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Lord Hoffmann said,

 ‘…I propose to begin by examining the way we interpret utterances in everyday life. It is a matter of constant experience that people can convey their meaning unambiguously although they have used the wrong words. We start with an assumption that people will use words and grammar in a conventional way but quite often it becomes obvious that, for one reason or another, they are not doing so and we adjust our interpretation of what they are saying accordingly. We do so in order to make sense of their utterance: so that the different parts of the sentence fit together in a coherent way and also to enable the sentence to fit the background of facts which plays an indispensable part in the way we interpret what anyone is saying. No one, for example, has any difficulty in understanding Mrs. Malaprop. When she says ‘She is as obstinate as an allegory on the banks of the Nile,’ we reject the conventional or literal meaning of allegory as making nonsense of the sentence and substitute ‘alligator’ by using our background knowledge of the things likely to be found on the banks of the Nile and choosing one which sounds rather like ‘allegory.’
Mrs. Malaprop’s problem was an imperfect understanding of the conventional meanings of English words. But the reason for the mistake does not really matter. We use the same process of adjustment when people have made mistakes about names or descriptions or days or times because they have forgotten or become mixed up. If one meets an acquaintance and he says ‘And how is Mary?’ it may be obvious that he is referring to one’s wife, even if she is in fact called Jane. One may even, to avoid embarrassment, answer ‘Very well, thank you’ without drawing attention to his mistake. The message has been unambiguously received and understood.

Why, then, do [previous] cases… arrive at a different answer? I want first to deal with two explanations which seem to me obviously inadequate. First, it is sometimes said that the examples which I have given from ordinary life are concerned with what the speaker meant to say. He may subjectively have intended to say something different from what he actually said and it may be possible, by the kind of reasoning which I have described, to divine what his subjective intentions were. But the law is not concerned with subjective intentions. All that matters is the objective meaning of the words which he has used.
It is of course true that the law is not concerned with the speaker’s subjective intentions. But the notion that the law’s concern is therefore with the ‘meaning of his words’ conceals an important ambiguity. The ambiguity lies in a failure to distinguish between the meanings of words and the question of what would be understood as the meaning of a person who uses words. The meaning of words, as they would appear in a dictionary, and the effect of their syntactical arrangement, as it would appear in a grammar, is part of the material which we use to understand a speaker’s utterance. But it is only a part; another part is our knowledge of the background against which the utterance was made. It is that background which enables us, not only to choose the intended meaning when a word has more than one dictionary meaning but also, in the ways I have explained, to understand a speaker’s meaning, often without ambiguity, when he has used the wrong words.
When, therefore, lawyers say that they are concerned, not with subjective meaning but with the meaning of the language which the speaker has used, what they mean is that they are concerned with what he would objectively have been understood to mean. This involves examining not only the words and the grammar but the background as well… We…will in due course have to answer the question: if, as long ago as 1803, the background could be used to show that a person who speaks of The Waterman’s Arms means The Bricklayer’s Arms, why can it not show that a person who speaks of 12 January means 13 January?

I pass on to a second explanation which also seems to me inadequate. [namely ] that because such notices have unilateral operation, the conditions under which they may be served must be strictly complied with…But, as an explanation of the method of construction used in Hankey v. Clavering, it begs the question. If the clause had said that the notice had to be on blue paper, it would have been no good serving a notice on pink paper, however clear it might have been that the tenant wanted to terminate the lease. But the condition…related solely to the meaning which the notice had to communicate to the landlord. If compliance had to be judged by applying the ordinary techniques for interpreting communications, there was strict compliance. The notice clearly and unambiguously communicated the required message. To say that compliance must be strict does not explain why some other technique of interpretation is being used or what it is.
A variation of this explanation is to say that the language of the notice must be strictly construed. But what does it mean to say that a document must be ‘strictly’ construed, as opposed to the normal process of ascertaining the intentions of the author? The expression does not explain itself. If it operates merely by way of intensification, so that the intention must be clear, unambiguous, incapable of misleading, then I think that the notice in this case satisfied the test at that level. Likewise, as Lord Greene M.R. acknowledged when he said that the whole thing was obviously a slip, did the notice in Hankey v. Clavering . So the concept of strict construction does not explain the decision.
A more promising clue to the explanation is Lord Greene’s statement, in two places, that the notice must ‘on its face’ comply with the terms of the lease. What does ‘on its face’ mean? Clearly, the face of the document is being contrasted with the background, in law sometimes called the ‘extrinsic evidence,’ against which the language is ordinarily construed. But Lord Greene cannot have meant that the document must always be read without any background, because…[the cases] show that some background, at least, can be used. It appears, therefore, that Lord Greene is referring to some principle whereby background can be used to show that a person who speaks of The Waterman’s Arms means The Bricklayer’s Arms, but not that a person who speaks of 12 January means 13 January. What principle is this?
It is, I think, to be found in an old rule about the admissibility of extrinsic evidence to construe legal documents. In its pure form, the rule was said to be that if the words of the document were capable of referring unambiguously to a person or thing, no extrinsic evidence was admissible to show that the author was using them to refer to something or someone else…
Let us compare this rule with ordinary common sense interpretation of what people say. If someone has gone to great pains, well in advance, to secure tickets for himself and a friend for a Beethoven concert at the Royal Festival Hall by a famous visiting orchestra on 13 January and says to the friend a week earlier ‘I’ll see you at the Festival Hall concert on 12 January’ it will be obvious that he is referring to the concert on 13 January. According to the old rules of construction, the law will agree if there is no concert at the Festival Hall on 12 January. In that case there is a latent ambiguity. But if there is a concert on that date (Stockhausen, say, played by a different orchestra) he will be taken to have referred to that concert.
This extraordinary rule of construction is, as it seems to me, the only explanation for the decisions in Hankey v. Clavering [1942] [amongst others]…
It is clear that this rule of construction has been applied to the interpretation of notices for at least 200 years and it is hardly surprising that [the judges] applied it in this case. It is, however, highly artificial and capable of producing results which offend against common sense…
I think that the rule is not merely capricious but also, for reasons which I need not develop at length, incoherent. It is based upon an ancient fallacy which assumes that descriptions and proper names can somehow inherently refer to people or things. In fact, of course, words do not in themselves refer to anything; it is people who use words to refer to things. The word ‘allegory’ does not mean a large scaly creature or anything like it, but it is absurd to conclude, as judges sometimes do, that this is not an ‘available meaning’ of the word in the interpretation of what someone has said. This is simply a confusion of two different concepts; as we have seen, a person can use the word ‘allegory,’ successfully and unambiguously, to refer to such a creature.
Even in its natural habitat, the construction of wills, the rule has not been (and, I think, cannot be) applied with any consistency…
If your Lordships are to follow this path, it will be necessary to say that Hankey v. Clavering and the older cases which it followed are no longer good law. It would be wrong, I think, to distinguish them on narrow grounds and leave them as wrecks in the channel, causing uncertainty and litigation in the future…
The rule as applied to wills, which restricts the use of background in aid of construction, reflects a distrust of the use of oral evidence to prove the background facts. The people who could give evidence about the background to a will would in most cases be members of the family interested in the outcome of the case and until 1843, persons with an interest in the litigation were not even competent witnesses. No doubt the exclusion of background makes, in a somewhat arbitrary way, for greater certainty in the sense that there is less room for dispute about what the background was and the effect which it has upon the intention to be attributed to the testator. But, as the cases mournfully show, this certainty is bought at the price of interpretations which everyone knows to be contrary to the meaning which he intended.
There are documents in which the need for certainty is paramount and which admissible background is restricted to avoid the possibility that the same document may have different meanings for different people according to their knowledge of the background. Documents required by bankers’ commercial credits fall within this category. Article 13(a) of the Uniform Customs and Practice for Commercial Credits (1993 revision) says (echoing Lord Greene M.R.’s phrase in Hankey v. Clavering ) that the documents must ‘upon their face’ appear to be in accordance with the terms and conditions of the credit. But the reasons of policy which require the restriction of background in this case do not apply to notices given pursuant to clauses in leases. In practice, the only relevant background will be, as in this case, the terms of the lease itself, which may show beyond any reasonable doubt what was the intention of the person who gave the notice. There will be no question of the parties not being privy to the same background – both of them will have the lease – and no room for dispute over what the relevant background is.
In the case of commercial contracts, the restriction on the use of background has been quietly dropped. There are certain special kinds of evidence, such as previous negotiations and express declarations of intent, which for practical reasons which it is unnecessary to analyse, are inadmissible in aid of construction. They can be used only in an action for rectification. But apart from these exceptions, commercial contracts are construed in the light of all the background which could reasonably have been expected to have been available to the parties in order to ascertain what would objectively have been understood to be their intention: Prenn v. Simmonds [1971] 1 W.L.R. 1381 , 1383. The fact that the words are capable of a literal application is no obstacle to evidence which demonstrates what a reasonable person with knowledge of the background would have understood the parties to mean, even if this compels one to say that they used the wrong words. In this area, we no longer confuse the meaning of words with the question of what meaning the use of the words was intended to convey. Why, therefore, should the rules for the construction of notices be different from those for the construction of contracts? There seems to me no answer to this question. All that can be said is that the rules for the construction of notices, like those for the construction of wills, have not yet caught up with the move to common sense interpretation of [commercial] contracts which is marked by the speeches of Lord Wilberforce in Prenn v. Simmonds [1971] 1 W.L.R. 1381 and Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen [1976] 1 W.L.R. 989 . The question is therefore whether there is any reason not to bring the rules for notices up to date by overruling the old cases….’
Hoffmann concluded that there was no such reason.

[Edited for ease of reading. You can find the original report on Westlaw.]

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