Economically powerful parties are increasingly inserting clauses in their one-way contracts to prevent any claims by the weaker party. Realistically, the weaker party has no negotiating power and just signs off in the hope that things will work out for the best. Think the banks. Think big business. Think your government. The courts have long supported the concept of commercial certainty and in almost all cases will enforce contracts literally and without undue delay. The procedural mechanism of the summary dismissal motion in Ontario was designed perhaps with such contractual limitation clauses in mind. On the other hand, the law never ceases to surprise the clients, the lawyers and, sometimes, the judges themselves.
The decision this year of the Supreme Court of Canada of Tercon Contractors Ltd. v. British Columbia (Transportation and Highways) most certainly surprised the litigants and the lower court judge, and I expect most of the lawyers involved. The highest court in the land, the Supreme Court of Canada, reversed the Court of Appeal, which had reversed the trial judge, which I speculate reversed the view of the pre-trial judge, etc. That is the classic legal multiple negative that can leave one’s head shaking.In the result, the SCC agreed with the original trial judge and sent the Court of Appeal a message that, despite the law, the overriding principle of equity will be applied and will be paramount.There has been long-standing tension between black letter law and the law of equity. Historically, the English courts were split into separate divisions to deal with separate claims arising from a breach of law versus a breach of equity. The courts were never split in such a way in Canada and have always had jurisdiction to decide cases brought on either type of legal foundation. But the tension is real and remains.Equity is a most amorphous concept and one might speculate that it is, like pornography, in the eye of the beholder.In Tercon, the court decided that, despite a clearly worded no-claims clause agreed to by the bidder for the government project, a claim could in fact be brought by the unsuccessful bidder. The winning argument made by the bidder was that the clearly worded clause was in fact ambiguous – in other words, black was white.An unfair tender action usually brings into question the fairness of the process or the objectivity of the government representatives involved. Being granted leave to continue such a claim and actually winning it at trial are of course two entirely different things.Perhaps the test of best counsel is their ability to “feel” when an action will be allowed to proceed on the basis that it will touch the judicial heart of the court and therefore vault into the equity stratosphere. The heart of the court is generally cold.From the view of this country’s most powerful players, equity remains a troublesome and unpredictable legal weapon. For the rest, equity represents a last hope in the face of formidable documentation. With equity, even the perfect contract doesn’t always work.