Bathurst Resources Ltd v L & M Coal Holdings Ltd  NZSC 85
The Supreme Court in Bathurst Resources Ltd v L & M Coal Holdings Ltd  NZSC 85 has provided important guidance on how extrinsic evidence and implied terms are used to aid interpretation of contracts.
The Court has agreed that the approach to be taken on interpretation of written contracts is governed by the law of contract and is an objective task. The Court also confirmed that in principle, extrinsic evidence, such as the background context, evidence of prior negotiations and evidence of subsequent conduct, may be admissible when interpreting a contract. The Court has said that relevance and probative value are the touchstones for admissibility of such evidence, in accordance with the framework provided by the Evidence Act 2006. This means, for example, that a blanket rule rendering evidence of pre-contractual negotiations inadmissible is not justifiable.
The Court has found with implying of terms into a contract beyond those expressly agreed, such as to give business efficacy to a contract, an unexpressed term can only be implied if it is strictly necessary, in that the term would spell out what the contract, read against the relevant background, must be understood to mean.