COURT OF APPEAL FOR ONTARIO

CITATION: Thunder Bay (City) v. Canadian National Railway Company,

2018 ONCA 517
DATE: 20180611
DOCKET: C64026

Laskin, MacPherson and Fairburn JJ.A.

BETWEEN

The Corporation of the City of Thunder Bay

Applicant (Appellant)

and

Canadian National Railway Company and

Fort William First Nation

Respondents (Respondent on Appeal)

Christopher Matthews and Sanj Sood, for the appellant

Guy Pratte, Nadia Effendi and Duncan Ault, for the respondent

Heard: January 24, 2018

On appeal from the judgment of Justice G. Patrick Smith of the Superior Court of
Justice, dated June 9, 2017, with reasons reported at 2017 ONSC 3560.

Laskin J.A.:

A. OVERVIEW

[1] This appeal concerns the interpretation of an agreement made in 1906 for

the construction of a bridge across the Kaministiquia River in Thunder Bay. The

parties to the agreement were the Town of Fort William, now amalgamated into
 Page: 2

the appellant, the City of Thunder Bay, and the Grand Trunk Pacific Railway, now

the respondent Canadian National Railway Company (“CN”).

[2] Grand Trunk Pacific built the Bridge, completing it in 1909. The Bridge is a

combined railway and roadway bridge: railway tracks run through the center; on

each side of the railway tracks is a single lane for vehicles; on each side of the

vehicle lanes is a sidewalk for pedestrians to cross the Bridge.

[3] The Bridge remained open for railway trains, cars, trucks, and people for

over 100 years. However, in 2013, CN briefly closed the Bridge because of a fire.

The fire caused only minor damage and CN reopened the Bridge three days later.

But it reopened the Bridge only for railway trains and pedestrians, not for motor

vehicles. It claimed that the Bridge could not safely be reopened for motor vehicles

because of the risk an “errant” or wayward vehicle would leave the roadway, go

across the sidewalk and into the river. In the over 100 year history of the Bridge,

no vehicle has ever done so.

[4] When CN refused to reopen the Bridge for vehicles, Thunder Bay brought

an application for a determination of its contractual rights under the 1906

Agreement. Two provisions of this Agreement are central to this appeal: s. 3, in

which Grand Trunk Pacific agreed to give Fort William “the perpetual right to cross

the said bridge for street railway, vehicle and foot traffic”; and s. 5, in which CN

agreed to “maintain the bridge in perpetuity”.

 Page: 3

[5] Before the application judge, Thunder Bay took the position CN is in breach

of its contractual obligation to keep the Bridge open perpetually for vehicles. CN

took the position that it could not do so safely without making significant structural

changes to the Bridge, which were beyond its obligation to “maintain” under s. 5 of

the Agreement. The application judge sided with CN. He made three findings:

 The parties intended that CN would maintain the Bridge for the type of traffic
that existed at the time the 1906 Agreement was entered into: streetcars,
horse, and cart traffic, not motor vehicle traffic.

 Although CN had maintained the Bridge for motor vehicle traffic, it

consistently took the position that it had no contractual obligation to make
structural changes necessary to keep motor vehicle traffic flowing.

 Thunder Bay had the onus to define clearly the relief it sought and the
changes needed to make the Bridge safe for motor vehicles, and it failed to
do so.

[6] On its appeal, Thunder Bay challenges these findings and contends that

they are tainted by legal error or are unreasonable. It submits the parties intended

that the citizens of Thunder Bay would have the perpetual right to cross the Bridge

by any kind of vehicle, and that, to enable them to do so, CN would have the

obligation to maintain the Bridge in perpetuity. CN contends that the application

judge made no legal error, his findings are supported by the evidence, and so

appellate intervention is not warranted. As I view the appeal, it raises two broad

issues:

1. Is the application judge’s finding on the parties’ intent tainted by “extricable”

errors of law or is it unreasonable?
 Page: 4

2. Did the application judge err in law by holding that Thunder Bay had the onus
to give the court a specific and detailed proposal to make the Bridge safe for
motor vehicles?

[7] I would answer the questions raised by these two issues as follows:

Question 1: Yes, the application judge’s finding is unreasonable and, in

addition, is tainted by two extricable errors of law:

a. The application judge’s finding is unreasonable

because he failed to give proper effect to the
words of the 1906 Agreement or to the context in
which the Agreement was made.

b. In interpreting the 1906 Agreement, the

application judge committed an extricable error of
law by failing to give any effect to the words
“perpetual” and “in perpetuity”.

c. The application judge also committed an

extricable error of law by taking into account the
subsequent conduct of the parties, though the
meaning of the 1906 Agreement is not
ambiguous. Alternatively, even if its meaning is
ambiguous, the application judge failed to
consider the parties’ relevant subsequent
conduct.

Question 2: Yes, the application judge erred by placing an onus on Thunder

Bay to provide a proposal to make the Bridge safe for motor vehicles. CN

has a contractual obligation to maintain the Bridge for motor vehicles in

perpetuity, an obligation it has breached. To rectify its breach, CN must

reopen the Bridge; it therefore has the onus to determine what maintenance

is needed to alleviate any safety concerns associated with the Bridge’s

reopening.
 Page: 5

[8] For any of the reasons given in answer to question 1, the application judge

erred in his interpretation of the 1906 Agreement. Under that Agreement, vehicle

traffic means any kind of vehicle traffic, including car and truck traffic. The parties

intended that Thunder Bay would have the right to cross the Bridge perpetually by

using any kind of vehicle, and that CN would be obliged to maintain the Bridge in

perpetuity for any kind of vehicle that used it.

[9] I would allow the appeal, issue a declaration that CN breached the 1906

Agreement, and order CN to reopen the Bridge for motor vehicle traffic. What

repairs or upgrades the Bridge needs, if any, are for CN to decide.

B. BRIEF BACKGROUND: THE 1905 AGREEMENT, THE 1906

AGREEMENT AND THE BRIDGE

[10] The application judge thoroughly reviewed the background giving rise to this

litigation. In my reasons, I will discuss only those facts necessary to resolve the

issues on the appeal. To put these issues in context, I will first discuss the 1905

Agreement, which preceded and gave rise to the 1906 Agreement. Then I will

discuss the terms of the 1906 Agreement, and describe the Bridge itself.

(a) The 1905 Agreement

[11] At the turn of the 20th century, railways were being built to provide access to

the various parts of our vast country. The National Transcontinental Railway was

built to run from Moncton all the way to Winnipeg. Grand Trunk Pacific had already
 Page: 6

built a line running from Winnipeg, across the Prairies, to Prince Rupert, British

Columbia.

[12] Grand Trunk Pacific also wanted to build a branch line to connect the

National Transcontinental Railway with Lake Superior. It chose Fort William as the

terminal port. The Lake Superior branch line would allow Grand Trunk Pacific to

carry grain from the Prairies to Fort William, for shipment by boat to Southern

Ontario and various points across the Great Lakes.

[13] In 1905, Grand Trunk Pacific and Fort William entered into an agreement for

the construction of the Lake Superior branch line. Under this 1905 Agreement, Fort

William agreed to pay Grand Trunk Pacific $300,000 “for lands, docks, yards,

buildings or any improvements in connection with the purposes of the Company”.

The Lake Superior branch line brought benefits to both parties – Grand Trunk

Pacific increased the profitability of its operations; and Fort William gained social

and economic benefits through the development of a terminal infrastructure in the

Town.

[14] In order for its Lake Superior branch line to be effective, Grand Trunk Pacific

had to build a railway bridge over the Kaministiquia River. The 1905 Agreement

did not provide for the building of a railway bridge over the river. But s. 6 of the

Agreement gave Grand Trunk Pacific an option to build a bridge for railway traffic.

If Grand Trunk built this bridge, Fort William agreed to pay it $50,000, and in return,
 Page: 7

its citizens would have the perpetual right to cross the bridge by street railway,

vehicle, and foot traffic. Clause 6 provided:

The Municipal Corporation will pay to the Company an

additional bonus of fifty thousand dollars if within one
year from the signing of this agreement it obligates itself
to construct within two and half years from date of this
agreement, a Bridge, at a location to be agreed upon by
the Company and the Municipal Corporation, and give
the Municipal Corporation the perpetual right to cross
same for street railway, vehicle and foot traffic, also street
approach on the South side of the Kaministiquia River,
over lands owned by the Company, it being understood
that the Company reserves all right for railway traffic. The
bonus will be payable on the completion of the bridge.

(b) The 1906 Agreement

[15] In 1906, Grand Trunk Pacific exercised its option under s. 6 of the 1905

Agreement, and entered into the 1906 Agreement with Fort William. In s. 1, Grand

Trunk Pacific agreed to build a “combined railway and highway bridge”, and in s.

6 Fort William agreed to pay $50,000 when the bridge was completed.

[16] Sections 3 and 5 are the key provisions of the 1906 Agreement. Under s. 3,

Grand Trunk Pacific agreed to give the citizens of Fort William the “perpetual right”

to cross the Bridge for street railway, vehicle, and foot traffic:

The Company will give the Municipal Corporation the

perpetual right to cross said bridge for street railway,
vehicle and foot traffic on roadways supported by
brackets on each side of the railway bridge substantially
as shown on Plate “C” and this portion of the bridge shall
be for the Town and any person or corporation authorized
by the Town.
 Page: 8

[17] Section 5 is ancillary to s. 3. To ensure that Fort William had the “perpetual

right” to cross the bridge, Grand Trunk Pacific agreed to “maintain the Bridge in

perpetuity without costs to the Town”:

The Company will maintain the bridge in perpetuity

without costs to the Town except the cost and
maintenance of street car rails and trolley wires which will
be furnished by the Town or Electric Railway Company
using the bridge; and that the space allowed for Town
traffic on each side of the bridge, be sufficient to
accommodate street car, vehicular traffic and separate
passage for foot passengers.

[18] Grand Trunk Pacific completed construction of the Bridge in 1909 at a cost

of approximately $230,000. Fort William paid the agreed on amount of $50,000.

(c) The Bridge

[19] In this court, CN suggested that the Bridge was, in fact, two separate

bridges: a railway bridge and a “roadway bridge”. The 1906 Agreement says

otherwise. It provides for one Bridge, “a combined railway and roadway bridge”.

[20] Most of Thunder Bay lies to the north of the Bridge; the Fort William First

Nation lies to the south. The Bridge is known as the James Street Swing Bridge. It

was originally designed to be a swing bridge to allow shipping on the river, but it is

no longer used for that purpose.

[21] CN and its predecessors have used the Bridge continuously for railway

traffic. But the use of the roadway portion of the Bridge has changed over time.

Although the Bridge continued to be used by pedestrians and vehicles until the
 Page: 9

2013 fire, after 1950 the roads were no longer used for street railway. Instead they

were used exclusively for vehicular traffic. Up until 1968, the route over the Bridge

was part of a major provincial highway, providing access to the city and to the Fort

William First Nation. That year, however, the Lakehead Express (Highway 61)

opened and the route over the Bridge became a minor arterial road.

[22] Still, the road over the Bridge remains a vital thoroughfare for the people of

Thunder Bay and the Fort William First Nation. Its importance is borne out by traffic

statistics, which show that in 2007 (the last year for which statistics are available)

an average of 8,871 vehicles traversed the Bridge every day. Now that the Bridge

is closed to cars and trucks, the only practical vehicle access for vehicles going to

Fort William First Nation is along Highway 61, a ten kilometre detour.

[23] The Bridge itself is around 150 metres long. As I have said, the railway tracks

run along the middle of the Bridge. The two driving lanes – one on either side of

the railway tracks – are cantilevered on the outside of steel trusses, and rely on

the railway structure for support. Wooden railings run between the railway tracks

and the roadways. Wooden timbers on the wood deck on each side of the

roadways form roughly six by six inch curbs. Although the pedestrian sidewalks

are not separated from the roadways by a railing, they are raised from the

roadways by the height of these wooden curbs, six inches. The sidewalks are

between 1 metre and 1.7 metres wide, and have railings on the outside.
 Page: 10

[24] The Bridge is structurally sound and can carry a heavier load than that

required of a modern bridge. But each of the two driving lanes is narrow, 2.85

metres wide, which is 15 centimetres less than the minimum 3 metres required

under current bridge design standards. To alleviate any safety concerns, the speed

limit on the Bridge has been reduced from 40 kilometres per hour to 20 kilometres

per hour, and three speed bumps have been installed.

[25] Over the years, CN has made numerous repairs and upgrades to the Bridge,

including a major overhaul between 1984 and 1985. These repairs and upgrades

are itemized at para. 70 of the application judge’s reasons. Still, the expert

evidence called on the application suggests that the sidewalks are too weak to

support a vehicle that leaves the roadway, and in the absence of crashworthy

barriers, a wayward vehicle might go in the river. No vehicle has done so for the

entire lifespan of the Bridge, over 100 years.

C. THE ISSUES

(1) Is the application judge’s finding on the parties’ intent tainted by

extricable errors of law or is it unreasonable?

[26] The application judge gave thorough reasons for his decision, 30 single

space pages. But his analysis of how he interpreted the 1906 Agreement is

contained in one or at most two paragraphs, paras. 158 and 159:

With respect to the first issue, while it is difficult to

ascertain the intention of the parties at the time they
signed the 1906 Agreement, I find that by the words used
 Page: 11

in the agreement, the subsequent conduct of the parties

and the context in which the agreement was signed, it
was the intention of the parties that the CN would
maintain the Bridge for the type of Bridge traffic that
existed at the time, namely streetcar and horse and cart
traffic. Use of motor vehicle and truck traffic was just
beginning to take place with very few if any cars or trucks
owned in the towns of Fort William and Port Arthur. As
noted above, in 1909 when the Bridge was completed,
there were only 1,176 motorized vehicles in all of the
Province of Ontario.

While there is evidence that the GTP and CN continued

to maintain the roadway Bridge for motorized vehicles
until it was closed following the fire, the record does not
support the City’s position that the CN maintained the
Bridge to the extent that it made structural changes
necessary to comply with modern safety codes. There is
considerable evidence that the CN took a consistent view
that structural changes to the Bridge were beyond the
scope of its contractual obligations and that it resisted
any suggestion by the City that it was bound to make
whatever changes were necessary to keep vehicular
traffic flowing.

[27] The standard for appellate review of a trial judge’s interpretation of a contract

such as the 1906 Agreement, which is not a standard form contract, is now well

established. The question of the proper interpretation of a contract is a question of

mixed fact and law: the application of the legal principles for interpreting a contract

to the words of the contract and the context in which those words were used. A

trial judge’s interpretation, like any finding on a question of mixed fact and law, is

entitled to deference from an appellate court. An appellate court is justified in

intervening only if the finding is tainted by a palpable and overriding error or is

unreasonable, or if a question of law can be extricated from the trial judge’s

 Page: 12

process of interpretation. And the Supreme Court of Canada has said “courts

should be cautious in identifying extricable questions of law in disputes over

contractual interpretation”: see H.L. v. Canada (Attorney General), 2005 SCC 25,

[2005] 1 S.C.R. 401, at paras. 4, 55-56, and 69-71; Sattva Capital Corp. v. Creston

Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 54; and Teal Cedar

Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688, at para. 45.

[28] Thunder Bay submits that the application judge’s finding that the parties

intended to maintain the Bridge solely for the type of traffic that existed in 1906

both reflects extricable errors of law and is unreasonable. CN submits that the

application judge’s interpretation is a finding of mixed fact in law, is supported by

the evidence, reveals no error of law, and thus appellate intervention is not

warranted.

[29] In my view, the application judge’s finding that the parties intended to

maintain the Bridge only for streetcar, horse, and cart traffic – in other words, the

vehicle traffic that existed in 1906 – is both unreasonable and is tainted by two

extricable errors of law, the first more important than the second. In summary:

a. The application judge’s finding is unreasonable because it fails

to take account of the full context in which the 1906
Agreement was made, is inconsistent with his earlier findings
on the context for the Agreement, is contrary to the parties’
reasonable expectations, and is at odds with the express
words of the Agreement.
 Page: 13

b. In interpreting the 1906 Agreement, the application judge

committed an extricable error of law by failing to give any
effect to the words “perpetual” and “in perpetuity”.

c. The application judge also committed an extricable error of

law by taking into account the subsequent conduct of the
parties, though the meaning of the 1906 Agreement is not
ambiguous. Alternatively, even if its meaning is ambiguous,
the application judge failed to consider the parties’ relevant
subsequent conduct.

(a) The application judge’s finding on the parties’ intent is unreasonable

[30] The principles of contract interpretation are also well established. They were

summarized by Doherty J.A. in Dumbrell v. Regional Group of Companies Inc.,

2007 ONCA 59, 85 O.R. (3d) 616, by Winkler C.J.O. in Salah v. Timothy’s Coffees

of the Worlds Inc., 2010 ONCA 673, 268 O.A.C. 279, and recently by Brown J.A.

in Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA

1007, 13 C.E.L.R. (4th) 28. The overriding principle is that the meaning of an

agreement and the intent of the parties in entering into it must be derived from the

words the parties used and the context in which they used those words. In

Dumbrell, at paras. 52 and 53, Doherty J.A. quoted an important paragraph from

Professor Swan’s text on contract law, and then concisely summarized the

principle in his own words:

Professor … Swan puts it well in Canadian Contract Law

(Markham, Ont.: Butterworths, 2006) at 493:

There are a number of inherent features of

language that need to be noted. Few, if any
words, can be understood apart from their
 Page: 14

context and no contractual language can be

understood without some knowledge of its
context and the purpose of the contract.
Words, taken individually, have an inherent
vagueness that will often require courts to
determine their meaning by looking at their
context and the expectations that the parties
may have had.
The text of the written agreement must be read as a
whole and in the context of the circumstances as they
existed when the agreement was created. The
circumstances include facts that were known or
reasonably capable of being known by the parties when
they entered into the written agreement. [Citations
omitted.]

In short, context – also described in the case law as “the surrounding

circumstances” or “the factual matrix” – almost always matters because words

rarely have meaning apart from their context.

[31] In this case, the central debate was over the meaning of the words “vehicle

traffic” or “vehicular traffic” in the 1906 Agreement, and the parties’ intent in using

these words. The application judge interpreted the words narrowly to mean only

the vehicle traffic that existed in 1906 – streetcars, horses, and carts. CN asks this

court to uphold his interpretation. Thunder Bay argues for a broad meaning and

submits that the parties intended vehicle or vehicular traffic to include any kind of

vehicle, including the vehicles that now almost exclusively use the Bridge: cars and

trucks. I agree with Thunder Bay’s argument.

[32] I begin with the words of the 1906 Agreement. Under it, the citizens of

Thunder Bay have the right to cross the Bridge by vehicle traffic, and CN has the
 Page: 15

obligation to maintain the Bridge for vehicular traffic. The Agreement does not

define vehicle or vehicular traffic, nor does it limit vehicle traffic to carts and horses;

instead the phrases vehicle traffic and vehicular traffic are open ended. And the

right and obligation are not time limited; instead they are said to be perpetual or

last in perpetuity. Inevitably, the way people get from point A to point B will change

over time, as indeed did the way the citizens of Thunder Bay have used the Bridge.

The text alone of the 1906 Agreement is inconsistent with the application judge’s

narrow interpretation, which freezes vehicle traffic to the vehicle traffic used to

cross the Bridge over 100 years ago.

[33] The full context in which the 1906 Agreement was signed unquestionably

supports the broad interpretation of vehicle traffic put forward by Thunder Bay. The

application judge referred to much of this context early in his reasons but did not

seem to consider it at all when, later in his reasons, he made his finding on the

parties’ intent. His conclusory statement that he considered the “context” is

unsupported.

[34] Three contextual considerations are important in interpreting the meaning of

vehicle or vehicular traffic in the 1906 Agreement: the purpose of both the 1905

and the 1906 Agreements; the reasonable expectations of the parties in entering

into the 1906 Agreement; and the coming of the automobile era. Each of these

considerations was known or reasonably capable of being known at the time. Even

apart from the words of the Agreement, by failing to take these contextual
 Page: 16

considerations into account, the application judge made a finding on the parties’

intent that was unreasonable and that justifies the intervention of this court.

(i) The purpose of the 1905 and 1906 Agreements

[35] The purpose of any agreement is always an important contextual

consideration: see Dumbrell, at para. 55. Here, in my view, the purpose of the 1906

Agreement has to be looked at together with the purpose of the 1905 Agreement

– collectively, as a package. CN contends this court cannot do so as the application

judge made a “core finding” that the two Agreements were distinct. At para. 65 of

his reasons, the application judge did say that the two Agreements “are separate

and distinct” because the 1905 Agreement gave no contractual rights or imposed

any obligations concerning the Bridge. Literally, the application judge was correct.

But commercially these two agreements, made one year apart, were intertwined:

the 1905 Agreement included a clause that gave Grand Truck Pacific the option to

construct the Bridge, which, when exercised, gave rise to both the 1906 Agreement

and ultimately the Bridge itself.

[36] And five paragraphs earlier in his reasons, at para. 60, when considering

their purpose, the application judge sensibly viewed the two Agreements together.

He found that the Agreements were intended to promote long term growth and

prosperity and expand industrial activity in Fort William:

There is no serious dispute about the historical context

within which the Agreements were negotiated. The
 Page: 17

preamble of the 1905 Agreement makes it clear that it

was not just anticipated, but expected, that the building
of the railroad would fuel growth and economic prosperity
in the long term. The parties to the Agreements
contemplated that such growth would include a larger
population and expanding industry, particularly given that
a central purpose of the Agreements was to expand
industrial activity of the Town.

[37] The application judge’s finding about an expected larger population was

supported by the statistics. Between 1902 and 1906 the population of Fort William

more than doubled from 4,799 to 10,032. By the time the Bridge was built in 1909,

the population had nearly doubled again to 18,003. Yet the application judge’s

overall finding on the purpose of the Agreements sits uncomfortably with his later

narrow interpretation of the meaning of vehicle traffic in the 1906 Agreement.

(ii) The reasonable expectations of the parties

[38] As Professor Swan wrote in the paragraph quoted in Dumbrell, the

reasonable expectations of the parties in entering into an agreement are also an

important contextual consideration. Both parties expected great gains from these

two Agreements. The application judge referred generally to these expectations in

the paragraph of his reasons just quoted above. More specifically, Grand Trunk

Pacific expected the Lake Superior branch line to be an important source of

revenue – a “mighty grain chute”, transporting millions of bushels of wheat from

rail to water transport at Fort Williams. In turn, Fort William was expected to be “the
 Page: 18

greatest port on the lakes”, offering “great promise for the future”, and expecting

“great commercial and industrial activity”.

[39] The application judge made a key finding at para. 61 of his reasons about

the parties’ expectations for the Bridge itself:

Clearly, both parties contemplated using the Bridge for

many years in the future—the City for “street railway,
vehicle and foot traffic” and the CN for rail traffic.

[40] That finding echoes the language of the 1906 Agreement, in which the right

to use the Bridge and the obligation to maintain it are to be in perpetuity. But this

finding is quite inconsistent with the application judge’s narrow interpretation of the

1906 Agreement. It makes little sense to acknowledge on one hand that the parties

expected a long term increase in growth, industrial activity, and population, and

expected the Bridge to be used “for many years”, while concluding on the other

hand that the Bridge was only to be maintained for what amounts to horse and

buggy carriage. This inconsistency is even more glaring when the third contextual

factor is taken into account: the coming of the automobile era.

(iii) The coming of the automobile era

[41] CN seeks to support the application judge’s finding on the parties’ intent in

two ways: by relying on the motion passed by the Municipal Council of Fort William

authorizing the 1906 Agreement; and by relying on the near absence of cars and

trucks on the streets of Fort William in 1906. Neither assists CN.

 Page: 19

[42] Fort William Council did pass an authorizing motion, and the motion said

that the roadways should “be sufficient to accommodate streetcar, horse traffic and

foot traffic”. The motion is a piece of extrinsic or external evidence, which might

reveal Fort Williams’ “subjective intention” in entering into the 1906 Agreement.

But extrinsic evidence of a party’s subjective intent in entering into a contract has

no place in contract interpretation for at least two reasons: first, resort to a party’s

subjective intent undermines the goal of certainty, a prime goal of a written

contract; and second, the parties may not have a common subjective intention

because one party’s subjective intention may not be shared by the other party: see

Dumbrell at para. 50. Thus, the parties’ intent and the meaning of their contract

must be ascertained by looking at the actual words they used and the context in

which they used them, but not by their subjective intention in using them.

[43] CN is on firmer ground in relying on the near absence of cars and trucks

when the 1906 Agreement was made. This near absence was relied on by the

application judge. Back then, streetcars, horses, and carts were the predominant

means of vehicle travel. But, as I have said, the meaning of vehicle traffic was not

so limited in the Agreement itself; it was unlimited. And Thunder Bay’s citizens had

the right to cross the Bridge by vehicle not for just a few years, but well into the

future, in fact perpetually. Back in 1906, the parties can reasonably have been

taken to know that soon, not even many years in the future, automobiles would

become the predominant mode of road travel.

 Page: 20

[44] Indeed, even earlier, in 1887, in its official report, the Ontario authority

responsible for roads had observed: “[M]otor carriages may be seen on the streets

of the larger cities, and present indications are that they will soon become an

important means of travel and transportation”. By 1906, the Ontario Government

had already passed the second version of the An Act to regulate Speed of

Operating Motor Vehicles on Highways, S.O. 1906 c. 46, which licensed

automobiles and drivers, and regulated speed and traffic.

[45] Though admittedly with the benefit of now knowing the pervasive use of cars

and trucks in our society, I cannot conceive why we should limit the meaning of

vehicle traffic on the roadways of the Bridge to carts and horses. I regard the

application judge’s finding on the parties’ intent in entering into the 1906

Agreement to be unreasonable. On this basis alone, I would allow the appeal on

the first issue. But I would also allow the appeal for a second and related reason:

the application judge’s failure to give any effect to the words “perpetual” and “in

perpetuity”.

(b) The application judge committed an extricable error of law by failing

to give any effect to the words “perpetual” and “in perpetuity”

[46] Another important principle of contract interpretation is that the court should

interpret the contract as a whole, and avoid an interpretation that does not give

effect to all of its terms or that renders one or more of its terms ineffective. A failure

to apply this principle is an error of law: see Salah, at para. 16; and Teal Cedar, at
 Page: 21

para. 44. Thunder Bay submits that in interpreting the 1906 Agreement, the

application judge failed to apply this principle because he failed to give effect to

the important words “perpetual” and “in perpetuity” in the 1906 Agreement. He

therefore committed an extricable error of law. I agree with Thunder Bay’s

submission.

[47] Grand Trunk Pacific received what it bargained for in the 1906 Agreement:

a bridge over the river for its rail traffic. That Bridge was important to its operation

of the Lake Superior branch line. And CN continues to use the Bridge for its rail

traffic to this day.

[48] In exchange, the fundamental right Fort William bargained for in the 1906

Agreement was the right of its citizens to cross the Bridge perpetually, either by

using their vehicles or on foot. To ensure that this right was protected, CN was

obliged to maintain the Bridge in perpetuity.

[49] Early in his reasons, the application judge recognized two critical points: first,

an agreement that imposes a perpetual obligation will be enforced and cannot be

terminated unilaterally; and second, the 1906 Agreement does not have an expiry

date or a provision giving either party a right to terminate its obligations. To these

two points, I would add a third: the words of the Agreement do not in any way

qualify Thunder Bay’s right under s. 3 or CN’s obligation under s. 5 – as I have

said, the word “vehicle” is not defined or limited to any particular kind of vehicle.
 Page: 22

[50] When, however, the application judge came to interpret the 1906

Agreement, he failed to take into account the points he had made earlier: that the

right of the people of Thunder Bay to use their vehicles to cross the bridge did not

expire, but continued perpetually, in other words permanently or forever; and that

CN cannot unilaterally terminate its obligation to maintain that right in perpetuity.

[51] In 1906, motor vehicle traffic was admittedly limited in this province. But it

was increasing, and was being regulated. As I have already suggested, back in

1906, it would not have taken much imagination to realize that in the future, cars

and trucks would become a far more common way than horses and carts to get

from one place to another. Yet, on the application judge’s finding, the use of the

Bridge for vehicular traffic was to be static, frozen in time, limited to the traffic that

then mainly existed: streetcars, horses, and carts. That finding gives no effect

whatsoever to the right of the people of Thunder Bay to use the Bridge for their

vehicles perpetually or to CN’s obligation to maintain the Bridge in perpetuity.

[52] CN’s answer to Thunder Bay’s submission is essentially twofold. Its first

answer is that interpreting the 1906 Agreement to give a perpetual right to cross

the Bridge when Fort William paid only $50,000 produces a “commercial

absurdity”. I do not accept this argument. The words of the Agreement are clear.

The right to cross and the obligation to maintain are to continue in perpetuity.

$50,000 in 1906 dollars is what the parties agreed to. Grand Trunk Pacific got its
 Page: 23

rail crossing; Fort William got its perpetual right to cross the Bridge by vehicles or

on foot. That bargain is not at all commercially absurd.

[53] CN’s second and main answer focuses on its obligation to maintain. CN

draws a distinction between maintaining the Bridge and making structural changes

to the Bridge. The former, it says, is its obligation under the Agreement; the latter

is not. Then, drawing on the expert evidence it led before the application judge,

CN contends that making the Bridge safe for cars and trucks would require

structural changes to the Bridge, changes that exceed its maintenance obligation.

[54] The jurisprudence lends some support to the distinction CN has drawn. As

the application judge noted, a requirement to “maintain” imposes:

[A]n obligation on a party to take the measures necessary

to cause a thing to remain in existence; to keep vigorous,
effective or unimpaired; to guard from loss or derogation;
to cause to continue in a specified state; to care for
property for purposes of operational productivity.

[55] This maintenance obligation is limited. On some of the authorities it does not

include changing the structure of a bridge, making it, for example, stronger or more

durable: see Attorney General v. Great Northern Rail Co., [1916-17] All. E.R. Rep.

272 (U.K. H.L.).

[56] But I view the distinction between maintenance and structural changes to be

of little practical consequence. As the application judge found, CN consistently took

the position that the many repairs and upgrades it has made to the Bridge over the
 Page: 24

years were matters of maintenance, not structural changes. Yet those repairs and

upgrades, all falling within CN’s maintenance obligation, have been sufficient to

allow cars and trucks to drive safely across the Bridge. The “errant” vehicle CN

claims to be concerned about has never manifested itself. Virtually no activity is

risk free. But the risk of an errant vehicle going into the river must be minimal with

three speed bumps and a speed limit of 20 kilometres per hour on the Bridge. One

might have thought that, having repaired the minor damage caused by the fire, CN

could simply have reopened the Bridge, and maintained it for vehicular traffic as it

and its predecessors have done, without incident, for over 100 years.

[57] Even more significant, the distinction CN draws between its maintenance

obligation and making structural changes to the Bridge is irrelevant in these

proceedings. CN’s argument that the Bridge cannot be reopened safely for

vehicular traffic without altering the structure of the Bridge is, in substance, an

argument that it should be relieved of its contractual obligation under the 1906

Agreement to maintain the Bridge. CN sought this very relief even before Thunder

Bay started its application. However, its action for an order that it not be required

to reopen the roadway portion of the Bridge was stayed by the order of Fregeau

J.: see Thunder Bay (City) v. CN Rail, 2016 ONSC 469, 49 M.P.L.R. (5th) 148.

[58] Faced with a stay, CN still seeks in this proceeding to avoid what is

otherwise a clear breach of its contractual obligation by claiming it cannot open the

Bridge safely for vehicles unless it exceeds its maintenance obligation. In other
 Page: 25

words, CN seeks to achieve indirectly what Fregeau J. already held it cannot do

directly.

[59] But as Thunder Bay has pointed out, CN’s position is tantamount to relying

on the doctrine of frustration of contract to excuse its breach. CN is seeking to

show that the 1906 Agreement, at least for vehicle traffic, has become “incapable

of being performed”. That argument, however, is not available to it in this

proceeding, especially in this court. The application judge made no finding that the

1906 Agreement was at an end, nor could he. He did not even make a finding that

CN was incapable of performing its contractual obligation. CN must therefore

comply with the 1906 Agreement and reopen the Bridge for cars and trucks.

Presumably it will make whatever maintenance repairs and upgrades it thinks

necessary to maintain the risk to public safety at an acceptable level.

[60] Because the application judge committed an extricable error of law by failing

to give effect to all the terms of the 1906 Agreement, he adopted an interpretation

of the parties’ intent not supported by the text of the document. The right to cross

the Bridge perpetually, and the obligation to maintain the Bridge in perpetuity, can

only mean that the parties intended the Bridge to be open for any kind of vehicle,

not just horses and carts.

[61] In addition to what I have already discussed, the trial judge made a second

extricable error of law in his interpretation of the contract: he rested his

 Page: 26

interpretation on the subsequent conduct of the parties, even though the text of the

1906 Agreement was not ambiguous. This error also warrants appellate

intervention.

(c) The application judge committed an extricable error of law by taking

into account the subsequent conduct of the parties

[62] In his interpretation of the 1906 Agreement, the application judge said that

he took into account the subsequent conduct of the parties. The rationale for

considering the parties’ subsequent conduct when interpreting an agreement is

that “it may be helpful in showing what meaning the parties attached to the

document after its execution, and this in turn may suggest that they took the same

view at an earlier date”: see S.M. Waddam’s, The Law of Contracts, 3rd ed

(Toronto: Canada Law Book, 1993), para. 323; and Montreal Trust Co. of Canada

v. Birmingham Lodge Ltd. (1995), 24 O.R. 3rd 97 (C.A.).

[63] Subsequent conduct, however, can be an unreliable guide to parties’ intent

at the time they entered into an agreement. The dangers of reliance on the parties’

subsequent conduct were thoroughly canvassed by Strathy C.J.O. in Shewchuk v.

Blackmont Inc., 2016 ONCA 912, 404 D.L.R. (4th) 512, at paras. 39-46. Because

of the dangers he averted to, “evidence of subsequent conduct should be admitted

only if the contract remains ambiguous after considering its text and its factual

matrix”.
 Page: 27

[64] Even if admitted to resolve ambiguity in the parties’ intent when they entered

into an agreement, the cogency or reliability of the evidence will vary depending

on its nature. As Strathy C.J.O. wrote at para. 53 of Shewchuk:

Evidence of subsequent conduct will be more reliable if

the acts it considers are the acts of both parties, are
intentional, are consistent over time, and are acts of
individuals rather than agents of corporations.

And he noted at para. 54:

Evidence of subsequent conduct will have greater weight

if it is unequivocal in the sense of being consistent with
only one of the two alternative interpretations of the
contract that generated the ambiguity triggering its
admissibility.

[65] In the present case, although the application judge said that “it is difficult to

ascertain the intention of the parties at the time they signed the 1906 agreement”,

he made no express finding that the meaning of the Agreement was ambiguous.

If its meaning and the parties’ intent were not ambiguous, as in my view they were

not, then the application judge made an extricable error of law in relying on the

parties’ subsequent conduct.

[66] If, however, the meaning of the 1906 Agreement was ambiguous, the

application judge failed to consider the relevant subsequent conduct of the parties.

The only subsequent conduct he seemed to consider was CN’s “consistent view

the structural changes to the Bridge were beyond the scope of its contractual

obligation”. CN’s own view of how it categorized its work of repairing and upgrading
 Page: 28

the Bridge hardly deserves much weight. Its views are not the acts of both parties,

and furthermore are the views of the corporation, not of the individuals who carried

out the repairs and upgrades.

[67] At best, CN’s view of the work it did could shed some light on the question

whether the obligation to maintain includes the obligation to make structural

changes to the Bridge to ensure its safe operation. For the reasons I have already

expressed, the scope of CN’s maintenance obligation has no relevance in these

proceedings. Even so, CN’s views of its maintenance obligation combined with the

undisputed fact that not a single vehicle has ever gone into the river, show that CN

can comply with the 1906 Agreement and still ensure the safety of motor vehicle

traffic on the Bridge.

[68] Moreover, if any relevant ambiguity exists in the meaning of the 1906

Agreement, that ambiguity relates not to the scope of CN’s maintenance obligation,

but to the meaning of vehicle traffic. Does it mean only vehicles that mainly existed

in 1906, streetcars, horses, and carts? Or does it also includes cars and trucks?

On this question, the subsequent conduct of the parties, especially CN itself,

resolves any ambiguity. The subsequent conduct of CN in maintaining the safe

operation of the roadways on the Bridge for the exclusive use of cars and trucks

supports Thunder Bay’s position that vehicle traffic in the 1906 Agreement was

meant to include the advent of motor vehicle traffic. CN’s subsequent conduct has

been intentional, consistent over time, and unequivocally supportive of the

 Page: 29

interpretation of the Agreement put forward by Thunder Bay. It is thus a highly

reliable indicator that under the 1906 Agreement motor vehicle traffic, as well as

streetcars, carts, and horses, would have the perpetual right to cross the Bridge,

and CN would have the perpetual obligation to maintain the Bridge for that

purpose.

[69] For these reasons, I conclude that the application judge erred in his

interpretation of the 1906 Agreement. Under the Agreement cars and trucks have

a perpetual right to cross the Bridge, and to ensure that right is preserved, CN has

a corresponding obligation to keep open and maintain the Bridge in perpetuity. To

terminate its obligation CN would have to seek a court order that its obligation to

maintain is incapable of being performed.

(2) Did the application judge err in law by holding that Thunder Bay had
the onus to give the court a specific and detailed proposal to make
the Bridge safe for motor vehicles?

[70] The application judge found that under the 1906 Agreement, CN was only

obliged to maintain the Bridge for the vehicle traffic existing at the time. His finding

seems to suggest that CN has no obligation to maintain the Bridge for cars and

trucks, even though CN has done so since motor vehicles started crossing the

Bridge.

[71] Yet the application judge went on to consider whether the Bridge could be

made safe for motor vehicles, implicitly suggesting that if he was satisfied that it

could, he would grant the relief Thunder Bay sought. But he held that Thunder Bay
 Page: 30

had the onus to provide him with a specific and detailed proposal for the changes

needed to make the Bridge safe for motor vehicles, and further that Thunder Bay

failed to meet its onus. Thus, he dismissed Thunder Bay’s application. He wrote at

paras. 162-163 of his reasons:

This is an application commenced by the City and the

City has the onus of clearly defining the relief it is seeking
and of providing cogent evidence of what changes are
required to make the Bridge safe for motorized traffic. It
has failed to do so despite having its experts examine the
Bridge. These reasons have set out in detail the expert
evidence that has been provided to illustrate that the
court has not been provided with a clear and detailed
proposal.

Without a specific and detailed proposal from the City –

one that has been tested and approved as structurally
safe for public traffic, this Court is left without reliable
evidence upon which to formulate the orders that the City
is seeking. This Court cannot make an order based upon
conjecture, speculation or the possibility that an “idea”
may be workable. This is all the more critical when the
safety of the public is at risk. Without evidence, it is not
possible to determine whether the work required to open
the Bridge safely is within the scope of what was intended
by the parties signing the 1906 Agreement.

He also held that Thunder Bay’s pleading was deficient and could not support the

relief it requested.

[72] Thunder Bay submits that the application judge erred in placing the onus on

it to show how the Bridge could be made safe for cars and trucks and that

misplacing the onus is an error of law. CN submits that the application judge

correctly placed the onus on Thunder Bay, as the City was asking for what
 Page: 31

amounted to an order for specific performance, and any order for specific

performance must be clear and specific.

[73] I agree with Thunder Bay’s submission. Thunder Bay was entitled to two

heads of relief: a declaration that by refusing to reopen the Bridge for motor

vehicles, CN had breached the 1906 Agreement; and an order that CN reopen and

maintain the Bridge for motor vehicle traffic. It had no onus to show the court how

the Bridge could be reopened safely for motor vehicles. If the onus lay anywhere,

it lay with CN, which maintains over 7,000 bridges across Canada, and which

under its Bridge Maintenance Program, is required to ensure the safe operation of

all of its bridges, including this Bridge.

[74] On the application, each side provided expert evidence from three

witnesses. This expert evidence was extensively reviewed by the application

judge. The experts on both sides agreed that, though the Bridge is structurally

sound, the pedestrian walkways cannot support the weight of a wayward vehicle

and the existing curbs and railings would not prevent a wayward vehicle from going

into the river.

[75] CN’s experts gave the opinion, implicitly accepted by the application judge,

that the risk of an errant vehicle going into the river was sufficiently high to warrant

closing the Bridge to vehicular traffic until this risk could be addressed by

improvements or modifications to the Bridge. According to CN’s experts, these

 Page: 32

improvements or modifications would require structural changes to the Bridge. And

as I have said, CN contends that structural changes are beyond its maintenance

obligation in s. 5 of the 1906 Agreement.

[76] I question the credibility of CN’s expert opinion. Since the Bridge’s inception,

CN has maintained it for all types of vehicular traffic, and for nearly 70 years

exclusively for motor vehicle traffic. In all this time, CN never claimed that the

Bridge posed a safety hazard. It has not claimed that the fire in 2013, which caused

only minor damage, in any way damaged the roadways over the Bridge or impaired

their safety. And yet not once has a car or truck gone off either roadway and into

the river. Somehow, a Bridge that was seemingly entirely safe for motor vehicle

traffic up until the time of the fire – and especially so after the speed limit was

reduced and speed bumps were installed – has now become unsafe and cannot

be reopened unless the Bridge is structurally altered. I find it hard to fathom how

CN can claim that a safety hazard now exists and can only be alleviated by

structural changes to the Bridge.

[77] But neither the credibility nor the reliability of the expert evidence needs to

be addressed in this appeal because the expert evidence is essentially irrelevant.

The citizens of Thunder Bay had a contractual right to cross the Bridge by motor

vehicle and CN has a contractual obligation to maintain the Bridge for that purpose

in perpetuity. By refusing to reopen the Bridge to cars and trucks, CN has breached

the 1906 Agreement. To rectify the breach, it must reopen the Bridge and maintain
 Page: 33

the roadways for motor vehicle traffic. How it chooses to do so is for it to decide.

CN, not Thunder Bay, is the expert in bridge maintenance. As I have said, it

maintains over 7,000 bridges. The Bridge Maintenance Program, referred to by the

application judge early in his reasons, but not in his analysis, governs its

maintenance obligation for all its bridges.

[78] That program, mandated by the Railway Safety Act, R.S.C., 1985, c. 32 (4th

Supp.) and Transport Canada, takes precedence over any agreement. Under it,

CN assumes responsibility for the condition of bridges over which CN and other

railway companies operate trains. CN has admitted that its Bridge Maintenance

Program applies to this Bridge, and not just to the railway tracks but as well to the

roadways and pedestrian walkways, as it is a combined Bridge. CN has also

admitted that because a bridge does not comply with modern design standards,

as this Bridge does not, is not a reason to close a bridge. Under the Bridge

Maintenance Program, CN maintains many bridges that do not meet current

standards. It does so by making any repairs and upgrades needed to mitigate any

safety risk from outdated designs. If any doubt exists about onus, the Bridge

Maintenance Program resolves that doubt.

[79] Through its experts, Thunder Bay did put forward at least one suggestion

for how to alleviate the safety concerns raised by CN’s experts. But it had no

obligation to do so. It is entitled simply to an order that CN reopen the Bridge for

cars and trucks and maintain it in accordance with its contractual obligation under
 Page: 34

the 1906 Agreement. To repeat what I said earlier, at bottom, CN wants this court

to relieve it of its contractual obligation on the premise that the Bridge cannot be

used safely by cars and trucks without structural changes, which are beyond CN’s

maintenance obligation. I doubt the validity of the premise of CN’s request. But

whether valid or not, the relief underlying it was not sought by CN in this litigation,

nor ordered by the application judge, and is precluded by the 2016 stay order of

Fregeau J.

D. CONCLUSION

[80] I would allow the appeal, set aside the order of the application judge and in

its place:

a) Declare that CN has breached the 1906 Agreement; and

b) Order CN to reopen the Bridge for vehicle traffic and maintain the Bridge in
accordance with the 1906 Agreement.

[81] Thunder Bay is entitled to its costs of the appeal and the application in the

agreed on amounts of $40,000 and $250,000, each amount inclusive of

disbursements and applicable taxes.

Released: “J.L.” June 11, 2018

“John Laskin J.A.”

“I agree. J.C. MacPherson J.A.”
“I agree. Fairburn J.A.”