“The comma has earned its notoriety as a troublemaker.” (Austin v Bell Canada, 2019 ONSC 4757 at para. 45)

In a recent class action, a comma in a pension plan was alleged to have generated a dispute of more than $100 million. The judgment re-affirmed a key factor in contractual interpretation law in Canada by rejecting the placement of that comma as a determining factor.

The Bell Canada Pension Plan (the “Plan”) directed that indexation should be given to its members annually, and defined the method of calculation. The first of two steps was to determine a figure to reflect the annual increase in the cost of living, using the method in s. 1.29 of the Plan (emphasis added):

1.29: “‘Pension Index’ means the annual percentage increase of the Consumer Price Index, as determined by Statistics Canada….

(Statistics Canada publishes the monthly Consumer Price Index (the “CPI”), and also publishes an annual percentage increase figure.)

So – did that wording in the Plan direct Bell, as manager of the Plan, to use the monthly CPI figures (“as determined by Statistics Canada”) in order to independently calculate the annual percentage increase? Or was Bell required to adopt the annual percentage increase figure “as determined by Statistics Canada”?

A pensioner issued a class action, arguing in part that the placement of the comma in s.1.29 required Bell to use the Statistics Canada annual figure, which would have increased the amount of indexation of the Bell pension for 2017, with a ripple effect of payments to all pensioners of millions of dollars over time.

Justice Morgan certified the class action for thousands of pensioners, and heard the Plaintiff’s motion for summary judgment at the same time. In his Reasons, Morgan J. dismissed the case entirely against the Bell Defendants, prioritizing a contextual interpretation of the Plan over a restrictive and narrow construal of the comma itself.

Contractual Interpretation: Substance over Comma

The Court agreed with the Bell Defendants that the Plan must be read as a whole, in order to determine the meaning of the allegedly ambiguous wording in s.1.29.

Critically, the calculation of the “Pension Index” in that section was only the first of two steps required to proceed with indexation of the pensions each year. The Pension Index figure from s. 1.29 had to be inserted into a series of calculations in s. 8.7 of the Plan for the various groups of pensioners. The evidence showed that a rounding provision in that section would be engaged extensively if Bell’s reading of the Pension Index definition was employed, but would be rendered almost meaningless if the Plaintiff’s reading of the Pension Index definition (which would have required Bell to adopt the annual CPI increase figure calculated by Statistics Canada) prevailed.

Justice Morgan considered that contextual evidence to be persuasive as a matter of contractual interpretation, citing a precedent: “the court should strive to give meaning to the agreement, and ‘reject an interpretation that would render one of its terms ineffective’”. (para. 63)

In reaching that conclusion, Justice Morgan rejected arguments by the Plaintiff, including the “series qualifying rule” of interpreting comma placement, in favour of a reading of the Plan which preserved the overall coherence of the contract: “it is not possible to surmise that the drafters of the Plan went to all of that trouble and detail only to have the entire exercise rendered meaningless by a deferral to Statistics Canada’s method of rounding.” (para. 65)

Implications for Companies—Context Matters

The Court in Austin followed a lineage of Court of Appeal and Supreme Court of Canada decisions prioritizing contextual analysis over a narrow and restrictive construal of individual contractual terms. Decisions such as Scanlon v. Castlepoint Development Corporation (1992), 11 O.R. (3d) 744 (C.A.), and National Trust Co. v. Mead, [1990] 2 S.C.R. 410 have interpreted agreements using a broader contextual analysis to give effect to each term of an agreement.

Ultimately, parties to a contract must be aware of the structure and functionality of a contract as whole. Where possible, “excessively minute detail(s)” (para. 43) - such as, perhaps, the placement of a comma - will be interpreted in context. Parties can protect themselves by understanding how the individual terms in their contracts interact effectively as a functional whole.