The proper approach to construction of a document

When construing an agreement, the court tries to discover what a reasonable person would have understood the parties to mean.

In Jumbo King v Faithful Properties Ltd ([1999] 3 HKLRD 757, CFA) the Deed of Mutual Covenant of a large development that had separate commercial and residential elements identified ‘shops’ and ‘offices’ as being areas that the developer retained for his exclusive occupation. It did not, however, expressly say that the developer retained the right to exclusive occupation of utility rooms in the commercial parts of the building. Could it be inferred from this failure that these areas were common areas and that the developer did not have a right to exclusive occupation of them? The CFA held that this was not the case. In a deed made between the developer and the purchaser of a unit in the residential part of the development there was no need to go into this level of detail. The parties had simply intended to say that the developer kept the right to the exclusive occupation of the commercial part of the development in general. They could have expressed themselves more clearly but there was no doubt as to their intention.

Lord Hoffmann NPJ said that the construction of a document is:

‘[A]n attempt to discover what a reasonable person would have understood the parties to mean. And this involves having regard not merely to the individual words they have used, but to the agreement as a whole, the factual and legal background against which it was concluded and the practical objects which it was intended to achieve.’ (at 773)

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