{"id":6017,"date":"2021-11-02T10:00:37","date_gmt":"2023-08-12T08:04:04","guid":{"rendered":"https:\/\/www.millerthomson.com\/the-interpretation-of-releases-and-the-supreme-court-of-canada-decision-in-corner-brook-city-v-bailey\/"},"modified":"2026-03-10T14:11:46","modified_gmt":"2026-03-10T18:11:46","slug":"the-interpretation-of-releases-and-the-supreme-court-of-canada-decision-in-corner-brook-city-v-bailey","status":"publish","type":"post","link":"https:\/\/www.millerthomson.com\/en\/insights\/construction-and-infrastructure-law\/the-interpretation-of-releases-and-the-supreme-court-of-canada-decision-in-corner-brook-city-v-bailey\/","title":{"rendered":"The interpretation of releases and the Supreme Court of Canada decision in Corner Brook (City) v Bailey<\/i>"},"content":{"rendered":"\n

In its recent decision in Corner Brook (City) v Bailey<\/em>,[i]<\/a> the Supreme Court of Canada discussed the interpretation of releases and, more importantly, the proper approach for determining the scope of each specific release. Although decided in the context of a motor vehicle accident, the analysis set out in the unanimous decision has implications for the interpretation of releases in a wide variety of contexts including the construction sphere.<\/p>\n\n\n\n

In simple terms, a \u201crelease\u201d is a contractual document in the context of a dispute, which provides for the relinquishment, in whole or in part, of a right or claim.[ii]<\/a> In most cases the provision of a release is in return for the settlement of the dispute. Releases typically contain wording similar to the below:<\/p>\n\n\n\n

\u2026 any and all claims between the Parties relating to or arising out of the Dispute. \u2026 (broad, but confined to a particular defined matter, subject to further constraint by how the matter is defined)<\/em><\/p>\n\n\n\n

\u2026any and all claims concerning any and all services\u2026 (broader, encompassing the entirety of work\/services provided)<\/em><\/p>\n\n\n\n

\u2026all disputes, manner of actions, causes of action, suits, debts, duties, accounts, bonds, covenants, contracts, letters of intent, losses or inquiry of any kind or nature, liabilities, claims and demands whatsoever in law and in equity that they now have, or in the future may have, in respect of, but not limited to [the Matter\/Dispute between the parties<\/strong>] \u2026 (though limited to a particular issue, potentially broad enough to encompass all future claims, regardless of how they arise)<\/em><\/p>\n\n\n\n

It is not uncommon that parties to a construction dispute will be asked to sign expansive standard form releases prior to receiving payment, even where the only issue in dispute is delayed payments. The Supreme Court of Canada\u2019s decision in Corner Brook<\/em> emphasizes that doing so (i) could easily impact rights in unrelated and uncontemplated litigation, and (ii) that whatever their position on a project a person would be well served by obtaining legal advice prior to signing a release to ensure the release signed is properly tailored to their specific position, and only releases the intended contemplated claims.<\/p>\n\n\n\n

i. Background<\/h2>\n\n\n\n

In Corner Brook, <\/em>the respondent struck with a motor vehicle an employee of the City of Corner Brook, Newfoundland  (the \u201cCity<\/strong>\u201d), who was performing road work. The employee sued the respondent for injuries sustained in the accident and, in a separate action, the respondent and her husband sued the City for property damage to the car and for physical injury suffered by the respondent. The respondent and her husband reached a settlement with the City, released the City from liability relating to the accident, and discontinued their action.<\/p>\n\n\n\n

Years later, the respondent brought a third party claim against the City for contribution or indemnity in the action brought against her by the employee. The City, in turn, brought a summary trial application on the basis that the release barred the third party claim. The respondent\u2019s position was that the release did not bar the City from liability because the third party claim was not specifically contemplated by the parties when they signed the release.<\/p>\n\n\n\n

ii. Lower Court decisions<\/h2>\n\n\n\n

The application judge concluded that the release barred the respondent\u2019s third party claim against the City and stayed the claim. However, on appeal the Newfoundland and Labrador Court of Appeal unanimously allowed the appeal and reinstated the third party claim.<\/p>\n\n\n\n

iii. Supreme Court decision<\/h2>\n\n\n\n

In a unanimous decision delivered by Rowe J, the Supreme Court of Canada held that the appeal should be allowed and the order of the application judge reinstated.<\/p>\n\n\n\n

Of particular significance in the result reached by the Supreme Court of Canada is its analysis regarding the approach to the interpretation of releases in Canadian law. The relevant parts of the decision in this respect are set out below.<\/p>\n\n\n\n

a) The \u201cBlackmore Rule\u201d has been overtaken by Sattva<\/h3>\n\n\n\n

Discussing the interpretation of releases, Rowe J first looked to the \u201cBlackmore Rule\u201d which has traditionally governed this subject in commonwealth jurisdictions. As he describes, the Blackmore Rule involves a particular approach to the interpretation of releases, which requires that they can only apply to matters within the parties\u2019 contemplation at the time of execution:[iii]<\/a><\/p>\n\n\n\n

The general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given. But a dispute that had not emerged, or a question which had not at all arisen, cannot be considered as bound and concluded by the anticipatory words of a general release.<\/p>\n\n\n\n

\u2026  a release cannot apply, or be intended to apply to circumstances of which a party had no knowledge at the time he executed it, and that if it is so general in its terms as to include matters never contemplated, the party will be entitled to relief.<\/p>\n\n\n\n

Rowe J then went on to note that the Blackmore Rule, though adopted in Canada, has been given a narrow interpretation in the following ways:[iv]<\/a><\/p>\n\n\n\n

    \n
  1. it does not allow consideration of the subjective intention of the parties; and<\/li>\n\n\n\n
  2. it does not preclude parties from releasing unknown claims.<\/li>\n<\/ol>\n\n\n\n

    As a result of this narrow interpretive tendency, Rowe J found that the Blackmore Rule has, in effect, been subsumed by the modern approach to contractual interpretation as set out in the Supreme Court of Canada decision in Creston Moly Corp v Sattva Capital<\/em>[v]<\/a>. <\/em>As a result, Rowe J found that:<\/p>\n\n\n\n