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
    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.

[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 judges finding on the parties intent tainted by extricable
    errors of law or is it unreasonable?

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 judges finding is unreasonable and, in addition, is tainted by two
    extricable errors of law:

a.

The application judges 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 Bridges reopening.

[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 20
th
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 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, 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.

[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 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.

[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 judges 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 judges 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 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 Citys 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 judges 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 judges 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 judges 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 judges 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
    judges 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 judges 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
    judges 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.

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 judges 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. Timothys
    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 Swans 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 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 Bays 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
    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 judges 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 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 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 judges 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 judges
    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
    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 futurethe 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 judges 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 judges 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.

[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 partys subjective intent in entering into a
    contract has no place in contract interpretation for at least two reasons: first,
    resort to a partys 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 partys 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 Bays 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.

[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 judges 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 judges 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 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 Bays 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 Bays right under s. 3 or CNs obligation under s. 5  as I
    have said, the word vehicle is not defined or limited to any particular kind
    of vehicle.

[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 judges 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 CNs obligation to maintain the Bridge in
    perpetuity.

[52]

CNs answer to Thunder
    Bays 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 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]

CNs 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 years were matters of maintenance, not structural changes. Yet those
    repairs and upgrades, all falling within CNs 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.
    CNs 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
    words, CN seeks to achieve indirectly what Fregeau J. already held it cannot do
    directly.

[59]

But
    as Thunder Bay has pointed out, CNs 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
    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. Waddams, 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.

[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 CNs consistent
    view the structural changes to the Bridge were beyond the scope of its
    contractual obligation. CNs own view of how it categorized its work of
    repairing and upgrading 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, CNs 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 CNs maintenance obligation has no relevance in
    these proceedings. Even so, CNs 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 CNs 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 Bays position that vehicle traffic in the 1906 Agreement
    was meant to include the advent of motor vehicle traffic. CNs subsequent conduct
    has been intentional, consistent over time, and unequivocally supportive of the
    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 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 Bays 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 Bays 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
    amounted to an order for specific performance, and any order for specific
    performance must be clear and specific.

[73]

I agree with Thunder Bays 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]

CNs
    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 CNs
    experts, these 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 CNs expert opinion. Since the Bridges 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 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 CNs 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
    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 CNs maintenance obligation. I doubt the validity of the
    premise of CNs 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.