Last month the Supreme Court released its decision in City of Corner Brook v. Bailey, 2021 SCC 29 (CanLII). The case dealt with the interpretation of the release Bailey signed in favour of Corner Brook.
The facts of the case were that Bailey, while driving, struck a City employee performing road work who subsequently sued Bailey for his injuries. In a separate action, Bailey sued the City for property damage to the car and physical injury suffered. She ultimately settled and provided the City with a release from liability relating to the accident. Sometime after resolving her claim, Bailey brought a third party claim against the City for contribution or indemnity in the action brought against her by the employee. The City argued, successfully on a summary trial application, that the release barred the third party claim. Bailey argued it did not because the third party claim was not specifically contemplated by the parties when they signed the release. The Court of Appeal reversed and the Supreme Court reinstated the summary trial application decision upholding the release. In doing so, the Supreme Court provided guidance on releases as follows:
- A release is a contract and the general principles of contractual interpretation as set out in Sattva Capital Corp. v. Creston Moly Corp. [2014] 2 S.C.R. 633 apply. Sattva states that Courts read the contract as a whole, giving the words used their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time it is signed. Releases should be interpreted in light of the circumstances for which they are created;
- Any judicial tendency to interpret releases narrowly is the function of the release itself and not a specific rule of interpretation; and
- A release can include unknown claims and the drafter should consider wording that makes clear whether the release covers such claims and whether the claims must be related to a particular area or subject matter. In other words, if the release is meant to be broad to cover unknown or unforeseen circumstances, it should say so. As an example, the Court stated that the release, if it intends to cover unforeseen or unknown claims that relate to a particular time frame or subject matter, should say so.
In Bailey, the Supreme Court held that Corner Brookâs release was sufficiently drafted as it dealt with all actions including those unforeseen relating to the accident.
The relevant section of the release reads as follows:
. . . the [Baileys], on behalf of themselves and their heirs, dependents, executors, administrators, successors, assigns, and legal and personal representatives, hereby release and forever discharge the [City, its] servants, agents, officers, directors, managers, employees, their associated, affiliated and subsidiary legal entities and their legal successors and assigns, both jointly and severally, from all actions, suits, causes of action, debts, dues, accounts, benefits, bonds, covenants, contracts, costs, claims and demands whatsoever, including all claims for compensation, loss of use, loss of time, loss of wages, expenses, disability, past, present or future, and any aggravation, foreseen or unforeseen, as well as for injuries presently undisclosed and all demands and claims of any kind or nature whatsoever arising out of or relating to the accident which occurred on or about March 3, 2009, and without limiting the generality of the foregoing from all claims raised or which could have been raised in the [Bailey Action] . . . .