was “fair and reasonable”. He found bad faith on the part of the trustees on
the basis that they had adopted hardball tactics by trying to force H to sell the
home, and awarded punitive damages against them in the amount of $20,000. The
Held, the appeal should be allowed.
While the factual matrix plays a significant role by deepening the court’s understanding of the words of a contract, it must never be allowed to overwhelm the
words of the contract. The trial judge committed an extricable error of law by
ignoring that principle. He allowed his view of the factual matrix to overwhelm
and even contradict the words of the contract. The dominant theme of the contract, expressed in multiple articles, was that each party was to remain financially
independent of the other and that neither was to have any obligation to support
the other. It was in that light that the phrase “ordinary and reasonable costs of
maintaining the said residence” had to be construed. It was not open to the trial
judge to make the inference that A wanted to care for H for the rest of her life and
to use that inference to drive his interpretation of the agreement. Because of that
inference, he erroneously excluded from “ordinary and reasonable maintenance”
in art. 7(f) what he termed “capital costs”. The trial judge also erred by interpreting some provisions of the contract according to what he considered “fair”, rather
than seeking to give the words of the contract their ordinary and grammatical
meaning in the context of the contract as a whole. The realty taxes and insurance
costs had to be borne by H after the expiry of three years because the words of the
contract, in their ordinary and grammatical sense, said so.
The trial judge’s finding of bad faith on the part of the trustees was based in
part on their failure to make capital repairs after the expiry of three years. In fact,
H was responsible for those repairs. The main basis for the trial judge’s finding of
bad faith was his view that the trustees tried to force H to sell the residence. Given
that H was not paying all of the costs of maintaining the residence, the trustees
could reasonably take the position that she had not fully complied with art. 7(f)
and that the residence should be sold. The trial judge’s finding of bad faith, and
the award of punitive damages, were set aside.
The trial judge properly found that A was in violation of the cohabitation
agreement and that, as a result, the estate was duty-bound to pay the mortgage
together with any arrears.
Sattva Capital Corp. v. Creston Moly Corp.,  2 S.C.R. 633,  S.C.J.
No. 53, 2014 SCC 53, 2014EXP-2369, J.E. 2014-1345, 373 D.L.R. (4th) 393, 
9 W. W.R. 427, 59 B.C.L.R. (5th) 1, 461 N.R. 335, 25 B.L.R. (5th) 1, 358 B.C.A.C. 1,
614 W.A.C. 1, 242 A.C. W.S. (3d) 266, apld
Other cases referred to
Kilitzoglou v. Cure,  O.J. No. 716, 2014 ONSC 1018, 97 E. T.R. (3d) 205,
31 C.C.L.I. (5th) 72, 237 A.C. W.S. (3d) 481 (S.C.J.); Kilitzoglou v. Curé,  O.J.
No. 201, 2015 ONSC 369, 4 E. T.R. (4th) 1, 248 A.C. W.S. (3d) 362 (S.C.J.)
Statutes referred to
Family Law Act, R.S.O. 1990, c. F.3
Succession Law Reform Act, R.S.O. 1990, c. S.26
APPEAL by the defendants from the judgment of H.K.
O’Connell J. of the Superior Court of Justice dated April 26, 2017.