  
I.  
INTRODUCTION  
[1]  
This judgment addresses appeals and cross-appeals brought in respect of decisions of a  
Court of Queens Bench judge [Judge] in three separate Chambers applications in which he  
interpreted both a universal life insurance policy [ULP] and The Saskatchewan Insurance (Licence  
Condition) Amendment Regulations, 2018, Sask Reg 75/2018 [2018 Regulation]. In each case, an  
appellant brought an originating application pursuant to s. 11 of The Queens Bench Act, 1998,  
SS 1998, c Q-1.01, and Rule 3-49(1)(d) of The Queens Bench Rules, seeking a determination of  
the rights of the insured under a ULP issued or assumed by one of the respondent insurance  
companies.  
[2]  
The Judge heard the applications consecutively and rendered three separate but similar  
decisions: Ituna Investment LP v Industrial Alliance Insurance and Financial Services Inc.,  
2019 SKQB 75 [Ituna Decision]; Mosten Investment LP v The Manufacturers Life Insurance  
Company o/a Manulife Financial, 2019 SKQB 76 [Mosten Decision]; and Atwater Investment LP  
v BMO Life Assurance Company, 2019 SKQB 77 [Atwater Decision]. In each, the Judge dismissed  
the insureds application for declaratory relief because the declarations sought were not supported  
on his interpretation of the insurers ULP. The Judge also interpreted the 2018 Regulation as  
having only prospective effect, from which it may be inferred that the Judge found the 2018  
Regulation did not interfere with the insureds rights under a contract for life insurance that had  
been entered into prior to its enactment.  
[3]  
Each appellant appealed against the interpretation of their ULP and each respondent cross-  
appealed against the interpretation of the 2018 Regulation. Broadly speaking, the primary issue  
raised in the appeals relates to whether the Judge erred when he found the ULPs did not provide  
for unlimited stand-alone investment opportunities within [a side account](Mosten Decision at  
para 357; Atwater Decision at para 356; and Ituna Decision at para 299). There are secondary  
issues in each appeal, some relating to whether an insurer is entitled, on its own initiative, to refund  
or reject monies tendered by an insured for investment under the ULP in question. These issues  
also give rise to allegations in the appeals and cross-appeals that the Judge erroneously ruled  
 
Page 2  
certain evidence was or was not relevant to the interpretation of a ULP. The principal issue in the  
cross-appeals is whether the Judge erred when he found the 2018 Regulation did not affect the  
ULPs at issue because they had been entered into prior to its enactment.  
[4]  
The appeals also raise fundamental questions as to the proper way to approach the  
interpretation of a contract and as to the standard of appellate review applicable in such cases.  
While acknowledging that the law in this regard is not without its controversy, we find the Supreme  
Court of Canada jurisprudence sets forth a single, comprehensive approach to contract  
interpretation and identifies discernable principles for selecting the applicable standards of  
appellate review in cases of contract interpretation. On that basis, we find that the correctness  
standard of appellate review applies to the issues of contract interpretation raised in these appeals.  
[5]  
Applying the appropriate standards of review, having reviewed the record of each  
application in the Court of Queens Bench and the Judges reasons for judgment in each  
application, and having considered the partiessubmissions in each of the appeals and cross-  
appeals, we:  
(a)  
allow the appeal under CACV3407 between Mosten Investment LP [Mosten] and  
The Manufacturers Life Insurance Company o/a Manulife Financial [Manulife], set  
aside the Judges interpretation of the ULP in that case, and interpret it as permitting  
unlimited, stand-alone investment within the side account;  
(b)  
allow the appeal under CACV3408 between Atwater Investment LP [Atwater] and  
BMO Life Assurance Company [BMO Life], set aside the Judge’s interpretation of  
the ULP in that case, and interpret it as permitting unlimited, stand-alone  
investment within the side account;  
(c)  
(d)  
dismiss the appeal under CACV3409 between Ituna Investment LP [Ituna] and  
Industrial Alliance Insurance and Financial Services Inc. [Industrial Alliance];  
allow the cross-appeals in part, set aside the Judges interpretation of the 2018  
Regulation, and interpret and construe the 2018 Regulation, as well as s. 2-5.1  
[2020 Regulation] of The Insurance Regulations, RRS c I-9.11 Reg 1 [Insurance  
Page 3  
Regulations], as prospective legislation that is universally applicable to all licensed  
insurers in Saskatchewan from the date of its enactment;  
(e)  
(f)  
make no order as to costs in either this Court or in the Court of Queens Bench in  
the appeals and cross-appeals under CACV3407 and CACV3408; and  
order Ituna to pay Industrial Alliance’s costs in the Court of Queen’s Bench and on  
the appeal and cross-appeal under CACV3409.  
II.  
INTERPRETATION  
A.  
The Parties and their Appeals and Cross-appeals  
[6]  
The appellants (cross-respondents) are Mosten in CACV3407, Atwater in CACV3408 and  
Ituna in CACV3409. When we refer to the Appellants in these reasons, it is a collective reference  
to Mosten, Atwater and Ituna, regardless of whether we are referring to an appeal or cross-appeal.  
[7]  
The respondents (cross-appellants) are Manulife in CACV3407, BMO Life in CACV3408  
and Industrial Alliance in CACV3409. A reference to the Respondents is a collective reference to  
Manulife, BMO Life and Industrial Alliance.  
[8]  
When referring collectively to the Appellants and the Respondents, e.g., when all of them  
agree on some point, we use the word parties; however, we also use that word generically to refer  
to the parties to a contract, relying on context to indicate usage. When addressing the appeals, we  
refer to a specific appeal by the name of the Appellant, i.e., the Mosten Appeal, the Atwater Appeal  
or the Ituna Appeal. We refer to all of the appeals and cross-appeals collectively as these matters.  
B.  
Reference Points  
[9]  
We refer to the Lieutenant Governor in Council for the Province of Saskatchewan as the  
Lieutenant Governor. Where there is no need to differentiate between the two regulations at issue  
in the cross-appeals, we use the word Regulation to refer to both the 2018 Regulation and the 2020  
Regulation.  
     
Page 4  
[10] As noted, each appeal pertains to the interpretation of a specific ULP, namely:  
(a)  
In the Mosten Appeal, a ULP issued by Aetna Life Insurance Company of Canada  
[Aetna Life] on November 19, 1997, as Policy No. F 2239527, insuring the life of  
Walter de Bruin and recording Dr. de Bruin as the applicant, insured and  
beneficiary and to which Mosten later added Michael Hawkins as an insured life  
after acquiring Dr. de Bruins interests under the ULP [de Bruin ULP]. Manulife  
acquired the rights, liabilities and obligations of Aetna Life under the de Bruin ULP  
in 2004.  
(b)  
In the Atwater Appeal, two identical ULPs issued by AIG Life Insurance Company  
of Canada [AIG] (which was BMO Lifes corporate name prior to April 1, 2009),  
both issued on February 18, 2002, recording the applicant, the insured and the  
beneficiary as 605945 Saskatchewan Ltd. [605945] (whose sole shareholder and  
officer was Conrad Walkom) and insuring the lives of Mr. Walkom and his  
daughter, Brittany Walkom, under Policy 16551, and insuring the lives of  
Mr. Walkom and his daughter, Shayla Walkom, under Policy 13468 [because they  
are, for relevant purposes, identical, we refer to these two ULPs in the singular, as  
the Walkom ULP]. 605945 assigned its interests under the Walkom ULP to Atwater  
on December 31, 2008. Atwater then added Mr. Hawkins as the life insured under  
the Walkom ULP.  
(c)  
In the Ituna Appeal, a Flex Accountor Special Flex 5ULP issued by The  
National Life Assurance Company of Canada [National Life], a subsidiary of  
Industrial Alliance, on August 20, 1999, as Policy 4005565, recording the  
applicant, the insured and the life insured as Fred Zinkhan and the beneficiary as  
Karen Zinkhan [Zinkhan ULP]. National Life transferred its business and assets,  
including the Zinkhan ULP, to Industrial Alliance in 2005. Mr. Zinkhan assigned  
the Zinkhan ULP to Ituna on March 19, 2009. Ituna substituted Mr. Hawkins as the  
life insured under the Zinkhan ULP, effective September 11, 2011.  
Page 5  
C.  
The Nature of a ULP  
[11] A ULP is a contract for life insurance that allows the insured to take advantage of  
accrual-tax exemption provisions under the Income Tax Act, RSC 1985, c 1 (5th Supp), and the  
Income Tax Regulations, CRC, c 945 [together, Tax Rules]. Typically, an insured obtains a tax  
advantage on investment income by means of an account where the return on investment is exempt  
from accrual tax, provided sums in the account do not exceed limits established under the Tax  
Rules [exempt account]. Separate and apart from this, the insurer may receive, hold and invest  
sums on behalf of an insured in an account that is not exempt from accrual tax under the Tax Rules  
[side account].1 In these reasons, exempt account refers to: (i) the Investment Accountsunder  
the de Bruin ULP; (ii) the Investment Accountsunder the Walkom ULP; and (iii) the Flex  
Accountunder the Zinkhan ULP; and, side account refers to: (i) the Carrier Fundunder the  
de Bruin ULP; (ii) the Side Accountunder the Walkom ULP; and (iii) the Express Account”  
under the Zinkhan ULP.  
[12] As is evident, every ULP is a life insurance contract. However, a ULP that provides for a  
side account also has a non-insurance aspect; that is, it is an investment contract. It is at once both  
of these things and neither of them as a whole. In our view, such a ULP is not Janus-faced; it is an  
amalgam of its two faces. An understanding of its general nature as a contract is important because,  
in certain respects, the law applies different rules to the interpretation of insurance contracts and  
consumer contracts than to the contracts that lack those characteristics. This is so despite the fact  
that, as we explain below, all contracts must be interpreted in accordance with the same basic  
analytical framework, which we, like the Judge, describe as the Sattva approach, in reference to  
that articulated by Rothstein J. in Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53, [2014]  
2 SCR 633 [Sattva].  
[13] The law approaches the interpretation of an insurance contract differently than other types  
of contracts for several reasons. Insurance contracts serve the interests of society as a whole by  
spreading the risk of fortuitous loss broadly. They are generally contracts of adhesion. The parties  
1
The term side account is defined under s 3.1(1)(c) of the 2018 Regulation and under s. 2-5.1(1) of the 2020  
Regulation as “an account associated with a life insurance policy that holds amounts in excess of the maximum amount  
permitted to be held in a life insurance policy that is exempt from accrual taxation pursuant to the Income Tax Act  
(Canada)”.  
 
Page 6  
to them are, for the most part, significantly disparate in their knowledge of the relevant law and  
insurance practices and, conversely, in their knowledge of facts relevant to the assessment of risks.  
For these and other reasons, Parliament and the provincial legislatures have passed laws governing  
the content of insurance contracts and setting out the rights and obligations of the parties to them  
(see, generally, the Insurance Companies Act, SC 1991, c 47, The Insurance Act, SS 2015, c I-9.11  
[The Insurance Act, 2015], and the Insurance Regulations). In some respects, the relevant  
legislation reflects public policy decisions taken to ensure that insurance contracts comport with  
community values.  
[14] For similar reasons, the courts have developed what is known as the doctrine of utmost  
good faith (uberrima fides; see Carter v Boehm (1766), 97 ER 1162; Coronation Insurance Co. v  
Taku Air Transport Ltd., [1991] 3 SCR 622; Whiten v Pilot Insurance Co., 2002 SCC 18, [2002]  
1 SCR 595; and Fidler v Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 SCR 3),  
recognising the near fiduciary aspect of an insurance contract. As the Judge observed, the courts  
have also developed special principles of interpretation for insurance contracts (see Geoff R. Hall,  
Canadian Contractual Interpretation Law, 3d ed (Toronto: LexisNexis, 2016) at 241255 [Hall  
Text]).  
[15] A pivotal question in these matters is whether all of this insurance lawapplies when  
interpreting the contracts at issue here because, as we have noted, the ULPs are at once both life  
insurance contracts and investment contracts. In our view, it is unnecessary, and would be  
incorrect, to interpret these ULPs in a manner that ignores this fundamental characteristic. Rather,  
when it exists, the interpreting court should focus on the specific issues of contract interpretation  
raised by the parties and ask whether those issues engage any of the specialised principles of  
contract interpretation that apply to insurance contracts and to life insurance contracts in particular.  
[16] That is the approach we have taken in these appeals. The ULPs at issue here all have these  
two aspects of insurance and investment, albeit their texts differ. Clearly, the principles of  
interpretation that apply to life insurance contracts apply to certain aspects of ULPs. However, we  
conclude that they do not apply to significant parts of these ULPs and, in particular, do not apply  
to the issues of interpretation raised by the parties in these appeals. Further, as both the insurance  
and investment aspects of the ULPs strongly indicate that a ULP is a consumer contract, as opposed  
Page 7  
to a commercial contract or a contract between participants in a given industry, we have interpreted  
them in a manner that takes account of that characteristic (see Hall Text at 217221).  
D.  
The Dispute that Underpins the Appeals  
[17] As noted, the amount an insured may invest within an exempt account is limited by the Tax  
Rules. The Tax Rules do not limit the amount an insured may invest within a side account. The  
common dispute, which underpins each appeal, is whether there is a contractual limit on the  
amount an insured may invest in a side account.  
[18] One reason the answer to that question is important to the parties is that some of the  
investment opportunities made available under the ULPs in question are guaranteed investment  
products with fixed rates of return that were established years ago, at the time of contract  
formation. At that time, interest rates were much higher than today. In the result, the rates of return  
under these ULP investment products well-exceed what is currently available under comparable  
investment products. The ULPs also contain investment bonus provisions that, if exercised by an  
insured, further enhance the insured’s rate of return and increase the cost to the insurers who agreed  
to provide them.  
[19] In their applications, the Appellants asked the Judge to declare that they had a contractual  
right to invest unlimited amounts within a side account. The Respondents argued the ULPs ought  
to be interpreted as establishing a contractual limit on the amount that may be invested or held in  
a side account. The Judge found the ULPs did not “provide for unlimited stand-alone investment  
opportunities” within a side account. The various issues raised in the appeals all relate to whether  
the Judge erred in that regard.  
[20] With that background in mind, we turn to consider the issues arising in these matters.  
 
Page 8  
III. ISSUES  
[21] The Appellants and the Respondents have put several issues before the Court.  
A.  
CACV3407 Mosten Appeal  
[22] Mosten asks the Court to determine whether the Judge erred:  
(a)  
(b)  
by finding the purpose of the de Bruin ULP was both protection and investment but  
that the general economic purpose of insurance does not include investment;  
when interpreting the word premium in the de Bruin ULP by (i) treating it as a legal  
term of art instead of using its plain and ordinary meaning, (ii) finding an insured  
is an insurance industry participant, (iii) finding Manulife could restrict the amount  
of premiums paid under the ULP, and (iv) finding Manulife could refund excess  
premiums without having received a request therefor;  
(c)  
by declining to exercise his jurisdiction to address (i) Mostens request for a  
declaration regarding an investment bonus, and (ii) the way in which an investment  
bonus is calculated and credited under the de Bruin ULP; and  
(d)  
by striking evidence adduced by Mr. Hawkins, a principal of Mosten2, and when  
he considered evidence adduced by Greg Cerar, an affiant of Manulife.  
B.  
CACV3407 Manulife Cross-appeal  
[23] Manulife cross-appeals against the Mosten Decision alleging the Judge erred by  
considering an overly narrow factual matrix and by excluding evidence on grounds of  
inadmissibility or irrelevance. Manulife also asserts the Judge erred by finding the Regulation is  
not declaratory and, if not, Manulife asserts the Regulation has retroactive effect or, in the further  
alternative, retrospective effect.  
2 Mr. Hawkins is also a principal of Atwater and Ituna.  
     
Page 9  
C.  
CACV3408 Atwater Appeal  
[24] Atwater asks the Court to determine whether the Judge erred:  
(a)  
when defining the word premium in the Walkom ULP by (i) attributing an  
expectation to an insured that is not supported by the words of the ULP, (ii) failing  
to use the plain and ordinary meaning of the payment of premiums provision in the  
ULP, (iii) finding an insured is an insurance industry participant, and (iv) placing  
undue emphasis on the tax-exempt investment aspect of the ULP while ignoring its  
taxable investment aspect;  
(b)  
by relying on an industry publication to determine the purpose of ULPs generally  
and by holding that an ordinary insured would know the niceties of insurance  
taxation; and  
(c)  
by admitting what is known as the Dietrich Affidavit, which it says is hearsay.  
CACV3408 BMO Life Cross-appeal  
D.  
[25] BMO Lifes cross-appeal against the Atwater Decision alleges the Judge erred by  
considering an overly narrow factual matrix and by excluding evidence on grounds of  
inadmissibility or irrelevance. BMO Life also asserts the Judge erred by finding the Regulation is  
(i) not declaratory, (ii) ultra vires the Lieutenant Governor, (iii) not retroactive, and (iv) not  
retrospective.  
E.  
CACV3409 Ituna Appeal  
[26] Ituna asks the Court to find that the Judge erred:  
(a)  
(b)  
(c)  
when defining the word premium under the Zinkhan ULP;  
in applying the principles of interpretation to standard form insurance contracts;  
in his approach to and use of context in the interpretation of a standard form  
contract;  
     
Page 10  
(d)  
by conflating the first two stages of interpretation under Ledcor Construction Ltd.  
v Northbridge Indemnity Insurance Co., 2016 SCC 37, [2016] 2 SCR 23 [Ledcor];  
(e)  
(f)  
(g)  
by erroneously basing his analysis on a faulty understanding of a ULP;  
by finding premium is a legal term of art;  
by finding an ordinary insured would have understood the niceties of the insurance  
and investment interaction under a ULP;  
(h)  
(i)  
(j)  
by ignoring and rewriting provisions of the Zinkhan ULP, leading to absurdities;  
by striking portions of Mr. Hawkinss affidavit and reply affidavit; and  
by declining to exercise his jurisdiction to grant the declarations it sought thereby  
failing to address what it describes as the Term Allocation Contravention.  
F.  
CACV3409 Industrial Alliance Cross-appeal  
[27] In its cross-appeal against the Ituna Decision, Industrial Alliance alleges the Judge erred  
by considering an overly narrow factual matrix and by excluding evidence on grounds of  
inadmissibility or irrelevance. Industrial Alliance asserts the Judge erred by finding the Regulation  
is (i) not declaratory, (ii) ultra vires the Lieutenant Governor, and (iii) not retrospective.  
IV. STANDARDS OF REVIEW  
A.  
In General  
[28] The appellate standard of palpable and overriding error applies to all questions of fact  
(Housen v Nikolaisen, 2002 SCC 33 at para 10, [2002] 2 SCR 235 [Housen]; and H.L. v Canada  
(Attorney General), 2005 SCC 25 at para 53, [2005] 1 SCR 401). Absent an extricable question  
of law, the standard of palpable and overriding error also applies to questions of mixed fact and  
law (Housen at paras 31 and 33; and Sattva at paras 5253). The standard of correctness applies  
to questions of law (Housen at paras 89 and 33). The interpretation of a statutory instrument is a  
question of law (TELUS Communications Inc. v Wellman, 2019 SCC 19 at para 30, [2019] 2 SCR  
144; Heritage Capital Corp. v Equitable Trust Co., 2016 SCC 19 at para 23, [2016] 1 SCR 306  
     
Page 11  
[Heritage Capital]; and Canadian National Railway Co. v Canada (Attorney General), 2014 SCC  
40 at para 33, [2014] 2 SCR 135; see also Canada (Minister of Citizenship and Immigration) v  
Vavilov, 2019 SCC 65 at para 37, 441 DLR (4th) 1).  
B.  
In Contract Interpretation  
1. The PartiesPositions  
[29] The parties agree that the ULP at issue in their respective appeals is a standard form  
contract. For the most part, they also agree that the interpretation of their respective ULP, qua  
standard form contract, raises questions of law that are subject to appellate review on the standard  
of correctness. In this regard, they rely on the majority reasons in Ledcor, where Wagner J. (as he  
then was) wrote:  
[24]  
I would recognize an exception to this Courts holding in Sattva that contractual  
interpretation is a question of mixed fact and law subject to deferential review on appeal.  
In my view, where an appeal involves the interpretation of a standard form contract, the  
interpretation at issue is of precedential value, and there is no meaningful factual matrix  
that is specific to the parties to assist the interpretation process, this interpretation is better  
characterized as a question of law subject to correctness review.  
[30] While BMO Life agrees that the correctness standard applies to the interpretation of the  
Walkom ULP, it submits some issues of interpretation could still give rise to a question of mixed  
fact and law because extrinsic evidence exists to assist the court. BMO Life also characterises the  
interpretation of the Walkom ULP as having low precedential value to anyone other than insurers  
and hedge fund investors. In its cross-appeal, BMO Life argues the Judge erred by adopting an  
overly narrow view of the evidence that is admissible in the interpretation of a standard form  
insurance contract under the first of the three stages of the approach outlined in Ledcor. If the  
Judge should have considered a broader factual matrix, BMO Life says the appropriate standard  
of review would be palpable and overriding error (Ledcor at para 48; and Sattva). Even so, BMO  
Life submits the identification of the correct legal test to be applied is a question of law that attracts  
the standard of correctness (Sattva at para 49).  
   
Page 12  
2.  
The Supreme Court Jurisprudence  
[31] While the parties have, in most respects, agreed that correctness is the standard of review  
applicable in these appeals, we acknowledge that the law relating to this issue is not without  
controversy. However, we do not subscribe to the view, espoused by some, that the Supreme Court  
of Canada dicta on this issue is inconsistent or conflicting. As we see it, the Supreme Court of  
Canada jurisprudence sets forth a single, comprehensive approach to contract interpretation and  
identifies discernable principles for selecting the applicable standards of appellate review in cases  
of contract interpretation. Based on that jurisprudence, as we explain below, we agree that the  
correctness standard of appellate review applies to the issues of contract interpretation raised in  
these appeals.  
[32] As noted, academic criticism has been leveled at Supreme Court of Canada jurisprudence  
on contract interpretation in recent years and, particularly, its dicta on the applicable standard of  
appellate review; see: Angela Swan, Jakub Adamski & Annie Y. Na, Canadian Contract Law, 4th  
ed (Toronto: LexisNexis, 2018) at 733735 [Swan Text]; Hall Text at 146153; John D. McCamus,  
The Law of Contracts, 3d ed (Toronto: Irwin Law, 2020) at 853860 [McCamus Text]; Sandra L.  
Corbett and Ryan P. Krushelnitzky, Through the Scratched Looking Glass: Sattva, Ledcor, Teal  
and Developments in the Law of Contract(2017) 1 Ann Rev Civ Lit 379; Earl A. Cherniak,  
Sattva Revisited(2015) 34:2 Adv J 6 at 7; Andrea M. Bolieiro, Ledcor and the Trouble with  
Taking a Categorial Approach to Standards of Review(2017) 35:4 Adv J 35; and Daniele  
Bertolini, Unmixing the Mixed Questions: A Framework for Distinguishing Between Questions  
of Fact and Questions of Law in Contractual Interpretation(2019) 52 UBC L Rev 345. In the  
Swan Text at pages 723724, the authors comment on Sattva, Ledcor and Sabean v Portage La  
Prairie Mutual Insurance Co., 2017 SCC 7, [2017] 1 SCR 121 [Sabean], which the parties placed  
at the core of these appeals, querying:  
8.100 Where do we go from here? The Supreme Court has made so many inconsistent  
and conflicting statements in such an amazingly short time that the law on contractual  
interpretation could be anythingblinding flash (except where ambiguous), intention of  
the parties or even the protection of their reasonable expectations. No single comprehensive  
approach to contractual interpretation that covers all contracts exists. But if that is the case,  
should not the court have expressly stated it? Moreover, is that approach consistent with  
the courts recent view, affirming the existence of a unifying principle, the general  
organizing principleof good faith performance, underlying all contractual relations?  
(Footnotes omitted)  
 
Page 13  
[33] As to the standard of review, the Swan Text also suggests that [t]he problem... is that the  
issues that decide whether one or the other standard [of review] is applicable also go to establishing  
the surrounding circumstances used to interpret a contract and, hence, the two issues get hopelessly  
tangled up(Swan Text at 724, footnote 193). In our view, the opposite is true, at least in relation  
to standard form contracts. The factors relevant to whether the correctness standard applies do not  
establish whether there are surrounding circumstances relevant to the interpretation of such a  
contract. It is the reverse; the existence or non-existence of a factual matrix or of circumstances  
surrounding contract formation specific to the parties to such a contract determines the standard  
of review. As we will explain, this is not to say that circumstances that are not specific to the  
contracting parties are irrelevant to issues of standard form contract interpretation. But, if the  
contract is in a standard form and there are no such surrounding circumstances, its interpretation  
may have precedential value and, therefore, the correctness standard of appellate review applies.  
If the contract is not in a standard form or there are circumstances surrounding its formation  
particular to the parties and that are relevant to the issue of interpretation, the standard of review—  
absent an extricablequestion of law—–is palpable and overriding error.  
[34] Although we have referred here to a standard form contract, we would emphasise that it is  
misleading to speak as if the question as to the applicable standard of review relates to the contract  
as a whole. The question is the applicability of a standard of review to the issue or issues of  
interpretation put before the appellate court. An issue may relate to the contract as a whole. It may  
relate only to a single clause that is itself in a standard form and that is not affected by the  
circumstances surrounding contract formation specific to the parties. The interpreting court may  
be faced with issues of interpretation that, on appeal, attract the correctness standard along with  
issues that attract the palpable and overriding error standard. With these considerations in mind,  
we have chosen to use the phrase issue of standard form contract interpretation in these reasons  
when speaking about the interpretation of standard form contract language in the absence of a  
meaningful factual matrix that is specific to the parties. To be clear, the terms of the contract as a  
whole, which must always be considered, may still affect an issue of standard form contract  
interpretation.  
[35] Approached in this manner, the question of whether there are factual circumstances of  
contract formation specific to the contracting parties that are probative of the meaning of contested  
Page 14  
contractual language is properly understood as key to determining whether the interpretation of  
that language is an issue of standard form contract interpretation and, as such, is subject to  
appellate review on the correctness standard. That is a different question than whether there are  
any surrounding circumstances relevant to the interpretation of a contract as a whole.  
[36] In Sattva, Rothstein J. described surrounding circumstances as knowledge that was or  
reasonably ought to have been within the knowledge of both parties at or before the date of  
contracting(at para 58). Where an issue of standard form contract interpretation is engaged, such  
circumstances will exist. However, they are, by definition, limited to what was or reasonably ought  
to have been known to the parties in all instances where that standard form contract exists. The  
proper scope of evidence of surrounding circumstances in relation to these ULPs is very much at  
issue in these appeals.  
[37] The law relating to these issues is addressed in more detail below.  
3.  
Precedential Value  
[38] It is often said, based on Sattva, that the presumptive standard of review relating to contract  
interpretation is palpable and overriding error, as contract interpretation is generally a question of  
mixed fact and law. However, this idea speaks most directly to commercial contracts. Standard  
form contracts are now pervasive, evermore so in the context of online consumer transactions. For  
these latter types of contract, which certainly outnumber commercial ones, the presumptive  
standard of appellate review is correctness, as we will explain.  
[39] It is our view that the application of the correctness standard of review to issues of standard  
form contract interpretation is doctrinally consistent with Sattva. That is so because the principal  
factor that indicates whether an issue of contract interpretation gives rise to a question of law is its  
precedential value (Canada (Director of Investigation and Research) v Southam Inc., [1997] 1  
SCR 748 [Southam]; Housen; Sattva; the majority reasons in Ledcor3; Canada (Attorney General)  
v Fontaine, 2017 SCC 47 at para 35, [2017] 2 SCR 205 [Fontaine]; Churchill Falls (Labrador)  
3 See also the dissenting reasons of Cromwell J. in Ledcor, where he observed that “precedential value” is the critical  
issue when determining whether a correctness review is appropriate but also found that this was just a “different way”  
of posing the “key question”, which he saw as “the degree of generality” of the legal principle at issue (at para 117),  
invoking the Southam spectrum of generality.  
 
Page 15  
Corp. v Hydro-Québec, 2018 SCC 46 at para 49, [2018] 3 SCR 101; J.W. v Canada (Attorney  
General), 2019 SCC 20 at paras 110112, [2019] 2 SCR 224; and Trenchard v Westsea  
Construction Ltd., 2020 BCCA 152 at paras 4143, 37 BCLR (6th) 103; see also MSI Methylation  
Sciences, Inc. v Quark Venture Inc., 2019 BCCA 448 at paras 6468, 31 BCLR (6th) 264).  
[40] On one gauge, the precedential value of an interpretation is related to the repeated use of  
the contract language in question. We use the example of a standard form real estate contract, as  
was at issue in Vallieres v Vozniak, 2014 ABCA 290, 377 DLR (4th) 80 [Vozniak], where the bulk  
of the clauses are identical under each contract, underscoring the precedent-setting nature of their  
interpretation.  
[41] In contextual terms, even though in a standard form, each contract for the sale of real estate  
would necessarily contain unique or uncommon, and possibly handwritten, clausese.g., the  
drapes stay but the dishwasher is excluded”—the interpretation of which has no precedential value.  
The mutual intention of the parties as to whether drapes includes curtains and blinds in the context  
of that contract is better gleaned from the circumstances surrounding contract formation. Such a  
question is, for the reasons explained in Sattva, a question of mixed fact and law. Whereas, the  
interpretation of a standard form clause in that same contract is a question of law precisely because  
how it is interpreted has value to multiple other users of the sameand, potentially, other—  
standard form contracts. On this gauge, the precedential value of an interpretation lies in the  
potential for multiple, subsequent uses of the same contract language by different or even the same  
parties.  
[42] On a related measure, the precedential value of an interpretation lies in its importance as  
law. Precedential value is a normative term that invokes a number of legal principles. These  
principles are themselves expressions or aspects of the rule of law. Here, we speak of principles  
such as stare decisis as it manifests under the objectives of attaining consistency in the application  
of the law, certainty and predictability of legal results, judicial accountability, and justified  
decision-making. These and other aspects of the rule of law underpin Rothstein J.s analysis of the  
standards of review in Sattva and that of Wagner J. in Ledcor (see also Southam and Housen).  
[43] The Supreme Court has ruled that where an issue of contract interpretation is more akin to  
a “dispute…over a general proposition that might qualify as a principle of law” (Southam at  
Page 16  
para 37) or over the correct legal test(Ledcor at para 43) than it is to a very particular set of  
circumstances that is not apt to be of much interest to judges and lawyers in the future(Southam  
at para 37; and Ledcor at para 48) the interpretation of the contract language at issue is of general  
importance to the law. Where an issue of interpretation transcends the four corners of the dispute  
between the parties to it, as Cromwell J. observed in Ledcor (at para 117), the interpretation has  
precedential value.  
[44] Where an issue of standard form contract interpretation has been decided, certainty in the  
law and consistency in its application should be central objectives for every subsequent  
interpreting court. The prior interpretation is the law relating to that issue. It would be untenable  
if this law differed when different courts considered the same issue in subsequent matters (Vozniak  
at para 13; see also Canadian Imperial Bank of Commerce v Urbancorp (Leslieville) Developments  
Inc., 2020 ONCA 449 at para 27). Consistency in the law is advanced by appellate review of such  
an interpretation for its correctness (Ledcor at para 39), within the framework of stare decisis and  
comity.  
[45] Justice Rothstein suggested in Sattva that extricablequestions of law would arise rarely  
in the context of contract interpretation (at para 55). However, as Wagner J. observed in Ledcor,  
Rothstein J. was not speaking about all types of contracts when he made that remark. He was  
speaking about the uniqueness of a negotiated commercial contract where a meaningful factual  
matrix exists to assist with its interpretation, which, as a category, does not cover the full breadth  
of the contracts courts are asked to interpret.  
[46] As appellate judges, we find the word extricable guides the determination of the  
appropriate standard of review. It tells us to look for a sometimes elusive bright line that  
demarcates pure questions of law from questions of mixed fact and law. Notwithstanding  
Rothstein J.s cautious view, the post-Sattva jurisprudence reflects the fact that appellate courts  
have found questions of law to have arisen in the review of contract interpretation where the lower  
court had, for example:  
(a)  
read a term in a contract in isolation or otherwise failed to read the contract as a  
whole (1298417 Ontario Ltd. v Lakeshore (Town), 2014 ONCA 802 at para 7, 122  
OR (3d) 401, leave to appeal to SCC refused, 2015 CanLII 38344 [Lakeshore  
Page 17  
(Town)]; Richcraft Homes Ltd. v Urbandale Corporation, 2016 ONCA 622 at para  
69, 406 DLR (4th) 507 [Richcraft Homes]; Whirlpool Canada Co. v Chavila  
Holdings Limited, 2017 ONCA 81 at para 72, 134 OR (3d) 161; 911502 Alberta  
Ltd. v Elephant Enterprises Inc., 2014 ABCA 437 at para 12, 588 AR 296 [Elephant  
Enterprises]; Directcash ATM Management Partnership v Maurices Gas &  
Convenience Inc., 2015 NBCA 36 at para 23, 437 NBR (2d) 292 [Directcash]; and  
Amberber v IBM Canada Ltd., 2018 ONCA 571 at paras 5964, 424 DLR (4th) 169  
[Amberber]);  
(b)  
failed to consider a material part of the contract (Havenlee Farms Inc. v HZPC  
Americas, 2017 PECA 20 at paras 3536 [Havenlee Farms]; and Sanofi Pasteur  
Limited v UPS SCS, Inc., 2015 ONCA 88 at para 37, 382 DLR (4th) 54);  
(c)  
(d)  
adopted an interpretation that rendered meaningless a provision of the contract  
(Richcraft Homes at para 69);  
failed to give effect to important words in the contract (Thunder Bay (City) v  
Canadian National Railway Company, 2018 ONCA 517 at paras 46 and 60, 424  
DLR (4th) 588, leave to appeal to SCC refused, 2019 CanLII 23877 [Thunder Bay  
(City)]; Jesan Real Estate Ltd. v Doyle, 2020 ONCA 714 at para 35; and Fuller v  
Aphria Inc., 2020 ONCA 403 at para 50);  
(e)  
failed to consider the factual matrix (IFP Technologies (Canada) Inc. v EnCana  
Midstream and Marketing, 2017 ABCA 157 at para 58, [2017] 12 WWR 261, leave  
to appeal to SCC refused, 2018 CanLII 28111 [IFP Technologies], citing British  
Columbia (Minister of Technology Innovation and CitizensServices) v Columbus  
Real Estate Inc., 2016 BCCA 283 at paras 40 and 51, 402 DLR (4th) 117; and  
Starrcoll Inc. v 2281927 Ontario Ltd., 2016 ONCA 275 at paras 1617, 68 RPR  
(5th) 173); or failed to consider a material part of a relevant factual matrix (Jeffrie  
v Hendriksen, 2015 NSCA 49 at para 28, 360 NSR (2d) 65 [Jeffrie]; and Puri  
Consulting Limited v Kim Orr Barristers PC, 2015 ONCA 727 at paras 18 and 33,  
128 OR (3d) 14 [Puri Consulting]);  
Page 18  
(f)  
failed to recognise that a legal term of art has a certain meaning at law (IFP  
Technologies at para 62, citing Sattva at para 53; and Deslaurier Custom Cabinets  
Inc. v 1728106 Ontario Inc., 2017 ONCA 293 at paras 6568, 135 OR (3d) 241);  
(g)  
(h)  
strained to create ambiguity where none existed (Amberber at paras 63 and 65);  
allowed the factual matrix to overwhelm the text of the contract (Kilitzoglou v Curé,  
2018 ONCA 891 at para 41, 143 OR (3d) 385 [Kilitzoglou]; Havenlee Farms at  
paras 3536; and British Columbia (Ministry of Forests) v Teal Cedar Products  
Ltd., 2015 BCCA 263 at para 57, 386 DLR (4th) 40 [Teal Cedar CA], but, in Teal  
Cedar Products Ltd. v British Columbia, 2017 SCC 32 at para 4, [2017] 1 SCR 688  
[Teal Cedar SCC], Gascon J. for the majority held:  
Second, there is a question of contractual interpretation: whether the  
arbitrator let the factual matrix overwhelm the words of the contract when  
he interpreted an amended settlement agreement between the parties in  
light of the factual matrix of their failed negotiations. This question may  
be formulated in two ways: (1) whether the arbitrator allocated excessive  
weight to the factual matrix; or (2) whether the arbitrators interpretation  
of the factual matrix was isolated from the words of the contract. The  
former formulation is a question of mixed fact and law and thus falls  
outside the scope of appellate review permitted under the Arbitration Act.  
The latter formulation, while it raises a question of law, lacks arguable  
merit in this case because the arbitrators interpretation was clearly  
anchored in the words of the contract, which he interpreted in light of the  
factual matrix. Without arguable merit, this formulation also fails to confer  
appellate review jurisdiction under the Arbitration Act.  
(i)  
(j)  
(k)  
(l)  
based an interpretation on the subsequent conduct of the parties even though the  
text of the contract was not ambiguous (Thunder Bay (City) at paras 61 and 65);  
relied on subsequent conduct evidence to create an ambiguity (Wade v Duck, 2018  
BCCA 176 at para 32, 422 DLR (4th) 423);  
relied on subsequently arising circumstances to construe a contract (Kilitzoglou at  
para 40);  
relied on its own assessment of what was fair or reasonable, rather than giving  
the words of a contract their ordinary and grammatical meaning in the context of  
the contract as a whole (Kilitzoglou at paras 5758);  
Page 19  
(m)  
(n)  
failed to correctly apply contract law (Elephant Enterprises at para 10; Jeffrie at  
para 26; and Moulton Contracting Ltd. v British Columbia, 2015 BCCA 89 at  
paras 5 and 78, 381 DLR (4th) 263);  
resorted to the doctrine of contra proferentem too early in the interpretive process  
(Puri Consulting at para 33; and Pepin v Telecommunications Workers Union, 2017  
BCCA 194 at para 6, 97 BCLR (5th) 345 [Pepin]), or without first finding an  
ambiguity (Directcash at paras 2526), or without resolving how the doctrine was  
applicable where both parties had had a meaningful opportunity to negotiate the  
contract (Pepin at para 7); and  
(o)  
breached the rules of natural justice by finding an implied term where that issue  
had not been joined between the parties and was not the subject of submissions  
(Servus Credit Union Ltd. v Crelogix Acceptance Corporation, 2020 ABCA 220,  
[2020] 10 WWR 67).  
[47] Quite apart from the foregoing specific errors of law, the general application of the  
correctness standard in appeals involving issues of standard form contract interpretation does not  
result from the identification of an extricable question of law. In Ledcor, Wagner J. described the  
precedential value of standard form contracts as being an exception to the Courts holding in Sattva  
that the presumptive standard of review is palpable and overriding error (Ledcor at paras 3345).  
As we see it, it is better described as the application in a different context of the principles that  
underpin that holding. More specifically, Wagner J. affirmed that the interpretation of a standard  
form contract has precedential value where there is no meaningful factual matrix that is specific  
to the particular parties to assist the interpretation process(Ledcor at paras 4 and 24, emphasis  
added).  
[48] In this way, Wagner J.s reasons reconcile the holding in Sattva with the precedential value  
of the interpretation of a standard form contract by explaining that, where such an interpretation  
has precedential value, it has a sufficient degree of generality on the spectrum of particularity”  
described in Housen (at para 28) to be concerned with a general proposition. As the Court there  
remarked, this issue was earlier addressed by Iacobucci J. in Southam:  
Page 20  
[37]  
[T]he matrices of facts at issue in some cases are so particular, indeed so unique,  
that decisions about whether they satisfy legal tests do not have any great precedential  
value. If a court were to decide that driving at a certain speed on a certain road under certain  
conditions was negligent, its decision would not have any great value as a precedent. In  
short, as the level of generality of the challenged proposition approaches utter particularity,  
the matter approaches pure application, and hence draws nigh to being an unqualified  
question of mixed law and fact. See R. P. Kerans, Standards of Review Employed by  
Appellate Courts (1994), at pp. 103-108. Of course, it is not easy to say precisely where  
the line should be drawn; though in most cases it should be sufficiently clear whether the  
dispute is over a general proposition that might qualify as a principle of law or over a very  
particular set of circumstances that is not apt to be of much interest to judges and lawyers  
in the future.  
[49] Cast in Southams terms, the answer to an issue of contract interpretation is neither  
particular nor unique if it involves the same issue of interpretation and the same or substantially  
the same contract language as is used in other contracts and there is no meaningful factual matrix  
specific to the parties that is relevant to the issue. Rather, the answer is a general rule or general  
proposition on the spectrum of particularity and, therefore, the issue of interpretation falls on the  
question of law side of that spectrum. Viewed in this way, the standard of appellate review relating  
to issues of standard form contract interpretationwhich arises only when the foregoing  
conditions have been metis not an exception to the rule that the palpable and overriding error  
standard is generally applicable but is an application of the principles espoused in Southam,  
Housen, Sattva and Ledcor.  
[50] Justice Rothstein himself drew on Southam and Housen to observe that the precedential  
value of an interpretation often dictates whether the issue of interpretation gives rise to a question  
of law (Sattva):  
[50]  
…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.  
[51]  
The purpose of the distinction between questions of law and those of mixed fact  
and law further supports this conclusion. One central purpose of drawing a distinction  
between questions of law and those of mixed fact and law is to limit the intervention of  
appellate courts to cases where the results can be expected to have an impact beyond the  
parties to the particular dispute. It reflects the role of courts of appeal in ensuring the  
consistency of the law, rather than in providing a new forum for parties to continue their  
private litigation. For this reason, Southam identified the degree of generality (or  
precedential value) as the key difference between a question of law and a question of  
mixed fact and law. The more narrow the rule, the less useful will be the intervention of  
the court of appeal:  
If a court were to decide that driving at a certain speed on a certain road  
under certain conditions was negligent, its decision would not have any  
Page 21  
great value as a precedent. In short, as the level of generality of the  
challenged proposition approaches utter particularity, the matter  
approaches pure application, and hence draws nigh to being an unqualified  
question of mixed law and fact. See R. P. Kerans, Standards of Review  
Employed by Appellate Courts (1994), at pp. 103-108. Of course, it is not  
easy to say precisely where the line should be drawn; though in most cases  
it should be sufficiently clear whether the dispute is over a general  
proposition that might qualify as a principle of law or over a very  
particular set of circumstances that is not apt to be of much interest to  
judges and lawyers in the future. [para. 37]  
[52]  
Similarly, this Court in Housen found that deference to fact-finders promoted the  
goals of limiting the number, length, and cost of appeals, and of promoting the autonomy  
and integrity of trial proceedings (paras. 16-17). These principles also weigh in favour of  
deference to first instance decision-makers on points of contractual interpretation. The  
legal obligations arising from a contract are, in most cases, limited to the interest of the  
particular parties. Given that our legal system leaves broad scope to tribunals of first  
instance to resolve issues of limited application, this supports treating contractual  
interpretation as a question of mixed fact and law.  
(Emphasis added)  
[51] As we read the decision of the majority in Ledcor on this point, Wagner J. affirmed this  
reasoning that the precedential value of an interpretation has a determinative effect on the nature  
of the question arising at both the interpretive stage and the appellate stage. Justice Wagner also  
remarked that the fact a contract is a standard form contract and the fact there is no relevant factual  
matrix specific to the parties similarly indicate its interpretation may give rise to a question of law  
(at paras 4 and 24).  
[52] As we have explained, we would put the matter differently but to the same end. A contract  
(or issue) is a standard form contract (or an issue of standard form contract interpretation) for the  
purposes of appellate review only if three conditions are met. First, there must be an identical or a  
substantially identical form of contract language capable of standardised use by multiple, different  
parties. In the overwhelming majority of cases, that means the standard form contractual language  
at issue will have been entirely reduced to writing. The assertion of an oral, handwritten or typed  
term or condition or other deviation from standard form text relevant to the issue of interpretation  
in question connotes the existence of a meaningful factual matrix specific to the contracting parties,  
such that the issue of interpretation is a question of mixed fact and lawi.e., being unique, it lacks  
precedential value (for example, see Albo v The Winnipeg Free Press, 2020 MBCA 50 at para 18,  
[2020] 6 WWR 187).  
Page 22  
[53] Second, there must be no factual matrix that is specific to the parties to the contract and  
that is probative of the issue of contract interpretation. In the McCamus Text, the author describes  
standard form contracts as follows (at 202203):  
In these kinds of situations, the document put forward will typically constitute a standard  
printed form that the party proffering the document invariably uses when entering  
transactions of this kind. The form will often be offered on a “take it or leave it” basis. In  
the typical case, the other party, then, will have no choice but either to agree to the terms  
of the standard form or to decline to enter the transaction altogether. Standard form  
agreements are a pervasive and indispensable feature of modern commercial life. It is  
simply not feasible to negotiate, in any meaningful sense, the terms of many of the  
transactions entered into in the course of daily life. …  
See also MacDonald v Chicago Title Insurance Company of Canada, 2015 ONCA 842 at para 33,  
127 OR (3d) 663; and Corydon Village Mall Ltd. v TEL Management Inc., 2017 MBCA 8 at  
paras 3048, 407 DLR (4th) 263.  
[54] Third, the standard form contract must be one that has been or will be repeatedly entered  
into.  
[55] These three factors are characteristic of a contract, the interpretation of which will have  
precedential value. The interpretation of a standard form contract or of a standard form clause is  
always a question of law because the answer has precedential value. That is so because the law  
and the facts are the same each time the standard form contract language is interpreted. The  
interpretation is, accordingly, a finding of law that is subject to appellate review for its correctness.  
[56] This analytical framework is consistent with the reasoning in Ledcor. There, Wagner J.  
concluded that correctness was the applicable appellate standard in that case based on these three  
factors; that is, the appeal involved the interpretation of a standard form contract, the interpretation  
was of precedential value, and there was no meaningful factual matrix specific to the parties to  
assist the interpretation process. It is also consistent with the following reasoning in Ledcor, which  
suggests that appeals relating to aspects of standard form contracts may nonetheless give rise to  
mixed questions of fact and law:  
[48]  
Depending on the circumstances, however, the interpretation of a standard form  
contract may be a question of mixed fact and law, subject to deferential review on appeal.  
For instance, deference will be warranted if the factual matrix of a standard form contract  
that is specific to the particular parties assists in the interpretation. Deference will also be  
warranted if the parties negotiated and modified what was initially a standard form  
contract, because the interpretation will likely be of little or no precedential value. There  
Page 23  
may be other cases where deferential review remains appropriate. As Iacobucci J.  
recognized in Southam, the line between questions of law and those of mixed fact and law  
is not always easily drawn. Appellate courts should consider whether the dispute is over  
a general propositionor a very particular set of circumstances that is not apt to be of  
much interest to judges and lawyers in the future(para. 37).  
[57] On first impression, the foregoing passage appears to differ from the framework that we  
propose and that is reflected at paragraph 46 of Ledcor. There is, however, no difference in  
substance. Rather, the seeming difference results from the fact that, in the foregoing passage,  
Wagner J. refers to standard form contractsas including contracts that may be in or based on a  
standard form but where there is also a factual framework relating to the parties to assist with  
interpretation or where there have been modifications to the contract. In our respectful opinion,  
referring to such contracts as standard form contractsfor purposes of interpretation and  
determining the standard of review may be the source of some of the confusion referred to in the  
academic commentary. In our view, it is both preferable and more accurate to use the term  
standard form contractsin reference only to those contracts that, in their entirety, meet all three  
conditions described above. More specifically, it is preferable and more accurate to address  
contract interpretation on an issue-by-issue basis to determine whether each issue is an issue of  
standard form contract interpretation. Approached in this manner, a contract or contractual  
provision that has been modified or that is subject to interpretation based on a meaningful factual  
matrix specific to the parties to it is not a standard form contract at all and does not involve an  
issue of standard form contract interpretation.  
[58] We would emphasize that, for the first judge who decides an issue of standard form contract  
interpretation, the classification of such an issue as a question of law for standard of review  
purposes is irrelevant. The usual process of contract interpretation applies. The interpreting judge  
is obliged to apply the principles of contract interpretation to the facts. The facts include the written  
contract and the surrounding circumstances, which would be limited in the manner described  
above. The interpretive process differs only where the issue of standard form contract  
interpretation has already been decided by another court. In that case, the earlier interpretation  
would constitute law relating to that issue. In such a case, comity and stare decisis would come  
into play in the usual way.  
Page 24  
[59] We would finally note that we have concluded that the three factors that signal the existence  
of an issue of standard form contract interpretation are present in relation to the issues of  
interpretation raised in these appeals. Each of the appeals involves the interpretation of a contract  
that uses standard form language. The interpretation of each ULP is, at the very least, of  
precedential value to the insurer and insureds who have contracted and may in the future contract  
under the same or a similar standard form ULP. There is no suggestion that there is a meaningful  
factual matrix specific to the parties that would assist with the interpretation of any of the issues  
of contract interpretation before the Court. Our reasons for these conclusions are explained below.  
C.  
In the Exercise of Judicial Discretion  
[60] The standard of review of an exercise of judicial discretion is deferential, meaning an  
appellate court is not entitled to substitute its own discretion for that of the judge vested with the  
authority merely because it would have exercised the authority differently (Friends of the Oldman  
River Society v Canada (Minister of Transport), [1992] 1 SCR 3 at 7677).  
[61] The Court’s decision in Rimmer v Adshead, 2002 SKCA 12 at para 58, [2002] 4 WWR 119  
[Rimmer], is the most commonly referenced case in Saskatchewan for the standard of appellate  
review of the discretionary decisions of judges. Building on the principles that underpin the rule  
of law and recognising that no discretionary power is completely unfettered or unlimited,  
Cameron J.A. said, “the powers in issue are discretionary and therefore fall to be exercised as the  
judge vested with them thinks fit, having regard for such criteria as bear upon their proper  
exercise”. The criteria that bear upon the proper exercise of judicial discretion “are legal criteria,  
and their definition as well as a failure to apply them or a misapplication of them raise questions  
of law” (British Columbia (Minister of Forests) v Okanagan Indian Band, 2003 SCC 71 at para 43,  
[2003] 3 SCR 371 [Okanagan]). As such, these questions of law are subject to appellate review  
on the standard of correctness (Housen at paras 89 and 33).  
[62] An appellate court may also intervene where a judge who is vested with a discretionary  
authority has failed to give any or sufficient weight to a consideration that is relevant to its exercise  
(Penner v Niagara (Regional Police Services Board), 2013 SCC 19 at para 27, [2013] 2 SCR 125;  
MiningWatch Canada v Canada (Fisheries and Oceans), 2010 SCC 2 at para 43, [2010] 1 SCR 6;  
Strom v Saskatchewan Registered Nurses’ Association, 2020 SKCA 112 at para 60, [2020] 12  
 
Page 25  
WWR 396 [Strom]; Kot v Kot, 2021 SKCA 4 at paras 1519 [Kot]; and Fontaine at para 36) or  
where the judge has made a palpable and overriding error when assessing the evidence (Okanagan  
at para 43; Strom at paras 6063; Rimmer at para 58 refers to such errors as “disregard [of] a  
material matter of fact”).  
[63] The Court recently summarised the foregoing in Kot:  
[20]  
In summary, these cases confirm that appellate intervention in a discretionary  
decision is appropriate where the judge made a palpable and overriding error in their  
assessment of the facts, including as a result of misapprehending or failing to consider  
material evidence. Appellate intervention is also appropriate where the judge failed to  
correctly identify the legal criteria which governed the exercise of their discretion or  
misapplied those criteria, thereby committing an error of law. Such errors may include a  
failure to give any or sufficient weight to a relevant consideration.  
D.  
In Evidentiary Matters  
[64] In each appeal and cross-appeal, the parties have raised questions as to the admissibility of  
evidence, the relevance of evidence, or the application of exclusionary rules of evidence. Although  
the standard of review relating to the admission of evidence depends on the nature of the question,  
questions of the nature raised in these matters are typically questions of law and, therefore, would  
be subject to the standard of correctness: Southam at para 41; Hess v Thomas Estate, 2019 SKCA  
26 at para 30, 433 DLR (4th) 60; and Donald J.M. Brown, Civil Appeals, loose-leaf (Rel 2020-4)  
vol 2 (Toronto: Thomson Reuters, 2019) at para 12:5320. However, we find no need to address  
the standard of review relating to these evidentiary issues any further. Given our conclusions as to  
the proper scope of admissible evidence about the circumstances surrounding contract formation  
in relation to issues of standard form contract interpretation, the evidence proffered by the parties  
is by and large irrelevant and inadmissible.  
V.  
THE SATTVA APPROACH  
A. Consensus Ad Idem  
[65] In the language of appellate review, these appeals are about determining whether the Judge  
erred in his interpretations of the ULPs. Cast in terms of the standard of review, the question is  
whether the Judge correctly identified the applicable lawwhich, in these matters, is limited to  
the principles of contract interpretationand correctly applied the law to the facts.  
     
Page 26  
[66] To answer those questions, we must first identify the Judges target, which may be simply  
done. The goal of all contract interpretation is to ascertain consensus ad idem. Consensus ad  
idema phrase that, like many Latin phrases, has largely fallen into disuse by Canadian courts—  
is the meeting of the mindsbetween or among the parties to a contract. Consensus ad idem arises  
when all parties understand and accept the contractual commitments each party has made to the  
others (Jedfro Investments (U.S.A.) Ltd. v Jacyk, 2007 SCC 55 at para 17, [2017] 3 SCR 679, citing  
with approval Paal Wilson & Co. A/S v Partenreederei Hannah Blumenthal (1982), [1983] 1 All  
ER 34 (HL) [Paal Wilson]). In Paal Wilson, Lord Diplock wrote (at 4849):  
To create a contract by exchange of promises between two parties where the promise of  
each party constitutes the consideration for the promise of the other what is necessary is  
that the intention of each as it has been communicated to and understood by the other (even  
though that which has been communicated does not represent the actual state of mind of  
the communicator) should coincide. That is what English lawyers mean when they resort  
to the latin phrase consensus ad idem and the words that I have italicised are essential to  
the concept of consensus ad idem, the lack of which prevents the formation of a binding  
contract in English law.  
(Emphasis in original)  
[67] There can be no enforceable contract without consensus ad idem. The concept it expresses  
underpins the fundamental requirements of contract formation, namely, offer, acceptance,  
consideration and communication. It holds that every party to an enforceable contract must have  
the same understanding as to the content of each of its fundamental requirements. For an  
enforceable contract to come into existence, the parties must reach consensus ad idem as to what  
has been offered and accepted and as to the consideration therefor. This can only occur where  
those promises have been communicated to, and understood by, all of the parties. Consensus ad  
idem is essential to contract formation and enforcement and it is, therefore, the object of contract  
interpretation.  
[68] In the appellate jurisprudence, the phrase consensus ad idem is now generally described in  
terms of the intentions or true intentions or mutual intentions or objective intentions of the parties  
at the time they entered into the contract (Teal Cedar SCC at para 57; Ledcor at paras 33 and 38;  
Sattva at paras 55 and 57; Jesuit Fathers of Upper Canada v Guardian Insurance Co. of Canada,  
2006 SCC 21 at para 27, [2006] 1 SCR 744; Eli Lilly & Co. v Novopharm Ltd., [1998] 2 SCR 129  
at paras 54 and 56 [Eli Lilly]; Consolidated-Bathurst Export Ltd. v Mutual Boiler and Machinery  
Insurance Co., [1980] 1 SCR 888 at 901 [Consolidated-Bathurst]; Gilchrist v Western Star Trucks  
Page 27  
Inc., 2000 BCCA 70 at para 17, 73 BCLR (3d) 102 [Gilchrist]; Davidson v Allelix Inc. (1991), 86  
DLR (4th) 542 (Ont CA) at 547; Swan Text at 259; Hall Text at 913; McCamus Text at 801803;  
Gerald H.L. Fridman, The Law of Contract in Canada, 6th ed (Toronto: Carswell, 2011) at 1317  
[Fridman Text]; and S.M. Waddams, The Law of Contracts, 7th ed (Toronto: Thomson Reuters,  
2017) at 97103).  
[69] However, and this must be kept front of mind at all times, the issue is not what the parties  
subjectively understood or intended, or later came to think the agreement was (see, for example,  
Halifax (Regional Municipality) v Canadian National Railway Company, 2014 NSCA 104 at  
paras 57 and 63, 353 NSR (2d) 18; see also Eli-Lilly at para 54). Unlike statutes4 or constitutional  
documents5, the meaning of a contract is fixed at the time of its formationit does not come to  
mean something else over time. As the learned author states in the Hall Text (at 5051):  
It is a fundamental precept of the law of contractual interpretation that the exercise is  
objective rather than subjective. The goal in interpreting an agreement is to discover,  
objectively, the partiesintention at the time the contract was made.[Emphasis added.]  
The objective approach applies to both the words of the contract and their context.  
Therefore, the exercise is not to determine what the parties subjectively intended but what  
a reasonable person would objectively have understood from the words of the document  
read as a whole and from the factual matrix. “Bearing in mind the relevant background, the  
purpose of the document, and considering the entirety of the document, what would the  
parties to the document reasonably have understood the contested words to mean?”  
[Emphasis added.] Put another way, [i]n interpreting a contract, what is relevant is the  
parties’ outward manifestations…”.  
The objective nature of the endeavour affects the entire interpretive exercise. It defines the  
perspective for interpretationthe words in their context mean not what the parties  
subjectively believe them to mean but rather what a reasonable third party would take them  
to meanand renders evidence of subjective intention absolutely inadmissible.  
(Footnotes omitted; emphasis in original, italics emphasis added)  
[70] Similarly, in the Fridman Text, the learned professor states (at 1516):  
The law is concerned not with the partiesintentions but with their manifested  
intentions. It is not what an individual party believed or understood was the meaning of  
what the other party said or did that is the criterion of agreement; it is whether a reasonable  
man in the situation of that party would have believed and understood that the other party  
was consenting to the identical terms. As Fraser C.J.A. said in Ron Ghitter Property  
Consultants Ltd. v. Beaver Lumber Co. [(2003), 17 Alta LR (4th) 243 at 249 (CA)]:  
4 See R v Perka, [1984] 2 SCR 232 at 265.  
5 See Reference re Same-Sex Marriage, 2004 SCC 79 at para 22, [2004] 3 SCR 698, and Edwards v Attorney-General  
for Canada (1929), [1930] AC 124 (PC).  
Page 28  
…the parties will be found to have reached a meeting of the minds, in other  
words be ad idem, where it is clear to the objective reasonable bystander,  
in light of all the material facts, that the parties intended to contract and  
the essential terms of that contract can be determined with a reasonable  
degree of certainty.  
Sometimes it is a simple matter to decide what the parties have manifested to each other,  
and consequently, whether they have agreed, and if so, upon what. This is especially true  
where a document containing their agreement has been prepared and signed by the parties.  
If the plain wording of the document reveals a clear and unambiguous intent, it is not  
necessary to go further. Indeed, once that has been done, it may not be possible to have  
recourse outside such document, either to other written material or to parol evidence from  
the parties or anyone else, in order to explain, or otherwise clarify what is contained in the  
document.  
(Footnotes omitted, emphasis added)  
[71] Regardless of nomenclature, the role of courts in interpreting contracts is to give effect to  
the bargain by which the parties intended to be bound: Ruth Sullivan, Contract Interpretation in  
Practice and Theory (2000), 13 SCLR (2d) 369 (QL) at para 24. As such, when asked to interpret  
a contract, the courts principal objectives are to determine whether there was consensus ad idem  
at the time the parties purportedly made their contract and, if so, what it entailed.  
[72] In every case, contract interpretation begins with the words of the contract, whether  
reduced to writing or not. To give meaningful effect to consensus ad idem, the interpretive process  
must remain firmly grounded in the language chosen by the parties to govern their relationship.  
Contextual factors are used to assist with achieving an accurate interpretation of the contract.  
Contextual assistance is gleaned from the contract itself and from the circumstances surrounding  
its formation, i.e., the factual matrix (Prenn v Simmonds, [1971] 3 All ER 237 (HL) at 239240  
[Prenn]; and Sattva). However, because contract interpretation involves the examination of both  
text and context, interpretive friction may arise between the ordinary meaning of the text of a  
contract and the meaning suggested by the factual matrix.  
[73] The first principle of contract interpretation is that the parties to a contract are presumed to  
have intended what the text of the contract actually says (Eli Lilly at para 56; Heritage Capital at  
para 47; Fischbach & Moore of Canada Ltd. v Noranda Mines Limited, Potash Division (1971),  
19 DLR (3d) 329 (Sask CA); UMA/B&V Ltd. v SaskPower International Inc., 2007 SKCA 40 at  
para 26, [2007] 6 WWR 277, leave to appeal to SCC refused, 2007 CanLII 40508; Salah v  
Timothys Coffees of the World Inc., 2010 ONCA 673 at para 16, 268 OAC 279; Goodlife Fitness  
Page 29  
Centres Inc. v Rock Developments Inc., 2019 ONCA 58 at para 15; Fridman Text at 436438; and  
Hugh G. Beale, ed, Chitty on Contracts, 31st ed, vol 1 (London: Sweet and Maxwell, 2012) at  
932). This is the cardinal presumption of contract interpretation and it places the written agreement  
of the parties at the core of the interpretive process.  
[74] Under a strict textualist approach, the words of the contract is where interpretation starts  
and ends. Strict textualism is not the law in Canada. The proper approach to contract interpretation  
is that outlined by Rothstein J. in Sattva. It is our view that the Sattva approachwith the caveat  
set out belowestablishes the general framework for the interpretation of all contracts under  
Canadian law.6  
[75] Under the approach outlined in Sattva, this cardinal presumption remains and the  
interpreting court also looks outside the text of the contract to objective evidence of the mutual  
intention of the parties to assist with the interpretation of the text. This is the approach consistently  
taken by Canadian courts (see, for examples, Sattva at para 57; Eli Lilly at paras 54567; BG Checo  
International Ltd. v British Columbia Hydro and Power Authority, [1993] 1 SCR 12 at 2324 [BG  
Checo]; Pacific National Investments Ltd. v Victoria (City), 2004 SCC 75 at para 31, [2004] 3  
SCR 575; Spencer Health Network Inc. v Co-operators Life Insurance Company, 2018 SKQB 244  
at paras 7379; Swan Text at 259; Hall Text at 913; and McCamus Text at 805808). We note  
that this approach was most recently affirmed by the Supreme Court in the context of  
post-incorporation contracts in Owners, Strata Plan LMS 3905 v Crystal Square Parking Corp.,  
2020 SCC 29, 450 DLR (4th) 105, where Côté J. said:  
[37]  
To conclude, the applicable test for finding that a post-incorporation contract exists  
is the same as the one for finding that any other agreement exists at common law. The test  
is objective, and the offer, acceptance, consideration and terms may be inferred from the  
partiesconduct and from the surrounding circumstances.  
6 In the United Kingdom, all contracts “must be interpreted objectively by asking what a reasonable person, with all  
the background knowledge which would reasonably have been available to the parties when they entered the contract,  
would have understood the language of the contract to mean” (The Financial Conduct Authority and others v Arch  
Insurance (UK) Ltd. and others, [2021] UKSC 1 at para 47; see also: Wood v Capita Insurance Services, [2017] UKSC  
24).  
7 The decision in Eli-Lilly states the current law on the inadmissibility of extrinsic evidence of intent, but the holding  
in Eli-Lilly to the effect that a factual matrix is not relevant unless the court first finds ambiguity in the contract text  
has been overruled by Tercon Contractors Ltd. v British Columbia (Transportation and Highways), 2010 SCC 4 at  
paras 6566, [2010] 1 SCR 69 [Tercon], and Sattva.  
Page 30  
[76] Finally, we are aware that, in Ledcor, Wagner J. affirmed the existence of and applied the  
“governing principles of interpretation applicable to insurance policies…summarized by  
Rothstein J. in Progressive Homes(at para 49). Similarly, we recognise that there are special  
principles for interpreting certain other categories of contract, including employment contracts,  
performance bonds, guarantees and releases, etc. If we are correct in holding that there is a single,  
general framework for the interpretation of all contracts, these specialised principles, including  
those summarised in Progressive Homes Ltd. v Lombard General Insurance Co. of Canada, 2010  
SCC 33, [2010] 2 SCR 245 [Progressive Homes], which received great attention from the parties  
in these matters, must be reconciled with the dicta in Sattva. It is our view such a reconciliation is  
possible, as we agree with the statement in the Hall Text that apparent exceptions to Sattva can  
generally be explained as resulting from a principled application of the Sattva approach in the  
context of the type of contract in question.  
[77] However, it is not necessary to deal further with the Progressive Homes framework  
because, as we have noted above and will more fully explain below, the issues of standard form  
contract interpretation before us in these matters do not engage with those principles and, in  
particular, do not relate to a commercial insurance contract of the kind considered in Ledcor.  
B.  
The Factual Matrix  
[78] In addition to the contested aspects of the text of the contract, the contract as a whole,  
ordinary dictionaries, style guides and the rules of grammar (which are interpretive aids under a  
textualist approach), the interpreting court must examine the relevant factual matrix, i.e., the  
circumstances surrounding contract formation. When describing this aspect of the analysis in  
Sattva, Rothstein J. wrote:  
[47]  
…[T]he interpretation of contracts has evolved towards a practical, common-sense  
approach not dominated by technical rules of construction. The overriding concern is to  
determine the intent of the parties and the scope of their understanding(Jesuit Fathers  
of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R.  
744, at para. 27, per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia  
(Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 64-65, per  
Cromwell J.). To do so, a decision-maker must read the contract as a whole, giving the  
words used their ordinary and grammatical meaning, consistent with the surrounding  
circumstances known to the parties at the time of formation of the contract. Consideration  
of the surrounding circumstances recognizes that ascertaining contractual intention can be  
difficult when looking at words on their own, because words alone do not have an  
immutable or absolute meaning:  
 
Page 31  
No contracts are made in a vacuum: there is always a setting in which they  
have to be placed. ...In a commercial contract it is certainly right that the  
court should know the commercial purpose of the contract and this in turn  
presupposes knowledge of the genesis of the transaction, the background,  
the context, the market in which the parties are operating.  
(Reardon Smith Line, at p. 574, per Lord Wilberforce)  
[48]  
The meaning of words is often derived from a number of contextual factors,  
including the purpose of the agreement and the nature of the relationship created by the  
agreement (see Moore Realty Inc. v. Manitoba Motor League, 2003 MBCA 71, 173 Man.  
R. (2d) 300, at para. 15, per Hamilton J.A.; see also Hall, at p. 22; and McCamus, at  
pp. 749-50). As stated by Lord Hoffmann in Investors Compensation Scheme Ltd. v. West  
Bromwich Building Society, [1998] 1 All E.R. 98 (H.L.):  
The meaning which a document (or any other utterance) would convey to  
a reasonable man is not the same thing as the meaning of its words. The  
meaning of words is a matter of dictionaries and grammars; the meaning  
of the document is what the parties using those words against the relevant  
background would reasonably have been understood to mean. [p. 115]  
[79] See also Prenn, where Lord Wilberforce wrote (at 239240):  
In order for the agreement of 6th July 1960 to be understood, it must be placed in its  
context. The time has long passed when agreements, even those under seal, were isolated  
from the matrix of facts in which they were set and interpreted purely on internal linguistic  
considerations. ...We must ...enquire beyond the language and see what the circumstances  
were with reference to which the words were used, and the object, appearing from those  
circumstances, which the person using them had in view. …  
[80] The House of Lords more recently addressed the breadth of evidence relevant to contract  
interpretation in Investors Compensation Scheme Ltd. v West Bromwich Building Society, [1998]  
1 WLR 896 (HL) at 913 [Investors Compensation], where Lord Hoffman described the factual  
matrix as including absolutely anything which would have affected the way in which the language  
of the document would have been understood by a reasonable man(at 913). However,  
Lord Hoffman also confirmed that absolutely anythingdoes not include evidence of previous  
negotiations between the parties and evidence of the partiessubjective intentions. Critically, he  
observed that background facts must have been reasonably available to all parties at the time of  
contracting (at 913).  
[81] Drawing on this, Rothstein J. described in Sattva similar conceptual limits on the breadth  
of relevant surrounding circumstances:  
[58]  
The nature of the evidence that can be relied upon under the rubric of surrounding  
circumstanceswill necessarily vary from case to case. It does, however, have its limits. It  
should consist only of objective evidence of the background facts at the time of the  
execution of the contract (King, at paras. 66 and 70), that is, knowledge that was or  
Page 32  
reasonably ought to have been within the knowledge of both parties at or before the date  
of contracting. Subject to these requirements and the parol evidence rule discussed below,  
this includes, in the words of Lord Hoffmann, absolutely anything which would have  
affected the way in which the language of the document would have been understood by a  
reasonable man(Investors Compensation Scheme, at p. 114). Whether something was or  
reasonably ought to have been within the common knowledge of the parties at the time of  
execution of the contract is a question of fact.  
[82] In short, extrinsic evidence of the circumstances surrounding contract formation is relevant  
and material if it assists with or is probative of the accurate interpretation of contested contract  
text. That evidence may be particularly useful where the text of the contract appears to be unclear,  
ambiguous, or fails to deal expressly with the matter in dispute. Nonetheless, and in keeping with  
the cardinal presumption, the interpreting courts goal is always to discern and give effect to the  
meaning of the disputed text. In Sattva, Rothstein J. put it in these terms:  
[57]  
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 (Hayes  
Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to  
deepen a decision-makers understanding of the mutual and objective intentions of the  
parties as expressed in the words of the contract. The interpretation of a written contractual  
provision must always be grounded in the text and read in light of the entire contract (Hall,  
at pp. 15 and 30-32). While the surrounding circumstances are relied upon in the  
interpretive process, courts cannot use them to deviate from the text such that the court  
effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility  
Cellular Inc. (1997), 101 B.C.A.C. 62).  
(Emphasis added)  
[83] The Supreme Court has since confirmed these principles and given guidance as to what  
type of extrinsic evidence is generally relevant and material:  
(a)  
The factual matrix assists in discerning the meaning of the words that the parties  
chose to express their agreement; it is not a means by which to change the words  
of the contract in a manner that would modify the rights and obligations that the  
parties assumed thereunder(Resolute FP Canada Inc. v Ontario (Attorney  
General), 2019 SCC 60 at para 78, 444 DLR (4th) 77, Côté and Brown JJ. (Rowe J.  
concurring), citing Hall Text, at 3334).  
(b)  
Extrinsic evidence of surrounding circumstance is not to be used to change or  
overrule the meaning of [the] words [of a contract](Sattva at para 60).  
Page 33  
(c)  
(d)  
The use of a factual matrix is limited by the legal principle that contractual  
interpretation must remain grounded in the text of the contract so as to avoid  
effectively creating a new agreement between the parties(Teal Cedar SCC at  
para 63).  
Interpretation of written contractual provisions must be grounded in the text and  
read in light of the entire contractand [s]urrounding circumstances, including  
knowledge that was or reasonably ought to have been within the knowledge of  
both parties at or before the date of contracting, may be considered in interpreting  
the terms of a contract, although they may not overwhelm the contracts express  
words(Fontaine at para 37).  
(e)  
(f)  
The purpose behinda contract may inform the interpreting court of the parties’  
reasonable expectations as to the meaning of a contested term (Ledcor at para 66).  
Evidence of one partys subjective intention therefore has no independent place’  
when considering the circumstances surrounding the formation of a contract(S.A.  
v Metro Vancouver Housing Corp., 2019 SCC 4 at para 30, [2019] 1 SCR 99, citing  
Eli Lilly at para 54).  
(g)  
The nature of the evidence upon which an interpreting court may rely consists only  
of objective evidence of the background facts at the time of the execution of the  
contract(Sattva at para 58, citing King v Operating Engineers Training Institute  
of Manitoba Inc., 2011 MBCA 80 at paras 66 and 70, 270 Man R (2d) 63), namely,  
knowledge that was or reasonably ought to have been within the knowledge of  
both parties at or before the date of contracting(Sattva at para 58).8  
[84] Aggregating this guidance in the most encompassing of terms, relevant extrinsic evidence  
will include anything that tends to establish the facts known, or facts that reasonably ought to have  
been known, to all parties at or before the date of contracting and that deepens the interpreting  
courts understanding of the mutual and objective intention of the parties as expressed by the words  
8 For the purposes of appellate review, Sattva also stands for the proposition that questions as to whether something  
was or ought to have been within the common knowledge of the parties at the time of execution of the contract is a  
question of fact (at para 58).  
Page 34  
of the contract (Sattva at paras 57, 58 and 60). Broadly stated, the proper approach to contract  
interpretation involves the determination of consensus ad idem on the basis of the text of the  
contract as a whole together with a matrix of extrinsic evidence that objectively manifests what  
the parties understood the contested contract text to mean at the time of contract formation.  
[85] In Ledcor, Wagner J. also observed that an interpreting court must consider factors such  
as the purpose of the contract, the nature of the relationship it creates, and the market or industry  
in which it operates(at para 31; see also Sattva at para 48). In a commercial context, these three  
factors allow an interpreting court to take a more expansive approach to determining the parties’  
common intentions in relation to an issue of standard form contract interpretation (Sattva at  
para 118; and McCamus Text at 805808). This has long been the case. In Hillas & Co., Ltd. v  
Arcos, Ltd., [1932] All ER 494 (HL) at 503504, Lord Wright wrote:  
Business men often record the most important agreements in crude and summary  
fashion; modes of expression sufficient and clear to them in the course of their business  
may appear to those unfamiliar with the business far from complete or precise. It is,  
accordingly, the duty of the court to construe such documents fairly and broadly, without  
being too astute or subtle in finding defects; but, on the contrary, the court should seek to  
apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam  
pereat [i.e., words are to be understood that the object may be carried out and not fail9].  
That maxim, however, does not mean that the court is to make a contract for the parties, or  
to go outside the words they have used, except in so far as there are appropriate implications  
of law, as, for instance, the implication of what is just and reasonable to be ascertained by  
the court as matter of machinery where the contractual intention is clear but the contract is  
silent on some detail. …  
[86] A court has less scope to consider evidence of surrounding circumstances of this kind  
where the issue of standard form contract interpretation relates to a consumer contract rather than  
a commercial contract. However, as we have indicated above, the fact that an issue before the court  
is one of standard form contract interpretation does not mean that no evidence of surrounding  
circumstances is admissible in relation to it. A factual matrix may still exist, but it mustgiven it  
is only where there is no meaningful factual matrix specific to the parties that such an issue arises—  
be the same for all who use the same standard form contract language to govern their contractual  
relationship.  
9 As translated in Canada Square Corp. v Versafood Services Ltd. (1981), 130 DLR (3d) 205 (WL) (Ont CA) at  
para 32, and Sherry v CIBC Mortgages Inc., 2016 BCCA 240 at para 61, 88 BCLR (5th) 105.  
Page 35  
[87] We note, for example, that in the case of a consumer insurance contract, the insureds  
knowledge is taken to be that of the average person applying for insurance and not a person versed  
in the niceties of insurance law(Sabean at para 13; National Bank of Greece (Canada) v  
Katsikonouris, [1990] 2 SCR 1029 at 1043; and Co-operators Life Insurance Co. v Gibbens, 2009  
SCC 59 at para 21, [2009] 3 SCR 605 [Gibbens]). Knowledge of that kind, lacking specificity as  
it does, will often be of little use in determining the meaning of contested contract language. In the  
result, an issue of standard form contract interpretation will often turn entirely on the disputed  
contract language, considered in the context of the contract as a whole, or by taking into account  
broader societal interests, or under the blunt instrument of contra proferentem (Hall Text at 218–  
221). Extrinsic evidence, including as to purpose, relationship and the market or industry, will  
often add little or nothing to the analysis.  
C.  
Legislation and Terms of Art  
[88] The parties have raised issues of standard form contract interpretation that the Respondents  
submit are informed by legislation and substantive common law. By substantive common law, we  
mean common law other than the law of contract interpretation. In particular, the Respondents say  
the Courts interpretation of the word premium or the term payment of premiums, which are used  
in each of the ULPs to describe monies paid by the insured to the insurer, must recognise the  
statutory definition of premium under The Saskatchewan Insurance Act, RSS 1978, c S-26 [The  
Insurance Act, 1978], as well as the meaning courts have attributed to premium in previous cases.  
These factors were central to the conclusion reached by the Judge that the word premium is a legal  
term of art, meaning an amount paid for insurance.  
[89] As noted, issues of contract interpretation may also raise questions as to the effect of statute  
law10 or common law on the interpretation of a disputed contract provision. For example, for public  
policy reasons, a legislature may have interfered with the freedom to contract by statutorily  
imposing contractual terms and conditions on contracting parties.11 Legislated rules of contract of  
10 See also Fontaine v Canada (Attorney General), 2020 ONCA 688, in respect of the application of court protocols  
in the context of the interpretation of a residential school settlement agreement.  
11 See, for example, The Insurance Act, 2015, ss 8-28, 8-41, 8-95 and 8-166. Pursuant to s. 7-27(1)(n)(i) of The  
Insurance Act, 2015, the Lieutenant Governor in Council may make regulations respecting life insurance policies that  
provide for “either or both of the form and contents of” a life insurance policy, an application therefor, and an  
endorsement or rider thereon, etc. See also Hart Stores Inc. v 3409 Rue Principale Inc., 2020 NBCA 49 at para 45.  
 
Page 36  
this or any other kind must be applied when identifying and interpreting the contract or provision  
at issue. In such cases, the interpreting court must approach interpretation of the  
statutorily-imposed term or condition as a question of law.12 This factor is not mentioned in Sattva  
or Ledcor.  
[90] Statutory provisions that fall within this category are those that impose or prohibit  
contractual conditions or speak directly to the interpretation of a contract in some other way. In  
the latter respect, using Saskatchewan insurance contracts as the example, ss. 8-121(3) and  
8-178(3) of The Insurance Act, 2015 each provide: A designation in favour of the heirs, next  
of kinor estateof an insured, or the use of words having similar meaning in a designation, is  
deemed to be a designation of the personal representative of the insured. Under these provisions,  
the Legislature has expressly fixed the meaning of certain words and phrases when used in a  
Saskatchewan insurance contract. An interpreting court must follow that legislated interpretation.  
[91] A legislature may also prescribe the circumstances under which a contractual term or  
condition is unenforceable, invalid or void. Again, using Saskatchewan insurance contracts as the  
example, s. 8-8(9) of The Insurance Act, 2015 states that the question of materiality in any  
contract of insurance is a question of fact. The provision then goes on to provide that no  
admission, term, condition, stipulation, warranty or proviso to the contrary contained in the  
application for insurance or in the policy or in any agreement or document relating to the contract  
has any force or validity(emphasis added).  
[92] A legislature may even deem certain evidence inadmissible for the purposes of contract  
interpretation, thereby interfering with the interpreting courts broad discretion on matters of  
evidence and supplanting the Sattva approach. See, for example, s. 8-8(1) of The Insurance Act,  
2015, which provides:  
All the terms and conditions of a contract of insurance must be set out in full in the policy  
or in writing securely attached to the policy when it is issued, and unless so set out no term  
of the contract or condition, stipulation, warranty or proviso modifying or impairing its  
effect is valid or admissible in evidence to the prejudice of the insured or a person to whom  
insurance money is payable under the contract of insurance.  
12  
For example, see Metropolitan Toronto Condominium Corporation No. 590 v The Registered Owners and  
Mortgagees of Metropolitan Toronto Condominium Corporation No. 590, 2020 ONCA 471 at paras 1315.  
Page 37  
[93] In our opinion, however, this principle does not extend to statutory provisions that deal  
with the subject matter of a contract, such as insurance, as opposed to the contract itself. As a rule,  
the mere fact that an enactment defines or uses a word or phrase also found in a contract does not  
affect the interpretation of that word or phrase as used in that contract. This reflects the application  
of the cardinal presumption under the Sattva approach; that is, the parties intended the legal  
consequences of the words they chose to use, which is determined by the ordinary meaning of  
those words and the way in which they are used in the contract, interpreted in light of the  
surrounding circumstances. If the contract or extrinsic evidence does not disclose that the  
contracting parties intended the meaning of a word in their contract to accord with the definition  
or usage of that word in legislation, the legislated meaning would not apply.  
[94] Where the contract is a commercial contract, rather than a consumer contract, the Sattva  
approach can lead to a different result due to the probative value of industry-specific language,  
knowledge and practices that are specific to an industry or a commercial setting. This is reflected  
in the concept of legal terms of art. This, too, is a concept that was not specifically considered  
in either Sattva or Ledcor. It was, however, relied on by the Judge in determining the meaning of  
premium. In each of his decisions, the Judge defined the word premium or the phrase payment of  
premiums by looking outside the text of the contract. He concluded that, when premium is used in  
the insurance context, it is understood to have such a status and specific meaning that it has  
become a legal term of art that must be adhered to when interpreting an insurance policy(Mosten  
Decision at para 119; Atwater Decision at para 129; and Ituna Decision at para 117).  
[95] The dissenting reasons of LHeureux-Dubé J. in Manulife Bank of Canada v Conlin, [1996]  
3 SCR 415 at para 44 [Conlin], are of interest in this context. In that case, where she was the only  
judge to write on this point, LHeureux-Dubé J. framed her reasons by first quoting the following  
passage from Lord Diplock in Sydall v Castings Ltd., [1967] 1 QB 302 (CA) at 313314 (at  
para 42):  
Documents which are intended to give rise to legally enforceable rights and duties  
contemplate enforcement by due process of law which involves their being interpreted by  
courts composed of judges, each one of whom has his personal idiosyncrasies of sentiment  
and upbringing, not to speak of age. Such documents would fail in their object if the rights  
and duties which could be enforced depended upon the personal idiosyncrasies of the  
individual judge or judges upon whom the task of construing them chanced to fall. It is to  
avoid this that lawyers, whose profession it is to draft and to construe such documents,  
have been compelled to evolve an English language, of which the constituent words and  
Page 38  
phrases are more precise in their meaning than they are in the language of Shakespeare or  
of any of the passengers on the Clapham omnibus this morning. These words and phrases  
to which a more precise meaning is so ascribed are called by lawyers terms of artbut  
are in popular parlance known as legal jargon. …  
(Emphasis added by LHeureux-Dubé J.)  
[96] Justice LHeureux-Dubé went on to define legal term of art in the context of contract  
interpretation:  
[43]  
After having specified the nature of legal terms of art, Lord Diplock stated the  
basic rule of judicial interpretation, as well as the methodology, that are applicable in that  
context (at p. 314):  
The words and phrases...which are terms of artmust therefore be given  
the meaning which attaches to them as terms of art;...  
The lexicon of terms of art is to be found in the decided cases and in the textbooks consulted  
by legal practitioners.  
[44]  
It is quite obvious that where courts expound judicial interpretations of legal  
terms of artusing such external aids as legal textbooks, the resulting outcome cannot  
appropriately be labelled a plain meaningdefinition.  
[45]  
Where an instrument uses a legal term of art, there is a presumption that the term  
of art is used in its correct legal sense: Inland Revenue Commissioners v. Williams, [1969]  
1 W.L.R. 1197 (Ch.; Megarry J.).  
[46]  
This is the presumption that is resorted to by my colleague Iacobucci J. when he  
makes use of admissible external aidsi.e.: McGuinness, supra,in determining the  
correct meaning of the phrase to give time. As McGuinness reviews extensive case-law  
authority that establishes the generally accepted meaning in lawof these legal terms of  
art, it is an admissible external aid to judicial interpretation: see Driedger, supra, at  
pp. 428, 468 and 474; see also P.-A. Côté, The Interpretation of Legislation in Canada  
(2nd ed. 1991), at pp. 449-53 and 457-58.  
[97] This reasoning fits comfortably with Sattva, Ledcor and our approach to issues of standard  
form contract interpretation. The reference to legal terms of art, like the reference to boilerplate  
clauses, is a reference to contractual terms that may be used in a fashion such that they have the  
three characteristics that make them standard form contract language. That being so, they have  
precedential value. In Ledcor, Wagner J. spoke tangentially to this point when he preferred an  
interpretation of a term of the contract in question because it was consistent with previous  
interpretations of similar clauses in the jurisprudence(at para 63).  
[98] The decision in IFP Technologies, which was relied on by the Judge, illustrates this  
principle. As the Judge noted, the Alberta Court of Appeal there held that the term working interest  
was a legal term of art that had an accepted meaning and usage in the oil and gas industry and,  
Page 39  
therefore, the Court interpreted the contracts in question using that accepted meaning and usage.  
The Judge adopted the following reasoning in IFP Technologies, where Fraser C.J.A. characterised  
this approach as analogous to the reasoning relating to standard form contracts:  
[60]  
Where a standard form contract is involved, the standard of review that applies to  
its interpretation is usually correctness: [Ledcor at paras 4, 24, 46, 48]. As the Supreme  
Court noted, these are highly specialized contracts typically sold widely to customers  
without negotiation of their terms and their interpretation could affect a large number of  
people. As a result, it would be undesirable for courts to interpret identical standard form  
provisions inconsistently.  
[61]  
By analogy, this reasoning applies with equal force to legal terms of art which have  
a common meaning to participants in a given industry. In such event, there is no identified  
need to define what such terms mean. Participants in the oil and gas industry rely on the  
commonly accepted usage of many terms: see, for example, the Glossary of Land Terms  
published by the Canadian Association of Petroleum Land Administration (CAPLA):  
CAPLA, Glossary of Land Terms 2016, NEXUS (September 2016) 9 at 15. Working  
interestis one of them. Since this term has an accepted meaning and usage in this sector,  
and its interpretation has precedential value, it must therefore be interpreted consistently.  
Thus, where the issue involves the meaning of a legal term of art in this case, working  
interestas used in the oil and gas industry the standard of review with respect to the  
meaning of that term is correctness. [Footnote omitted]  
[62]  
While a legal term of art may be modified by the parties to an agreement, that does  
not permit a trial judge to ignore the meaning attributable to it in the absence of such  
modification. To do so is tantamount to failing to take into account a key term of a contract  
or relevant factor or ignoring applicable principles and governing authorities. That, in turn,  
is a question of law reviewable for correctness: Sattva, supra at para 53; Deslaurier Custom  
Cabinets Inc. v 1728106 Ontario Inc., 2017 ONCA 293 at paras 65-68. …  
[99] As we have said, we do not see this as analogous reasoning but as an application of the  
same principles of precedential value to terms of art, as they would apply to any other standard  
form contract language. Cast in the terms we have adopted, the interpretation of a legal term of art  
isif the three defining characteristics existan issue of standard form contract interpretation. A  
term of art is standard form contract language, repeatedly used without a meaningful factual matrix  
specific to the parties. As Fraser C.J.A. explained, it is a term of art precisely because it has a  
known and accepted meaning and usage in a given industry. Where participants in that industry  
have used such standard form contract language and there is no meaningful factual matrix specific  
to the parties in relation to that language, the accepted meaning and usage constitutes a part of the  
factual matrix because it is known or ought to be known by industry participants.  
Page 40  
[100] The issue in these matters is whether the use of the word premium or the phrase payment  
of premiums meets this standard and is, accordingly, an issue of standard form contract  
interpretation. That issue is addressed below.  
VI. ANALYSIS  
A.  
Introduction  
[101] These matters raise two broad questions for the Court to answer: (a) did the Judge err in  
his interpretation of any of the ULPs; and (b) did the Judge err in his interpretation of the 2018  
Regulation? As to the first of these, the principal issue of contract interpretation before the Judge  
in each case was whether the ULP in question allowed for an insured to invest an unlimited amount  
in the side account.  
[102] The parties submit the Judge correctly identified Ledcor as outlining the basic framework  
for interpreting the ULPs qua standard form insurance contracts, but they disagree as to how it  
should be applied. With respect, we have a different opinion. For the reasons explained above, we  
agree that Ledcor governs the choice of appellate standard of review in relation to the issues of  
interpretation raised by the parties. These issues relate to the interpretation of a contract that is  
entirely in a standard form. For reasons that we explain below, we find there is no meaningful  
factual matrix relating to contract formation that is specific to the parties to any of the ULPs. Each  
of the ULPs has been entered into repeatedly and, more specifically, the contested language has  
been used repeatedly. As such, the three characteristics that identify an issue of standard form  
contract interpretation exist and the correctness standard applies on appellate review, as it did in  
Ledcor.  
[103] We do not agree, however, that Ledcor outlines the legal framework for interpreting the  
ULPs. That is so for two reasons. First, Ledcor was concerned with the interpretation of a  
commercial insurance contract. The ULPs are not contracts of that kind. The fact they are not  
commercial contracts is a crucial distinction in determining what evidence of surrounding  
circumstances is admissible. Second, the fact they are both life insurance contracts and investment  
contracts is also a crucial distinction. We have concluded that the principles of interpretation that  
apply to insurance contracts, and particularly to commercial insurance contracts, such as those  
   
Page 41  
related to exclusion clauses, etc., do not apply to the issues of standard form contract interpretation  
arising in respect of the ULPs. The reasons for this and our conclusion are set out below.  
[104] We have described the Sattva approach as the correct approach to all issues of contract  
interpretation, including issues of standard form contract interpretation. We must, accordingly,  
determine whether the Judge interpreted the contested portions of the ULPs in a manner that,  
however he described the process, was consistent with the Sattva approach as we see it. If we  
decide he did not do so, we must interpret the contested contract language anew.  
B.  
Issues Common to All Three Matters  
[105] Certain issues, including the evidentiary issues, are common to all three of these matters.  
We have decided to dispose of these issues first. Similarly, the cross-appeals all question the  
correctness of the Judges conclusions about the same statutory instrument, being the 2018  
Regulation. For that reason, the cross-appeals will be addressed separately but together, after we  
apply the principles of interpretation to the ULPs.  
1.  
Evidentiary Issues  
[106] As may be apparent by now, our analysis of the standard of review and the framework for  
interpreting a contract resolves the partiesallegations that the Judge erred in his assessment of the  
admissibility and relevance of the evidence proffered by the parties.  
[107] For evidence to be admissible it must be relevant. Evidence that tends to make the existence  
of a fact more or less probable is probative of that fact. A fact is material if it is or tends to prove  
or disprove an element of a cause of action or of a defence or any other fact that must exist for the  
court to rule in favour of one side or the other in an action. Justice Watt precisely defined factual  
relevancy, materiality and admissibility in these terms in R v Candir, 2009 ONCA 915, 250 CCC  
(3d) 139:  
[47]  
Relevance is not an inherent characteristic of an item of evidence. Relevance exists  
as a relation between an item of evidence and a proposition of fact that the party adducing  
the evidence seeks to prove or disprove by the introduction of the evidence. Relevance is  
relative, not absolute, a function of and dependent on the circumstances of the case in which  
it is offered, including, but not only, the positions of the parties: R. v. Pilon (2009), 243  
C.C.C. (3d) 109 (Ont. C.A.), at para. 33.  
   
Page 42  
[48]  
The threshold for relevance is not high. To determine whether an item of evidence  
is relevant, a judge must decide whether, as a matter of human experience and logic, the  
existence of a particular fact, directly or indirectly, makes the existence of a material fact  
more probable than it would be otherwise: see R. v. Cloutier, [1979] 2 S.C.R. 709, at  
pp. 730-32. The exclusivity or cogency of the inferences that may be drawn from the item  
of evidence have no place in the inquiry into relevance: see R. v. Underwood (2002) 170  
C.C.C. (3d) 500 (Alta. C.A.), at para. 25.  
[49]  
Materiality is a legal concept. Materiality defines the status of the proposition a  
party seeks to establish by the introduction of (relevant) evidence to the case at large. What  
is material is determined by the governing substantive and procedural law and the  
allegations contained in the indictment. Evidence is material if what it is offered to prove  
is in issue according to the governing substantive and procedural law and the allegations  
contained in the indictment. Evidence is immaterial if what it is offered to prove is not in  
issue under the governing substantive and procedural law and the allegations contained in  
the indictment.  
[50]  
Admissibility is wholly and exclusively a creature of the law. The rules of  
admissibility, for the most part negative, exclude evidence that is both relevant and  
material. A rule of admissibility need not be invoked when an item of evidence is either  
irrelevant or immaterial. Evidence is admissible if it satisfies all applicable exclusionary  
rules.  
[108] These principles are equally applicable in a civil context. In brief, relevant evidence is  
anything that has some tendency to show that a material fact is true. Evidence that is irrelevant or  
immaterial is not admissible.  
[109] The issues put to the Judge in these matters were issues of standard form contract  
interpretation. That is so in part because there was no meaningful factual matrix specific to the  
parties to the ULPs that would assist with their interpretation. That conclusion is clear from both  
the evidence proffered and the absence of evidence regarding Dr. de Bruin, Mr. Walkom and  
Mr. Zinkhan. The evidence tendered by the Respondents was fact and opinion evidence known to  
industry participants and experts. Nothing suggests that the disputed evidence that was rejected,  
or that was admitted, was known to Dr. de Bruin, Mr. Walkom or Mr. Zinkhan. Nor is there any  
basis to infer that it ought to have been known to them. Broadly speaking, we are of the same view  
as the Judge, who had this to say in Mosten:  
[250] In the context of a summary proceeding, where the primary task is to interpret an  
insurance contract and where the parties are all agreed that the permissible factual matrix  
evidence does not include evidence of a contracting partys subjective intention and  
consists only of objective facts known by the parties at or before the date of contracting,  
the Court was faced with in excess of 5,000 pages of sworn evidence, expert reports and  
exhibits. It is obvious, simply from the statistical summary provided above, that the  
evidence tendered goes light years beyond the evidence of objective facts known by both  
parties at or before the date of contract.  
Page 43  
[251] The attempts of the insurers/respondents Manulife, Industrial Alliance and BMO  
in the related proceedings to place into the evidentiary record comprehensive information  
and views they had related to Universal Life policies was, in my respectful opinion,  
misguided. It failed to focus on what was permissible and admissible evidence when  
interpreting a standard form contract. The result of their approach was to overwhelm the  
court with detail and failure to provide much needed focus. This was compounded on all  
sides by a similar lack of focus in the thousands of pages of written argument and  
submissions.  
[110] In terms of the partiesallegations of error, this means there is no evidence extrinsic to any  
of the ULPs that is relevant to the issues of standard form contract interpretation that they have put  
before the Court. Accordingly, where the Judge excluded such evidence as irrelevant, immaterial  
or inadmissible, he did so correctly. Where he admitted it, he erred.  
2.  
Case Law Interpreting ULPs  
[111] The Judge properly concluded that case law precedents were relevant to the issues of  
interpretation before him. In his decisions, he wrote:  
The only Canadian decisions relating to a universal life insurance policy that counsel cited  
or that I have been able to identify are Fehr v Sun Life Assurance Company of Canada,  
2018 ONCA 718, 84 CCLI (5th) 124 [Fehr], and Kang v Sun Life Assurance Company of  
Canada, 2013 ONCA 118, 19 CCLI (5th) 171 [Kang], and the trial level decisions that  
preceded them. The Kang decision is not instructive to any measure.  
The Fehr case related to a proposed $2.5 billion class action concerning more than 230,000  
life insurance policies sold by Metropolitan Life Insurance Company of Canada between  
1985 and 1998 and allegations of misrepresentation in the sale of the policies and breach  
of contractual and other duties relating to premiums and fees charged to the policyholders.  
There is nothing in the reported decisions that provides any indication as to whether these  
policies had Side Accounts similar to those in the subject policies or the contractual  
language relied upon by [the Appellant] in this action.  
The decision of the Court of Appeal does contain a discussion of the nature or  
characteristics of the universal life insurance policies there in question. In that respect, the  
reasons for judgment state the following:  
[19]  
This action involves four variations of universal lifeinsurance  
policies sold by MetLife in Canada. The four policies had different  
features, catering to different consumer preferences.  
[20]  
A traditional whole lifeinsurance policy charges fixed  
premiums to fund a death benefit and an investment account. A universal  
life policy offers more choice and flexibility to the insured. Like a whole  
life policy, it has a cash accumulation feature. But it permits the insured to  
pay premiums in variable amounts on a flexible schedule, to take  
advantage of different investment options for surplus funds and to vary the  
death benefit. Premiums paid by the insured are paid into an  
accumulation fund. Cash in the accumulation fund is paid out from time  
to time to cover: the cost of the insurance (COI), that is the cost of  
 
Page 44  
insuring the death benefit; the costs of administration; and the acquisition  
of investments. Income on the investments is added to the policyholders  
accumulation fund.  
[21]  
Thus, in addition to providing life insurance, the policy serves as  
an investment vehicle. It has tax advantages, because income in the  
investment fund accrues on a tax-deferred basis. The policys cash value  
may enable the policyholder to borrow money from the policy.  
Alternatively, surplus funds can be used to pay future premiums from time  
to time (a so-called premium holiday) or for the remaining life of the  
policy (sometimes referred to as a vanishing premium).  
[22]  
But universal life insurance is not without risks. Because  
premiums are not fixed, poor investment returns, due to low interest rates  
or market declines, can cause premiums to increase and reduce the value  
of the accumulation fund. If the accumulation fund is depleted, the insured  
will have to pay increased premiums or see the entire policy lapse.  
[23]  
It is unnecessary to provide a detailed description of the terms of  
the various policies in order to address most of the issues on this appeal. I  
will discuss some of the pertinent provisions of the policies when I  
examine the motions judges analysis of the common issues.  
[24]  
These policies were fairly complex financial instruments. The  
manner in which they operated was not obvious from the policy language.  
It is not surprising, therefore, that MetLifes sales agents frequently used  
standard sales pitches and illustrations to demonstrate the operation of the  
policies to their clients.  
[25]  
Many of these policies were sold during times of high interest  
rates. Most projections given to prospective policyholders were based on  
those rates continuing. Everything was rosy when interest rates were high.  
Premiums were low, accumulation funds grew, and policyholders were  
happy. But when interest rates began to fall in the mid-1990s and into the  
2000s, MetLifes profits also fell. As did the income on policyholders’  
accumulation funds. Correspondingly, premiums and administration costs  
charged by MetLife and its successors went up. Some of these increased  
charges were paid out of policyholdersaccumulation funds.  
[64] I have noted that the policies are relatively complex financial  
instruments. They are also relatively complex contracts. The language is  
technical and legalistic, and important terms are undefined. For example,  
there is no definition of minimum premiumor maximum premium.  
The actual meaning of those terms is a matter of controversy. According  
to Sun Life, minimum premiumdoes not mean the lowest premium that  
a policyholder is required to pay in order to keep the policy in good  
standing. And maximum premiumdoes not mean the highest premium  
that can ever be charged to a policyholder. Some technical terms, such as  
non-rated classification, are undefined. Other terms, such as premium,  
monthly cost of insuranceand monthly insurance charge, are  
confusing. Key provisions, such as the manner in which Sun Life could  
adjust the COI from time to time, are opaque.  
Page 45  
[65]  
The motions judge himself required extensive additional  
evidence, including expert evidence, before he could determine whether  
Sun Life had breached the policy by adjusting the COI based on factors  
not enumerated in the policy. He was unable to do so by simply  
interpreting the policy and comparing it to what Sun Life claimed it was  
entitled to do. This was a key breach of contract issue, to which I now turn.  
These reasons demonstrated that complexity appears to be endemic to universal life  
insurance policies and that, in addition to providing life insurance, universal life insurance  
policies serve as investment vehicles with tax advantages. There is nothing in the Fehr  
decision which provides precedential guidance that assists me in the interpretation of the  
subject policies on the issue of whether the policies were intended to provide investment  
options beyond the tax‑advantaged investment options within the exempt policy criteria of  
the Income Tax Act.  
In the trial level decision of Perell J. (Fehr v Sun Life Assurance Co. of Canada, 2015  
ONSC 6931, 56 CCLI (5th) 15), he said the following at paragraph 91:  
[91]  
Under a universal life insurance policy, the premiums pay for:  
(a) insurance (a death benefit), for which there are COI [Cost of Insurance]  
and Administrative Fees; and (b) an investment that earns income. Under  
a universal life policy, the insureds premiums are paid into an account  
that is called an Accumulation Fund. The money in the Fund is used to pay  
the COI and an Administrative Fee and to purchase the investment. The  
earnings form the investment are added to the Accumulation Fund.  
Perell J.s statement that the earnings form the investment and are added to the  
Accumulation Fund provides no guidance to me. His decision did not address the specific  
issues before me. Nonetheless, there is nothing in his interpretation of the universal life  
insurance policy before him that suggested it included investment options beyond those  
permitted under the tax-exempt criteria.  
(Mosten Decision at paras 149153; Atwater Decision at paras 156160; and Ituna  
Decision at paras 145149)13  
[112] In addition to the two cases cited in the Judges reasons, we have identified the following  
cases as involving the interpretation of a ULP:  
(a)  
(b)  
R v Bilodeau, 2009 TCC 315 at para 4;  
Bellaire v Independent Order of Foresters (2004), 5 CPC (6th) 68 (WL) (Ont Sup  
Ct), particularly paras 711 and 19;  
(c)  
Lee v Transamerica Life Canada, 2017 BCSC 843 at paras 1112, [2017] 11 WWR  
146;  
13 The quoted text is from the Atwater Decision and the Mosten Decision. We acknowledge there are minor differences  
in the language the Judge used in the relevant paragraphs of the Ituna Decision, but the differences are not material to  
the issues in these appeals.  
Page 46  
(d)  
Kerr v CIBC World Markets Inc., 2017 ONSC 777 at paras 33, 140142, 150, 153–  
154 and 156, 64 BLR (5th) 115;  
(e)  
(f)  
Lamarche v Teolis, 2006 QCCS 2317 at paras 2629; and  
Cardinal Morello v BMO Nesbitt Burns Financial Services Inc., 2013 QCCS 3991  
at paras 1112, 23, and 4647.  
[113] The decision in Louisméus c Manufacturers Life Insurance Company (Manulife  
Financial), 2017 QCCS 3614 [Louisméus], appeal dismissed, 2017 QCCA 1710, is of potential  
value. There, the Courts of Québec were called upon to interpret the standard form ULP called the  
de Bruin ULP in these reasons. In that case, insureds had applied for a class action representing all  
people who had taken out a LArchitecte-type universal life insurance policy between 1989 and  
1993 with the death benefit option fixe plus valeur du fondsor indexé. The issue was that the  
cost of the insurance had increased at a faster rate than the minimum premium to be paid and,  
therefore, the amount deposited into the side account had decreased each year. In rejecting the  
application at the superior court level, Hamilton J. interpreted the de Bruin ULP as follows:  
2.  
Le contexte plus général  
[13]  
La police «L’Architecte» est une police d’assurance vie universelle lancée par  
Aetna le 15 mai 1989. Elle demeure sur le marché jusqu’au 31 décembre 1993.  
[14] Elle est distribuée exclusivement par le biais de représentants en assurance qui ont  
l’obligation de décrire le produit proposé au client.  
[15] Elle inclut trois options pour le capital-décès : «fixe», «fixe plus valeur du fonds»  
et «indexé».  
[16]  
La police-type est modifiée à plusieurs reprises entre 1989 et 1993. En particulier,  
la clause «Critères de provisionnement minimal» dont il est question dans le présent litige  
est modifiée de façon importante le 1er avril 1990:  
The current Minimum Fund Value Test provision in The Architect policy  
has created some confusion for some agents. We are pleased to announce  
a major revision and simplification to this provision. The provision has  
been substantially improved. The contract wording is now much easier to  
read and understand and you can illustrate the minimum fund values using  
The Architect software.  
[17]  
Mme Louisméus souscrit sa première police «L’Architecte» le 9 août 1993 et sa  
police inclut donc la nouvelle clause de provisionnement minimal simplifiée et améliorée.  
La clause en vigueur en 1989-1990 n’est pas en preuve.  
[18]  
Selon les termes de la police, le critère de provisionnement minimal doit être  
évalué après 10 ans. Dans les faits, l’assureur commence à effectuer le test en mai 2001 et  
applique le critère d’une façon qui est moins onéreuse que ce que prévoit la police.  
Page 47  
L’assureur décide aussi à cette même période de ne pas appliquer le critère de  
provisionnement minimal aux polices avec l’option capital-décès «indexé».  
[19]  
L’assureur évalue à cette période le nombre de polices «L’Architecte» qui seront  
affectées par le test de provisionnement minimal:  
Compte tenu de nos toutes dernières prévisions, plus de 50 % de tous les  
contrats originaux l’Architecte souscrits au cours de cette période [entre  
avril 1990 et décembre 1993] sont financés adéquatement parce que les  
clients ont profité des occasions de croissance offertes par ce produit,  
lequel bénéficiait d’un abri fiscal. Ensuite, 30 % des contrats ne sont pas  
en danger dans l’immédiat mais pourraient avoir besoin de primes  
additionnelles à l’avenir pour satisfaire aux exigences de financement  
minimal en ce qui a trait à l’assurance vie et 20 % des contrats sont  
financés au minimum et devront faire l’objet d’une intervention rapide  
pour satisfaire au test.  
[20]  
Mme Louisméus allègue dans sa demande que Gauthier lui a dit que plusieurs  
dizaines de milliers de polices «L’Architecte» sont vendues à travers le Canada entre 1989  
et 1993.  
[21]  
Gauthier témoigne qu’il a vendu 44 polices «L’Architecte» entre 1989 et 1993,  
dont celui de Mme Louisméus et son conjoint. Il témoigne qu’à date, aucun de ses autres  
clients n’ont reçu une augmentation de leur prime en application du test du  
provisionnement minimum.  
(Footnotes omitted)  
[114] None of the prior cases consider or reach a conclusion in relation to an issue of standard  
form contract interpretation that is the same or similar to those arising in these matters. That said,  
in the Mosten Appeal, we will take high-level guidance from the general comments of Hamilton J.  
in Louisméus because he addressed the same standard form ULP. The general background  
comments cited above in Fehr are also of interest, because they comment on the investment aspect  
of the ULP in a manner consistent with our analysis and conclusion; th