Can a court admit evidence of the factual matrix or circumstances surrounding the conclusion of an agreement?
Ontario, Canada
The following excerpt is from TD Bank v. Leigh Instruments Ltd. (Trustee of), 1998 CanLII 14806 (ON SC):
The court need not be confined to a strict, literal interpretation of the language of the document however, and may admit evidence of the “factual matrix” or circumstances surrounding the conclusion of the agreement as an aid in interpretation. Lord Wilberforce stated in Prenn v. Simmonds, supra at 1383-4: In order for the agreement of July 6. 1960, to be understood, it must be placed in its context. The time has long passed when agreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. …We must… inquire beyond the language and see what the circumstances were with reference to which the words were used, and the object, appearing from those circumstances, which the person using them had in view. Moreover, at any rate since 1859… it has been clear enough that evidence of mutually known facts may be admitted to identify the meaning of a descriptive term.
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