And and Or, or And or Or?

“Would you like cream or sugar with your coffee?”¹

Virtually no Canadian, upon having this question posed to them, would assume that they must choose between adding either cream or sugar to the exclusion of the other. The common understanding is that one may have cream exclusively, or sugar exclusively, or cream and sugar together, or neither in the coffee.

However, students of Canadian law quickly learn to distinguish between the importance of “and” and “or” when interpreting a statute. Like words such as “shall,” “must,” and “may,” “and” and “or” seem to take on a different, yet obvious and eventually ordinary, meaning when considered in a legislative instrument.

The question of interpreting the difference between “and” and “or” was recently raised before the Court of Appeal for Ontario in Rooney v. ArcelorMittal S.A.² The case involved alleged material misrepresentations in a take-over bid circular. The plaintiffs, former securities holders of Baffinland Iron Mines Corporation (“Baffinland”), alleged that “as a consequence of the defendants’ conduct, they received less for their Baffinland securities than they otherwise would have.”³ They relied on s. 131(1) of Ontario’s Securities Act⁴ to bring an action for damages against “the persons and companies who signed and filed the circulars.”⁵ The defendants brought a number of motions to strike the plaintiffs’ statement of claim. While most were unsuccessful, the motions judge ruled that s. 131(1) required an election between suing the offerors or the offerors’ directors and signatories.⁶ This was one of the two issues appealed by the former securities holders.⁷

At this point, it is worth considering the specific language of s. 131(1). The section reads as follows:

131(1) Where a take-over bid circular sent to the security holders of an offeree issuer as required by the regulations related to Part XX, or any notice of change or variation in respect of the circular, contains a misrepresentation, a security holder may, without regard to whether the security holder relied on the misrepresentation, elect to exercise a right of action for rescission or damages against the offeror or a right of action for damages against,

(a) every person who at the time the circular or notice, as the case may be, was signed was a director of the offeror;

(b) every person or company whose consent in respect of the circular or notice, as the case may be, has been filed pursuant to a requirement of the regulations but only with respect to reports, opinions or statements that have been made by the person or company; and

(c) each person who signed a certificate in the circular or notice, as the case may be, other than the persons included in clause (a).⁸

Applying Elmer Driedger’s “modern principle,” as directed by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd. (Re),⁹ the Court of Appeal held that the motions judge had “focused too narrowly on the plain meaning of s. 131(1).”¹⁰ Considering the entire context, with regard to ordinary and grammatical meaning, and in harmony with the scheme and object of the Act,¹¹ the Court concluded that the provision did not require a plaintiff electing to sue for damages to choose between suing the offeror and suing the offeror’s directors and signatories.¹²

The result can easily be justified as consistent with a legislative intent to remedy the mischief targeted by the provision. Clearly, it serves little purpose to require “the offeror’s directors and officers to sign a certificate affirming the integrity of the take-over bid circular if s. 131(1) forces a plaintiff into an election that could let those people off the hook.”¹³ More interesting, however, is the Court’s comment on plain meaning of “or.” The Court opined that “the plain meaning of ‘or’ can be either inclusive or exclusive. ‘Or’ is not a term of art that must be given a consistent interpretation throughout a legislative text.”¹⁴

As the example above demonstrates, the Court is absolutely correct that the plain meaning of “or” does not demand an exclusive interpretation. However, in the context of legislative drafting, there are usually higher degrees of clarity and certainty created when a narrower meaning can be presumed. This is a basic distinction that law students are taught to make at the beginning of their legal education. The Court’s comment does invite the question of what is lost when a word that legislators use in a consistent fashion is subject to multiple interpretations. Should the drafters of the Ontario legislation not normally be expected to anticipate the usual, exclusive interpretation of “or”? And if so, and they intended and relied on that meaning of “or,” how would it be possible to signal such a reliance?

Admittedly, this particular ambiguity in the Securities Act could have been eliminated simply through better drafting. The Court recognized this possibility in its discussion of comparable provisions in other provinces’ Acts.¹⁵ Maybe that is a sufficient answer, and as the Court suggests, “or” should always take its meaning from the context in which it is used, as it does in ordinary speech.

Regardless, for now at least, the meaning of “or” is clear in this provision of the Ontario Act. Whether arguments for a broader interpretation of “or” reappear in other disputes remains to be seen. But ultimately, the traditional assumption of a necessary difference between “and” and “or” may become a less meaningful distinction to future lawyers.