Words and Phrases - "parol evidence rule"

The appellant and his wife were hired by a busy professional couple (Dr. Gupta and Dr. Khanna) to construct a new home on a property they had acquired. Dr. Gupta found (perhaps on the internet) a template for a contract with the appellant that for the most part described the appellant as a general contractor. However, Hogan J accepted the parol evidence of Dr. Gupta and the appellant that the appellant and his wife had been hired to oversee the new home construction for a fee of $150,000 to be spread over three years, and that the costs of the trades, which were mostly paid by the appellant out of funds provided to him by Dr. Gupta, were paid by him on behalf of the couple rather than as principal. The appellant treated their $50,000 annual fee as being eligible for the small supplier exemption on the basis that the appellant’s wife was entitled to ½ in light of her responsibility for providing interior-decorating services.

Hogan J allowied the appellant’s appeal of CRA assessments made on the basis that he was the general contractor on the project and, therefore, should have charged and collected HST on the construction cost of over $1.5 million.

Respecting his acceptance of the parol evidence, Hogan J first noted (at para. 32):

Under the so-called “textualist” approach, parol evidence is admissible only in circumstances where the words or terms of the agreement are considered to be ambiguous (that is, when there is patent ambiguity). The “contextualist” approach, on the other hand, allows for the consideration of extrinsic evidence when there is latent ambiguity, thus making it possible for the factual matrix surrounding the contract at the time it was formed to be considered.

He then stated (at para. 53) that in light of various inconsistencies in the wording of the written contract that it was “ambiguous even under the more conservative textualist approach”, and that “Looking at the broader factual matrix of the agreement (as mandated by the contextualist approach) yields additional sources of ambiguity”. He then agreed with the appellant’s position that “parol evidence proffered by Dr. Gupta, his wife and himself is admissible because of the patent ambiguity in the contract” – and concluded (at para. 57) that “the Agreement does not accurately reflect their true intent.”