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Tag: Contract Interpretation

Contra Proferentem Rule Applied to Court Order Interpretation

Contra Proferentem” is a rule courts use when interpreting contracts.  In plain English it means that if there is an ambiguous clause in a contract it will be interpreted against the party responsible for drafting the clause.   In an interesting use of this rule reasons for judgement were released today by the BC Supreme Court, Victoria Registry, applying this rule to a Court order.
Today’s case (Horne Coupar v. Velletta & Company) involved a dispute between two Victoria lawfirms.  A lawyer left the first firm (Velletta & Company) and joined the second (Horne Coupar).  A few months prior to leaving the first firm the lawyer renegotiated compensation terms with her employer from a salaried position to one which entitled her to a percentage of her “collected professional fees” on the files that she worked on.
Upon joining the second firm “a dispute arose as to what files and clients (the lawyer) would take with her and how (the first firm) would be reimbursed for loss of those files“.    Ultimately a Court motion was brought and the parties entered into a consent order with the direction that “(the second firm is) to pay over professional fees to (the first firm), on a proportionate basis for those hours which had accrued while the matter was under (the first firm’s) conduct“.  This consent order was prepared by the lawyer who left the first firm and joined the second.
The lawyer then “deducted 50% from the payments made by (the second firm) to (the first firm)” as money owing to her under the percentage clause she negotiated prior to parting company with the first firm.  The first firm disputed the propriety of this deduction arguing that the Court order that was agreed to left no such option.
Mr. Justice Romilly agreed with the first firm and ordered that money be paid to the first firm without this deduction.  In coming to this decision the Court used the Contra Proterentem doctrine.  Specifically the Court reasoned as follows:
[10] Contra proferentem is a rule of contractual interpretation which provides that an ambiguous term will be construed against the party responsible for its inclusion in the contract.  This interpretation will therefore favour the party who did not draft the term presumably because that party is not responsible for the ambiguity therein and should not be made to suffer for it.  This rule endeavours to encourage the drafter to be as clear as possible when crafting an agreement upon which the parties will rely.  This rule also encourages a party drafting a contract to turn their mind to foreseeable contingencies as failure to do so will result in terms being construed against them.  That there is ambiguity in the contract is a requisite of the application of this rule, however, once ambiguity is established, the rule is fairly straightforward in application.

[11] In my view the contra proferentem rule clearly applies in this case.  It was Ms. Newman who prepared the consent order signed by herself and Velletta.  As quoted above, that consent order directs inter alia:

…Horne Coupar to pay over professional fees to Velletta & Company, on a proportionate basis for those hours which had accrued while the matter was under Velletta & Company’s conduct…

[12] This provision provides only for payment, not for deduction of “fees” to which Ms. Newman feels she is entitled (and has since deducted).  Ms. Newman’s failure to include a provision or stipulation for deduction of her own fees has resulted in an ambiguity which is to be construed against her by application of the rule of contra proferentem.  Therefore, the clear interpretation of this provision (as against the drafter) is that fees are not deductible.  Horne Coupar is bound by the consent order to pay the professional fees to Velletta in accordance with this order and without deduction for work done by Ms. Newman.