Court dismisses parole evidence to interpret contract where no ambiguity exists in written terms.

[*34] 1975 May 12

(STAVRINAKIS, P.D.C. & PAPADOPOULLOS, S.D.J.)

IN THE DISTRICT COURT OP NICOSIA

Yiannis G. Makri and Others,

Plaintiffs,

and

Georghios Miltiadous and Others,

Defendants.

(Application No. 27/73).

Contract - Written document - Whether parole evidence to prove pre-contract negotiations admissible - Only where there is an ambiguity in the document which cannot be resolved otherwise.

A. Markides, for the Plaintiffs.

A. Dikigoropoullos, for the Defendants.

RULING

The ruling of the Court was delivered by:-

STAVRINAKIS. P.D.C.: The plaintiffs in this [*35] originating summons inter partes under Order 55 Rule 1 of the Civil Procedure Rules, apply to the Court to interprete a written settlement made in Court on the 3rd November, 1972, in General Application No. 3/73. The defendants entered an appearance to the summons and filed their defence and counterclaim.

On the 22nd April, 1975, when the summons came up for hearing, learned counsel for the defendants expressed the intention to apply for an adjournment, with a view to appointing another advocate, as he himself intended to give evidence in the case regarding the pre-settlement negotiations. Learned counsel for the other side stated that he would object to oral evidence being adduced for the purpose of interpreting a written document.

The Court, then, suggested that, in view of the expressed intention of the plaintiffs’ counsel to object to the admission of extrinsic parole evidence, it would have been better if the issue of admissibility was disposed of before proceeding with the hearing of the substance of the case. Both sides consented to this course and on the 30th April, 1975, arguments were heard by both sides regarding the admissibility of parole evidence with a view to interpreting a written document.

The evidence sought to be adduced by the defendants concerns para. 4(b) of the agreement made [*36] between the parties and which appears in para

6 of the Statement of Claim in the summons. The relevant paragraph reads as follows (translated in English):-

"The second party shall pay to the first party the sum of £36,494= mentioned in para 3(b) above as follows:-

"(a) £9000= within two months from the signing of the agreement.

"(b) The balance with interest at 8% per annum - the said interest to be calculated on the balance of the capital standing due (ekastote ofilomenou kefaleou) and payable together with each instalment - by four equal six monthly instalments, the first one being payable on the 30th June , 1973".

The contention of the defendants is that the interpretation to be accorded to para 4(b), which he intends to support by oral evidence regarding the real agreement of the parties as it transpired through the pre-settlement negotiations, is that no interest should be chargeable on the balance for the period between the date of the contract and the payment of the £9000=,i.e., for two months.

On behalf of the plaintiffs it was argued that parole evidence is only admissible to interprete a written document where there is an ambiguity which [*37] cannot be resolved by reading the document as a whole and that in the present case no such ambiguity exists in the paragraph in question.

The relevant passage of the principle against the admission of parole evidence is set out in para 1851 in Phipson on Evidence, 10th ed. which reads:-

"Where the language of a document is clear and applies without difficulty to the facts of the case, extrinsic evidence is not admissible to affect its interpretation; but where the language is peculiar or its application to the facts is ambiguous or inaccurate, extrinsic evidence may, subject to the qualifications hereiafter stated, be given in explanaion".

The defendants’ contention is that there is nothing in the said paragraph to indicate as to when interest would become payable or on what amount and, therefore, this ambiguity can only be resolved by resorting to extrinsic evidence and in particular to presettlement negotiations.

This may be so but no peculiarity in the language or its application to the facts are ambiguous or inaccurate to justify the introduction of such extrinsic evidence. Looking at the paragraph in question, we may say that the interpretation should be confined to the document itself, as the sort of extrinsic evidence[*38] sought to be adduced by the defendants would amount to the addition of something in the contract which is not there. If what is intended is the correction or re-writing of the said agreement, then we cannot allow extrinsic evidence, for this purpose, on the pleadings as they stand.

Furthermore, regarding the dangers of entering into the pre-contract negotiations, Lord Wilberforce was very explicit in Prenn v. Simmonds , (1971)3 All E.R., p. 237 and we shall underline but a few passages of what he said to illustrate the position.

P. 240, letters P. to G. :-

"The reason for not admitting evidence of those exchanges is not a technical one or even mainly one of convenience. It is simply that such evidence is unhelpful. By the nature of things, where negotiations are difficult, the parties’ position with each passing letter are changing and until the final agreement, although converging still divergent. It is only the final document which records a consensus".

And at p. 241 , letter F.:-

"In my opinion, then, evidence of negotiations, or the parties’ intention ..... ought to be received and evidence should be restricted to evidence of the

factual background known to the [*39] parties at or before the date of the contract, including evidence of the ’genesis’ and objectively the ’aim of the transaction’."

Learned counsel for the defendants cited the above authority relying on the last quoted passage but as we have already said, what the defendants really want to introduce is evidence regarding the pre-settlement negotiations, out of which the settlement in question came into being, as formulated in the written document.

For all the above reasons, we rule that extrinsic parole evidence ca not be allowed for the purpose of interpreting para 4(b) of the settlement.

Application dismissed.