INTERPRETATION AND PRE-CONTRACTUAL NEGOTIATIONS

Management Corporation Strata Title Plan No 1933 v Liang Huat Aluminium Ltd [2001] BLR 351

In his re-statement of the principles by which commercial contracts are to be interpreted, Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912–913 left open for future consideration the extent to which the courts may have regard to pre-contractual negotiations when interpreting a contract. While he stated that the general rule is that such evidence is not admissible, he added that the ‘boundaries of this exception are in some respects unclear’. The door was thus left ajar for further exceptions to be created to the rule that such evidence is inadmissible. Uncertainty was heightened by an obiter dictum of Lord Nicholls in Bank of Credit and Commerce International SA v Ali [2001] 2 WLR 735 when he sought (at p. 747) to leave open for further argument the extent to which regard can be had to the actual intention of the parties when seeking to interpret a document (although both Lord Bingham and Lord Clyde were clear that the test to be applied is an objective, not a subjective one). The point therefore remains one of some uncertainty and, in this context, some useful guidance may be gleaned from the recent decision of the Court of Appeal of Singapore in Management Corporation Strata Title Plan No 1933 v Liang Huat Aluminium Ltd [2001] BLR 351.