The body of Canadian case law on the subject of releases is astonishingly large and rapidly growing. The sheer number of decisions summarized in this chapter and the chapters that follow is evidence itself of the frequency with which Canadian courts are asked to decide issues relating to releases.
The scope of rlaw.online does not encompass case law on releases discussed in The Law of Releases in Canada (Aurora, ON: Canada Law Book, 2006). For 2006 or earlier decisions of Canadian courts on the subject of releases that are not summarized below, please consult The Law of Releases in Canada. The colour green is used throughout this research platform to identify decisions that can be found in the Table of Cases for The Law of Releases in Canada.
When considering the jurisprudence on releases, and especially when looking for unifying themes, it is important to bear in mind that releases are given in markedly different situations. Three very common examples serve to highlight the divergent circumstances in which a release may be given.
A release may be given after the circumstances resulting in a claim or potential claim have occurred and a formal claim has been made, as in the case of a release provided to conclude the settlement of existing litigation. In these circumstances, the releasor very often will receive legal advice and will have a good understanding of the substance of the claims relinquished in the release. Many cases arising from such circumstances are summarized below in Chapter 4: Releases and Settlement.
A release may be given after the circumstances resulting in a claim or potential claim have occurred, but before any formal claim has been made, as, for example, upon a termination of employment when an employee accepts a settlement package and signs a release. In these circumstances, the releasor may or may not obtain legal advice and may or may not have a good understanding of the substance of the claims relinquished in the release.
A release may be given when the circumstances resulting in a claim have not occurred, as, for example, when a release is required prior to participation in an activity such as downhill skiing or recreational hockey. In rlaw.online, a release provided in advance of circumstances yet to occur that may result in a claim is referred to as a pre-emptive release. When a pre-emptive release is given, the releasor typically does not receive legal advice and does not have a good understanding of the substance of specific claims, arising from events which have not yet occurred, that are relinquished in the release. Cases in which the courts have considered pre-emptive releases are summarized below in Chapter 8: Anticipatory or Pre-emptive Releases.
Generally, the contents of this introductory chapter are relevant to releases given in all circumstances. Inasmuch as releases can be given in such divergent situations, though, it is of particular importance that releases and the law of releases be viewed and understood in the context of the particular circumstances of each case.
1.1 Purpose and Nature of a Release
A release is the relinquishment or abandonment, in whole or in part, of a right or claim. A release can be contrasted with a covenant not to sue. As can be seen later in this chapter (section 1.4), a covenant not to sue binds the covenantor not to take action on a particular right or claim. A release does not merely bind the releasor not to take action on a right or claim; its purpose is the “giving up” of a claim or right.
A release, understood in its broadest sense, may originate in a number of different ways under Canadian law. The primary focus of rlaw.online is releases formed on a consensual basis by parties who are sometimes referred to as the releasor and the releasee. Unless the context suggests otherwise, a release referred to in rlaw.online is a release formed in such a manner. But releases are also provided for in Canadian statutes and, in some cases, they are deemed or required by court orders. Further, the outcome of the application of certain common law principles may be the release of one or more parties. In this regard, see Chapter 2: Release Formation and Wording, section 2.6, Court Determined or Deemed Releases, and section 2.7, Release Taking Effect Pursuant to Common Law Principles. See also Chapter 4: Releases and Settlement, section 4.6.5, Deemed Release and Release by Court Order, and Chapter 11: Releases in Particular Situations, section 11.1, Releases and Statute Law.
Elfenbaum v. Saskatchewan Crop Insurance Corp., 1995 CanLII 5729 (SK QB)
A release executed by a party in favour of another party operates, in law, to discharge the opposite party, provided that, if it was a general release, the claim was one which was contemplated by the parties at the time the release was granted.
Sibley v. British Columbia Custom Car Association et al, 2005 BCSC 509
At law, the purpose of a release is to absolve a party from liability for negligence or for breach of contract. Such agreements are binding, provided they are not illegal, voidable, or unconscionable.
Orlandello v. Nova Scotia (Attorney General), 2005 NSCA 98 (CanLII)
The release in this case “released and forever discharged” the releasees from “all claims, demands, rights or causes of action of whatsoever kind and type” arising from an accident. The court said that a complete discharge of the cause of action is broader than a mere covenant not to sue for a subsisting cause of action.
Arcand v. Abiwin Co-operative Inc., 2010 FC 529 (Can LII), appeal dismissed, 2011 FCA 170 (CanLII)
A release is a contractual clause which often limits or precludes a party from commencing an action in the future. It is simply one type of promise which can be reduced to writing and to which the general rules of contract law apply. The definition from Black’s Law Dictionary, 5th Edition, quoted in Keats v. Arditti says, among other things, that a release is the relinquishment, concession, or giving up of a right, claim or privilege by the person in whom it exists or to whom it accrues.
Chapman v. King, 2010 MBQB 249 (CanLII)
As to the nature of a release, the court quoted a passage from The Law of Releases in Canada, including the proposition, drawn from a number of authorities, that a release is the relinquishment, in whole or in part, of a right or action.
Valic v. Workers’ Compensation Board, 2010 NWTSC 97 (CanLII)
This decision also quotes a paragraph from The Law of Releases in Canada about the nature and effect of a release, including the proposition that a release is the relinquishment, in whole or in part, of a right or action.
Davis v. Cooper, 2010 ONSC 4230 (CanLII) , appeal dismissed, 2011 ONCA 323 (CanLII) , motion for extension of time to serve and file leave to appeal application dismissed, Andria Davis v. CGU Group Canada Ltd. et al., 2012 CanLII 62858 (SCC)
A release constitutes a valid contract and like any other contract it is expected that parties should be held to what they have promised. A valid release releases the releasee from any subsequent actions related to the released claims in exchange for money or other valid consideration (citing Taske Technology Inc, v. PrairieFyreSoftware, referred to in section 1.2.1, below).
Thompson v. Musliyan, 2010 ONSC 5351 (CanLII)
Full and final releases entered into with the guidance and experience of legal counsel are to be taken seriously and not treated as a mere formality.
Bourdoukis (Swiss Precision Wire Cutting and Tool and Die Company) v. Kanda, 2011 ONSC 4283 (CanLII)
A full and final release is a valid contract. Like any other contract it is expected that parties should be held to what they have promised under a release. A valid release releases the releasee from any subsequent actions related to the released claims in exchange for money or other valid consideration (citing Taske Technology Inc., v. Prairie Fyre Software).
Gregory v. KPMG LLP, 2012 BCSC 1387 (CanLII)
The goal of a release such as that prepared by the defendants in this case is to put the parties’ dispute to rest with finality, specifically to liberate a party once and for all from any liability or obligation to another party arising out of specific circumstances (citing The Law of Releases in Canada). The purpose of a release is to ensure that the terms of the release achieve the goal expressed in the parties’ settlement which is that the release effectively terminates the parties’ action and provides a finality to their dispute and the potential for matters arising out of their dispute.
Hanna v. Polanski et al, 2012 ONSC 3229 (CanLII)
A release is of course a contract which bars any subsequent claims in exchange for valuable consideration, which is usually money (citing Bourdoukis v. Kanda, above).
Marjadsingh v. Walia, 2012 ONSC 6659 (CanLII) , appeal dismissed (except on costs), 2013 ONCA 336 (CanLII)
A release constitutes a valid contract and like any other contract it is expected that parties should be held to what they have promised. A valid release releases the releasee from any subsequent actions related to the released claims in exchange for money or other valid consideration (citing Taske Technology Inc., v. PrairieFyreSoftware Inc.). Courts do not lightly depart from the basic principles. Even where an exception to the basic rules applies there are strict rules that govern their application.
Shannex v. Dora Construction Ltd., 2016 NSCA 89 (CanLII)
A valid release, given for consideration and signed by someone who is represented by independent legal counsel, and without a legally recognized vitiating element like misrepresentation, undue influence or duress, discharges the civil claims that are clearly cited in the release.
PricewaterhouseCoopers Inc. v. Perpetual Energy Inc., 2020 ABQB 6 (CanLII) , appeal allowed, 2021 ABCA 16 (CanLII) , application for leave to appeal dismissed, Susan Riddell Rose, et al. v. PricewaterhouseCoopers Inc., et al., 2021 CanLII 58908 (SCC)
A release is the abandonment, in whole or in part, of a right or claim. The person requesting a release typically seeks to obtain a relinquishment of rights, which can be used as a bar to a future claim. There is no need for the party relying on the release to make out a case that the commencement of the action constitutes a breach of contract. There is no necessity for pleading a counterclaim. Even when a release is not effective to bar a particular proceeding, it may still be relevant to bar the merits of issues in that proceeding or in relation to the remedies that may otherwise be available.
Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577 (CanLII)
Where parties to litigation have reached a settlement, the overarching purpose of a general release is to resolve all matters as between the settling parties arising from the subject matter of the claims released, and not only the specific causes of action set forth in the pleadings. The general purpose of a release has been repeatedly stated to reflect the objective that the releasee is being severed from any ongoing or future involvement in the settled litigation whether it is at the suit of the releasor or at the suit of some other party or non-party who might have a claim against the releasee for contribution and indemnity arising from the same subject matter as the releasee is being discharged from.
Fehr v. Gribilas, 2022 ONSC 275 (CanLII)
The overarching purpose of a general release is to resolve all matters as between the settling parties and to put an end to the settling parties’ exposure to litigation (citing Terranata, above).
Shannon v Shannon, 2023 ABCA 79 (CanLII)
In a brief comment about what the Alberta Court of Appeal called the “aim of releases”, the court quoted these words from Corner Brook (City) v. Bailey, 2021 SCC 29: “…the parties bargain for finality, or … ‘to wipe the slate clean’.’
1.2 Effect and Consequences of a Release
The effect of a release can be contrasted with the effect of discontinuing an action. In Fieguth v. Acklands Ltd., 1989 CanLII 2744 (BC CA) , at paragraphs 28-29, the British Columbia Court of Appeal referred to authority which indicated that, while a settlement implies an obligation to furnish a release, no agreement to provide a release is implied in an offer to discontinue litigation. The Court of Appeal said that “an offer to discontinue without costs, even if accepted, does not constitute a discharge of a claim, there being a considerable difference between discontinuing an action and releasing or discharging a debt”. The jurisprudence set out in section 1.2.1 below sheds light on why there is a considerable difference between a discontinuance of an action and a release.
1.2.1 Extinguishment of Claim and Bar to Action
The case law is clear that the effect of a release is to extinguish the cause of action or rights that are within the scope of the release. Thus, a valid and enforceable release does not merely deprive the releasor of a remedy to enforce a right or claim within the scope of the release; it has the effect of nullifying or cancelling the right or claim. The effect of a release in extinguishing a cause of action may take on importance in particular situations, such as where a release is given by one or more, but not all, of jointly-liable parties. See, below, Chapter 7: Releases and Multi-Party Liability.
The effect of a release given privately by one party to another can be contrasted with the effect of a release of claims provable in bankruptcy, as provided for in bankruptcy legislation. Subsection 178(2) of the Canadian Bankruptcy and Insolvency Act says that, subject to certain exceptions, an order of discharge releases the bankrupt from all claims provable in bankruptcy. It has been held in a number of cases that, although the effect of the statutory provision is to release the bankrupt from claims provable in bankruptcy, it does not extinguish the debts or underlying legal obligations that form the basis for such claims. See, for example, Alberta (Attorney General) v. Moloney, 2015 SCC 51 (CanLII), [2015] 3 SCR 327, Schreyer v. Schreyer, 2011 SCC 35 (CanLII), [2011] 2 SCR 605, Genge v. Parrill, 2007 NLCA 77 (CanLII), Buchanan v. Superline Fuels Inc., 2007 NSCA 68 (CanLII), Miller, Re, 2001 CanLII 28479 (ON SC), Handelman, Re, 1997 CanLII 12409 (ON SC) and Re Kryspin, 1983 CanLII 1703 (ON SC).
Relying on the definition of “release” in Black’s Law Dictionary , 10th Edition (St. Paul, MN: Thomson Reuters, 2014), at page 1480, Gascon J. indicated in the Moloney case that the term “releases” in subsection 178(2) means “[l]iberation from an obligation, duty, or demand; the act of giving up a right or claim to the person against whom it could have been enforced”. Note that a definition of “release” from Black’s has also been quoted in cases involving a release given privately by one party to another: see section 1.1, above.
In Barry Gula v. Freed Developments Ltd., 2020 ONSC 6463 (CanLII) , the respondent terminated the applicant’s employment without cause; the letter of termination indicated, among other things, that the respondent would continue to pay ten months’ severance pay, in accordance with its payroll practice, in exchange for a release. With the assistance of the respondent, the applicant found a similar job almost immediately after the termination, with earnings equivalent to what he had been earning before. On an application for a determination of the applicant’s rights under his employment contract with the respondent, the court considered a number of issues. One assertion by the respondent was that the applicant had refused to enter into a release contrary to his contractual obligations to do so. The court said that, in the face of the dispute between the parties with respect to the interpretation of the applicant’s rights under the employment contract, it was reasonable for the applicant to refuse to execute a release which would have barred him from resorting to the court to resolve any dispute.
An interesting decision about the effect of a release in a very particular context is Re Fasken, 1961 CanLII 170 (ON SC). In this case, the court considered a partial release of a power of appointment granted in a will. The court discussed English and Ontario property legislation which, in relation to a power given to a person, provided for that person to “disclaim” or “release” the power. The court said it was perfectly obvious that there was a difference in meaning between the terms “disclaim” and “release” as found in a provision of the Ontario statute: a release by the donee of a power “destroys” the power, or part of it if there has only been a partial release, while a disclaimer does not “erase” the power but renders the donee incapable of exercising it, as in circumstances where there is more than one donee of the same power.
Conrod v. The King, 49 SCR 577, 1914 CanLII 52 (SCC)
After the death of Thomas Conrod due to the collapse of a tripod in in a railway yard, his widow and children sought to recover damages against the Crown under “Lord Campbell’s Act” on the basis of the alleged negligence of a servant of the Crown while acting within the scope of his employment. The claim was not successful and the dismissal of the claim was upheld by the Supreme Court of Canada. As stated by Anglin J., it was a condition precedent of the right of recovery under “Lord Campbell’s Act” that the deceased must have had a right of action against the defendant for the injuries which caused his death. But the deceased had, as a condition of his employment on the railway, undertaken to relieve the Crown of all liability for injuries he might sustain in the course of his employment.
Bartkow v. Merit Insurance Company, 1963 CanLII 822 (BC CA)
A claim does not continue in being after it has been released and discharged, and no judgment can be had upon it.
Dipersio v. Nova Scotia (Workers’ Compensation Appeals Tribunal), 2004 NSCA 139 (CanLII)
It was argued in this case that, after a plaintiff settles and releases his or her claim, the plaintiff’s right of action continues, subject to the new defence that the plaintiff’s claim has been released. The Nova Scotia Court of Appeal did not agree with this “ingenious submission”. Upon seeing the release, or being satisfied that there was a settlement, the court would strike or summarily dismiss the claim, or order that the parties comply with the terms of the settlement; such an aborted proceeding is not a “right of action”. The Court of Appeal referred to the Supreme Court of Canada decisions in Conrod v. Canada, above, and British Columbia Electric Railway Co. v. Turner and concluded that the release put an end to the right of action.
Operation 1 Inc. v. Phillips, 2004 CanLII 48689 (ON SC)
A release operates in law as an extinguishment of rights.
Taske Technology Inc., v. Prairiefyre Software Inc., 2004 Can LII 66295 (ON SC), appeal dismissed, [2005] O.J. No. 2683 (Div. Ct.)
A valid release is a bar to any subsequent action against the releasee which purports to deal with the released claims. A release, as the name suggests, is intended to liberate a party, once and for all, from any liability to another party arising out of particular circumstances (quoting from Abundance Marketing Inc. v. Integrity Marketing Inc. ).
Tesfamikael v. Porco, 2006 CanLII 34274 (ON SC)
A release relied upon by the defendant was a complete defence to the plaintiff’s claims in the action unless the release was unenforceable on the grounds of fraud, unconscionability or a similar equitable consideration.
Precision Remodelling v. Soskin, 2008 CanLII 31411 (ON SC)
This decision includes a quotation from The Law of Releases in Canada indicating that the intent of a release is to liberate a party, once and for all, from any liability or obligation to another party arising out of particular circumstances and that, because it extinguishes the underlying cause of action, a valid and enforceable release affords a complete defence to an action.
Incanore Resources Ltd. v. High River Gold Mines Ltd., 2008 CanLII 43047 (ON SC)
The court found that rights and obligations under a letter agreement were extinguished by the provisions of a subsequent, more comprehensive agreement and that this conclusion was strengthened by the clear and unambiguous language of a release given under minutes of settlement.
Cable Estate v. Ferguson, 2009 ABCA 333 (CanLII)
The issue on this appeal was whether the appellant was barred from bringing an action under the Fatal Accidents Act because his wife settled and released the respondent in a related action prior to her death. The court noted a number of decisions in which it was held that a release executed by the deceased prevented a claim under the Fatal Accidents Act or its equivalent. The appellant submitted that these authorities should not be followed because they were decided at a time when damages “were more strictly construed” and because social and economic conditions had changed. The court said that these submissions confused the entitlement to bring an action with the types of damages that dependants may claim.
White v. Colliers Macaulay Nicholls Inc., 2009 ONCA 444 (CanLII)
The Court of Appeal said that the trial judge was correct in holding that the full and final release executed by the appellant in this case was a complete bar to a particular action. The release was, as the trial judge said, “couched in the broadest of language”, and full and final releases are not a matter of mere formality.
DataNet Information Systems, Inc. v. Belzil, 2010 ABQB 72 (CanLII)
The plaintiff companies alleged a conspiracy to petition the companies into bankruptcy improperly. The plaintiffs had given a release that released the petitioning party from the actions pleaded in their amended statement of claim. The release extinguished the associated cause(s) of action. There remained no cause of action against those who were allegedly co-conspirators with the petitioning party.
Humberplex Developments Inc. v. Wycliffe Humberplex Limited, 2011 ONSC 556 (CanLII)
Any viable claim extant prior to the date of a settlement and mutual release was thereby extinguished and the applicant cannot resurrect a claim extinguished by the release.
Disera v. Bernardi, 2014 ONSC 4500 (CanLII)
A release operates as a legal bar to the pursuit of any subsequent claim that purports to raise an issue that has already been extinguished by the release.
Burge v. Emmonds Estate, 2017 BCSC 1526 (CanLII)
Valid releases were a complete bar to the petitioners’ claim for a declaration of a water easement over lands neighbouring their property which would allow them continued access to and use of a potable water system.
PricewaterhouseCoopers Inc. v. Perpetual Energy Inc., 2020 ABQB 6 (CanLII) , appeal allowed, 2021 ABCA 16 (CanLII) , application for leave to appeal dismissed, Susan Riddell Rose, et al. v. PricewaterhouseCoopers Inc., et al., 2021 CanLII 58908 (SCC)
The effect of a release is to extinguish a cause of action in a manner similar to the expiry of a limitation period. A valid and enforceable release affords a complete defence to an action because its effect extinguishes the underlying cause of action. Because a release extinguishes the underlying liability, it can be held up as a bar to a claim.
Zhang v. Dell Canada, 2020 ONSC 48 (CanLII)
After he was given notice of the termination of his employment with the respondent, the appellant accepted the respondent’s settlement offer and signed both a release and an acknowledgement that he accepted the compensation and benefits offered to him in full satisfaction of all claims and entitlement. The acknowledgement and release were a bar to the appellant’s action advancing claims for unpaid bonus, vacation pay and other amounts.
The Mansion House Estates Ltd. v. Mason, 2022 BCSC 1364 (CanLII) , application for stay of order allowed only in part, Mason v. The Mansion House Estates Ltd., 2022 BCCA 452 (CanLII)
The court said that, while a settlement agreement and related mutual releases in this case extinguished all past and future claims between the parties arising from past conduct to the date of those documents, they did not amount to a waiver of claims or fines arising from future conduct.
Badawy v. TD Bank Group, 2022 ONSC 5445 (CanLII)
A full and final release is a complete defence, subject to a finding that it is unenforceable (citing Tesfamikael, above).
Ricova International Inc. c. Gagan Chopra, 2023 QCCS 2871 (CanLII)
Under Québec civil law, a release is a form of extinction of obligations. Article 1671 of the Civil Code of Québec sets out the general causes of such extinction. It says that obligations are extinguished not only by the causes of extinction contemplated in other provisions of the Code, but also by, among other things, release.
1.2.2 A Release is a Shield
Given that the effect of a release is to extinguish a right or claim and to bar an action in respect of the right or claim, it comes as no surprise that Canadian courts have referred to a release as a “shield” against claims.
Phillips v. R.D. Realty Ltd., 1995 CanLII 7114 (ON SC) , appeal dismissed, 1996 CanLII 10251 (ON CA) , application for leave to appeal to Supreme Court of Canada dismissed, S.C.C. File No. 25626, S.C.C. Bulletin, 1997, p. 519
A release is a shield against claims of the parties executing the release.
Operation 1 Inc. v. Phillips, 2004 CanLII 48689 (ON SC)
In this case, the judge hearing motions for summary judgment said that the reasoning in earlier decisions regarding the distinction between an assignment of rights and a release (Phillips, 1995 CanLII 7114, affirmed 1996 CanLII 10251, and 1999 CanLII 48689) did not prevent a finding that the release provided protection – a shield – against claims.
Waterloo v. Wolfraim, 2006 CanLII 26166 (ON SC) , appeal allowed, Waterloo (City) v. Wolfraim, 2007 ONCA 732 (CanLII)
The motion judge held that a release given in settlement of a previous action against the employer of certain of the defendants in this action barred the claim against the employees. In considering whether the employees could rely on the release as a bar to the claim against them, the motion judge considered whether the employees were relying on the release as a shield and not as a sword. He concluded that the employees sought to invoke the terms of the release merely as a shield to defend against the claim in the second action; they did not raise the release as a sword to initiate a claim for damages. However, the decision of the motion judge was reversed on appeal. The Court of Appeal said it was not at all plain and obvious that the release was meant to include the employees and, absent the clearest of cases, which this was not, the position of the employees was properly the subject of a defence that should be pleaded and established as evidence.
1.3 Satisfaction, Release, and Accord and Satisfaction
Releases are closely related to the legal concept of accord and satisfaction. Accord and satisfaction is one way of achieving discharge from a debt or liability.
1.2.3 A Release as a Transfer or a Conveyance
While Canadian case law indicates that a release is a shield against claims, this does not mean that a release is necessarily always limited to a shielding effect. A release may have the effect of a transfer, as reflected in the definition of “transfer” in Black’s Law Dictionary, 11th Edition (St. Paul MN: Thomson Reuters, 2019), which includes a release. Specifically, Black’s says that a “transfer” is, among other things:
Any mode of disposing of or parting with an asset or an interest in an asset, including a gift, the payment of money, release, lease, or creation of a lien or other encumbrance.
In respect of legislation enacted by the Province of British Columbia, the B.C. Interpretation Act, R.S.B.C. 1996, c. 238, gives a similarly broad scope to the meaning of the word “dispose”. According to section 29 of the Interpretation Act, in a B.C. enactment, “dispose” means “to transfer by any method and includes assign, give, sell … release and agree to do any of those things”.
Jowitt’s Dictionary of English Law, 5th Edition (London: Thomson Reuters, 2019) says that a release is a gift, discharge or renunciation of a right of action and it is also “a common law conveyance of a larger estate, or a remainder or reversion, to one already in possession”.
An example of a release that effects a transfer of an interest in land is a release of mortgage under a traditional deed registry system. While traditional deed registry systems have been supplanted in many jurisdictions by the Torrens system, the granting of a mortgage under the traditional system conveyed the legal estate to the mortgagee, leaving the equity of redemption with the mortgagor. When the amount secured by the mortgage was repaid in full, the legal estate could be reconveyed to the mortgagor by a release or discharge of the mortgage or by operation of a defeasance clause in the mortgage. Under Ontario law, if the mortgage contained a defeasance clause or proviso that it would become void on payment of the amount secured by the mortgage, the legal estate would become revested in the mortgagor (or vested in such other person as was entitled to it) without reconveyance or release. But if the condition of the mortgage was interrupted, by default in payment or otherwise, payment would not automatically divest the mortgagee of title and a reconveyance or release of the legal estate would be necessary: see Falconbridge on Mortgages, 5th Edition (Toronto: Thomson, Reuters, 2019), page 19-3.
In contrast to a release of mortgage that reconveys the legal estate in land from mortgagee to mortgagor, the motions judge in the third of the three Phillips decisions summarized below referred to a release conveying rights in the opposite direction, that is, from mortgagor to mortgagee. More specifically, he recognized a release as a method of conveying the equity of redemption – comprising all of the residual rights of a mortgagor – to a mortgagee. As to the release of a mortgagor’s equity of redemption, see, for example, 355498 BC Ltd. v. Namu Properties Ltd. et al., 1999 BCCA 138 (CanLII), referring, at paragraph 14, to Melbourne Banking Corporation v. Brougham (1882) 7 App. Cas. 307 (PC), Canada (Attorney General) v. Logan, 1997 CanLII 10962 (SK QB), Pierce v. Empey, 1939 CanLII 1 (SCC), [1939] SCR 247 and Royal Bank of Canada v. McLeod, 1919 CanLII 378 (BC CA).
Royal Bank of Canada v. McLeod is an example of a case in which a mortgagor, by quit claim deed, released the mortgagor’s equity of redemption to the mortgagee. The British Columbia Court of Appeal considered whether, in the particular circumstances of this case, the mortgagor’s indebtedness had been extinguished and, on this question, the appellate court was evenly divided. The conclusion reached by two judges of the court was that, if the effect of the release was to vest absolutely in the mortgagee the land free from any right of redemption, and the parties entered into no agreement in respect of the consequences of such release as bearing upon the indebtedness, the indebtedness was extinguished. In the decision of the other two judges, it was noted that the security of the mortgaged land was only one of a number of securities held by the mortgagee and that there was no evidence of any intention to accept the quit claim deed in satisfaction of the whole debt; this decision expressed affront at the proposition that, because the land covered by one security for the portion of the debt then past due had been conveyed away, the resultant effect was that all other securities and the whole debt stood discharged.
In the context of discussing a settlement reached by a title insurer and its insured, the Ontario Court of Appeal spoke of both a “transfer” of the insurer’s subrogated interest to the insured and a “release” of the subrogation right: see Krawchuk v. Scherbak, 2011 ONCA 352 (CanLII) , at paragraphs 27 and 109, application for leave to appeal dismissed, Timothy Scherbak et al. v. Zoriana Krawchuk et al., 2011 CanLII 79120 (SCC) .
Saunders, Howell Manufacturing Ltd. v. Pike et al., 1998 CanLII 18774 (NL SC) , appeal dismissed, Nautical Data International Inc. v. Saunders, Howell Manufacturing Ltd., 2002 NFCA 13 (CanLII)
An applications judge found that a release of mortgage was void as against the plaintiff under a provision of the Judgment Enforcement Act which provided that a transfer of property made with the intention of defeating, hindering or delaying a creditor was “void” as against that creditor. For this purpose, ‘transfer’ was defined in the Act to include a conveyance and the applications judge said that the release of mortgage was a conveyance of the mortgaged property and therefore it fell within the definition of “transfer”. The majority of the Court of Appeal found no valid grounds to justify interference with the conclusions and the decision of the applications judge. The dissenting judge discussed the effect of a mortgage and a release of a mortgage. He said that a mortgage usually creates or evidences a debt obligation and provides for the conveyance of property (in this case, real property) to be held as security for payment or performance of the obligation. Although a mortgage in Newfoundland law continued, in form, to involve the absolute conveyance of the property to the mortgagee, the operation of equitable principles had the result that the conveyance was always subject to defeasance upon payment or release of the debt for which it was given as security. In like manner, a “release” of a mortgage usually involves two different transactions: (i) an acknowledgement of payment or forgiveness of the debt secured by the mortgage; and (ii) a reconveyance of the legal estate in the property to the mortgagor.
Phillips v. R.D. Realty Ltd., 1995 CanLII 7114 (ON SC) , appeal dismissed, 1996 CanLII 10251 (ON CA) , application for leave to appeal to Supreme Court of Canada dismissed, S.C.C. File No. 25626, S.C.C. Bulletin, 1997, p. 519
A release is not itself an assignment of rights and cannot be read as conferring upon the releasee a right of action in law or equity which was held by parties executing the release. In this case, the plaintiffs were mortgagees of a property which they sold under power of sale. They brought an action in which, among other things, they claimed entitlement to profit made on the subsequent resale of the property, even though they had recovered more than enough to cover the amount of the mortgage and had suffered no damage. The plaintiffs said that they had no obligation to account to the mortgagor for any monetary proceeds realized in connection with the property because of a release in extremely broad language given in an earlier fraud action involving the plaintiffs and the mortgagor. On a motion for summary judgment, the motions judge said that he failed to see how the release could have the effect of clothing the plaintiffs with entitlement to assert a right belonging to some other party. The action was dismissed as against the moving defendants.
Phillips v. R.D. Realty Limited, 1999 CanLII 3761 (ON CA)
After the decision in the Phillips case referred to above (1995 CanLII 7114, affirmed 1996 CanLII 10251), the plaintiffs proceeded with their action against certain remaining defendants for return of the commission paid when the plaintiffs sold the property under power of sale. The action was dismissed on a motion for judgment and this decision was upheld by the Court of Appeal. Again, because the plaintiffs had recovered the amount of the mortgage and had suffered no damage, the release from the earlier fraud action came into play. The Court of Appeal said the wording of the release was clear, in that it protected the plaintiffs against claims by the mortgagor, but it did not transfer any rights of the mortgagor. The release did not constitute an assignment of any entitlement or right that the mortgagor might have to the surplus realized on the sale, including the return of commission; it was nothing more than a release of claims.
Operation 1 Inc. v. Phillips, 2004 CanLII 48689 (ON SC)
In further proceedings that ensued after the Phillips decisions referred to above, the judge hearing motions for summary judgment did not accept submissions that appeared to ignore the distinction between an assignment and a release of rights drawn in the first set of Phillips decisions (1995 CanLII 7114, affirmed 1996 CanLII 10251). Later in this decision, with reference to Falconbridge on Mortgages, the motions judge said he did not think there is any doubt that a release – which in law operates as an extinguishment of rights – can be a method of conveying the equity of redemption, that comprises all of the residual rights of a mortgagor, to a mortgagee. Still later, the motions judge said that, if the distinction between an assignment of rights and a release that was drawn in the earlier decisions “appears rather fine and, perhaps, somewhat formal”, the reasoning did not prevent a finding that the release provided protection – a shield – agains claims.
Fish Creek Finish Carpentry Ltd v Lindner, 2021 ABCA 348 (CanLII)
The respondents had obtained an order permitting them to enforce certain debts against Andrew Lindner, who was the husband of the appellant Magalena Lindner. Magdalena and Andrew were plaintiffs in an action against a third party and were seeking damages for breach of contract related to the sale of a property jointly owned by them. This litigation was settled and the litigation agreement provided for a payment to Magdalena. Upon Magdalena’s receipt of the full settlement amount, Magdalena and Andrew each agreed to discontinue and release their individual actions against the other party. A chambers judge held that the settlement agreement was a fraudulent transfer within the meaning of the Fraudulent Preferences Act. The appellant’s main contention before the Court of Appeal was that the settlement agreement, or the release signed by Andrew, was not a transfer or conveyance of property by Andrew to Magdalena and there was no transfer or conveyance for the purposes of the Fraudulent Preferences Act. The Court of Appeal said that the relevance of the settlement agreement and the release by Andrew was in their being evidence of the transfer or conveyance, not in their being by themselves the transfer or conveyance. The settlement agreement and release, when considered in their overall context, demonstrated that Andrew had effectively transferred his cause of action in the property action to Magdalena for no consideration, thus allowing Magdalena to reach a final settlement with the other party, and thus defeating and prejudicing Andrew’s creditors by taking all settlement proceeds for herself. Having regard for the totality of the circumstances, the overall flow of events constituted a transfer or conveyance of property within the meaning of the Fraudulent Preferences Act.
Satisfaction means payment of damages, whether after judgment or by way of accord and satisfaction, or the rendering of any agreed substitution therefor. If the payment is of damages, it must be of the full damages agreed by the plaintiff or adjudged by the court as the damages due to the plaintiff; otherwise it will only be satisfaction pro tanto: Cuttell v. Bentz, 1985 CanLII 565 (BC CA), per Lambert J.A. at paragraph 55, and Kasperson v. Halifax (Regional Municipality), 2012 NSCA 110 (CanLII) , at paragraph 49, both quoting from Glanville L. Williams, Joint Torts and Contributory Negligence: A Study of Concurrent Fault in Great Britain, Ireland and the Common-law Dominions (London: Stevens & Sons Ltd., 1951).
Accord and satisfaction is the purchase of a release from an obligation, whether arising under contract or tort, by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative: British Russian Gazette and Trade Outlook Ltd. v. Associated Newspaper Ltd. [1933] 2 K.B. 616 (CA), at 643. Both accord and satisfaction – agreement and performance of the agreement – must be present to release a party from the requirement to satisfy its original obligation in full: see Part Payment of a Debt and a Proposal for Final Settlement of the Law: Process Automation Inc v Norstream Intertec Inc, 2012 CanLIIDocs 119, citing Sibree v. Trip (1846), 15 M. & W. 23, 153 E.R. 745 (Ex. Ch.).
1.3.1 Notice of Satisfaction or Satisfaction Piece
When a judgment has been satisfied by the party against whom it was granted, the payment of the judgment may be evidenced by a satisfaction piece or notice of satisfaction. The decisions summarized in this section address whether a satisfaction piece or notice of satisfaction has the effect of a release. In short, a satisfaction piece or notice of satisfaction is a specialized form of receipt and does not have the effect of a release.
Beers v. Olney, 1970 CanLII 835 (BC CA)
The court considered whether, after a judgment had been granted in favour of the appellant, the delivery and filing of a satisfaction piece by the appellant constituted a release of the judgment in his favour, thus extinguishing his right of appeal, or merely a formal receipt for the payment of the amount thereof, which would not have that effect. The operative wording of the document was “satisfaction is acknowledged of the judgment” followed by words identifying the judgment. The court could not read into this language any suggestion of a general release of rights, benefits, claims or advantages. The document was merely that what it said it was, an acknowledgment that the amount payable under a judgment had been paid and satisfied. As its clear purpose was to be filed as an entry in the judgment roll of the court, it contained formalities of execution unusual in an ordinary receipt. But, nevertheless, it had no, and was not intended to have any, greater effect than that of a receipt.
Rainbird Sprinkler Manufacturing Co. (Canada) Ltd. v. Elpat Holdings Ltd., 1996 ABCA 316 (CanLII)
A guarantor paid the full amounts owing under judgments in favour of primary creditors and a satisfaction of judgment piece was filed. It was argued that the satisfaction of judgment piece released all debtors. The Court of Appeal said that the satisfaction piece was not in itself a release of the debt. While the guarantor had paid the entire amount owing, this payment was not intended to discharge the debt as against the primary creditors, but merely to satisfy the obligation of the guarantor to pay his guarantee.
Bank of Nova Scotia v. Kostuchuk, 2003 MBCA 66 (CanLII)
The plaintiff commenced an action on a loan and obtained a default judgment. After the defendant paid the judgment and was given a satisfaction piece, the plaintiff learned that a mistake had been made and the amount of the judgment was far less than the amount allegedly owing. The plaintiff sought to set aside the default judgment that it had itself caused to be entered. The Court of Appeal said that the filing of the satisfaction piece was not a bar to the relief sought by the plaintiff, referring to the proposition in Heitman Financial Services Ltd. v. Towncliff that: A satisfaction piece … is … merely a specialized form of receipt and the filing of such a document does not operate as a release of … other joint debtors … because the joint action is still alive.”
Banville & Jones Wine Co. Inc. et al. v. Manitoba Liquor Control Commission, 2010 MBQB 23 (CanLII)
The governing law in Manitoba is clear: a notice of satisfaction is to be seen as a specialized form of receipt and the filing of a notice of satisfaction will not extinguish a right of appeal nor will it constitute a form of release.
Dunn v Condominium Corporation No. 042 0105, 2024 ABCA 38 (CanLII)
The respondent argued that this appeal was an abuse of process because the action had been settled. The respondent relied on a satisfaction of judgment and related emails between counsel. The appellate court said that, on a plain reading, the satisfaction of judgment did not purport to constitute a release or settlement. It was an acknowledgment by the judgment holder that he had received sufficient funds to satisfy the judgment. It said nothing about releasing any claims or waiving any appeal. The court referred to Beers, above, where a satisfaction piece containing similar wording was entered prior to the filing and serving of the notice of appeal and the court held that the satisfaction piece was simply a receipt, not a general release of rights, benefits, claims or advantages. Beers was followed in Heitman Financial Services Ltd v Towncliff Properties, 1982 CanLII (ONSC) where it was held that a satisfaction piece is merely a specialized form of receipt which does not bar an appeal. Heitman in turn was cited with approval on this point in Kostuchuk, above. The court in this case referred to the emails relied on by the respondent and found that, in the circumstances, the satisfaction of judgment did not constitute a release or settlement so as to render the appeal an abuse of process.
1.3.2 Accord and Satisfaction
The case law on accord and satisfaction continues to follow closely the principles laid out many years ago in the British Russion Gazette decision referred to above. In the Bow Valley Husky case noted below, McLachlin J. (as she then was) of the Supreme Court of Canada (dissenting in part, on another issue) adopted the requirements of accord and satisfaction as outlined in British Russion Gazette.
Scott v Parker, 1964 CanLII 112 (NB CA)
Tortious liability can be extinguished by instrument under seal, in which case consideration is not required, or by agreement for valuable consideration styled accord and satisfaction. There is no instrument under seal in this case. Accord and satisfaction consists, as the name imports, of two parts, accord and satisfaction. There must be something given or done by the defendant to or for the plaintiff which the latter accepts upon a mutual agreement that it shall be a discharge of the original cause of action. The agreement is the accord and the satisfaction is the consideration which makes the agreement operative. Consideration need not be executed but may be under certain circumstances executory. A release so-called may be evidence of an accord and satisfaction.
Farmer v. Foxridge Homes Ltd., 1992 CanLII 6206 (AB QB)
Accord and satisfaction involves an agreement, and the question of whether an accord has been arrived at is one of fact, not of law. The accord is the agreement to discharge the existing obligation, and the satisfaction is the consideration required to support it: Buchanan v. RCA Inc., [1988] B.C.W.L.D. 3647. The test for determining whether a settlement or accord and satisfaction exists is found in Mason v. Johnston (1893), 20 O.A.R. 412: “… If accord is a question of agreement, there must be either two minds agreeing, or one of the two persons acting in such a way as to induce the other to think that the money is taken in satisfaction of the claim and to cause him to act upon that view.” In order for accord and satisfaction to be a complete defence in this action arising from the termination of the plaintiff’s employment, the plaintiff should have had independent advice and there should have been evidence of a clear indication by the plaintiff that, knowing his rights, he nonetheless was satisfied with the amount that was ultimately provided to him. The defendant did not seek a release and, had it done so, then perhaps the plaintiff’s position may have been revealed.
Irwin (Re Bankruptcy), 1993 CanLII 835 (BC SC)
A creditor appealed from the decision of a trustee in bankruptcy to disallow the creditor’s claim. The debtor/bankrupt had made an “informal” proposal to his creditors, a significant feature of which was that no interest would accrue on the various debts after a specified date. Payments were made to the creditor under the proposal and the creditor’s claim in bankruptcy consisted largely of interest. The court did not accept the trustee’s arguments based on accord and satisfaction and it allowed the creditor’s appeal. The court quoted the following definition of accord and satisfaction from Chitty on Contracts, Vol. 1, 25th ed. (1983): “…the purchase of a release from an obligation…by means of any valuable consideration…The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative.” Referring to Williston on Contracts, the court said that, where it is difficult to determine whether the parties agreed that the new promise should be satisfaction in and of itself, or whether performance of the accord alone will constitute satisfaction, there is a presumption, in the United States at least, that actual performance is necessary. The presumption is based on the view that “it is not a probable inference that a creditor intends merely to exchange his present action for another”. The court did not need to rely on this presumption in light of the words of the informal proposal itself. There were no words of release therein. The creditors simply agreed to refrain from action on their original claims for so long as the bankrupt was not in breach of his obligations under the proposal. There was no accord, there was no release of the original obligation to the creditor and there was no satisfaction, which, under the informal proposal, was full performance by the debtor of his obligations thereunder.
Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., 1997 CanLII 307 (SCC) , [1997] 3 SCR 1210
The “requirements” of accord and satisfaction are as outlined by Scrutton L.J. in the British Russian Gazette case: accord and satisfaction is the purchase of a release from an obligation by means of any valuable consideration, not being the actual performance of the obligation itself.
Kelsey Estate (Re), 2002 CanLII 53984 (NL SC)
The court referred to the Bow Valley Husky case, above, regarding the “conditions” of accord and satisfaction and held that the applicants, who were named as beneficiaries under a will, were estopped from a further review of the executor’s accounts, as the matter had been resolved by a settlement agreement that amounted to accord and satisfaction.
Nautical Data International, Inc. In Re the Bankruptcy and Insolvency Act, 2005 NLTD 141 (CanLII)
The Court referred to the “principles” of accord and satisfaction, as set out in British Russian Gazette and confirmed in Bow Valley Husky, and concluded that an accord and satisfaction had been reached compromising the principal amount of a debt.
Process Automation Inc. v. Norstream Intertec Inc. & Arroyave, 2010 ONSC 3987 (CanLII)
The old common law rule is that a promise by a creditor to accept a smaller amount in payment of a debt is void for lack of consideration and therefore will not constitute an accord and satisfaction. This rule has been reversed by statute in provinces such as Ontario, where section 16 of the Mercantile Law Amendment Act provides that part performance of an obligation accepted by the creditor in satisfaction or rendered pursuant to an agreement for that purpose, though without any new consideration, will extinguish the obligation. The statutory provision reverses the common law rule regarding consideration but it continues to be the case that there can be no agreement where “founded on economic duress, undue influence or unconscionability”.
Action Management Inc. v. Archibald, 2011 NSSC 358 (CanLII) , appeal and cross-appeal dismissed, Archibald v Action Management Services Inc., 2015 NSCA 103 (CanLII)
The court found that a tenant of commercial premises made a payment to the landlord fully expecting a release from the lease and that the parties had reached an accord and satisfaction. While the consideration for the accord must not be the actual performance of the obligation itself, the court found that there was consideration beyond the obligation itself. The tenant had made an “agreeable offer” as requested by the landlord and the evidence supported an additional benefit to the landlord in that the landlord was to negotiate privately a new lease with a new tenant.
Ewachniuk Estate v. Ewachniuk, 2011 BCSC 395 (CanLII) , appeal on other grounds dismissed, 2011 BCCA 510 (CanLII)
The court referred to a definition of accord and satisfaction drawn from cases including the Bow Valley Husky case, above.
Diep v. Pham and Duong, 2019 ONSC 4209 (CanLII)
The plaintiff brought an action for recovery of an indebtedness owed by the defendant and, in its decision granting the plaintiff’s motion for summary judgment, the court said that, if the defendant paid the plaintiff a lesser amount in full satisfaction of the indebtedness, he should have obtained a release.
1.4 Covenant or Agreement Not to Sue
The effect of a release can be contrasted with that of a covenant or agreement not to sue. While a valid and enforceable covenant not to sue binds the covenantor not to take action on a particular right or claim, it does not extinguish the underlying right or claim. The distinction between a release and a covenant not to sue took on importance at common law in cases involving joint tortfeasors or debtors. The “established and time-honored common law rule” (see the MacArthur decision summarized below) was that the release of a joint tortfeasor or joint debtor would release the others. A covenant not to sue a joint tortfeasor or joint debtor would not affect the position of the others. But this approach has been severely criticized, in favour of an approach that determines the meaning and effect of the agreement reached by the parties through appropriate principles of interpretation, rather than categorization of contractual provisions: see Johnson v. Davies, [1998] 2 All ER 649 (CA) and Watts v. Lord Aldington, [1999] L&TR 578. In determining whether a document would take effect as a release or a covenant not to sue, the courts would interpret the document as a whole to draw from it whether the intention of the parties was that it would operate as a release or a covenant not to sue.
Toronto Dominion Bank v. Higgott et al., 1984 CanLII 2081 (ON SC)
Where a creditor receives a part payment from a debtor who is jointly, or jointly and severally bound, and that debtor intends by that payment to secure release from liability to the creditor, the creditor may do one of two things. The creditor may give the debtor a full and unqualified release of that debtor’s liability for the debt. If the creditor does so, the release operates to discharge all the other debtors. Instead of giving the joint debtor a release, the creditor may covenant not to sue on the obligation. The covenant not to sue will not release the other joint debtors. The court said that the first paragraph of instruments bearing the heading “Final Release” was on its face a complete and full release. There were no words of limitation or reservation. The plaintiff submitted that such words could be found in the second paragraph. But the second paragraph was on its face given in addition to (rather than in diminution of) the release in the first paragraph. It was a “further” covenant. The court said it was impossible to construe the instruments as simply covenants not to sue.
Heller-Natofin (Western) Ltd. v. Bender, 1984 CanLII 3801 (MB CA)
The court did not accept an argument that, three parties being jointly and severally liable for a debt, a release of one had the effect of releasing all three. The release included provisions to reserve the rights of the creditor against the two other debtors. The court said that the party in whose favour the release was given had not obtained a full and absolute release but a covenant on the part of the creditor that it would not sue him in the future.
Pacific NW Equip. Leasing Corp. v. Vancouver Whitecaps Partnership, 1985 (CanLII) 497 (BC SC) , affirmed on other grounds, Pacific Northwest Equipment Leasing Corp. v. B.C. Bearing Engineers Ltd., 1986 CanLII 1268 (BC CA)
The court considered an argument that the effect of a statutory provision was not merely a prohibition against an action on a debt, equivalent to a covenant not to sue, but an extinguishment of the debt, analogous to a release.
Bank of Montreal v. J.D.J. Ventures Ltd., 1991 CanLII 1012 (BC SC)
The applicant submitted that a valid release of one joint and several debtor discharges the liability of the others. That principle, the court said, is subject to the contractual relations between the parties and is also subject to the principle that the creditor may, in the course of giving a release, expressly reserve its right against the other debtors, citing Heitman Financial Services Ltd. v. Towncliff Properties . In Heitman, a covenant not to sue a joint debtor did not operate as a release to the other joint debtors. Whether a document constitutes a release or a covenant not to sue depends upon a determination of the intention of the parties.
Tucker (Guardian of) v. Asleson, 1993 CanLII 2782 (BC CA)
The Court of Appeal quoted extensively from Glanville Williams, Joint Torts and Contributory Negligence, London, 1951, including the following passage: “The rule that a release to one jointly or jointly and severally liable releases the other … prevails in the law of contract, but the judges have there developed the limitation upon the rule that a covenant not to sue one does not discharge the other. A document is read as a covenant not to sue and not as a release if it is worded as a covenant not to sue or if, although worded as a release, it expressly reserves rights against the other parties liable. This limiting rule has been carried over into the law of tort.” The court also noted that, in a footnote, the author of this work said that the rule does not apply to several concurrent tortfeasors.
British Columbia Ferry Corp. v. T & N, 1994 CanLII 1453 (BC SC)
The defendant made an application for production of documents relating to a settlement between the plaintiffs and other parties. The plaintiffs submitted to the court a “final released settlement document” in support of their submission that the document did not release joint tortfeasors but carefully drew a distinction between a release and a covenant not to sue. The court referred to the decision in Tucker v. Asleson, above, and a passage from the book by Glanville Williams quoted in that decision. In the result, the court did not require production of the documents.
Edmonton (City of) v. Lovat Tunnel Equipment Inc., 2000 ABQB 133 (CanLII)
The Court referred to the Tucker case, above, and, in particular, the passage from Glanville Williams, Joint Torts and Contributory Negligence, London, 1951 quoted in the Tucker case and set out above.
M. et al v. Hardwick et al, 2000 BCSC 1362 (CanLII)
The plaintiff argued that a settlement document took effect as a covenant not to sue rather than a release as a result of a clause in the document preserving the cause of action against other tortfeasors. However, the preservation of a right to claim against others was expressly tempered by a particular provision that the plaintiff would not seek to recover any portion of damage or loss from non-settling defendants in connection with matters forming the subject of the release. Accordingly, the document was properly interpreted as a release notwithstanding the broader clause indicating that it was not intended to constitute a release of claims made against parties to the action other than the releasees.
FBI Foods Ltd. v. Glassner, 2001 BCSC 1472 (CanLII)
In this case, the plaintiff paid a judgment obtained by the Cadbury third parties and the defendant Glassner was found liable to the plaintiff for contribution of half of the amount paid by the plaintiff to Cadbury. Glassner had settled Cadbury’s claim against him, and, with his liability for part of the settlement between Cadbury and the plaintiff established, he made a third party claim against Cadbury for breach of settlement and unjust enrichment. The court said that Glassner’s agreement with Cadbury was clearly not a release but a covenant not to sue. In this regard, the court noted that Cadbury agreed to discontinue its action against Glassner but not to a dismissal of the claim, there was no express release from liability, there was no express covenant by Cadbury not to seek from FBI Foods any loss flowing from the concurrent liability of Glassner, and Cadbury expressly reserved the right to proceed against FBI Foods without limitation.
MacArthur v. S. Bransfield Ltd., 2003 NBCA 71 (CanLII)
The “established and time-honored” common law rule is that release of one joint tortfeasor, whether under seal or by way of accord and satisfaction, releases all other joint tortfeasors. The device commonly used to escape the application of the rule is through the “covenant not to sue”. A critical factor which makes a document a covenant not to sue, as opposed to a release, is the fact that the cause of action is not discharged but preserved against other tortfeasors. The argument in this case was that a covenant to discontinue an action against a defendant was not a covenant foreclosing suit because an action had already been commenced and because the agreement was a release of one of many joint tortfeasors cloaked to hide its true nature. As to the first of these points, a covenant not to sue does not lose its character as such because it is executed after legal action has been commenced. As to the second point, there were important features of the agreement that distinguished it from an unconditional release, namely, a covenant reserving the right to continue the action against the remaining defendants and the fact that the cause of action was not released, discharged or extinguished.
Orlandello v. Nova Scotia (Attorney General), 2005 NSCA 98 (CanLII)
It was argued that many of the authorities before the court in this case considered releases with a covenant not to sue, while the release signed by the claimant did not contain an express covenant not to sue. The Court of Appeal said that this was a distinction without a difference. The covenant not to sue arose as a response to the “release bar” rule for joint tortfeasors. The “release bar” rule resulted in the unintended release of joint tortfeasors, which discouraged the settlement of claims for joint torts. To deal with these difficulties, the courts permitted settlement with one joint tortfeasor if the releasor merely covenanted not to sue that tortfeasor. The covenant would not discharge the cause of action. This principle which gives significance to the covenant not to sue had no application here. The release “released and forever discharged” the releasees from “all claims, demands, rights or causes of action of whatsoever kind and type” arising from an accident. A complete discharge of the cause of action is broader than a mere covenant not to sue for a subsisting cause of action.
Village on the Park (Re), 2009 ABQB 497 (CanLII)
A Pierringer Agreement (see Chapter 7 below) contained a covenant not to sue, rather than a release, and thus the common law rule that a release of one joint tortfeasor releases all joint tortfeasors was not applicable to release the defendant from liability.
Drucker, Inc. v. Gui, 2009 BCSC 542 (CanLII)
At common law a judgment or release of one joint tortfeasor released all other joint tortfeasors from liability. This outcome was modified by the B.C. Law and Equity Act, but only with respect to remaining tortfeasors who were parties to the action which was settled or in which a judgment was taken. In this case, a settlement was implemented through a “B.C. Ferries” agreement. A “B.C. Ferries” form of settlement is meant to accomplish two main goals. The first is to allow a plaintiff to settle with one joint tortfeasor without releasing the remaining joint tortfeasors. In order to avoid releasing the non-settling joint tortfeasors, no release is given. Rather, the plaintiff covenants not to sue the settling defendant. Further, no consent dismissal order is made. Instead, the plaintiff discontinues its action against the settling defendant. A second settlement agreement in this case was less detailed, but it contained a covenant not to sue instead of a release. The court concluded that these settlements did not release a defendant who was jointly liable with the parties in whose favour the covenants not to sue had been given.
DataNet Information Systems, Inc. v. Belzil, 2010 ABQB 72 (CanLII)
The release considered in this case was not merely a covenant not to sue. It used words of full and comprehensive release and did not: (i) expressly reserve any rights to continue pursuing any possible co-obligors; (ii) reveal any intention to pursue any co-obligors; or (iii) appear to be given with the knowledge and consent of any possible co-obligors.
Zypherus Holdings Inc. v Dorais Estate, 2013 ABCA 287 (CanLII) , application for leave to appeal dismissed, BDO Canada Limited, in its Capacity as Trustee of the Estate of Michel Dorais, Deceased, A Bankrupt v. Zypherus Holdings Inc., 2014 CanLII 11032 (SCC)
Courts distinguish between a release and a covenant not to sue. In the case of joint and several covenantors, a release of one discharges the other unless the creditor, when granting the release, reserves its rights against the other. Courts may interpret a release as a covenant not to sue “in all cases where the promisee [creditor] has been astute enough to reserve his rights against the debtors in the instrument”. Glanville L. Williams, Joint Obligations, (London: Butterworth & Co, 1949) states that “the necessity for looking in the deed for an express reservation of rights against the other debtors exists only where the deed is worded as a release”. If it is worded as a covenant not to sue, the other debtors remain liable.
Trillium Motor World Ltd. v. General Motors of Canada Limited, 2017 ONCA 545 (CanLII)
In this case, the Court of Appeal said it could not identify any palpable and overriding error in the conclusion of the trial judge that, although a release was valid, a covenant not to sue was void but was severable.
Rochette v Bradburn, 2021 BCSC 1752 (CanLII)
A petition sought orders against the members of a strata council (who subsequently resigned). These personal respondents argued that a release between the strata corporation and them was a complete answer to the petition as against them. In reliance on the release, they argued that the entire petition as against them should be dismissed, or alternatively that paragraphs of the petition claiming relief from them should be struck out. The petitioners did not acknowledge that the document relied on by the personal respondents was a legally effective “release”, but for ease of reference the court referred to it as a release in its judgment. The court agreed that the “release”, on its face, released the personal respondents from any damages owing to the strata corporation. But because the strata corporation made no claims against the personal respondents, there was an argument that the document was merely a covenant by the strata corporation not to seek damages from the personal respondents in the future.
1.5 Waiver and Release
In Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 SCR 490, the Supreme Court of Canada said that waiver occurs where one party to a contract or to proceedings takes steps which amount to foregoing reliance on some known right or defect in the performance of the other party. The Court referred to the elements of waiver as set out in Federal Business Development Bank v. Steinbock Development Corp. (1983), 42 A.R. 231 (C.A.), where the Alberta Court of Appeal said (at page 236) that:
The essentials of waiver are thus full knowledge of the deficiency which might be relied upon and the unequivocal intention to relinquish the right to rely on it. That intention may be expressed in a formal legal document, it may be expressed in some informal fashion or it may be inferred from conduct. In whatever fashion the intention to relinquish the right is communicated, however, the conscious intention to do so is what must be ascertained.
Thus, in Saskatchewan River Bungalows, the Supreme Court held that waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The Supreme Court went on to say that creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration. See also Jack Ganz Consulting Ltd. v. Recipe Unlimited Corporation, 2021 ONCA 907 (CanLII), at paragraph 46.
The authors of The Law of Waiver, Variation and Estoppel (Oxford: Oxford University Press, 2012), at pages 47 and 61, have described waiver as “a mechanism for bypassing the doctrine of consideration”. Given the reluctance of courts to “emasculate” the doctrine of consideration, these authors say, it would be natural for courts to impose a requirement as a substitute for consideration and limit the application of waiver. Knowledge, like consideration, would suggest that the party said to have given a waiver intended an unequivocal representation to have legal effect and thus knowledge is a suitable substitute for consideration.
A key distinguishing feature, then, between a release and a waiver is that the former requires consideration, unless given under seal, while the latter does not. (As to the requirements of a valid release, see Chapter 2, below.) The difference between a release and a waiver, with particular reference to consideration, is touched on in a passage from Halsbury’s Laws of England (London: LexisNexis, 2014) that has gone through several iterations in successive editions of Halsbury’s. The passage, as it has appeared in different editions of Halsbury’s, has been quoted in a number of Canadian cases. As can be seen from the decisions summarized below, Halsbury’s indicates that a person entitled to the benefit of a stipulation in a contract or of a statutory provision may waive it, and the fact that the other party acts upon the waiver is sufficient consideration, while an express waiver of a right of action or an interest in property is not effectual unless made with consideration and, where there is consideration, the statement operates as a release.
Findlay v. Kowal, 1945 CanLII 530 (MB QB)
In considering waiver of the special rights contained in a clause of a lease, the court quoted the following extract from Halsbury’s, 2nd Edition: “Waiver is the abandonment of a right, and is either express or implied from conduct. A person who is entitled to the benefit of a stipulation in a contract or of a statutory provision may waive it, or allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver of this kind depends upon consent and the fact that the other party has acted upon it is sufficient consideration—. If it is a mere statement of an intention not to insist upon the right, it is not effectual unless made with consideration; but where there is consideration the statement amounts to a promise and operates as a release.”
Centennial Leaseholds Ltd., Re, 1987 CanLII 7683 (NB QB)
The Registrar considered a release that included a waiver of a client’s rights to apply for taxation of its lawyers’ accounts. The Registrar referred to an extract from Halsbury’s Laws of England, 3rd Edition, Volume 14, Equity, Release and Waiver, at pages 636-638, which included the following discussion of waiver and release: “Waiver is the abandonment of a right, and is either express or implied from conduct. A person who is entitled to the benefit of a stipulation in a contract or of a statutory provision may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver of this kind depends upon consent, and the fact that the other party had acted upon it is sufficient consideration. … Where the right is a right of action, or an interest in property, an express waiver depends upon the same considerations as a release. If it is a mere statement of an intention not to insist upon the right, it is not effectual unless made with consideration; but where there is consideration the statement amounts to a promise and operates as a release.”
Carson v. Luncheonette Limited et al., 1987 CanLII 5202 (NL SC)
The court quoted a passage from Halsbury’s (edition not stated) which included the proposition that: “Where the right is a right of action, or an interest in property, an express waiver depends upon the same considerations as a release. If it is a mere statement of an intention not to insist upon the right, it is not effectual unless made with consideration; but where there is consideration the statement amounts to a promise and operates as a release.” The court said that the principles set out in the passage from Halsbury’s were followed in Central London Property Trust Ltd. v. High Trees House, [1947] K.B. 130.
Belliveau v. Blanchard et al., 1989 CanLII 8184 (NB QB)
On the subject of waivers, the court quoted a passage from Halsbury’s Laws of England, 4th Edition, which included the following propositions: “Waiver is the abandonment of a right in such a way that the other party is entitled to plead the abandonment by way of confession and avoidance if the right is thereafter asserted, and is either express or implied from conduct. …A person who is entitled to rely on a stipulation, existing for his benefit alone, in a contract or of a statutory provision, may waive it, and allow the contract or transaction to proceed as though the stipulation or provision did not exist. Waiver of this kind depends upon consent, and the fact that the other party has acted on it is sufficient consideration. …Where the right is a right of action or an interest in property, an express waiver depends upon the same considerations as a release. If it is a mere statement of an intention not to insist upon the right it is not effectual unless made with consideration, but where there is consideration the statement amounts to a promise and operates as a release.”
Finn v. St. John’s (City), 1999 CanLII 19807 (NL SC) , appeal and cross-appeal allowed in part on other grounds, 2002 NLCA 76 (CanLII)
In respect of the concept of waiver or election, the defendant referred to, and the court quoted, an extract from Halsbury’s Laws of England, 3rd Edition, which included the passage set out in the summary of the Centennial Leaseholds decision, above.
Valley Equipment Ltd. v. John Deere Ltd., 2000 CanLII 17208 (NB QB)
The court referred to Belliveau v. Blanchard and the passage quoted in that case from Halsbury’s Laws of England (4th Edition) on the subject of waiver, including the words from Halsbury’s set out in the summary of Belliveau, above. The court also referred to the discussion of waiver in the Saskatchewan River Bungalows case, above.
Johnston v. Carlos, 2002 ABCA 127 (CanLII)
The issue on this appeal was whether an insurer waived the limitation period for bringing an action for damages occasioned by a motor vehicle accident. After the expiry of the limitation period, the insurer sought medical documentation, offered to settle for $5,000 in exchange for a “full and final release and a discontinuance of action” (this proposal was rejected) and advised counsel of a two-day settlement conference. Thereafter, a statement of claim was issued and a statement of defence was filed, pleading that the action was statute-barred. The court cited Saskatchewan River Bungalows and referred particularly to the proposition that waiver will exist only where the waiving party had full knowledge of a right. The court said it was necessary for the party relying on waiver in this case to adduce evidence to show that the insurer had full knowledge of the right to rely on the limitation period. Such knowledge must include actual knowledge that the statement of claim had not been filed within the limitation period, which could not be presumed. The only evidence on this question supported the conclusion that the insurer believed that a statement of claim had been filed: after the expiry of the limitation period, the insurer requested a final release and, importantly, a discontinuance of action. There was no evidence to the contrary.
Midland Plaza Inc. v Midland Medical Services Inc., 2015 ONSC 7608 (CanLII)
A landlord brought a summary judgment motion against four indemnitors of a commercial lease. The landlord had required the principal shareholders of the corporate tenant to provide a contractual guarantee of the tenant’s obligations. The shareholders agreed to provide the requested indemnity on condition that they would be released from the indemnity unless the tenant fell into “habitual default” during the first three years. In connection with an agreement by the original tenant to sell its assets to a new tenant, the parties negotiated an assignment agreement. The indemnitors argued that, even if the tenant were found to have been in habitual default, the defaults were waived as a result of the assignment. The court said that these submissions would require it to find that the phrase “all requirements [of the lease] have been fulfilled up to the present time” in the assignment agreement was intended to operate as a waiver by the landlord in favour of the indemnitors of the “habitual default” condition. Citing Saskatchewan River Bungalows, the court said an enforceable waiver must arise from an “unequivocal and conscious” decision to abandon a right. The language of the agreement was neither unequivocal or conscious. At the time of the assignment, the landlord already had the right to treat the indemnities as being in force for the full term of the lease. There was no evidence that the indemnitors bargained to restore the right to a release.
1.5.1 A Release as a Waiver of Conflict of Interest
The decision summarized below confirms that a release can be evidence of waiver of a lawyer’s (alleged) conflict of interest
Sheriff v. Apps et al, 2012 ONSC 565 (CanLII)
In this case, the plaintiff alleged, among other things, that the defendant lawyer breached his duties to the plaintiff and was in a conflict of interest. The court found that there was no conflict of interest and, further, the court went on to conclude that the plaintiff had waived the alleged conflict of interest by his inaction and by releases that he had executed. (The releases given by the plaintiff included as releasees a company’s “agents” and the court found that the releases extended to the defendants as agents for the company.)
1.6 Releases and Unjust Enrichment
The Supreme Court of Canada has indicated in a number of decisions that a claim for unjust enrichment has three essential elements: first, that the defendant was enriched; second, that the plaintiff suffered a corresponding deprivation; and, third, that the defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason: see Moore v. Sweet, 2018 SCC 52 (CanLII), [2018] 3 SCR 303, at paragraph 37, and Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 SCR 269, at paragraphs 36 to 45. Canadian courts have addressed two areas where releases may come into play in the context of a claim based on unjust enrichment. The effect of a release may become a point of consideration in an unjust enrichment case when the release is relied on in support of the claim based on unjust enrichment, or when the release is relied on as a juristic reason in support of a defence to, or argument against, the claim for unjust enrichment.
Nijjar v. Feldman et al., 2020 ONSC 552 (CanLII)
The plaintiff was a commercial real estate broker. The defendant Lorne Feldman was having difficulty refinancing the existing commercial mortgage for a property owned by his real estate holding company, the main tenant of which was an operating company run by Feldman. Feldman approached the plaintiff at a time when the plaintiff was employed by First National Financial LP. The plaintiff secured an offer of mortgage financing from the Bank of Montreal. Not long thereafter, the plaintiff left First National. Feldman’s real estate company entered into an agreement with First National to end their relationship with respect to the refinancing and each party released the other. Eventually, the mortgage financing for the property was funded by the Bank of Montreal and, in this action against Feldman and the two companies, the plaintiff sought payment of commission. The court said that, while Feldman’s real estate company had a contract with First National for mortgage brokerage services, this contract was terminated at the time of the signing of the release between the real estate company and First National. As to a claim for unjust enrichment made by the plaintiff, the court said that, given the release provided by First National and the absence of any contract between Feldman or one of the defendant companies and the plaintiff at the time of the release, it was not possible for the plaintiff to claim compensation for services rendered prior to his departure from First National on the basis of unjust enrichment. In other words, any benefit the plaintiff provided as an employee of First National was clearly “covered by” the agreement between the real estate company and First National and “extinguished by” the release. Therefore, unjust enrichment arose only with respect to services provided after the plaintiff left First National.
1.6.1 Release Relied on as Support for a Claim of Unjust Enrichment
In the decisions summarized below, the effect of a release became a point of consideration in an unjust enrichment case because a release was relied on in support of a claim based on unjust enrichment.
Richardson Estate v. Mew, 2009 ONCA 403 (CanLII)
The appellant was the spouse and estate trustee of Richardson, who had designated his former spouse as the beneficiary under an insurance policy. After Richardson passed away, the appellant claimed entitlement to the proceeds of the policy. The appellant argued that the former spouse would be enriched if permitted to receive the proceeds. The appellant said that she would suffer a corresponding deprivation because she paid the 2007 premium for the policy from her personal earnings. As further support for this position, the appellant pointed to the general release in the separation agreement entered into by Richardson and his former spouse and asserted that, because the former spouse agreed to relinquish all rights to Richardson’s assets, it would be against good conscience to allow her to breach the agreement and claim the death benefit. As to whether the alleged enrichment of the former spouse was unjust, the Court of Appeal said that neither the facts of the case, nor the law, supported a determination that the general release in the separation agreement made it unjust for the former spouse to receive the death benefit.
Holowa Estate, 2011 ABQB 23 (CanLII)
In this case, the rules of a pension plan indicated that, on the death of James Holowa, a lump sum death benefit would be payable to the respondent Hanrahan, to whom Holowa was still legally married at the time of his death. But, as found by the court, Hanrahan had waived her right to the pension benefit in an agreement made during the marriage and again in an agreement made on separation, where she expressly released any rights arising on death, or out of any Act of the Province of Alberta. The court reviewed the elements of unjust enrichment, found that these elements were satisfied on the facts of the case and concluded that any pension benefit received by Hanrahan should be impressed with a trust in favour of Holowa.
1.6.2 Release as a Juristic Reason for Enrichment
The third element of an unjust enrichment claim is that the benefit and corresponding detriment occurred in the absence of a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case: Kerr v. Baranow, above, at paragraph 40. The Supreme Court has said that “established” categories of juristic reasons are a contract, a disposition of law, a donative intent and other valid common law, equitable or statutory obligations: see, for example, Moore v. Sweet, above, at paragraph 57. This third stage of the unjust enrichment analysis provides for due consideration of the autonomy of the parties, including factors such as “the legitimate expectation of the parties, the right of parties to order their affairs by contract”: Kerr v. Baranow, paragraph 41.
An example of a case in which a contract was accepted as a juristic reason for an alleged unjust enrichment is Simkeslak Investments Limited v. Kolter Yonge LP Limited, 2011 ONSC 7134 (CanLII). In that case, the court said that there could be no claim of unjust enrichment against one of the defendants because a contract with the other defendant constituted a juristic reason for any enrichment.
Canadian law is clear that releases are contracts and, further, releases often are given in the context of settlement agreements, which of course are contracts. Thus, as the decisions summarized in this section confirm, a settlement agreement or a release may stand as a juristic reason for an enrichment alleged to be unjust.
Brent v. Slegg Construction Materials Ltd., 2007 BCSC 661 (CanLII)
The plaintiff was the owner of a property against which the defendant filed a builder’s lien. The plaintiff paid the amount of the lien to obtain a discharge, but later commenced an action for the return of the money on the ground that the claim asserted in the lien was a false one. In response to the plaintiff’s allegation of unjust enrichment, the defendant argued that, because the parties entered into a settlement contract and a release of the lien was given, there was a juristic reason for any enrichment. The court held that the settlement agreement stood as a juristic reason for the enrichment.
Shannex Inc. v. Dora Construction Ltd., 2016 NSCA 89 (CanLII) , appeal from M.U. Rhino Renovations v. Dora Construction Ltd., 2016 NSSC 90 (CanLII)
The court said that a release and indemnity signed by the plaintiff/respondent was a contract. This is an established category of juristic reason to deny recovery for unjust enrichment. Under the two-step test for the “absence of juristic reason” element of unjust enrichment, the first step is to apply established categories of juristic reasons and the second step permits consideration of the reasonable expectations of the parties and public policy considerations. The release and indemnity was not just one of the “equities” to be balanced in the second step, as posited by the court below. The analysis doesn’t even reach the second step: a valid and clear release is a juristic reason that discharges a claim for unjust enrichment.
1.7 Releases and Mitigation of Damages
The implications of a release, or of a requirement that a release be provided, in the context of mitigation of damages, are discussed in the cases summarized below.
AMEC Americas Limited v. MacWilliams, 2012 NBCA 46 (CanLII)
In a wrongful dismissal action, the defendant pleaded that the plaintiff had failed to mitigate his loss by refusing settlement offers made by the defendant. The Court of Appeal said that the plaintiff did not fail to mitigate by reason of his refusal to accept a settlement offer, particularly where, among other things, the offer required the plaintiff to execute a full and final release of any claims he might have had.
Bowes v. Goss Power Products Ltd., 2012 ONCA 425 (Can LII)
The preponderance of appellate jurisprudence supports the view that, where an employment agreement contains a stipulated entitlement on termination without cause, the amount of the entitlement is either liquidated damages or a contractual sum. Either way, mitigation of damages is irrelevant for a number of reasons, one of which is that the inclusion of a broad release in the employment agreement, as in this case, demonstrates an intention to avoid resort to the courts, confirms a desire for finality and bolsters a finding that the parties intended that mitigation would not be required unless the agreement expressly provided to the contrary.
Cellular Baby Cell Phones Accessories Specialist Ltd. v. Fido Solutions Inc., 2017 BCCA 50
The duty to mitigate does not require a party to release claims it may have against a wrongdoer. In this case, the trial judge found that the defendant Fido had wrongfully terminated a dealership agreement with the plaintiff. The trial judge awarded only nominal damages on the basis that, in not selling to a prospective purchaser, the plaintiff had failed to mitigate its damages. A sale of the business, however, would have required the plaintiff to give Fido a general release of all claims. The duty to mitigate did not require the plaintiff to release Fido from potential damage claims. The requirement of a general release was “fatal” to the trial judge’s mitigation finding.
Fillmore v Hercules SLR Inc., 2016 ONSC 4686 (CanLII) , appeal dismissed, 2017 ONCA 280 (CanLII)
The plaintiff’s employment with the defendant was terminated and the defendant presented him with two letters, one with a severance offer and one with a new employment offer. In the severance offer, the plaintiff was offered a payment in exchange for a release; in the new employment offer, he was offered a new position at a greatly reduced salary and a six-month income guarantee at his old salary to assist him in the transition to the new role. The plaintiff did not accept either offer and the defendant argued that he failed to mitigate his damages solely by reason of his refusal to accept the new employment offer. The motion judge did not find a failure to mitigate. Had the plaintiff accepted the new employment offer, the six-month salary guarantee could arguably have amounted to consideration for a waiver of the plaintiff’s rights arising from his dismissal. The motion judge concluded that there was “no obligation on the plaintiff to effectively risk handing the defendant a Full and Final Release through the back door and under the guise of mitigation efforts” and, on appeal, the Court of Appeal said that it agreed with this conclusion. The Court of Appeal went on to say: “The motion judge found that on the facts of this case a reasonable person in the respondent’s position is not obliged to accept a term risking waiver of the wrongful dismissal claim. We see no error in this finding.”
Dussault v. Imperial Oil Limited, 2018 ONSC 1168 (CanLII) , appeal dismissed, 2019 ONCA 448 (CanLII)
The primary issue in this case was whether the plaintiffs had an obligation to mitigate their damages by accepting offers of employment from Mac’s Convenience Stores Inc., which purchased the branch of the defendant’s business for which the plaintiffs worked at the time when their employment with the defendant was terminated. The motion judge said that, given the defendant’s requirement that the plaintiffs sign a release in order to get a lump sum payment from the defendant, it was reasonable for the plaintiffs not to accept the Mac’s offers. Referring to Filmore, above, the court said the requirement that the plaintiffs give up any right to sue the defendant was “fatal”. The defendant argued that it was open to the plaintiffs to accept the Mac’s offers without signing a release in favour of the defendant, but the court found this argument to be disingenuous. The offer from Mac’s made reference to the expectation that the plaintiffs would sign a release in favour of the defendant, thereby clearly linking the offer and the release. In the circumstances, it was perfectly reasonable for the plaintiffs to reject the offer in order to avoid giving up any rights they might have against the defendant. Given that it was the defendant that made the payment of the lump sum conditional on the signing of a release, it was not reasonable to require the plaintiffs to parse the offer by accepting employment with Mac’s and rejecting the lump sum from the defendant when that is not how the offer was presented.
Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225 (CanLII)
In this case, the court said that, after termination of employment, an employee is not required to accept an employer’s settlement offer to mitigate the employee’s damages when that offer requires a release of the claim against the employee (presumably meaning the claim against the employer).
Hogan v 1187938 B.C. Ltd., 2021 BCSC 1021 (CanLII)
The plaintiff claimed damages arising from the termination of his employment with the defendant, which operated an automotive dealership and was part of the Dilawri Auto Group. Another car dealership that was part of the Dilawri Auto Group was prepared to offer a position to the plaintiff conditional on the settlement of this litigation. The plaintiff decided that he would not accept the offer. On the issue of whether the plaintiff had failed to mitigate his damages, the court referred to Filmore, above, where the Ontario Court of Appeal agreed that there is no obligation on an employee to risk handing the defendant a release “through the back door and under the guise of mitigation efforts”. The court said “that is similar to the situation here”. The plaintiff should not be required to compromise his legal claim as part of his duty to mitigate.
1.8 Release of Claims or Rights
In the decision summarized below, the Ontario Court of Appeal rejected an argument that was based on a distinction between the release of a claim under a statute and the release of a right under the statute.
405341 Ontario Limited v. Midas Canada Inc., 2010 ONCA 478 (CanLII)
The appellant in this case argued that there is a difference between a claim and a right, and that the release of a claim under franchise legislation is not equivalent to the release of a right under the statute. A provision of the franchise legislation said that any purported waiver or release by a franchisee of a right given under the statute was void. Part of the appellant’s argument rested on the use of the word “right”, and not “claim”, in this provision of the statute. The Court of Appeal said that, in the circumstances of this class proceeding, the distinction between rights and claims was artificial. The claims in the class action were derived from rights that the class members were seeking to assert.
1.9 Release Indicative of Intentions of Parties to a Contract
In the course of interpreting a contract, a court may find the existence of, or terms of, a release, to be indicative of the intentions of the parties. More broadly, as in the Vladescu case below, a contractual provision regarding a release to be given in the future may be an indicator of the intentions of the parties to the contract.
Vladescu v. CTVglobemedia Inc., 2013 ONCA 448 (CanLII) , application for leave to appeal dismissed, Florina Vladescu v. CTVglobemedia Inc., et al., 2014 CanLII 1213 (SCC)
The Court of Appeal concluded that provisions of a separation agreement between a member of a federally regulated pension plan and his former spouse did not amount to an assignment of a pre-retirement death benefit to the plan member’s former spouse. In the separation agreement, the plan member had agreed that, if he were to later cohabit with another person or remarry, he would make “all possible efforts” to enter into an agreement with his future partner in which she would release all claims she had to his pension. The court referred to the significance of this provision which, it said, revealed that the parties to the separation agreement recognized that a future spouse would be entitled to the pension benefits, including the pre-retirement death benefit, unless the future spouse released her rights to those benefits.
Kilitzoglou v. Curé, 2018 ONCA 891 (CanLII)
The Court of Appeal held that, in interpreting the provisions of a cohabitation agreement between parties referred to as Albert and Helen, the trial judge committed an error of law when he allowed his view of the factual matrix to overwhelm and even contradict the words of the contract. The appellate court said that, given the dominant theme of the agreement, it was not open to the trial judge to make the inference that Albert wanted to care for Helen for the rest of her life, and use that inference to drive his interpretation of the agreement. The provisions of the contract referred to by the Court of Appeal included a release of all rights each party had or might acquire in the estate of the other and a ”broad and sweeping” release by which the parties each released all claims with respect to the property of the other. The court said that consideration of these and other provisions left no doubt that a dominant theme of the agreement was that each party would remain financially independent of the other and that neither would have any obligation to support the other under any present or future circumstance.
CIT Financial Ltd. v Gee Force Logistics Inc., 2020 BCSC 18 (CanLII)
This action concerned a commercial lease financing agreement. A financing company sought judgment pursuant to a lease for two commercial trucks. The defendants advanced a counterclaim in which they argued that the plaintiff was liable in tort for fraudulent misrepresentation. The misrepresentation claim was based on arguments that the dealer of the trucks acted as the plaintiff’s agent or that the truck dealer and the plaintiff were joint tortfeasors. In response to these arguments, the plaintiff relied on, among other things, a contractual provision stating that, without prejudice to rights against manufacturers, suppliers or others, the plaintiff was released from all claims arising out of or in relation to the trucks. The court said it was apparent that the defendants’ primary action was against the truck dealer and an agency argument of the sort relied on by the defendants was not based on a reasonable interpretation of the commercial relationship between the parties, in which the plaintiff was merely a financier.
Manthadi v. ASCO Manufacturing, 2019 ONSC 5572 (CanLII) , appeal allowed, 2020 ONCA 485 (CanLII)
The respondent moved for summary judgment on her wrongful dismissal claim against the appellant and the motion judge granted the motion. The Court of Appeal allowed the appeal, concluding that summary judgment was not appropriate in the circumstances of this case. The respondent had signed a settlement and release agreement at an earlier time when her previous employer, a numbered company, sold its business to the appellant. The Court of Appeal disagreed with the finding of the motion judge that the settlement and release agreement was not relevant. The court said that the release clause applied only to the numbered company and that the motion judge was correct in finding that the settlement and release agreement did not disentitle the respondent from making a claim against the appellant. However, the agreement, while not relevant to the respondent’s entitlement to notice by the appellant, was potentially relevant in other ways. Among other things, the factual matrix surrounding the making of the agreement and the terms of the agreement could be relevant to the respondent’s understanding of how she would be treated on the sale of the business and the terms on which she entered the employment of the appellant.
1.9.1 Allocation of Risk
An agreement to release claims or liability, or an agreement to settle claims, may reflect an allocation of risk between the parties, as can be seen from the cases below. On the subject of limitation of liability clauses and risk allocation, see G. R. Hall, Canadian Contractual Interpretation Law, 4th Edition, (Toronto: LexisNexis, 2020), at page 368, where it is said that “[t]here are many valid reasons for contracting parties to use limitation of liability clauses, most notably to allocate risks”. This proposition, as it was enunciated in an earlier edition of the book, was quoted in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 (CanLII), at paragraph 102, by Binnie J. (who dissented on other grounds).
The Supreme Court of Canada has observed that, when parties enter into a release, the releasor takes on the risk of relinquishing the value of the claims he or she might have had, and the releasee pays for the guarantee that no such claims will be brought; the uncertainty or risk that is “allocated” to the releasor is precisely what the releasee pays for: see Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) , at paragraph 27.
In a case from Quebec that involved a contractual non-liability clause, the Supreme Court quoted a comment indicating that: “[R]isk management, which is necessary to every contracting strategy, and correlatively to every commercial management strategy, cannot be conducted without limitation of damages clauses … .” See 6362222 Canada Inc. v. Prelco Inc., 2021 SCC 39 (CanLII), at paragraph 66, quoting from Aubert de Vincelles, Carole, “Plaidoyer pour un affinement réaliste du contrôle des clauses limitatives de réparation portant sur les obligations essentielles”, [2008] R.D.C. 1034, at No. 9.
Another decision of a Canadian court which touches on the subject of risk allocation is 0824606 B.C. Ltd. v Plain Jane Boutique Ltd., 2018 BCSC 1887 (CanLII). In that case, the court considered a section of a lease which set out a particular limitation of the landlord’s liability and included a release by the tenant in favour of the landlord. The court referred to this section (at paragraph 137 of the decision) as a “risk allocation provision”: the court indicated that the provision addressed liability of the landlord for harm, loss or damage to any property belonging to the tenant and that the tenant was responsible for maintaining its own insurance to relieve the landlord from any such liability.
Mohammed v. York Fire and Casualty Insurance Co., 2006 CanLII 3954 (ON CA) , leave to appeal refused, [2006] S.C.C.A. No. 269
Minutes of settlement are a contract. A consent judgment is binding. Both are final, subject to reasons to set them aside. Finality is important in litigation. This is so for the sake of the parties who reached their bargain on the premise of an allocation of risk, and with an implicit understanding that they will accept the consequences of their settlement.
Miller Paving Limited v. B. Gottardo Construction Ltd., 2007 ONCA 422 (CanLII)
A “memorandum of release”, in which a supplier acknowledged that payment in full had been received for materials supplied, clearly allocated to the supplier the risk that payment in full had not been received.
Keefer Laundry Ltd. v. Pellerin Milnor Corporation, 2009 BCCA 273 (CanLII)
The trial judge found, in respect of equipment supplied to the plaintiff by the defendant, that the defendant was in breach both of an express warranty and the implied condition of fitness for purposes in the Sale of Goods Act, but that a document agreed to by the plaintiff was an effective release of the plaintiff’s claim. The trial judge said that the plaintiff asked for and received specific warranties as a matter of contract and, also as a matter of contract, agreed to a release of most of its claims. There was no reason for tort law to impose a different risk allocation on these commercial parties. The Court of Appeal dismissed an appeal from the decision of the trial judge, essentially for the reasons given by him, with which the appellate court was in general agreement.
Williams-Sonoma Inc. v. EllisDon Corporation, 2012 ONSC 5448 (CanLII) , appeal dismissed, Williams-Sonoma Inc. v. Oxford Properties Group Inc., 2013 ONCA 441 (CanLII)
A lease required tenants at a mall to acquire insurance to cover water damage claims on the premises and it obligated the landlord to maintain similar insurance for its property. The lease provided for a mutual release and waiver between the landlord and tenant for any occurrences which were the subject of insurance coverage. The lease also provided a release and waiver for those for whom the releasee was in law responsible with respect to occurrences insured against or required to be insured against by the releasing party. The motion judge said that the reason behind the inclusion of the release and waiver was to require the landlord and tenant to insure their respective portions of the risk. One of the intentions of having this release and waiver in the contract was the allocation of risk and certainty that cost would not be affected by one party asserting subrogation rights. The Court of Appeal noted that the release and waiver was included in a part of the lease entitled “Insurance” that allocated risk between the parties based on which party was required to obtain insurance coverage.
Pêcheries Guy Laflamme Inc. v. Capitaines propriétaires de la Gaspésie (A.C.P.G) Inc., 2015 FCA 78 (CanLII)
The Federal Court of Appeal considered a clause of a boat handling contract which stated that the owner of the vessel took responsibility for any risk resulting from the towage, docking, operating, wintering and/or launching of the vessel and released the owner of a slip dock from any civil liability resulting from these associated operations or handling. The court said that, while the owner of the ship considered the people who were part of the company that owned the dock to be his friends, if not his family, this did not take away from the fact that this was a commercial transaction for both parties. Allocating risks makes it possible to avoid disputes and the great expenses these entail.
Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd, 2017 ABCA 378 (CanLII)
This case concerned a standard form industry contract, characterized as a “knock for knock” or “no-fault” contract, under which each party generally assumed the risk of damage to its own assets, rather than having risk allocated on the basis of fault. An application for summary judgment put into issue terms of the contract that provided for the assumption of risk and the release of claims. In the result, the majority of the Court of Appeal concluded that this was not an appropriate case for summary judgment and that allegations of fraudulent misrepresentation raised a genuine issue requiring a trial.
ALC v. Bergmark Guimond et al., 2023 PESC 48 (CanLII)
The plaintiff claimed damages allegedly sustained as a result of a construction project involving the removal and reconstruction of a grandstand. Pursuant to the terms of the construction management contract, the plaintiff expressly waived and released claims as of the date of total performance of the contract. The contract specifically stated that the waiver of claims included without limitation those that might arise from negligence or breach of contract. This statement expressly contemplated claims that might arise in the future and specifically identified the two types of claims – breach of contract and negligence – advanced by the plaintiff in this case. Pursuant to the terms of a cost plus contract, the plaintiff expressly waived and released claims as of the date of the final certificate for payment. This contract also expressly contemplated claims that might arise in the future and specifically identified the two types of claims made by the plaintiff in this case. The court said that the intention of the parties, as expressed in these contractual provisions, was to waive all claims, including future claims that might arise from negligence or breach of contract, as of the date of a specific event – the date of total performance of the project under the construction management contract and the date of the final certificate for payment under the cost plus contract. This certainty and predictability in the allocation of risk between the parties was also supported by the context known to both parties when these contracts were formed. The contracts were standard form agreements prepared by the Canadian Construction Association and the Canadian Construction Documents Committee for use in the commercial construction industry. The court said that there is nothing unconscionable, contrary to public policy, or manifestly unjust about giving effect to a waiver clause in a freely negotiated contract that is widely used in the commercial construction industry, particularly in circumstances where the parties are sophisticated and capable of organizing their commercial affairs by allocating risks in a manner different from that which would otherwise be provided by law. The court was not convinced that there was any principled legal basis for disrupting the certain and predictable allocation of risk found in the standard form contracts.
1.10 Other Cases on the Nature or Effect of a Release
The cases set out below offer guidance with respect to particular points or issues relating to the nature or effect of a release.
Ayangma v. P.E.I. Teachers Federation, 2014 PECA 9, application for leave to appeal dismissed, Noël Ayangma v. Prince Edward Island Teachers’ Federation, 2014 CanLII 60081 (SCC)
The plaintiff, a teacher, alleged that the defendant Teachers’ Federation breached its duty of fair representation by failing to file two grievances on his behalf against his employer, the Eastern School District. The teacher had released the School District from, among other things, all causes of actions or grievances which existed at the time, or were discovered to exist, arising from all past, present or future dealings. The Teachers’ Federation was barred from filing a grievance because of the release and it was not in breach of its duty of fair representation.
Garneau v. Industrial Alliance Insurance and Financial Services Inc., 2015 ONCA 234 (CanLII) , application for leave to appeal dismissed, Denise Garneau v. Industrial Alliance Insurance and Financial Services Inc., 2015 CanLII 66249 (SCC)
After it had overpaid long-term disability benefits to the appellant, the respondent insurer reduced the appellant’s monthly benefit payments to reimburse itself for the overpayment. The appellant brought an action for a declaration that the respondent was not entitled to do so. The motion judge dismissed the action on a motion for summary judgment by the respondent. The Court of Appeal saw no error in the motion judge’s determination that a summary judgment motion was appropriate in this case. Among other things, the motion judge found that the respondent did not owe an ad hoc or situation specific fiduciary duty to the appellant. The Court of Appeal said that an ad hoc fiduciary duty will only be found where the alleged fiduciary has provided an express or implied undertaking to act in the best interests of the other party. The appellant relied on the terms of a release signed by the appellant in favour of the respondent’s predecessor. The Court of Appeal said that the release contained no wording which might suggest that it was to function as an undertaking by the insurer to act in the appellant’s best interests, nor did the circumstances in which the appellant provided the release give rise to an implied undertaking by the respondent.
AIG Insurance Co. of Canada v. Canjam Trading Ltd, 2015 ONSC (CanLII)
A release is the relinquishment in whole or in part of a right or claim. However, a release agreement does not necessarily amount to mutual rescission of an existing contract between the parties to the release. The fact that a release modifies existing contract terms does not mean that the contract is extinguished: parties to a contract are free to vary the terms of the contract through written agreement.
Ekum-Sekum Inc. v Bel-Air Excavating & Grading Ltd., 2017 ONSC 540 (CanLII)
The defendant hired the plaintiff to do paving work. Because of construction delays, some of the paving work could not be done until early December. The plaintiff told the defendant that the paving should not be done in cold weather and asked the defendant to sign a release before the next stage of paving was completed. The defendant signed the release. The court found that the release was an amendment to the terms of the original contract. The specifications regarding temperature requirements for paving were incorporated into the contract. When the defendant asked the plaintiff to pave in cold temperatures outside of specifications, the defendant required the plaintiff to work outside the terms of the contract. The original contract contemplated paving in accordance with specifications, and the release contemplated paving outside of specifications.
Kawartha Capital Corp. v. 1723766 Ontario Limited, 2020 ONCA 763 (CanLII)
The motion judge dismissed a counterclaim where the counterclaim raised matters covered by a release provided for in minutes of settlement. The appellants argued that the motion judge should have allowed the same matters to proceed to trial to the extent they were raised to support a defence of equitable set-off. The Court of Appeal disagreed with this argument. The release prohibited the appellants from pursuing claims arising from a broad spectrum of matters: it released the underlying basis of those claims, no matter the form (equitable set-off or damages in a counterclaim) in which they were asserted.
Sluyter Capital Investments Inc. v. 1902408 Ontario Limited, 2021 ONSC 5549 (CanLII)
The court granted a motion for summary judgment on a promissory note. By way of a mutual release attached to the note, the parties had released each other from any other claims each might have in respect of certain matters, save and except for the promisors’ obligations pursuant to the promissory note. In addressing arguments about a collateral agreement between the parties, the court observed that the promissory note did not contain a whole agreement clause. The court went on to say, though, that the mutual release attached to the promissory note had the same effect as an entire agreement clause. It prevented any of the parties from seeking to enforce any agreement except for the promissory note.
R. v. Booker, 2021 ONCJ 625 (CanLII)
These reasons for sentence followed the conviction of Barbara Booker on a charge of fraud in respect of cheques that were drawn on the accounts of the law firm at which she was secretary, law clerk and bookkeeper. The court addressed mitigating circumstances in the determination of a proportionate sentence and, in this context, it noted that Ms. Booker had settled a civil action brought against her by the principal of the law firm and LawPro and she had received a release from the plaintiffs. The release stated that the settlement in no way should be deemed as an admission of any wrongdoing by Ms. Booker. The court said this meant there was no remorse or acceptance of responsibility on the part of Ms. Booker for the fraudulent conduct.
Stewart v. Collins, 2022 ABQB 258 (CanLII)
After George Stewart died in an accident at the side of a road, his widow and family brought an action under the Fatal Accidents Act against the driver and owner of the truck that struck him. Stewart’s employer, Westana, continued paying his salary for several months after the accident and thereafter agreed to continue a stream of payments to his widow in lieu of workplace insurance. A trial of an issue was held to determine whether the defendants were entitled to deduct any of the payments made by Westana from the dependency claim. In this context, the court addressed whether the payments made to the widow were in the nature of a charitable gift to her, particularly in view of the fact that she signed a release in favour of Westana. The court said that the mere presence of a release does not necessarily nullify or override the gratuitous nature of voluntary giving. A release protects a charitable giver from their gift being construed as an avowal of liability for the loss itself, or assumption of obligation for further payments. However, a release neither alters the fundamental character of the charitable gift, nor operates to offset the liability of wrongdoers responsible for the loss that motivated the giving.
1.10.1 A Release as Consideration Provided by a Party to an Agreement
A valid release, unless given under seal, requires consideration. The requirement of consideration for a release is discussed below in Chapter 2: Release Formation and Drafting, section 2.2.2, Consideration. The issue addressed in this section is a different one, namely, whether a release can be the consideration provided by a party to an agreement.
It is worthy of note here that forbearance to sue has been accepted as consideration for a promise. In Cities Service Oil Co. v. Rubel, 1930 CanLII 441 (ON CA), the Ontario Court of Appeal said it is well-settled that, as set out in Chitty on Contracts, 18th Edition, page 25: “an agreement to forbear either absolutely or for a certain time, or for a reasonable time, to institute or prosecute legal or equitable proceedings to enforce a legal or equitable demand, is a sufficient consideration for the promise of [a] debtor, or of a third person, to pay the debt or do any other act”.
Walters v. Walters, 1946 CanLII 208 (SK CA)
The court said it was clear that there was consideration for a transfer of land by the plaintiff where, among other things, the plaintiff was relieved from what he considered to be a doubtful claim and also from any claim which might arise in the future and the possibility of litigation in regard to it.
Olafson v. Twilight Cariboo Lodge Ltd., 1966 CanLII 626 (BC CA)
The. appellant company argued that a mortgage to the respondents was given without consideration. The trial judge found consideration for the mortgage in the obligation of the respondents to release and discharge the company’s obligations owing to them by way of shareholders’ loans. But Lord, J.A. said that the evidence was clear that these obligations were not released or discharged. The mortgage could not be said to have been in consideration of a release and discharge which was not given. There was no consideration, express or implied, for the mortgage.
Laventure (Re), 1985 CanLII 1459 (AB QB)
A trustee in bankruptcy sought a declaration that a transfer made by the bankrupt transferring his interest in his home property to his then wife was void as against the trustee. The court considered statutory provisions including section 69 of the Bankruptcy Act, according to which any settlement of property, if the settlor became bankrupt within one year of the settlement, was void against the trustee, subject to an exception for any settlement made in favour of a purchaser in good faith and for valuable consideration. The court said that, in order for a person to be a “purchaser” for valuable consideration, it was not necessary that either money or physical property should be given; the release of a right, or the compromise of a claim was sufficient to constitute a person a “purchaser”.
D. Fogell Associates Ltd. v. Esprit de Corp (1980) Ltd., 1997 CanLII 3027 (BC SC)
In the rescission of an executory contract the consideration for each party’s promise to release the other often occurs when each party gives up their own rights under the contract. However, it is essential that the evidence demonstrate that both parties willingly gave up their rights, otherwise it is a unilateral termination of the contract (citing Collin v. Duke of Westminster, [1985] Q.B. 581).
Menon v. Prestige Toys Ltd., 2007 CanLII 25661 (ON SC) , appeal on other grounds dismissed, 2008 ONCA 424 (CanLII)
The defendants argued that there was no consideration for a settlement agreement, but the consideration was that the plaintiff would grant a full and final release upon payment of a specified amount by the defendants.
Mikkelsen v Truman Development Corporation, 2016 ABQB 23 (CanLII) , varied on appeal, 2017 ABCA 99 (CanLII) , application for leave to appeal dismissed, Wayne Mikkelsen, et al. v. Truman Development Corporation, 2017 CanLII 76782 (SCC)
The plaintiffs challenged the validity of a joint venture agreement and argued further that, even if it could be construed as enforceable, the joint venture agreement was terminated. The defendant argued that the termination agreement was not enforceable because there was an absence of consideration. The trial judge found that the joint venture agreement was not a valid contract so there was no need for a termination agreement. The trial judge also said that the parties’ mutual release of obligations under the joint venture agreement could be valid consideration for the termination agreement. On appeal, the Court of Appeal disagreed with the findings of the trial judge with respect to the joint venture agreement, but found that the termination agreement was enforceable, stating that it was supported by good consideration, because each party discharged the other from the requirement to perform its obligations under the joint venture agreement.
Grenon v. The Queen, 2021 TCC 30 (CanLII)
A person may be a “purchaser for valuable consideration” without advancing money if there is a corresponding “release of a right or the compromise of a claim”, as was observed in Re Laventure, above, but there needs to be some evidence of such a compromise or other arrangement.
Stewart v. Collins, 2022 ABQB 258 (CanLII)
After George Stewart died in an accident at the side of a road, his widow and family brought an action under the Fatal Accidents Act against the driver and owner of the truck that struck him. Stewart’s employer, Westana, continued paying his salary for several months after the accident and thereafter agreed to continue a stream of payments to his widow in lieu of workplace insurance. The court said that consideration flowed to Westana under this agreement. Both parties agreed that Westana could have faced litigation for either their failure to secure Worker’s Compensation Board coverage for Stewart, or representations that the Stewarts relied upon in this regard. At a minimum, the release covered off that liability. It therefore constituted consideration expressly given in exchange for the payments at issue, whether the risk of such liability was real or not. The agreement also allowed Westana to effectively ‘cap’ its liability in respect of George Stewart’s death, if brought into an action such as this one as a third party. While a more remote benefit, this too constituted a form of consideration.
1.10.2 Whether a Release Can Have the Effect of a Licence
Typically, one would not expect a release to be used when the intention of one party is to grant a licence to another. To the extent, though, that a release operates so as to discharge any claims relating to future conduct, the release may be seen to have “licensed” that future conduct. This notion that a release may have the effect of licensing future conduct is discussed in the decisions summarized below.
For decisions in which courts have considered more generally a release of future claims or conduct, see Chapter 6: Scope and Application of Releases, section 6.4.2, below.
Bancroft-Snell v. Visa Canada Corporation, 2018 ONSC 5166 (CanLII)
This was one of five class actions brought by a consortium of law firms in five Canadian provinces with respect to interchange fees paid by merchants in connection with the acceptance of Visa and MasterCard credit cards as payment for goods or services. On a motion for approval of settlement agreements, the Ontario court said that releases – for example, a release of a continuing nuisance or trespass – sometimes forgive or “license” continuing alleged wrongdoing. The court said that it saw the releases in this class proceeding “as appropriate for what [was] an excellent settlement” for the defendants Visa and MasterCard, who in effect were being “licensed” to carry on business as they had before.
Hello Baby Equipment Inc. v BofA Canada Bank, 2018 SKQB 276 (CanLII) , applications to quash appeals granted and applications for leave to appeal dismissed, Home Depot of Canada Inc. v Hello Baby Equipment Inc., 2020 SKCA 7 (CanLII) , application for leave to appeal dismissed, Home Depot of Canada Inc. v. Hello Baby Equipment Inc., et al., 2020 CanLII 81403 (SCC)
This was another of the five class actions referred to in the summary of the Bancroft-Snell decision, above. On a motion for approval of settlement agreements, the Saskatchewan court said that the settlements were not, as suggested by certain objectors, a licence to breach a statute. They were releases on behalf of releasors and affiliates, broadly defined. They would not bind new merchants or government actors such as the Commissioner of Competition.
Ayangma v. FLSB, 2018 PESC 43 (CanLII) , appeal allowed in part, Ayangma v FLSB & ELSB, 2019 PECA 22 (CanLII) , application for leave to appeal dismissed, Noël Ayangma v. French Language School Board, et al., 2020 CanLII 27679 (SCC)
A motion to strike out the plaintiff’s amended statement of claim on the ground that it disclosed no reasonable cause of action was allowed by the motions judge. Among other things, the motions judge found that a release signed by the plaintiff was not a law which could be relied upon by the plaintiff to ground a claim of discrimination contrary to section 15(1) of the Canadian Charter of Rights and Freedoms. The motions judge said that there were no ongoing obligations of the defendants pursuant to the release; the defendants’ only contractual obligation was to pay the plaintiff a sum of money. On appeal, Jenkins C.J.P.E.I. indicated that whether or not the release could ground a section 15(1) Charter claim was not the issue. The plaintiff’s claim was that the defendant School Boards were relying on the release as a licence to discriminate. The release could well be an “evidential factor” and there was no basis for striking any pleading about the release.
Chopak v. Patrick, 2020 ONSC 5431 (CanLII) , application for leave to appeal dismissed without prejudice to potential proceedings in the Court of Appeal, 2020 ONSC 6873 (CanLII)
The appellant in this case had made an earlier defamation claim against the respondent, which was settled. In that settlement, the respondent agreed to sign a mutual release and an apology and not make further defamatory remarks about the appellant. The minutes of settlement did not contain a confidentiality clause, as it was important to the appellant that he be able to inform people that the respondent had retracted a comment that was the subject of the defamation claim. The court said that, while the appellant asserted that he was entitled to comment on the outcome of the earlier case in order to rehabilitate his reputation, and that this was clearly contemplated by the parties when the settlement was reached and the release was signed, the settlement and release did not give the appellant a licence to defame the respondent.
1.10.3 A Release as Notice of a Claim
Of course, a release usually is relied on as a defence or answer to a claim. In the decision summarized below, though, the court considered whether the wording of a release supported the plaintiff’s argument that notice of a claim had been given in compliance with the Ontario Proceedings Against the Crown Act (since replaced by the Crown Liability and Proceedings Act, 2019, S.O. 2019, c. 7, Sch. 17).
Sidhu v. Her Majesty the Queen, 2012 ONSC 6993 (CanLII)
The issue on this motion was whether written notice of a claim had been given to the Crown in accordance with the Proceedings Against the Crown Act. The plaintiff relied on a release signed by him and delivered to the Crown which specifically left open claims other than a claim for costs of a criminal case that resulted in a mis-trial. This, it was said, signaled to the Crown that there might be litigation going beyond the claim for costs. The court said that the release did nothing more than provide a release for specific relief, namely, the costs of the criminal case. While the release left open the possibility that the plaintiff might maintain a claim of some sort against the Crown, it was entirely speculative as to what that claim might be. No particulars of any potential claim were specified. On the plaintiff’s best case, assuming that the requisite notice could be a combination of the release and other ways in which the plaintiff argued that the circumstances of the claim were identified, the Crown would be left to guess what possible liability it might have. The court held that the plaintiff had not complied with the Proceedings Against the Crown Act.
1.11 Issues Arising from Attempts to Secure a Release
The drive to achieve the certainty and finality associated with a release can be a very strong one and efforts to secure a release can sometimes lead to outcomes that may be seen as questionable. The potential for a questionable outcome is heightened by reason of the fact that releases are often sought in circumstances where a person asked to sign a release is in a vulnerable position. For example, a release may be sought from a person who has suffered injuries and trauma as a result of an automobile accident, or from a person who has just received notice of termination of his or her employment.
Unfortunate circumstances surrounding the signing of a release may give rise to a challenge to the enforceability of the release – cases dealing with the grounds for doing so, such as unconscionability and duress, are set out in Chapter 9, below. Aside from a challenge to the enforceability of a release itself, issues may arise in particular circumstances about the propriety of efforts to secure the release, or even about the authority for a demand or requirement that a release be given. Decisions in which such issues have been considered are summarized under the headings that follow.
See Chapter 11: Releases in Particular Situations, section 11.4.3, Release by Class Members or Potential Class Members for case law on the propriety of efforts to secure releases directly from class members or potential class members by an opposing party in class proceedings.
1.11.1 Release Sought by Employer Upon Dismissal of Employee
Courts have recognized that the circumstances surrounding termination of employment may place an employee in a vulnerable position. In Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 SCR 701, at paragraphs 91-95, Iacobucci J. referred to the power imbalance that informs virtually all facets of the employment relationship and he said that the point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence most in need of protection. It is perhaps not surprising that issues have arisen about the propriety of attempts by an employer to seek a release from a former employee in such circumstances. Still, though, in cases such as McNevan and Cornelson, below, appellate courts have indicated that, as a general proposition, it is a prudent course of action for an employer to seek a release in exchange for a severance package.
A more particular issue arises when the employer seeks a general release of claims in exchange for offering to pay no more than the former employee’s statutory entitlement. Indeed, a common thread through many decisions addressing the propriety of attempts to secure a release is concern about a demand that a general release be provided as a pre-condition before payment will be made of an amount that the person asked to sign the release is, in law, entitled to receive. This concern can also be seen, for example, in some of the decisions that deal with an attempt by an executor or estate trustee to secure a release in exchange for payment to a beneficiary of an amount to which the beneficiary is entitled: see Release of Executor or Trustee, section 1.11.2, below.
McIntosh v. Saskatchewan Water Corp., 1988 CanLII 4998 (SK QB)
The plaintiff was released without notice from his employment with the defendant and he refused the defendant’s offer of severance pay. The court found that the defendant’s offer was reasonable compensation and it granted judgment to the plaintiff for that amount. The plaintiff argued that he was entitled to interest on his damages because the defendant refused to advance the offered amount of severance pay unless the plaintiff signed a release. The court said that the defendant was completely unreasonable in that approach. It was nothing less than an attempt to coerce the plaintiff, who was without income, into accepting a settlement with which he was not in agreement. The court concluded that it was fitting that the defendant pay interest in accordance with the Prejudgment Interest Act.
Stolle v. Daishinpan (Canada) Inc., 1998 CanLII 2473 (BC SC)
In a termination of employment case, the court found that the defendant withheld the plaintiff’s statutory severance payment in order to obtain the execution by the plaintiff of a release protecting the defendant from any action by the plaintiff pursuant to the Employment Standards Act and the Human Rights Act. The court said that this conduct was in the circumstances inappropriate amounting to “high handed conduct.” The court added it was not making a finding that it is improper to obtain a release upon termination of an employee, but, in this case, the facts revealed a situation that was not “usual.”
Bondi v. Geographics Marketing Canada Inc., 1999 CanLII 5250 (BC SC)
In this case, the court said that it could not make a finding, as in Stolle (above), that the withholding of a statutory severance payment was for a collateral purpose. While in Stolle, the defendant withheld the payment in order to obtain the execution of a release of any further actions, there was nothing before the court to suggest that such a collateral motive was present in this case.
Chabot v. William Roper Hull Child and Family Services, 2003 ABQB 49 (CanLII)
The court said that the plaintiff in this termination of employment case was presented with the ultimatum of accepting the defendant’s unilateral assessment of reasonable notice through the execution of a release in order to obtain that to which she was entitled, payment in lieu of notice. When the plaintiff refused to execute the release, the defendant responded by paying a fraction of what it had assessed to be appropriate compensation in lieu of notice. The court saw similarity between this conduct and that condemned in Stolle (above). The court found that the plaintiff was entitled to an extension of the notice period by reason of the defendant’s overall insensitive and high-handed approach, including, among other things, its “stand and deliver” attitude in offering payment in lieu of notice conditional on the execution of a release.
Asselstine v. The Manufacturers Life Insurance Co., 2003 BCSC 1119 (CanLII)
Following the termination of her employment with the defendant university, the plaintiff’s application for long term disability benefits under a plan in respect of which she had paid premiums while she was an employee of the university was denied. The court found that the plaintiff had established eligibility for disability benefits, that the defendants had failed to deal with her in good faith, and further, that this was a situation where both punitive and aggravated damages should lie. Among other things, in examining the termination process, the court found that the plaintiff was dealt with unfairly. The university’s agreement to a salary continuance was subject to the plaintiff signing a release. The release was never explained to the plaintiff and, in fact, the plaintiff’s university representative acknowledged that she did not understand the release herself, despite the fact that it was a standard release signed every time there was a termination of employment without cause. The court said that the near-imposition of an agreement on a vulnerable, inadequately represented party gave rise to grave concern.
Yanez v. Canac Kitchens, 2004 CanLII 48176 (ON SC)
In this termination of employment case, it was suggested that the plaintiff should receive “Wallace damages” because the defendant offered less than the Employment Standards Act, 2000 minimums and asked for a release. The court found that the defendant did not intentionally set out to “short-change” the plaintiff. A mistake was made and once the mistake was discovered, the employer immediately rectified the situation by paying the additional amounts owing. The court said that, while it might fault the defendant for initially offering an amount which it thought was equal to the statutory minimum plus four days, and for asking for a release at the same time, the court specifically found that Wallace damages were “not at all merited”.
Wilson v. Goodyear Canada Inc., 2007 BCCA 136 (CanLII)
In this case, the plaintiff claimed enhanced damages on two grounds. One ground was the conduct of the defendant in requiring the plaintiff to sign a release, which would have involved the plaintiff accepting the defendant’s view of pension rights (ultimately held to be erroneous) before the defendant would pay to the plaintiff statutory severance or salary continuance in the amount considered to be appropriate by the defendant. The Court of Appeal said that, while there was some measure of justification for the criticism of the defendant’s conduct, the uncertainty surrounding the pension issue overshadowed other termination of employment issues and it would be unjust to characterize the actions of the defendant as being high-handed or in bad faith.
Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 (CanLII)
The appellants terminated the employment of the respondent and offered the respondent a settlement package, provided that he signed a release. The respondent accepted the offer and signed the release, but later he sued the appellants, claiming that the settlement and release were unconscionable. The Court of Appeal held that the respondent could not “bring himself within” any of the four elements of unconscionability. The appellants’ offer was not grossly unfair and neither was the linking of the settlement offer to the release. It was fair for the appellants, in the context of a reasonable settlement offer, to propose a release. It was then up to the respondent to accept, reject or negotiate any component of the offer, including the release.
McNevan v. AmeriCredit Corp., 2008 ONCA 846 (CanLII)
The defendant’s request for the plaintiff to sign a release before receiving a severance package was not regarded by the Court of Appeal as high-handed or in bad faith. Rather, an offer of severance conditional on the execution of a release is not only standard, but wise corporate practice.
Rubin v. Home Depot Canada Inc., 2012 ONSC 3053 (CanLII)
In this case, the plaintiff was given a termination letter on July 28, 2011 in which he was “offered” twenty-eight weeks pay in lieu of notice. The Employment Standards Act required that he be paid twenty-seven and three-quarter weeks pay in lieu of notice. The letter said that the payment would be made to the plaintiff by a lump sum (less statutory deductions) provided he signed a release by August 4, 2011. If he delayed signing, the receipt of the funds by the plaintiff would be, similarly, delayed. If he did not sign by August 4, 2011, the implication was that he would not be paid at all. The court said this was, at best, misleading. The payments required by the Employment Standards Act would have to be paid regardless of whether any release was ever signed.
Cornelson v Alliance Pipeline Ltd, 2014 ABQB 436 (CanLII) , appeal on other grounds dismissed, 2017 ABCA 13 (CanLII)
The plaintiff’s employment with the defendant was terminated by letter. Attached to the letter was a draft release, as well as the financial terms and conditions of a severance package. The plaintiff did not accept the proposed terms and conditions of termination, nor did he sign a release. The plaintiff argued that the defendant fundamentally breached and repudiated his employment agreement when, among other things, it imposed unacceptable and unauthorized conditions for any payment offered to be made upon termination, including a release. The court found nothing untoward in the defendant’s requirement that the plaintiff provide a release. Requiring a release on a termination payout was a prudent step for the defendant to take, particularly as it could reasonably anticipate that the plaintiff’s Long Term Incentive Program entitlement might be disputed. And, in fact, the defendant ultimately paid the plaintiff significant sums in the absence of a release.
Wyllie v Larche, 2015 ONSC 4747 (CanLII)
The court said that the defendant in this wrongful dismissal case sought to negotiate a release of the plaintiff’s claims against it by offering the compensation to which the Canada Labour Code entitled him. The plaintiff was not represented by a lawyer who could advise him of the legal implications of signing the release that the defendant demanded. The court said that, had the plaintiff signed the release in these circumstances, it likely would have been unenforceable, because of the inequality of the parties’ bargaining positions.
Jover v Creditloans Canada Financing Inc., 2017 BCSC 2341 (CanLII)
The plaintiff’s employment by the defendant was terminated on a without cause basis. The plaintiff’s employment contract provided that he was not entitled to any compensation on termination unless he signed a release of claims against the defendant. The plaintiff refused to sign the defendant’s release, because he disagreed with a number of its terms. The plaintiff argued that, by purporting to make amounts to which he was entitled under the Employment Standards Act conditional on signing a release, and imposing what he said were “new terms”, the defendant breached the contract and wrongfully dismissed him. The court found that the defendant did not breach the contract and did not wrongfully dismiss the plaintiff. The court went on to consider an argument based on Bhasin v. Hrynew, 2014 SCC 71, that the defendant breached its duty to act in good faith. The court said that the evidence did not support a finding of dishonest performance. The defendant did not “enforce the release on” the plaintiff. While the defendant could have acted more conscientiously in ensuring that the covering letter and release were consistent with the contract, and by obtaining legal advice before telling the plaintiff that receipt of his contractual entitlements was conditional on his signing the release, the court found that this did not rise to the level of arbitrary, capricious or dishonest conduct.
Dawe v. Equitable Life Insurance Company, 2018 ONSC 3130 (CanLII) , appeal allowed on other grounds, Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512 (CanLII) , leave to appeal denied, Equitable Life Insurance Company of Canada v. Michael Dawe, 2020 CanLII 25174 (SCC)
The motion judge indicated that, while obtaining a release is said to be a “wise corporate practice” (see McNevan, above), if the compensation proposed by an employer to an employee whose employment has been terminated, and the release sought by the employer, result in a contravention of the Employment Standards Act, requiring a release is not a proper corporate practice. The motion judge held that, in this case, the requirement of a release went too far: the employer demanded that the employee give up his common law rights in order to receive his statutory rights and the employer also did not meet the minimum requirements under the ESA. On appeal, the Court of Appeal said that the motion judge provided very brief reasons for reaching determinations that were largely conclusory. Assessing the correctness of both determinations would require reading in or assuming certain findings that were not explicitly made by the motion judge in his reasons. Given the Court of Appeal’s conclusion on the notice issue, it was unnecessary to engage in such an analysis to dispose of the appeal. Accordingly, the Court of Appeal said its reasons should not be taken as an endorsement of the motion judge’s conclusions regarding whether the release requirement contravened the ESA.
Caponero v Alberta Human Rights Commission (Office of the Chief of the Commission and Tribunals) and Kaizen Auto Group Ltd., 2024 ABKB 2 (CanLII)
A Human Rights Tribunal decided that a release signed by the applicant at the time of termination of his employment was valid, that the applicant had settled his human rights claim against his former employer and therefore that there were no grounds upon which the applicant’s human rights claim could proceed. An application for judicial review of the decision of the Tribunal was dismissed. On the application for judicial review, the applicant argued, among other things, that the release he signed included both the statutory pay he was entitled to pursuant to the Employment Standards Code and the additional severance pay he would receive if he signed the release. The applicant argued that this was contrary to the Employment Standards Code, as he could not be required to sign a release to receive the amounts prescribed in the Employment Standards Code. The court said that the decision of the Tribunal was based on clear and uncontroverted documentary evidence that the applicant was to be provided with his statutory termination pay regardless of whether he signed the release or not. Given the clear intention of the applicant’s employer to pay him his statutory severance pay pursuant to the Employment Standards Code, there was no evidential or factual basis underpinning the applicant’s argument that he was required to sign the release to obtain his statutory severance pay.
1.11.2 Release of Executor or Trustee
Two of the decisions summarized below refer to early English cases on the release of an executor or trustee. In Bronson v. Hewitt, below, Goepel J. of the British Columbia Supreme Court said that the “trustee’s entitlement to demand a release did not arise for the first time” in the action before him. He went on to say that the first reported case dated back to 1845, referring to Chadwick v. Heatley (1845) S.C. 2 Col. 137, 63 E.R. 671. In Chadwick, Justice Goepel said, the trustee sought to distribute trust funds to surviving beneficiaries and offered a general release as a condition to the payment; the plaintiff refused to sign the release and the court concluded that the trustee did not have the right to insist on having the release executed.
Justice Goepel also referred to King v. Mullins (1852), 61 E.R. 469, where, he said, the court held that, although it was usual practice to give a release in order to discharge a trustee, a trustee paying in accordance with the letter of the trust has no right to require a release. Note, though, that in Weisbrod v. Alberta, below, the Alberta Supreme Court Appellate Division indicated that, in King v. Mullins, the Vice-Chancellor was discussing “the different position of trustee and executor” when the Vice-Chancellor said it was usual to give a release to an executor, but a trustee paying in accordance with the letter of the trust would have no right to a release.
Modern Canadian decisions recognize that a request for releases from beneficiaries is a legitimate step for an executor seeking to avoid the cost and delay of a passing of accounts. Nevertheless, a concern surfaces in the Canadian decisions about estate assets being “held hostage” when beneficiaries are led to believe that they will not receive amounts to which they are entitled until they sign releases.
On this subject, see the article by Arieh Bloom, Release Me: An Analysis of the Law Surrounding the Use of Releases in the Estate and Trust Context, (2014), 34 Estate Trust and Pensions Journal 22 and see Ontario — Estate Administration Selected Legal Literature (Contributing Editor: Megan Connolly, Editor: Anne E.P. Armstrong) SLL-20 — Probate Essentials 2012: Winding Up in an Estate Administration by R. Craig Ross, Pallett Valo LLP I. — Releases, Holdbacks and Passing.
Weisbrod v. Alberta (Public Trustee), 1967 CanLII 757 (AB CA) , appeal quashed for lack of jurisdiction, Public Trustee v. Weisbrod and Weisbrod, 1967 CanLII 44 (SCC)
The Alberta Supreme Court, Appellate Division said that, under ecclesiastical law, an executor could never be discharged from office. Both executors and administrators, when they had performed their duties and distributed the estate to the persons entitled thereto, and had their accounts audited and passed, were entitled to require releases from the beneficiaries. The court referred to King v. Mullins (1852) 1 Drew 308, at 311, 61 ER 469, where, in discussing the different position of trustee and executor, the Vice-Chancellor said: “It is true that in the common case of executors, when the executorship is being wound up, it is the practice to give executors a release. An executor has a right to be clearly discharged, and not be … exposed to further litigation; therefore, he fairly says, unless you give me a discharge on the face of it protecting me, I cannot hand over the fund; and therefore it is usual to give a release; but such a claim on the part of a trustee would in strictness be improper, if he is paying in accordance with the letter of the trust. In such a case he would have no right to a release.” The Alberta court added that, in this passage from King v. Mullins, the Vice-Chancellor was dealing with a release under seal demanded of the beneficiaries.
Brighter v. Brighter Estate [1998] O.J. No. 3144 (Ont. Ct. J. (Gen. Div.))
An executor’s duty is to carry out the instructions contained in the will. The executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee. It is quite proper for an executor (or trustee, to use the current expression) to accompany payment with a release which the beneficiary is requested to execute. But it is quite another matter for the trustee to require execution of the release before making payment; that is manifestly improper.
Murphy v. Hoyt, 2004 NBCA 19 (CanLII)
All personal representatives have a duty to keep accurate accounts and to be ready to render such accounts when called on to do so. An application to pass accounts can arise in one of two ways. First, a person with a beneficial interest in the estate may seek an accounting from the personal representative. However, there is no absolute right to compel an accounting. Second, the personal representative may apply to have his or her accounts passed, but there is no obligation to do so. As a practical matter, a personal representative will pursue such an application to avoid the possibility of a beneficiary suing the personal representative over the administration of the estate. The alternative is to obtain a release from each of the persons with a beneficial interest in the estate. This is critical if a final distribution of the estate is contemplated.
Bedont Estate [2004] O.J. No. 4267, 9 E.T.R. (3d) 59 (Sup. Ct. J.)
A release is standard and accepted practice on an interim or final distribution, in lieu of a passing of accounts, and failure to provide such is a valid reason for payment to be withheld.
Bamlett et al v. Radium Caribou Ranches Corporation et al, 2007 BCSC 387 (CanLII)
The plaintiffs (referred to by the court as “Bamlett”) applied to replace the trustee of a joint venture. The joint venture held funds that should be distributed to the beneficiaries. The plaintiffs were told that the funds payable to them were available for distribution upon execution of certain documents, including mutual releases. Bamlett refused to provide a release and demanded immediate payment. The court said that the arguments made before it had previously been made when the matter came on before Mr. Justice Cullen. It was clear that Mr. Justice Cullen felt an accounting was a necessary step to resolution and he also appeared to recognize that the defendants were not entitled to compel Bamlett to execute a release as a precondition to distribution of the funds. The court said it was not fair that Bamlett should either pay for the accounting himself or risk continuing annual trust fees of $30,000.00 because he refused to provide a release that “he was not in law compelled to execute”.
Rooney Estate v. Stewart Estate [2007] O.J. No. 3944 (Sup. Ct. J.)
The lawyer for an estate wrote to a beneficiary indicating that, upon receiving her executed release, he would forward a payment to her. The court said that the manner of sending the release first and the cheque later suggested the “beneficiary was held hostage for the release”. There was every implication that the beneficiary’s entitlement was conditional upon forwarding the release. This practice was criticized in Brighter, above. One of the obligations of the lawyer was to ensure that all beneficiaries had competent, independent advice in reviewing the accounts, but there was no evidence that he advised the beneficiary to obtain independent legal advice. The court did not accept the lawyer’s argument that the release “intervene[d] to prevent a passing of accounts”. In the circumstances of this case, the release was not a fully informed one and it could not be enforced against the beneficiary.
Menard Estate, 2010 ABQB 208 (CanLII)
The court said that, in the absence of releases from all beneficiaries, the executrix in this case was obliged to bring her accounts to court.
Bronson v. Hewitt, 2010 BCSC 169 (CanLII) , appeal allowed on other grounds, 2013 BCCA 367 (CanLII)
In spite of judicial criticism, a review of B.C. practice manuals and CLE publications suggests that it is a common practice for a trustee to seek a release prior to distribution. The alternative to obtaining a release is for the trustee to pass the accounts. The passing of accounts will release a trustee from future obligations. For a trustee to request a release of future claims is not in itself objectionable. In this case, however, the proffered document sought not only a release of future claims but also that the beneficiaries indemnify and hold harmless the trustee from claims. A request for an indemnity and hold harmless agreement went well beyond the type of release referenced in the B.C. practice manuals. In addition, a letter to the beneficiaries suggested that they must sign the release before any cheque would be forthcoming. While a request for a release and indemnity in that form may be objectionable, it did not in the first instance create any loss or damage. If all of the beneficiaries had been prepared to sign the release, matters would have been resolved. They were not all prepared to do so. That signing the release was a condition of being paid became clear when only those who signed the release were paid. Under the terms of the trust, distributions were to be made equally. That did not happen. By paying certain beneficiaries and not others, the trustee breached the terms of the trust. As soon as the trustee paid certain beneficiaries, he was legally obliged to pay the others, regardless of whether or not they were prepared to sign the release. This breach did not arise in good faith. It arose because the trustee put his self-interests in obtaining a release and indemnity before the interests of the beneficiaries. He was not entitled to be relieved from the consequences of that action
Dalewood Economy Limited v. Black Estate, 2010 ONCA 824 (CanLII)
The respondents were bare trustees of interests in certain lands of which the appellant Dalewood was the beneficial owner. Dalewood had instructed the respondents to convey the lands to the appellant Meadowvale. Due to concerns about potential tax liability, the respondents refused to convey the lands unless the appellants first provided a release. There was no issue that Dalewood, as the beneficiary of the trust, was bound by the trust agreement, which contained terms releasing and indemnifying the trustees, but the appellants also sought a release from Meadowvale. The application judge ordered that the appellants provide the respondents with an executed release as an ancillary part of a broader order removing the respondents as trustees. On appeal, the appellants did not contest the part of the order requiring Meadowvale to provide a release; they argued that, as the respondents’ draft release was broader than the terms of the trust agreement, they should not be required to provide it. The respondents agreed that, generally, trustees are not entitled to demand a release as a precondition to the execution of their trust duties, but argued that in this case the trust agreement entitled the trustees to a release, and the release drafted by the respondents simply implemented the intention of the trust agreement. The Court of Appeal disagreed with this argument. The requested release was broader in scope than the release provided by the trust agreement. The Court of Appeal ordered that both appellants execute and deliver to the respondents a release and indemnity in the terms set out in the trust agreement.
Re Estate of Ruth Smith; Smith v. Rotstein, 2010 ONSC 2117 (CanLII) , appeal on other grounds dismissed, Smith Estate v. Rotstein, 2011 ONCA 491 (CanLII) , application for leave to appeal dismissed, Nancy-Gay Rotstein et al. v. Lawrence Jerome Berk Smith, Executor and Trustee of the Estate of Ruth Dorothea Smith, 2012 CanLII 8367 (SCC)
In the context of a dispute regarding two items of family jewelry, one of the parties to this litigation, Nancy-Gay Rotstein, argued that it was improper for the executor of her father’s estate to insist on a release from her before delivering the two pieces of jewellery. Rotstein submitted that, while it is common practice for an executor to seek a release before distributing a share of the estate, an executor cannot hold a portion of the estate’s assets “hostage in order to extort from the beneficiary” a release. The court said that this submission ignored what was transpiring at the time. Rotstein’s mother was taking the position that the jewellery belonged to her, not to the father’s estate, but to promote a better relationship with her daughter, she was prepared to part with the two pieces. The court saw the request for a release in these circumstances as a very prudent thing to do.
Denofrio Estate (Re), 2012 ONSC 3408 (CanLII) , appeal and cross-appeal dismissed, Denofrio v. Denofrio, 2013 ONSC 2106 (CanLII)
In this case, releases were requested by estate trustees in connection with outstanding matrimonial litigation brought by the wife of the testator, threatened litigation by certain beneficiaries of the estate and the possibility of the testator’s wife wanting to take her share under the will as opposed to taking her share under the Family Law Act. The court said that it understood why the releases were requested based on the outstanding matrimonial litigation and the threatened litigation and that the estate trustees were justified in requesting releases. The releases were proper, although they were possibly improperly labelled as full and final releases. On appeal, the Divisional Court said that the application judge was justified in finding that the demand for releases was reasonable, given the fact that the matrimonial litigation had not been settled at the time of the hearing of the application. The Divisional Court also said that, in view of the size of the claim by the testator’s wife, should she continue with that litigation, it was reasonable for the estate trustees to seek a release of the claim. The appellate court added that the application judge found that the estate trustees were really seeking partial releases because of their concerns about litigation.
O’Connor v. Jonasson, 2012 CarswellOnt 13137
Prior to making an interim distribution from an estate, the executors required a release from a beneficiary, including an approval of accounts. The beneficiary applied for an order directing that the interim distribution be made. The applicant relied on the proposition that an executor cannot insist on a release prior to making a distribution (Brighter, above). The executors suggested that an executor may in certain circumstances insist upon a release, and in the absence of a release, apply to pass accounts (Denofrio, above). Having considered circumstances including alleged threats of litigation, the value of the estate and the expenses that remained to be paid, the court concluded that there was no reasonable justification for the originally contemplated distribution not being made. The court granted the application and directed the executors to make the distribution.
Frizzell v Bonneau, 2012 SKQB 358 (CanLII)
This case arose from a “prolonged dispute” between the executrix of an estate and the beneficiaries during which the beneficiaries filed a complaint with the Law Society of Saskatchewan about the conduct of the executrix. The court said that the executrix used her position in an attempt to advance her personal interests when she demanded that the beneficiaries withdraw the Law Society complaint, release her from that complaint and advise the Law Society that they were satisfied with how the executrix had carried out her duties, before she would transfer estate lands to two of the beneficiaries. The executrix also demanded that each of the beneficiaries execute approvals of her accounts and releases. She took the position that she was entitled to ask for these releases because as executrix she would need a final release from the beneficiaries. The court said that this was incorrect and a final release from the beneficiaries was not required. The Queen’s Bench Rules required a release only if the executrix wished to be discharged without passing her accounts. She had the option of passing her accounts. Further, the appropriate time to request a release would have been when final accounts were provided to the beneficiaries and not as a condition of an interim distribution. Finally, even if the executrix could have justified a demand for a release in relation to potential claims against her arising from the administration of the estate, that was not all she demanded. She demanded that the Law Society complaint be withdrawn. She also demanded that the beneficiaries tell the Law Society that they were satisfied with her performance as executrix, which she was well aware was not true.
Estate of Catherine Davediuk, 2013 MBQB 307 (CanLII)
This decision addressed an issue regarding responsibility for the costs of passing the accounts of an estate as well as the cost of renewing an administration bond. Eight of the ten beneficiaries of the estate had signed releases but two were unwilling to do so or to waive the requirement for passing the accounts. The two beneficiaries argued that a passing of accounts would have been necessary anyway and that a release in an estate matter is not a formal requirement. The Master did not accept this argument. She said it is well established that the consent and release of all beneficiaries can alleviate the estate from the further expense of a formal passing of accounts, which can be a costly exercise.
Sheard Estate, 2013 ONSC 7729 (CanLII)
Executors must have their administration approved and be discharged. There are two ways of doing so. First, they may apply for a passing of accounts. Alternatively, they can avoid the cost and delay of a passing, and instead ask the beneficiaries to approve their administration and provide for their informal discharge directly. Releases have been commonly used to do this for decades in Ontario. It is common and quite proper, to accompany a payment to a beneficiary with a release, which the beneficiary is asked to execute and return. This was not a case of “holding the bequests to ransom”. Nor was it a case like Rooney Estate (above) where the estate lawyer demanded a release from the beneficiary before delivering his accounts, and also implied payment to the beneficiary was conditional upon delivery of a release. There, the court noted the failure to suggest independent legal advice was a vitiating factor in terms of the release. On the facts of this case, the court said that, although it might have been better for the estate trustees’ lawyer to suggest independent legal advice to the beneficiaries before signing the releases, this was not fatal to the enforceability of the releases.
Parson v. McGovern, 2014 ONSC 1785 (CanLII)
An estate trustee is in a fiduciary position and must act in good faith and fairly to all beneficiaries. An estate trustee’s request for a release and a waiver of passing of accounts from all beneficiaries before making a final distribution of an estate is a reasonable step, provided the beneficiaries are advised that, if any beneficiary does not agree, the estate trustees will ask a court to review and approve their accounts and that the beneficiaries will have an opportunity to have their objections decided by a judge. In the Brighter case, the court’s decision to override the trustee’s discretion and to order an interim distribution could have been justified on the ground that the trustee had acted with mala fides, because she was attempting to extort a release from one beneficiary, while distributing the shares to two other beneficiaries. This conduct would have breached a trustee’s duty of fairness to the beneficiaries.
McEwan v. McEwan, 2014 BCSC 1325 (CanLII)
In its supplemental reasons for judgment on costs of an action under the Wills Variation Act (by then repealed), the court addressed an offer to settle relied on by the defendants. The offer said that the defendants would pay settlement funds to the plaintiff at the time of distribution of the estate of the testator and the plaintiff would execute a release acknowledging that the settlement funds were received in full satisfaction of claims and irrevocably instruct counsel to sign and enter a consent dismissal order. The court found that, at the time the offer to settle was open for acceptance, it was not one that the plaintiff ought reasonably to have accepted. There was no certainty concerning when the settlement funds would be paid. The plaintiff was being asked to sign a full release of the defendants (both in their personal capacities and as executors of the estate) and to “irrevocably instruct” his lawyer regarding the consent dismissal order. However, neither was tied in any way to the payment of the settlement funds. Based on the terms offered in the offer to settle, the plaintiff could find himself powerless to force the defendants to wind up the estate and pay the settlement funds in a timely way.
Eve v Brook, 2016 ONSC 1496 (CanLII)
An estate trustee proposed to make an interim distribution to beneficiaries, but requested that a release be executed before the distribution was made. The plaintiff, one of the beneficiaries, alleged that the estate trustee refused to make the proposed interim distribution unless the plaintiff first signed “overly broad releases and indemnities”. The court said there is no entitlement for a beneficiary to receive an interim distribution. An estate trustee is entitled to request a release and waiver before making a distribution, provided that the beneficiaries are advised. If the beneficiary does not agree, the estate trustee will be required to formally pass their accounts and the beneficiary will have an opportunity to make objections. The lawyer for the estate trustee in this case was explicit that if the release and indemnity was not signed, the accounts would be passed. The court said that the requirement for a release is a prudent step to be taken by an estate trustee.
The Estate of Ingrid Loveman, Deceased, 2016 ONSC 2687 (CanLII)
Estate trustees may be justified in not releasing payments to beneficiaries until satisfied that the beneficiaries would not be taking threatened legal action against the estate, where proceeding otherwise could potentially lead to further problems and potentially jeopardize the estate and the administration of it (citing Denofrio, above).
Moretto Estate, 2019 ABQB 103 (CanLII)
The practice of a personal representative making distribution to a beneficiary contingent on being released by the beneficiary has been criticized. However, in Denofrio Estate (above) the court found that requiring a release as a precondition of an interim distribution was justified where litigation with beneficiaries over estate administration was both ongoing and threatened. Notably, the representative’s accounts had not been passed at that point. Obtaining releases from beneficiaries is a common and often practical way of obtaining their approval of the estate administration and of eliminating or reducing the risk of “downstream” beneficiary claims against the representative. However, it is not the only way. By passing the accounts in accordance with the Surrogate Rules, the representative can accomplish the same objectives, i.e., obtain the court’s approval of the estate administration and the representative’s compensation. In Alberta, a representative has the option of pursuing releases from the beneficiaries in lieu of formal or informal passing of accounts (citing Surrogate Rule 100). At issue in this case was whether a distribution payable to a beneficiary should be paid into court and held, pending the beneficiary signing a release in favour of the representative. While the representative was initially justified in asking for a release, i.e., to approve the estate administration and its compensation, the court itself approved those things and payment of the beneficiary’s share into court pending provision of a release was unwarranted.
Re the Estate of Marilyn Carol Hirtle, 2021 NBQB 250 (CanLII)
An application to pass the accounts of an estate was precipitated by objections to some of the accounts by one of the beneficiaries. The court was satisfied that all steps taken by the executor and his counsel were necessary and reasonable in the context of this case and were primarily caused by the unreasonable behaviour of the objector. The court said it was apparent in the circumstances of this case that the executor likely would never have received a release from the objector and that the executor’s only recourse in light of allegations made against him was to file for a formal passing of accounts. The remaining question, the court said, was whether the additional legal fees incurred should be borne by the other beneficiaries. In this context, the court indicated that the objector was correct to say that releases are not always required in estate matters and that the requirement of a release should not be used to hold estate distribution hostage; another means for an executor to absolve himself/herself from liability is to go to a passing of accounts. Ultimately, to reflect its disapproval of the actions, baseless accusations and allegations made against the executor, the court ordered that 2/3 of the legal costs incurred relating to the passing of accounts were to be payable by the objector out of his share of the residue of the estate.
Clayton v. Clayton, 2021 ONSC 5811 (CanLII)
When Gerald Clayton passed away, the assets in his estate were distributed pursuant to the provisions of a primary will, under which a family trust was established, and a secondary will, under which a wife’s trust for Gerald’s widow, Shirley, was established. Upon the death of Shirley, the wife’s trust was to be collapsed and the undistributed income and capital remaining in it added to the family trust and thereafter the estate was to be distributed equally among Gerald and Shirley’s three children Dan, Karen, and Patricia. On this application by Dan for removal of the trustees of the two trusts, the court found that the trustees, through their representative, attempted to secure from Dan a release with respect to the passing of accounts for a period in excess of a decade. The trustees, through their representative, attempted to do so without having presented Dan with the requisite supporting documents. In addition, the court found, among other things, that the trustees’ representative never told Dan that he should seek independent legal advice before signing the release and that the release was much more significant in content than as described to Dan. The court found that the trustees’ conduct was so unreasonable as to amount to conduct in which no honest or fair-dealing trustee would have engaged.
Jones v Jones, 2021 SKQB 34 (CanLII)
It was argued in this case that executors could not refuse to transfer assets in order to coerce a beneficiary to sign a release of the executors for the approval of accounts. Legal commentary citing, inter alia, Brighter v Brighter Estate was filed by way of an exhibit to an affidavit. The court quoted at length from Moretto (above) which the court noted was a more recent decision in which Brighter had been discussed. The court said the conflict between parties to this litigation had been going on for years. The executors were finding it difficult and frustrating to deal with the ongoing administration of the estate with no prospect of resolution. The court was in no doubt that the executors were trying to reach a resolution while respecting the wishes of the testatrix, even if just to extract themselves from the conflict of administering this estate. The practical result of distributing the estate in full, without a release, was that there would be nothing left within the estate for the executors to indemnify or protect themselves from ongoing allegations which were directly related to their role as executors. In the court’s view, the executors wanted to achieve resolution to ensure that there were no surprises in the future. In these circumstances, the court was satisfied that the executors’ delay in distributing the estate subject to the request for a release was reasonable.
Williams v. Crate, 2023 ONSC 4470 (CanLII)
The applicants objected to the respondents’ claim for executors’ compensation, although the applicants had signed releases and an interim distribution statement that included the compensation claims. The court said that the respondents had not refuted evidence of the applicants that the applicants were told that, unless they signed the releases, they would not receive their distributions. Further, there was no evidence to suggest that the respondents advised their clients, the applicants, that there were two ways to bring the estate administration to an end. As explained in Sheard Estate, the estate trustees could either apply for a passing of accounts or ask the beneficiaries to approve their administration and provide for their informal discharge directly. The court found that the respondents chose the latter without explaining to the applicants that a passing of accounts was another available option. The respondents had control of the estate bank account, and until the applicants signed the releases, the applicants would not receive their distributions. The distributions to the applicants did not “accompany” the releases as noted in Sheard Estate and in Brighter Estate. The respondents were essentially holding the applicants’ distributions hostage until the applicants signed the release and waiver documents prepared by the respondents. As the court said in Brighter Estate, “[t]he executor has no right to hold any portion of the distributable assets hostage in order to extort from a beneficiary an approval or release of the executor’s performance of duties as trustee, or the executor’s compensation or fee…. that is manifestly improper”. The court found find that it was a breach of the respondents’ fiduciary duty to the applicants to impose a condition on their receipt of a substantial interim distribution without explaining the options to them and without warning them of the consequences of signing the release and waiver documents.
1.11.3 Release of Matters with Public Interest Implications
As a result of the particular circumstances from which it arises, a claim or dispute may have public or societal implications extending beyond the private interests of the parties directly involved in it. A private resolution of the claim or dispute by the directly-involved parties may not necessarily mean that the broader public or societal implications cease to be of any importance. According to the British Columbia Supreme Court decision in Leonard v The Manufacturers Life Insurance Company, 2020 BCSC 1840 (CanLII) , at paragraph 114, application for leave to appeal dismissed, 2022 BCCA 28 (CanLII) : “It is against public policy for a releasor to forgo a public right, which … include[s] the right to complain to a regulator administering a legislative scheme established in the public interest.”
The view of public policy expressed in Leonard seems not entirely unlike the public policy reflected in the following proposition from Halsbury’s Laws of England, 4th Edition Reissue (London: Butterworths, 1998), Volume 9(1), at page 606: “At common law … an agreement to stifle or withdraw from a prosecution in respect of a misdemeanour of a public, as opposed to a private, nature is against public policy, because the effect of it is to take the administration of the law out of the hands of the courts and to put it into the hands of a private individual to determine what is to be done in the particular case.”
In the decisions summarized below, the courts have considered circumstances where a release as between private parties has, or may have, a connection to issues of broader public or societal concern.
Prior v. Sunnybrook and Women’s College Health Sciences Centre, 2006 CanLII 17329 (ON SC)
It cannot be proper to offer to withdraw an allegation of fraud made to an outside body contingent on a release in a civil proceeding.
Chapman v. King, 2010 MBQB 249 (CanLII)
The plaintiff argued that a release offended public policy because it prevented him from disclosing allegations to the police to investigate potentially criminal behaviour and it prevented him from disclosing behaviour of the defendant, a lawyer, to the Law Society of Manitoba to determine if a breach of a lawyer’s code of conduct had occurred. The court found that the release did not prevent the plaintiff from making disclosure to The Law Society. Both parties contemplated that at some point the plaintiff might discuss the matters at issue with the Law Society and this was reflected in the release. Further, the court was not satisfied that the allegations in the statement of claim constituted criminal conduct. The court was not persuaded that the release was invalid on the grounds of public policy.
Thompson (Family Trust), 2011 ONSC 7056 (CanLII)
It is improper for a person, subject to regulation, to require that a complaint about his or her conduct be released or withdrawn in exchange for payment or a benefit as part of a private settlement of a related civil matter. This case involved a release provision of a settlement agreement that extended to pending and possible future complaints filed with the Law Society of Upper Canada (as it then was). The court said that, across many jurisdictions, it offends public interest and public policy when a term of settlement requires withdrawal of a complaint against a lawyer (or refraining from filing a complaint or declining to cooperate regarding a complaint).
Law Society of B.C. v. Batchelor, 2013 LSBC 9 (CanLII)
A useful summary of this case is provided in the overview to the decision rendered by a Hearing Panel of the Law Society of British Columbia. As stated in the overview, the complainant filed a complaint with the Law Society against a lawyer centring on his representation of her in a family law matter. The lawyer attempted to buy himself out of the Law Society’s complaint process initiated by the complainant. He entered into an agreement with the complainant in which he agreed to make a payment to her in exchange for a release of claims against him, including the complaint against him that was before the Law Society. This was professional misconduct under the Professional Conduct Handbook. To his credit, when the breach was brought to the lawyer’s attention by the Law Society, he quickly corrected the agreement and admitted his mistake to the Law Society. His subsequent actions did not excuse his original transgressions, but they were given importance by the Hearing Panel in its consideration of the disciplinary action that it imposed.
Law Society of Saskatchewan v. Phillips, 2015 SKLSS 2 (CanLII)
A complaint was made to the Law Society of Saskatchewan that, after receiving notice of termination of his retainer, a lawyer attempted to impose inappropriate conditions on the release of the clients’ files. One of the conditions outlined in a letter by the lawyer to “facilitate” release of the files was that a form of release be executed by the clients. Upon receipt of the letter, the complainant contacted the Law Society and objected to the terms of the release. Before the Law Society Hearing Committee, it was argued that the lawyer should not have sought to obtain a blanket release of liability as a condition to transferring the file and its attendant trust monies to the clients. Further, it was argued that the conduct of the lawyer was akin to cases where lawyers have attempted to “bargain away” a client’s right to complain or sue the lawyer. The lawyer did not dispute that a complaint cannot be “bargained away” but argued that the release did not refer to the release of any complaint or of the ability to sue the lawyer for any steps he had previously taken “with respect to the client”. The Hearing Committee said the lawyer would have been aware that he was “in jeopardy” with the clients and it was reasonable to conclude that a particular term of the release was drafted to protect the lawyer from such jeopardy. The Hearing Committee found the lawyer’s conduct to be inimical to the best interests of the public.
Freeman v. Canadian Natural Resources Limited, 2018 ABQB 310 (CanLII)
After the defendant terminated his employment without cause, the plaintiff reached a settlement of his claims with the defendant. He signed a release that specifically covered a complaint he had made to the Association of Professional Engineers and Geoscientists of Alberta and he signed a form of letter requesting withdrawal of the APEGA complaint. Later, he made a second complaint to the APEGA regarding the condition of the settlement that he submit a request for withdrawal of the first complaint. The APEGA published a decision indicating that such a practice was improper. On an application to the Master in the context of his employment-related action, the plaintiff argued that the release was against public policy and unenforceable. The Master said that he would make no findings on the complaints, other than to observe that the APEGA eventually heard both of them; the Master also said it is not surprising that a regulatory body acting in the public interest would find itself not bound to give effect to an agreement regarding the withdrawal of a complaint, particularly when it was not a party to the agreement. On the issue of whether the clause pertaining to withdrawal of the initial complaint was contrary to public policy, the Master found that it was not contrary to public policy in the fact situation before him and that, even if it was, he would find it to be severable.
1.11.4 Position of Control and Inappropriate Pressure for Release
The cases referred to below arose from circumstances where, in effect, a party used a position of control to bring inappropriate pressure to bear on another party to sign a release. As to undue influence, duress and other grounds for challenging a release, see Chapter 9, below.
Eyben v. K.R. Ranches (1970) Ltd., 1982 ABCA 178 (CanLII)
In considering whether a judgment in favour of the appellant should be inclusive of interest, the Court of Appeal noted the willingness of the respondent to pay a particular amount but only if the appellant signed a complete release. The court said that this had the effect of putting an unfair pressure on the appellant: to obtain what was admittedly due him, he was being required to surrender his right to assert that a larger sum was payable. The court went on to indicate that economic pressure that is calculated and unfair may in a proper case bear on the court’s determination of interest payable.
Leger v. Arsenault, 1992 CanLII 7163 (NB QB)
After an amount had been recovered on a judgment, the successful party sought payment of the proceeds from his lawyer. In circumstances as in this case, the lawyer should not be seen to deduct his account from the proceeds and concurrently obtain a waiver of taxation of the account from the client. There may be circumstances where such a release is appropriate, but to meet the onus of avoiding a presumption of undue influence there should be a reasonable hiatus, either by review and approval of the account prior to the proceeds being at hand or by obtaining the waiver subsequent to the disbursement of the net proceeds to the client at a time not immediately related to the client receiving his money. To take the release concurrently with providing the client his proceeds, less the lawyer’s account, is to do so in circumstances where the suggestion of undue influence or the potential for undue influence upon the client is present.
Sharpe v. McCarthy, 1994 CanLII 767 (BC CA)
The plaintiff was told that the defendant Wood Gundy would not release the securities held in his investment account, nor allow him to access his portfolio, until he signed a release of claims in respect of matters in issue between the parties. Punitive damages were awarded against Wood Gundy on the basis of what the Court of Appeal referred to as its “unwarranted and uncalled for decision to refuse to allow the plaintiff access to his own money and his own securities”. The court did not agree that that the conduct of Wood Gundy in attempting to procure settlement and a release was factually and commercially justifiable. The conduct of the company was wrongful, callous and insensitive. The plaintiff was deprived of access to his own money for about a year for no other reason than to force him to settle the dispute on terms dictated by an official of Wood Gundy. The Court of Appeal said that it would not interfere with the award of punitive damages.
Ault v. Canada (Attorney General), 2003 FC 1155 (CanLII)
The applicant resigned from the federal public service and requested a transfer of pension funds under a reciprocal pension transfer agreement, but later indicated that she wished to revoke the transfer request. The Crown advised her that it would accept a revocation only if she executed a release and indemnification agreement. On an application for judicial review of this decision, the court said that the imposition of a requirement for a release and indemnification was very harsh because its effect would be to deprive the applicant of the ability to claim damages for the actions of the Crown, while leaving her open to claims by the Crown. Further, there was serious inequality of bargaining position, because the applicant was eligible to receive a pension, but was unable to access those funds without agreeing to the Crown’s conditions. In the circumstances, it was patently unreasonable to require the applicant to execute a release and indemnity as a condition to accepting the revocation of her consent to the transfer of funds.
Ault v. Canada (Attorney General), 2008 CanLII 86923 (ON SC)
Following on the series of events that were before the court in the Ault case summarized above, the plaintiffs in this action sued the federal government for damages for negligent misrepresentation. The court concluded that the government was negligent in the way it held out reciprocal transfer agreements as a legitimate “opportunity” for public servants to pursue without, at the same time, highlighting the significant, identifiable risks associated with electing a transfer of pension entitlements under reciprocal transfer agreements. In the course of its decision, the court said that, when different plaintiffs tried to revoke their application for a transfer, they were met with an “extremely aggressive response”, requiring them to sign a release and indemnification agreement that was “draconian”. Later in the decision, the court said that, when the plaintiffs asked to revoke their applications for a transfer, they were faced with a “totally unreasonable” release and indemnification agreement to sign before the Treasury Board would accept the revocation: “This is not behaviour which one expects of one’s government, one’s employer or one’s pension plan administrator.”
1.11.5 No Lawful Authority for Release
While, typically, no issue arises about the authority of a private individual or entity to seek a release, the actions of a representative of government must of course be founded on lawful authority. In the decisions below, the courts considered issues about the authority for imposition of a requirement that a release be provided as a condition to participation in a government program.
Holland v. Saskatchewan (Agriculture, Food and Rural Revitalization), 2004 SKQB 478 (CanLII)
This decision was summarized by the Supreme Court of Canada in a later decision (referred to below) in related litigation. As stated by the Supreme Court, the applicants were game farmers who refused to register in a government program aimed at preventing chronic wasting disease in domestic cervids, because they objected to a broadly worded indemnification and release clause in the registration form. As a result of their refusal to sign the form, the game farmers lost the CWD-free herd certification level which they had acquired by conforming to provincial CWD prevention rules, before the merging of provincial and federal programs. The game farmers successfully established on judicial review that the indemnification and release clauses had been invalidly included in the registration form. The court found in the judicial review proceeding that the Saskatchewan Minister of Agriculture, Food and Rural Revitalization had no legislative authority to make acceptance of these clauses, which the judge characterized as “broad in the extreme”, a condition to participate in the CWD program. The program’s reliance upon game farm operators might justify limited indemnification and release clauses restricted to the operator’s actions, but these could not validly extend to the actions of government employees. The Supreme Court of Canada noted that the government did not appeal this decision reached in the judicial review proceeding.
Saskatchewan (Agriculture, Food and Rural Revitalization) v. Holland, 2007 SKCA 18 (CanLII) , appeal allowed in part, Holland v. Saskatchewan, 2008 SCC 42 (CanLII) , [2008] 2 SCR 551
As stated by the Supreme Court of Canada in its decision in this litigation, following the successful application for judicial review in the Holland case referred to above, the game farmers sought a remedy for the financial loss they suffered as a result of the government’s wrongful reduction of certification status. They commenced a class action, claiming damages on three alleged grounds, namely, misfeasance in public office, intimidation and negligence. In the context of an application to strike out the claim, the Court of Appeal addressed the Minister’s reliance on “the immunity of public law transgressions, such as jurisdictional error, from tortious liability”. It found that the actions of the Minister which underpinned the appeal were neither legislative nor quasi-judicial in character and that his actions, including the demand for a release and indemnification, were not cloaked in a private law immunity. As for the negligence claim, the Court of Appeal held that it should be struck from the statement of claim to the extent it alleged liability on the basis the Minister failed to act within the scope of his authority when demanding the indemnity and release (and when reducing herd status). The Supreme Court of Canada agreed with the Court of Appeal that the claim for negligently acting outside the law, or breach of statutory duty, could not succeed and that the paragraphs asserting this cause of action were rightly struck from the statement of claim.
Canada (Attorney General) v. Arsenault, 2009 FCA 300 (CanLII) , application for leave to appeal dismissed, Arsenault v. Canada (Attorney General), 2010 CanLII 17154 (SCC)
This case concerned the implementation of a management plan for snow crab areas by the Minister of Fisheries and Oceans. The management plan provided for certain financial assistance to crabbers. In order to receive financial assistance, the respondents were required by government officials to sign an agreement which provided for a release of all claims or suits against the Crown that related to or arose from the agreement. The application judge found that the management plan did not require execution of a release and the insistence on a release was “illegal”. An appeal from this decision was allowed. The majority of the Federal Court of Appeal held that the management plan was an expression of policy and the Minister’s discretion was not exhausted by the approval thereof. The Minister was not bound by his policy and he could, at any time, make changes thereto. Consequently, whether the Minister turned his mind to a release of liability condition when he issued the management plan or whether it was an afterthought resulting from suggestions made by department officials was of no help to the respondents, as the Minister could not fetter his discretion when he issued the management plan.