Parole Evidence Rule
Louis W. Bray Construction Ltd. v Ottawa (City), 2018 CanLII 14351 (ON SCSM)
20. Relying on the Supreme Court of Canada decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), Bray stated that parole evidence was necessary in order to clarify the ambiguity found in the agreement.
Fung v. Decca Homes Limited, 2019 ONCA 848 (CanLII),
REASONS FOR DECISION
[1] The respondent overpaid the appellants for work done on a construction project. The appellants agreed. Accordingly, the appellants wrote the respondent a $150,000 cheque, the amount of the overpayment, but asked that the respondent not cash the cheque.
[2] The parties later entered into a demand promissory note for that same amount. An irrevocable direction was given to a law firm to pay that amount to the respondent from the proceeds of other properties once sold. The appellants admitted that the respondent’s overpayment had been directed into those properties.
[3] The respondent believed that the appellants had abandoned his project when, among other things, the appellants failed to respond to a series of the respondent’s emails. The respondent made a written demand on the note. When it was not paid, the respondent brought an application for payment. That application was granted.
[4] The appellants say that the application judge erred by failing to take into account an oral agreement that is said to have modified the written promissory note. That oral agreement is said to have been made at the same time that the note was entered into.
[5] We see no error in the application judge’s application of the parole evidence rule in the circumstances of this case: Hawrish v. Bank of Montreal, 1969 CanLII 2 (SCC), [1969] S.C.R. 515, at p. 520.
Even if there was a collateral oral agreement, something that is disputed by the respondent, that oral agreement could not contradict the written agreement.
Accordingly, we agree with the application judge that the written agreement prevails and that the respondent could enforce the note. It was contingent on nothing.
Louis W. Bray Construction Ltd. v Ottawa (City), 2018 CanLII 14351 (ON SCSM),
20. Relying on the Supreme Court of Canada decision in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), Bray stated that parole evidence was necessary in order to clarify the ambiguity found in the agreement.
21. For opposite reasons, in their submissions, counsel for both Ottawa and Bray relied on discreet portions of paragraph 59 of Sattva:
“…The parole evidence rule precludes admission of evidence outside the words of the written contract that would add to, or subtract from, vary or contradict contract that has been wholly reduced to writing… …The purpose of the parole evidence rule is to achieve finality and certainty in contractual obligations…”
22. In my view, the most informative statement from the Court in Sattva regarding this particular point is found in paragraph 60:
“…parole evidence…is used as an interpretive aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words. The surrounding circumstances are facts known or facts that reasonably ought to have been known to both parties at or before the date of contracting; therefore, the concern of unreliability does not arise.”
