In an appeal from the Alberta Court of Appeal, the Supreme Court in Ledcor Construction Limited v. Northbridge Indemnity Insurance Company et al., held that the appropriate standard of review in interpreting standard form contracts is correctness. In doing so, they recognized that standard form contracts generally should be recognized as constituting an exception to the Supreme Court's holding in Sattva Capital Corp. v. Creston Moly Corp. that contractual interpretation is a question of mixed fact and law, subject to deferential review on appeal.
The Court held that the importance of the factual matrix is less important when it comes to cases involving standard form contracts. It held that the factors which are important in interpreting a standard form contact (purpose, nature of the relationship and market/industry) are not inherently fact-specific and will generally be the same for each party who enters into the standard form contract. It is important to note, however, that the Court does not completely rule out the possibility of using factual matrix to interpret such contracts.
The Court also noted the importance of precedential value in respect of standard form contracts in its rationale for why they should be interpreted on a correctness standard. Unlike regular contracts, an interpretation of a standard form contract may have implications far beyond the parties to the agreement at issue and as such, the standard of review should be a question of law.
Cromwell J., in dissent, held that the interpretation of a standard form contract must strictly follow the Court's reasoning in Sattva and the standard of review should be mixed fact and law – not correctness.
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