Monday, 5 March 2012

BCCA Restates Principles for Admissibility of Extrinsic Evidence

In Athwal v. Black Top Cabs Ltd., 2012 BCCA 107, the court provided some welcome clarity regarding situations when extrinsic evidence is admissible to interpret a written contract and the kind of evidence admissible in each situation:
  1. whether or not the contract is ambiguous, extrinsic evidence, generally restricted to circumstances known by both parties, “is admissible for the purpose of determining the meaning of the words of the contract as they would be understood by an “objective reasonable bystander” in the circumstances of the parties”; and
  2. if the meaning of a provision remains ambiguous “after the contextual inquiry into the circumstances in which the agreement was reached”, the court may consider “extrinsic evidence of what was said, done or known by the parties when the contract was made … for the purpose of determining the parties’ common intention.” 
The court also explained that “ambiguity” arises when “the meaning of the words is vague, inconsistent or in conflict with other provisions of the contract, redundant, or overly general”.

In coming to the above conclusions, the court relied on Water Street Pictures Ltd. v. Forefront Releasing Inc., 2006 BCCA 459 and Black Swan Gold Mines Ltd. v. Goldbelt Resources Ltd. (1996), 25 B.C.L.R. (3d) 285 (C.A.)