Interpretation of press releases: Supreme Court of Canada drops 150-year-old rule

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In its unanimous decision, Corner Brook (City) v Bailey, the Supreme Court of Canada ruled that the general rules of contractual interpretation set out in Sattva Capital Corp. v Creston Moly Corp. now apply to versions. In other words, releases will now be interpreted the same as any other contract.

This goes beyond the 150-year-old approach to the interpretation of release, known as the “Blackmore Rule”, that “a release cannot apply, or be intended to apply in circumstances of which one party was unaware ”at the time of release. was executed. This meant that the courts would interpret waivers narrowly to apply only to the specific dispute that was settled by the parties pursuant to the waiver, even though the express language of the waiver also covered future and unknown claims. The Blackmore rule no longer applies to the interpretation of rejections as a result of Local stream.

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Facts

While driving her husband’s car, the defendant, Mary Bailey, collided with a City of Corner Brook employee, David Temple, while Mr. Temple was working for the city (the “Incident”).

Ms. Bailey and her husband (the “Bailey”) brought an action against the Town for car damage and physical injuries that Ms. Bailey suffered in the incident (the “Bailey Action”). In a separate action, Mr. Temple sued Ms. Bailey for the injuries he sustained as a result of the incident (the “Temple Action”).

The Baileys settled the Bailey Action with the City, releasing the City of all liability relating to the Incident, and withdrew their claim. The relevant excerpt from the press release reads as follows:

. . . the [Baileys], on behalf of themselves and their heirs, dependents, executors, administrators, successors, assigns and legal and personal representatives, release and discharge forever the [City, its] officers, agents, officers, directors, managers, employees, their associated, affiliated and subsidiary legal entities and their successors and legal beneficiaries, jointly and individually, of all actions, lawsuits, causes of action, debts, contributions, accounts, benefits , obligations, commitments, contracts, costs, claims and demands whatever they may be, including all claims for compensation, loss of use, loss of time, loss of wages, expenses, disability, past, present or future, and any worsening, foreseen or unforeseen, such as as well as for currently undisclosed injuries and all claims and claims of any kind arising out of or related to the accident on or about March 3 2009, and without limiting the generality of the foregoing of all claims raised or which may have been raised in the [Bailey Action] . . . . [Emphasis in decision]

Almost 5 years later, Ms. Bailey brought an action against the City, claiming a contribution or compensation from the City in the event that she was found liable under the Temple Action (the “Third Party Claim”). The City applied for a summary trial and requested a stay on the grounds that the discharge excluded the third party.

History of the procedure

The Supreme Court of Newfoundland allowed the City’s request to stay the third party claim based on (i) the wording of the release; (ii) the finding that Ms. Bailey had considered the facts underlying the claim as a third party due to the fact that she had been served with the Temple action prior to signing the release; and (iii) the conclusion that the parties had considered all types of claims relating to the incident on the basis of the correspondence between the lawyers leading to the release.

The Court of Appeal unanimously allowed the Bailey’s appeal and restored the third party claim. The Court of Appeal noted that the Blackmore Rule has, over time, been incorporated into the general rules of contractual interpretation set out in Sattva and Ledcor Construction Ltd. vs. Northbridge Indemnity Insurance Co. Therefore, the Court of Appeal concluded that the words, context and exchange of correspondence were all consistent with the release releasing only Ms Bailey’s claims in the Bailey action and did not specifically prohibit third party claims.

The Supreme Court of Canada allowed the City’s appeal and restored the Supreme Court’s decision.

Holding: Blackmore Rule overtaken by Sattva

In the unanimous decision of Rowe J., the Supreme Court of Canada concluded that the third party claim fell within the ordinary meaning of the language of the release. The surrounding circumstances also confirmed that the parties knew, or should have known, the facts underlying the third party claim when they executed the release.

The Court held that the Blackmore rule no longer applies and that the general rules of contractual interpretation set out in Sattva now apply to versions. When dealing with a discharge, as with any other contract, courts should “read the contract as a whole, giving the words used their ordinary and grammatical meaning, in accordance with the surrounding circumstances known to the parties at the time of formation of the contract. contract “. Rowe J. noted that any future judicial tendency to restrict the meaning given to language in a release will not be “the function of a special rule, but rather a function of the context in which the releases are given.” .

To take with

Therefore, the key question is whether a claim in question is a claim that the parties mutually intend to discharge upon performance. The courts will look at the language of release, as well as the surrounding circumstances, to interpret the objective meaning of that language and come to a decision. As the Supreme Court of Canada noted, drafters should use wording that makes it clear whether the release will cover unknown claims and whether the claims must relate to a particular field or subject. Releases written in language that unambiguously specifies a particular period or topic are less likely to give rise to tensions between the words and what the surrounding circumstances objectively indicate by the parties.


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