Plaintiff v Defendant

Plaintiff v Defendant - [2010] VSC 317 - VSC 2010 case summary — Zoe

[14]

The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.

It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.

Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties' presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.[2]

[22]

12 There is other evidence which to a greater or lesser extent supports Darnley's contention about the way in which the parties understood the terms of the obligations in the Management Agreement. Two residents at the Domaine were called by Darnley to give evidence: Mr Raymond Love and Ms Dorothy Donaldson. Mr Raymond Love recalled that from the outset of his period of residence he was told that there would be respite services as well as a nurse employed at the premises. Ms Dorothy Donaldson recounted a conversation she recalled having had with Ms Testart at a display villa at around Christmas 2001. Ms Donaldson recalled being told there would be a nurse at the Domaine and that respite facilities would be available within the Domaine. Furthermore, there was the evidence of Mr Paul Shaw who prepared the architectural drawings for the Domaine on which he worked from 2000. His instructions for the preparation of the drawings in part came from Mr Mark Casey at meetings, and Mr Shaw recalled the presentation to the local Council in 2000 at which Mr Mark Casey gave an overview of the services to be provided by RSA. In addition, Darnley's Sales Director, Mr Max Williams, had been told at meetings with Mr Mark Casey that the management services to be provided by RSA would include respite facilities at the Domaine and that there would be an onsite nurse. He had been told that the availability of respite facilities helped sales because residents who needed respite would not need to leave the village if they needed respite in circumstances in which they could not otherwise stay in their own residence in the village. The availability of respite facilities at the village would mean that the residents could remain within the broader community in which they lived in circumstances where they might not otherwise be able to stay in their own home independently. Mr Christopher Tucker was the Advertising Executive who handled Darnley's advertising of the Domaine. He produced a number of brochures and was briefed by Mr Mark Casey about the key concepts involved in the project. His evidence was to the effect that the village would provide facilities for personal care, including nursing, and respite care.

[31]

19 A separate defence was relied upon by RSA maintaining that the default notices were not valid in form. Notices must be clear and unambiguous.[14] It seems to me, however, that each of the notices, albeit different from each other to some extent, gives clear and unambiguous notification to the recipient of the nature of the breaches alleged. The first rectification notice dated 24 May 2007 relevantly asserted a breach of clause 23 by asserting that RSA had sold, transferred, assigned, licensed or otherwise parted with its rights and obligations under the Management Agreement without the prior written consent of Darnley. It is plain enough from this identified event (described under the heading "Breach of cl. 23 - assignment") as the complaint that RSA had no longer the undertaking which it had contracted with Darnley to manage. The second rectification notice was dated 20 August 2007 and, under the heading "Breaches of cl. 7(a) - provision of Management Services at the Premises to a high standard", the notice identified a failure "to use, make available or operate 12 respite units provided by Darnley at the Premises for the accommodation of carers". Under the same heading there was also identified a failure by RSA "to provide the services of a nurse 24 hours a day for the care and benefit of the residents". Each of the remaining defaults identified were modified somewhat by the third rectification notice dated 5 September 2008. The third rectification notice nonetheless sufficiently identified clearly and unambiguously the complaints which were the subject of the proceeding in terms which are comparable to those previously found in the earlier rectification notices. Thus, under the heading "Breaches of cl. 7(a) - provision of Management Services at the Premises to a high standard" there was, under clause 2.1, the assertion of a breach that RSA had failed "properly or at all, to use, make available or operate 12 respite units provided by Darnley at the Premises", and in clause 2.6, an allegation that RSA had failed to provide the services of a nurse for the care and benefit of the residents either (a) 24 hours a day; or (b) except for the period between about 21 - 26 June 2006, permanently to staff the post of Director of Nursing at the facility provided therefore between 9am and 5pm on weekdays. Under the heading "Breach of cl. 23 - assignment" the notice identified as a breach that RSA had "sold, transferred, assigned, licensed or otherwise parted with its rights under the management agreement without the prior written consent of Darnley". In my opinion there is nothing that is unclear or ambiguous about the terms of these notices and (if it were relevant) there was certainly no evidence that any of the notices were in any way not understood by RSA.

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Cases Cited (5)