“Put it in writing.” That’s the advice given to people who want to avoid a future dispute. But what happens when a dispute arises over the meaning of what was written? In Byrne v Byrne 2013 BCSC 934, the Supreme Court of British Columbia gives a helpful reminder of the principles that a court will rely on to resolve ambiguity in a written agreement. In Byrne, the husband and wife entered into a separation agreement three years after separating. The agreement dealt with the division of the family assets, including RRSPs that the parties owned. The separation agreement called for Mr. and Ms. Byrne to resolve their property issues by way of spousal rollovers between their RRSPs. However, when the time came to implement the terms of the separation agreement, the parties disagreed on the correct interpretation of the agreement.
The Court laid out the principles for resolving a dispute over the written words of the separation agreement. The Court reminded the parties that while a separation agreement is a particular species of contract, the general principles of contractual interpretation still apply when attempting to determine what the parties intended. The Court applied the rules set out in Avenue Canadian Ventures Corp. v No. 151 Cathedral Ventures Limitedto determine the parties’ intention:
The whole of the agreement must be considered in order to determine if its clauses can be read together in harmony;
The words of the agreement must be given their plain, ordinary meaning and an objective test should be applied to the interpretation of words used in the agreement;
To assist in determining the contractual intent of the parties, one is entitled, if necessary, to consider the “factual matrix” known to the parties when the agreement was made. The factual matrix is to be distinguished from extrinsic evidence generally. Extrinsic evidence may be resorted to only once a determination is made that the written agreement is ambiguous;
A determination of ambiguity is not a precondition to consideration of the factual matrix; and
The factual matrix is the background of relevant facts which the parties knew and had in mind when they drew the written text of their agreement. While the factual matrix may be considered, it must remain in the background while the agreement itself takes the foreground.
The Court then proceeded to apply the above test to the disagreement between Mr. and Ms. Byrne, and came out in favour of Ms. Byrne. The Court did not consider it necessary to consider the “factual matrix” in this case because the Court was able to determine the intention of the parties by giving the words of the agreement their plain, ordinary meaning and reading them in the context of the agreement as a whole.TheByrne case is helpful because it shows the approach that a court will take when it is given the task of determining what the parties intended when they signed the agreement in the face of an ambiguity. While Byne provides us with this framework, it also serves as a helpful reminder that, by careful drafting and review, such disputes can be avoided altogether. Ambiguities in the written language of an agreement often become invisible to lawyers and clients who spend a great deal of time developing the agreement. By stepping back and evaluating the agreement objectively, or by giving the agreement to an impartial third party to review, parties can ensure that the agreement is clear and unambiguous and that a court’s interpretation (which will almost always make one of the parties unhappy) is not necessary.