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w w w . C A N A D I A N L a w y e r m a g . c o m N o v e m b e r / D e c e m b e r 2 0 1 4 17 O P I N I O N determine 'the intent of the parties and the scope of their understanding.' To do so, a decision-maker must read the con- tract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circum- stances known to the parties at the time of formation of the contract." Rothstein con- tinued: "The historical approach should be abandoned. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, consid- ered in light of the factual matrix." But what about the long-entrenched parol evidence rule, that precludes admis- sion 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? Doesn't examining "surrounding circumstances known to the parties" violate that rule? No, said Rothstein. "The goal of examin- ing such evidence is to deepen a deci- sion-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract." The parol evidence rule, he said, is not offended because "surrounding circumstances" are 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. Contractual interpretation, Rothstein went on, is a question of mixed fact and law. Can there ever be an appeal from interpretation? Rothstein says: "It may be possible to identify an extricable question of law from within what was initially charac- terized as a question of mixed fact and law." In that case (called rare by Rothstein), leave to appeal can be granted. But in Sattva, he said, there was no extricable question of law from the question of mixed fact and law, and therefore there could be no appeal from the arbitrator's decision. A court messes with traditional rules at the law's peril. It is hard to distill the essence of Sattva, a rambling and poorly crafted judgment (a departure from Rothstein's usual clarity), but it seems to put the stamp of approval on a new and much broader approach to the interpretation of contracts. "Surrounding circumstances known to the parties," unrestrained by the parol evidence rule, is an expansive and vague concept. What do these circumstances encom- pass? For example, will evidence of the negotiations between parties — drafts of agreements, perhaps — now be admis- sible? There have been rumblings in the commercial bar about new uncertainties introduced by Sattva into what had been a long-established and well-understood part of the law. One more thing. Our highest court often gives guidance to the profession in obiter dicta, helpful asides not essential to the judgment. But obiter run rampant clut- ters up a case and obscures the main mes- sage. This happened in Sattva. Rothstein began a lengthy exegesis with, "As this Court rarely has the opportunity to address appeals of arbitral awards, it is, in my view, useful to explain. . . ." No it wasn't. Philip Slayton is president of PEN Canada, an organization of writers that protects and promotes freedom of expression. Follow him on Twitter @philipslayton. LIVE EVENTS DESIGNED FOR CORPORATIONS AND LAW FIRMS Thomson Reuters Legal Executive Institute is the leading provider of CLE events for the legal industry. Below you'll find upcoming live conferences that might be of interest to you and your team. You can register for yourself and any members of your department. Registration can be applied to anyone in your company – a different person could attend each event. DISCOUNTS AVAILABLE Individual Discount – Receive 15% off any individual program. Use promo code 15CORPORATE at checkout. Group Discounts – We have great group discounts available for you and your colleagues. Call 1-800-308-1700 for more information or to register. The more events you purchase, the more you save: ȕ1VSDIBTFSFHJTUSBUJPOTHFUPGG ȕ1VSDIBTFSFHJTUSBUJPOTHFUPGG 2 WAYS TO REGISTER westlegaledcenter.com 2 1.800.308.1700 1 Drafting Clearer Contracts October 30 – Washington DC November 6 – New York , NY December 11 – San Francisco, CA $895 Northeast M&A/Private Equity Forum December 3 - Boston, MA $595 22nd Annual Marketing Partner Forum January 21-23 - Rancho Palos Verdes CA $2495 The 3rd Annual Institute for Corporate Counsel December 10 - New York $299 Untitled-2 1 2014-10-28 9:01 AM

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