April 30, 2024
That eye-catching headline is a bit misleading. In criminal litigation, subjective intention – whether the accused meant to commit the offence- might be important (though not always). In civil litigation involving contracts, which is one of our areas of practice, there is a key difference between “subjective “ intention and “objective” intention.
Why is this?
Because human nature causes us to apply 20/20 hindsight to our own motivation to favour the result we want. As judges often note, it is quite common for the subjective intention of two parties to a contract to be different.
“Objective intention” refers top what a sensible outsider- such as a judge- would decide what was the shared motivation that caused the parties to agree in the first place. They want different things- that is the bargain they make, such as money for goods- but there is also the shared desire – “you want my money and I want your goods”.
How do courts find the objective intention?
In the case of a written contract, the words are important, but words may have a different meaning depending upon the context- how much money for which goods?- so courts often look at the surrounding circumstances at the time the contract was created.
This contextual approach makes common sense but actually has only been the standard in Canada (and thus Ontario, including Thunder Bay) since 2014. Prior to that time, courts focused on the ordinary meaning of words. Reference to standard dictionaries was extremely important. But words often have more than one dictionary meaning, so to understand them, inevitably we have to look at surrounding circumstances. The difference in approach, however, is real. Though courts still will look at dictionaries, now the inquiry does not stop there.
The same case clarified the significance of the two types of intention. As the Supreme Court explains:
It is necessary to say a word about consideration of the surrounding circumstances and the parol evidence rule. The parol evidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing. To this end, the rule precludes, among other things, evidence of the subjective intentions of the parties The purpose of the parol evidence rule is primarily to achieve finality and certainty in contractual obligations, and secondarily to hamper a party’s ability to use fabricated or unreliable evidence to attack a written contract. [citations omitted]
“Parol evidence” in a contract means any evidence which is intended or tends to show that the actual agreement differs from the written contract.[1] This rule exists because parol evidence is often used to make an untruthful attack on the true meaning of the contract. Parol evidence often simply means “oral evidence” that contradicts the plain meaning of words in a written contract.
Though the 2014 Supreme Court decision goes to great pains to say that the parol evidence rule survives in Canada, in practice courts often have trouble distinguishing subjective from objective evidence.[2]
TAKEAWAYS
This means that if you are involved in contract litigation you need a lawyer who:
- Understands parol evidence.
- Understands the difference between what most judges will allow as “objective evidence” or exclude as “subjective evidence.”
- Possesses the advocacy skills to convince the judge that the admissible surrounding evidence leads to the contractual interpretation in your favour.
WHAT WEILERS LLP CAN DO FOR YOU
At Weilers LLP, part of our proud tradition is having the in-depth knowledge and advocacy skills to help clients with their contract disputes. Our progressive approach in this context means that we stay current, and constantly work to improve our advocacy skills to benefit our clients. If you need lawyers who know the law, and are good advocates, give us a call. We may be the right lawyers for you.
[1] Tip of the cap to Cornell Law School’s website for help with this explanation https://www.law.cornell.edu/wex/parol_evidence_rule
[2] Compare the majority and dissenting views in Reddick v. Robinson, 2024 ONCA 116 for an example of how judges may disagree.