Interpreting Legal Documents – Ambiguity

Written on behalf of Peter McSherry
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General Principle

It is a fundamental legal concept that a term in an agreement which is ambiguous, that is capable of at least two interpretations, should be read against the interest of the party which drafted the document.

The theory which lies behind this principle is that the person who wrote the document has the ability to make precise what the meaning of the document is to be. Hence, that same person should be held accountable for any possible controversy if there is debate about its  interpretation.

In employment cases, in particular, when the bargaining power between the parties tends to be one-sided, courts often have used this concept to rule against the employer when reviewing a document such as an employment contract when the questioned term is capable of differing interpretations.

Release No Bar to Sexual Harassment Case

This argument was used recently in a case involving a release signed by an employee, an unusual application of this argument.[1]

The plaintiff in the lawsuit had been terminated by the company in August of 2011. She then signed a release in exchange for payment of $10,000. Some 4.5 years later, the employer began an investigation of a sexual harassment complaint against one of its employees. This caused an array of further allegations against the same person, eight in total, one of which was made by the plaintiff. The plaintiff, in the face of her signed release, sued the Salvation Army and the person alleged responsible. The claim against the employer was resolved in unknown terms.

This left the claim against the personal defendant who sought an immediate judgment dismissing the claim, primarily due to the release which had been signed by the plaintiff when she was first terminated many years prior.

That release contained these terms:

  1. The release was intended to resolve all claims arising between the employer and employee arising from her employment or its termination;
  2. The release included a release of any claims against anyone associated with the employer which arose or was connected to her employment.

As difficult as it may be to see this document as capable of two meanings, the judge came exactly to this conclusion. The court stated:

While many of the alleged events occurred at the place of employment and perhaps, because of employment, sexual harassment, intimidation and other improper conduct are not connected to employment. They are clearly separate matters.

The judge found that the release was ambiguous as to whether it was intended to cover all possible claims or limited to employment claims. As he found the term unclear, he allowed the claim to continue for “non-employment claims”. He continued to find that the sexual harassment claim was such a case, as difficult as that conclusion may appear to be.

The case is not finished. What was decided here is that there was enough of an issue to warrant a full trial.

The decision is nonetheless illustrative of the discretion given to judge to (1) assess whether there is an apparent ambiguity in the document and (2) then apply this principle of resolving the question against the employer, usually the party which drafted the document. It is yet another example of words on the agreement not meaning what the average person would expect.

Get Legal Advice Before You Act

No matter what you may think a document means, take time to get legal advice. It may unlock doors to your advantage. Contact the offices of Guelph employment lawyer Peter McSherry. We can guide you through the issues and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.





[1]Watson v Salvation Army