Out-Law News 2 min. read
26 Oct 2006, 7:30 pm
A five-year contract with Aliant Telecom gave Rogers access to thousands of poles that carried its cables to homes across Canada. Aliant didn't own the poles; it only acted as an agent for a power company. When the power company decided to take control of the poles itself and raise the rates, Aliant gave 12-months' notice to Rogers that its deal would be terminated one year before the expiry of the five-year term.
Early termination would force Rogers to start paying the power company at the higher rates, costing Rogers an extra CAN$1 million over that final year. But Rogers could avoid this expense if Aliant had no right to terminate early.
Aliant's right turned on a single clause:
"[…This Agreement] shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party."
Aliant interpreted this as a right to terminate at any time upon one year's notice to Rogers. But Rogers read it as a right to terminate only at the end of the current or a renewed five-year term.
The dispute came before Canada's Radio, Television and Telecommunications Commission.
Aliant argued that, based on grammatical rules of punctuation, since the comma closed the clause "and thereafter for successive five (5) year terms", the subsequent qualifier "unless and until terminated by one year prior notice in writing by either party" qualified all of the preceding section.
Aliant added that, had the intention been to limit the right to terminate to the end of the five-year term, there would have been no comma placed before the word "unless" and clear wording would have been included specifying by what date the notice was required.
Not so, argued Rogers. If Aliant could terminate at any time upon one year's notice, the express agreement by the parties to a five-year term was effectively meaningless. Why bother with the words "…for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms," it asked?
The Commission sided with Aliant, describing the clause as "clear and unambiguous." Had the intention been to limit the right to terminate at the end of the current and any renewal term, clear wording would have been included specifying by what date the notice was required, it said.
That ruling was issued in July. This month, Globe and Mail reported that Rogers is appealing. In doing so, Rogers will rely on Canada's second official language. The Toronto daily said that Rogers spent two months finding a French version of the same contract. The punctuation is different in the French version and Rogers says it supports its interpretation of the English version. According to The New York Times, Rogers has also commissioned a 69-page affidavit from an authority on contract language.
Aliant is said to be preparing its response.
In the UK, as in many other jurisdictions, when faced with a contractual ambiguity, courts examine evidence of the parties' intentions. They consider the contract as a whole, not just the specific clause and adopt the ordinary meaning of words.
In 1998, Lord Hoffman ruled in the House of Lords: “The meaning of words is a matter of dictionaries and grammars; the meaning of the documents is what the parties using those words against the relevant background would reasonable have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of the words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax.”