CHAPTER 2: Release Formation and Wording

2.1 Format of a Release

The format of a release will depend on the circumstances in which it is given. For example, a release given in settlement of litigation will be much unlike a pre-emptive release signed before participation in an inherently risky activity.

Considerations in cases involving pre-emptive releases may include whether reasonable steps were taken to make an intended participant aware of the terms of the release. Thus, in one case, the format of a waiver printed on a ski resort ticket was important because participants were required to tear the ticket and attach it to a ticket holding “apparatus”, which forced them to look at the back of the ticket where the waiver was printed. (See the Cejvan case discussed below in Chapter 8: Anticipatory or Pre-Emptive Releases, section 8.4.3, Communication of the Terms of a Release.)

Obviously, such considerations would have no bearing on a release given, with the advice of legal counsel, in settlement of litigation. Again, as stated at the outset of Chapter 1, above, 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.

2.1.1 Written or Oral Release

Canadian law is clear that a release need not be in writing and that an oral release is valid and enforceable. Needless to say, though, evidentiary issues regarding the existence and terms of a release are less likely to arise if the release is reduced to writing (whether in paper or electronic form).

Northern Crown Bank v. Elford, 1917 CanLII 114 (SK CA)

The plaintiff Northern Crown Bank from time to time advanced money to a partnership, Elford and Cornish, and the amount of the advances was guaranteed by H. H. Elford and Frank Cornish individually.  An arrangement was reached whereby the liabilities of the firm were assumed by H. H. Elford. In consequence of this arrangement, Frank Cornish asked what he had to show that he was released and the plaintiff’s manager said he didn’t need anything to show he was released; the bank was taking Elford and his security for the Elford & Cornish account. The trial judge considered whether the bank, having obtained Elford’s securities on the representation that the account of the firm would be released, and having since that time held the securities, could be absolved from the representation made by the manager that the account of the firm would be released. The trial judge held that the bank could not “take that position and refuse to make good those representations”. An appeal by H. H. Elford from a judgment granted by the trial judge against him personally was dismissed and the appellate court also considered a cross-appeal by the bank from the dismissal of its claim against a former partner of the firm, Mercie A. Elford. The appellate court said that the liability of Mercie A. Elford could only be as a member of the firm of Elford & Cornish and that the arrangement entered into with H. H. Elford, and the subsequent receipt by the plaintiff from him of various securities, operated as a release of any claims against Mercie A. Elford.

Laurentian Bank of Canada v. Ellacott, 1998 ABCA 382 (CanLII)

The defendant argued that the plaintiff bank had orally agreed to accept a quit claim from him in full satisfaction of its claims on his personal guarantees of mortgages. After reviewing conflicting evidence, and evidence which made the suggestion of an oral contract to release improbable, the trial judge found no such agreement was made or even offered. On this appeal by the defendant, the Court of Appeal said that the appellant’s evidence about the alleged oral contract to release was insufficient to found an oral contract which had the immediate effect of releasing the appellant from liability, whether without conditions or even subject to delivery of an executed quit claim.

Albu v. The University of British Columbia, 2014 BCSC 239 (CanLII) , appeal dismissed, 2015 BCCA 41 (CanLII)

A settlement agreement and release are not required to be in writing. They can be purely oral agreements and still valid in law. It so happens that in this case they were reduced to writing, but they are not required to be in writing

High-Tech Realty Inc. v. Pichugin, 2014 ONSC 1783 (CanLII)

Contrary to the position of the appellant, a Small Claims Court judge found there to be no verbal agreement and release that would be binding on the parties to this case. On appeal, the court agreed with the submission of the appellant that a verbal agreement is as binding as a written one. But, the court said, the difficulty and the risk to the party asserting an oral agreement is that verbal agreements and handshakes are more ambiguous than written releases and may be exceedingly difficult to prove – hence the preoccupation with reducing agreements to writing for purposes of certainty and clarity. The court saw no basis to interfere with the findings of the Small Claims Court judge.

Archibald v Action Management Services Inc., 2015 NSCA 103 (CanLII)

The Court of Appeal concluded that the lower court judge made no palpable and overriding error when he found as a fact that the parties had orally agreed that a lease would be terminated and that the tenants would be released from their obligations under it. A clause of the lease stated, among other things, that no provision of the lease was to be deemed to have been waived by the landlord unless such waiver was in writing signed by the landlord. The Court of Appeal said that this type of clause is usually referred to by Canadian courts as a type of exclusion clause, while in the United States it is known as a “no oral amendment clause”. The appellate court cited Shelanu Inc. v. Print Three Franchising Corporation, 2003 CanLII 52151 (ON CA), as the leading case in Canada on “no oral amendment clauses”. As accepted in Shelanu, parties by mutual agreement may agree orally to terminate a written lease without regard to the terms provided for in the lease. The lower court judge did not err in finding that the oral of agreement of the parties effectively terminated the lease and the tenants’ obligations thereunder.

2.1.2 Release in Electronic Form

Legislation recognizing the growing prevalence of electronic documents and electronic signatures has been enacted in Canada at both the federal and provincial level. Among the Canadian statutes that deal with the subject of electronic signatures are the federal Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5, and the Ontario Electronic Commerce Act, 2000, S.O. 2000, c. 17. Subsection 11(1) of the Ontario statute states, for example, that a legal requirement that a document be signed is satisfied by an electronic signature (although there are particular types of documents to which the statute does not apply).

It is to be expected that releases will increasingly take the form of electronic documents and be executed with electronic signatures. Note that there is no requirement, however, that a release be in the form of a signed document, electronic or otherwise.

Arif v. Li, 2016 ONSC 4579 (CanLII)

The plaintiff’s son-in-law completed an online registration form for an introductory rock-climbing course; a notice appeared below the registration form on the website that indicated agreement with booking conditions, including a release and waiver of liability. The plaintiff himself also signed release and waiver documents at the site of the rock=climbing course. On a motion for summary judgment, the court dismissed the plaintiff’s claim, but said it was placing no weight on the website registration notice, because the evidence was that this notice had not come to the plaintiff’s attention.

Quilichini v. Wilson’s Greenhouse, 2017 SKQB 10 (CanLII)

The defendants brought a motion for summary judgment seeking dismissal of the plaintiff’s action on the ground that the plaintiff had no claim enforceable in law because he had executed an electronic form of waiver and release. The court said that Saskatchewan legislation, The Electronic Information and Documents Act, 2000, made clear that agreement to contractual terms can be expressed by touching or clicking on an appropriately designated icon or place on a computer screen and the fact that the plaintiff could have been asked to sign a “hard copy form” did not detract from this conclusion.

Schnarr v. Blue Mountain Resorts Limited, 2018 ONCA 313, application for leave to appeal dismissed, 2019 CanLII 7956 (SCC)

This decision resulted from two appeals heard together by the Court of Appeal which raised common issues. On the facts of one appeal, the plaintiff Schnarr purchased a season ski pass from the website of the defendant Blue Mountain. As part of his online transaction, Schnarr executed a release of liability agreement, waiver of claims, assumption of risk and indemnity agreement. The Court of Appeal held that Schnarr was bound by the Blue Mountain waiver (in respect of both tort and breach of warranty claims).

Peters v. Soares, 2019 BCSC 189 (CanLII)

The plaintiff claimed that he was injured in a jiu-jitsu competition held by the defendants and one of the defendants argued that two waivers applied so as to bar the plaintiff’s claim. The first waiver was part of a membership agreement signed by the plaintiff and the second waiver was part of an online registration form completed by the plaintiff in connection with his participation in the competition. The plaintiff’s evidence was that he believed he was releasing the host from claims for injuries that were the plaintiff’s own responsibility. The court said there was no evidence as to the online waiver form, the terms of which the plaintiff was alleged to have accepted. The court concluded that the plaintiff did agree to terms of a waiver, but, without the terms themselves, the court could not determine whether the plaintiff’s evidence that he understood he was only releasing claims for injuries that were his own responsibility was reasonable. The defendant was not able to discharge his onus of proving that the waiver language of the online registration form excluded the plaintiff’s claim.

McCallum v. Jackson, 2019 ONSC 7077 (CanLII)

When completing the online registration process to enter a racing event, the plaintiff electronically accepted a release and waiver of liability, assumption of risk and indemnity agreement. He did not contest that he had waived his right to sue certain organizations that claimed the protection of the release, but he argued that he was not required to indemnify those organizations in the event of a crossclaim against them by another party. The court found that the release document was valid and binding on the plaintiff and that he had waived his right to sue, as he had conceded, but found that there was no valid indemnity clause binding on the plaintiff as relied upon by the organizations.

Zaky v. 2285771 Ontario Inc., 2020 ONSC 4380 (CanLII)

The plaintiff claimed damages for injuries suffered at an “indoor trampoline and fun park”. The defendant relied on an electronic waiver document signed by the plaintiff at a computer kiosk on the defendant’s premises. The document said that the plaintiff released all claims for damage or injury suffered as a result of participating in trampoline games or activities. A motion for judgment by the defendant was dismissed because the motion judge concluded that there was a genuine issue requiring a trial as to whether the defendant took reasonable steps to bring the terms of the waiver to the plaintiff’s attention. The motion judge said that he generally concurred with a number of paragraphs from the defendant’s factum, including the following: “It is immaterial that the plaintiff’s waiver was signed electronically rather than manually.  Section 19(1) of the Electronic Commerce Act, 2000 provides that a contract may be formed by ‘touching or clicking an appropriate icon or other place on a computer screen.’ Further, section 19(3) of the Act explicitly indicates that a contract “is not invalid or unenforceable by reason only of being in electronic form.”

Arksey v Sky Zone Toronto, 2021 ONSC 4594 (CanLII)

This was a decision on a motion for summary judgment based entirely on the terms of a waiver and release of liability signed by the plaintiff. The defendant had directed the plaintiff to a “waiver kiosk” to review its required waiver. At the waiver kiosk, the plaintiff interacted with a computer with a touchscreen. To operate the computer, the plaintiff had to touch the screen with her finger(s) in appropriate places. Rather than just allowing the user to scroll through the legal terms, the form required the plaintiff to touch her finger to a box beside each of two key paragraphs on the screen to specifically enter a checkmark beside the words “I agree” beside each paragraph. The plaintiff indicated her express acceptance and agreement to the terms by using her finger to place checkmarks in each of the specific boxes. The plaintiff accepted both before pressing the general “Accept” button at the bottom of the screen. The court concluded that the plaintiff’s claim could not succeed “in face of the waiver signed by the plaintiff”.

Manson v Mitchell, 2023 BCSC 723 (CanLII)

This action arose out of injuries suffered by the plaintiff as a result of a mountaineering incident. The defendants sought a declaration that a waiver and release signed by the plaintiff applied to the mountaineering trip during which the incident occurred and was a full defence to the claim. The plaintiff completed and signed the waiver and release through a weblink sent to him in an email from the defendant. He did so by initialling the waiver with the letter “M” in two locations, one of which was above the words “Participant’s Signature”. It was undisputed that the plaintiff read and understood the waiver and release when he signed it and that he was bound by it. In the result, the court found that the waiver did not apply to the mountaineering trip during which the incident occurred, although it did apply to an earlier climb.

2.1.3 Release and Collateral Agreement or Documents

When a release is given in conjunction with an associated agreement, such as a settlement agreement or some other companion document, issues may arise about the extent to which the release is to be understood by reference to the associated agreement or other document. Further, when a release is included in a document that serves other purposes as well as the release of claims or liability, the other aspects or provisions of the document may affect a court’s view of the release. Decisions addressing circumstances such as these are summarized below.

In Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII) , the court referred to “lazy drafting” of a release which included a list of letters written by counsel, rather than incorporating information from the letters, as needed. The decision of the court regarding the interpretation of this release is summarized in Chapter 5: Interpretation of Releases, section 5.10, Ambiguity or Errors in Release.

For cases dealing with the relevance of contextual documents to the interpretation of a release, see Chapter 5: Interpretation of Releases, section 5.6.3, Contextual Documents.

K.R.M. Construction Ltd. v. British Columbia Railway Company, 1982 CanLII 488 (BC CA)

The renegotiation of a major contract by the appellant railway company and the respondent contractors resulted in an amending agreement and a release. The appellant argued that, while the settlement agreement and release referred to each other, they were two separate and distinct contracts. The appellant’s position was that the agreement was prospective in nature, intended to govern the relationship between the parties in the future, while the release was retrospective in nature and contained a settlement of all past disputes. The Court of Appeal held that the release could not be viewed apart from the agreement; the two documents were part of one transaction and it was not open to the appellant to treat the release as isolated from the agreement.

Block Bros. Realty Ltd. v. Bank of Montreal, 1989 ABCA 109 (CanLII)

The appellant argued that a term deposit agreement regarding money placed on deposit to support a letter of credit for a maintenance bond was an agreement collateral to a release contained in a quit claim document. The Court of Appeal said that the two agreements had no relationship to each other. They existed as independent documents. The term deposit agreement was prior in time and was not conceived to complement or supplement the quit claim agreement.

Sibley v. British Columbia Custom Car Association et al, 2005 BCSC 509

The plaintiff was injured prior to his intended participation in a motorcycle race as a result of a collision between a snowmobile and his motorcycle. The raceway park was a member track of the National Hot Rod Association and the plaintiff had signed an NHRA release that was reproduced in the NHRA Rulebook. The plaintiff argued that the release agreement incorporated the NHRA rules or, alternatively, that the rules constituted a collateral warranty, and that there had been breaches of the rules because, among other things, the presence of the snowmobile on the racetrack was a violation of the rules. The court said there was no oral representation giving rise to a collateral warranty and the wording of the rules did not support the assertion that the parties intended the rules to form part of the release. The court found that the rules were not incorporated into the release and did not constitute a collateral warranty.

Arndt v. The Ruskin Slo Pitch Association, 2011 BCSC 1530 (CanLII)

The plaintiff signed up to play for a team in a softball league. She thought she was signing a team roster and did not know that the document contained a waiver of liability. The document on its face did not appear to be a waiver – it appeared to be a roster. Unlike the waivers held to be enforceable in other cases, the release was not a separate sheet and the waiver and signature were not on the same page. The court held that the waiver was not enforceable against the plaintiff.

Newsham v. Canwest Trade Shows Inc., 2012 BCSC 289 (CanLII)

The plaintiff rented booth space at a show and it was agreed that, in lieu of paying rental fees for the space, the plaintiff would perform at the show. The reverse side of the exhibitor’s contract signed by the parties contained a release of liability clause. The plaintiff was injured during a performance when he slipped on a stage. He argued that the parties had entered into a performance contract that stood “fully outside the four corners of the exhibitor’s contract” and that only this collateral contract applied to him in his capacity as a performer. The court held that the plaintiff had not established the existence of an enforceable collateral contract and, further, that, even if the collateral contract existed, this would not justify the conclusion that the terms agreed to in the exhibitor’s contract were excluded from the collateral contract.

Burgener v. Haldimand (County), 2012 ONSC 5230 (CanLII)

The plaintiff accepted a severance proposal from his employer and “in essence, retired subject to the terms of the agreement”. In accordance with one of the terms of the severance agreement, the plaintiff signed a release. Later, he commenced an action claiming accumulated sick leave benefits. The severance agreement allowed a claim for “usual retiree benefits” and the court said that the severance agreement was “incorporated into the release”: but for that agreement, the release would have been a bar to the claim.

AIG Insurance Co. of Canada v. Canjam Trading Ltd, 2015 ONSC (CanLII)

After the applicant insurer had paid compensation to the respondent in respect of claims made under trade credit insurance policies, the parties entered into a release and assignment agreement. The respondent argued that the release replaced the policies and extinguished any entitlements the insurer may have had under the policies. The court held that the policies continued in force despite the release and that neither contract stood alone, rather the agreements mutually informed each other.

Chinn v. Hanrieder, 2013 BCCA 310 (CanLII)

As found by the trial judge, the defendant agreed to transfer her interest in certain mineral rights to the plaintiffs in return for their release of any interest they might have in their father’s estate as it related to a particular property. The releases signed by the plaintiffs indicated that they released their interest in the property for the sum of $10. On appeal, the defendant/appellant submitted that the trial judge was wrong to go beyond the written agreement to determine whether there were additional or different contractual terms. The plaintiffs/respondents argued, first, that the releases formed only part of an agreement and, alternatively, that the parties reached an enforceable collateral agreement prior to the signing of the releases. The Court of Appeal found that both positions of the respondents could be sustained. The evidence accepted by the trial judge was that the respondents signed the releases after being promised the interest in the mineral rights in return. The whole of the contract included an offer by the appellant and an acceptance given orally by one of the respondents on behalf of both. Alternatively, the respondents’ agreement to sign the releases in return for the interest in the mineral rights could be said to constitute a collateral agreement which was proved by way of parol evidence. The collateral contract made between the parties was that the appellant would assign her interest in the mineral rights to the respondents in return for their entering into the contract of release.

2.1.4 Format and Heading of a Pre-Emptive Release

There is no required or standard format for a release. However, the cases referred to below reveal that, at least in the specific context of a pre-emptive release, the format or heading of a release may take on importance when the validity or enforceability of the release is challenged. The subject of pre-emptive releases is addressed extensively below in Chapter 8: Anticipatory or Pre-Emptive Releases.

Clarke v. Alaska Canopy Adventures, 2014 ONSC 6816 (CanLII)

On a motion for summary judgment involving an agreement containing a pre-emptive release, the motion judge said that the agreement announced itself as a “Participant Agreement” and the waiver portion of the agreement was minimized both by the document’s title and by its layout, with the waiver content relegated to the back of the page. Further evidence was necessary to determine if, in the circumstances, the plaintiff could reasonably be seen as understanding she was waiving her right to sue for all operator negligence.

Urbanson v. Western Canadian Place Ltd., 2016 ABQB 32 (CanLII)

In this case, the Master allowed an application for summary dismissal of the plaintiff’s claim on the basis of a release and waiver signed by the plaintiff. The defendant’s witness did not claim that it was standard procedure to draw attention to, or say anything about, the form of waiver at the time when it was signed; apparently, the waiver form was allowed to speak for itself. In reaching a decision that reasonable efforts had been made to bring the import of the waiver to the attention of the plaintiff, the Master referred to the formatting of the document, including the presentation of the release and waiver as one separate page and the heading on it that was bolded, in a larger font and in capitalized letters.

Arif v. Li, 2016 ONSC 4579 (CanLII)

This was not a case where an exclusion of liability was buried in small print on the reverse side of a contract. The heading of the releases signed by the plaintiff “loudly announced their purpose and call[ed] for the reader’s attention”.

Jamieson v. Whistler Mountain Resort Limited Partnership, 2017 BCSC 1001 (CanLII)

Where a plaintiff signs a contract containing an exclusion of liability clause, identification of specific risks is not generally required. It is enough that the waiver is described as “broad in scope and effect”, having an explicit heading in bold print and a body that “contained the waiver of all claims for any cause including negligence”.

Hosseinkhani v. QK Fitness Inc., 2019 ONSC 70 (CanLII) , appeal dismissed, 2019 ONCA 718 (CanLII)

Under the Ontario Occupiers’ Liability Act, to rely on an exclusion of liability, an occupier must take reasonable steps to bring the exclusion to the attention of the party to whom a duty of care is owed. In this case, a membership agreement signed by the plaintiff did nothing to draw an exclusion of liability to the plaintiff’s attention. The exclusion was on the reverse of a document under the general heading Membership Agreement – Terms and Conditions and the terms and conditions were in “tightly printed ‘fine print’”. There was no place for the plaintiff to sign or initial the exclusion clause, which would have provided some evidence of reasonable steps to bring the waiver to the attention of the signer.

2.2 Requirements of a Valid Release

It is clear in Canadian law that a release is a contract: Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) , at paragraph 21. Thus, the requirements of a valid and enforceable contract – such as consideration for a contract not given under seal – apply to releases. As to the requirements for formation of a contract, see Chapter 4: Releases and Settlement, section 4.1, The Legal Basis for a Settlement, section 4.3, Formation and Completion of a Settlement: Two Step Analysis, and section 4.4, Formation of a Settlement Agreement.

Although principles of contract formation apply to releases, there are actually not many requirements that dictate the characteristics or content of a valid release. As we see elsewhere in this chapter, a release can be oral rather than written (section 2.1.1), there is no standard or required format for a release (section 2.1.4) and no particular form of words is necessary to constitute a valid release (section 2.5.1). The parties do not even need to use the word “release” (sections 2.5.1 and 2.5.1.1), although of course it is advisable to do so in order for the parties to make their intention clear.

As alluded to above, consideration is required for a release, except in the case of a release given under seal. The history and law of documents given under seal is canvassed in a 1988 report of the British Columbia Law Reform Commission: see Law Reform Commission of British Columbia, Report on Deeds and Seals, Law Reform Commission of British Columbia, 1988 CanLIIDocs 43. The Report on Deeds and Seals explains that an instrument executed under seal is a deed and that the term “contract,” broadly-speaking, embraces any consensual binding obligation, including one made by deed. Other kinds of contracts that are not deeds are referred to as “parol” or “simple” contracts.

The Supreme Court of Canada touched on the history of the “sealed contract rule” in Friedmann Equity Developments Inc. v. Final Note Ltd., 2000 SCC 34 (CanLII), at paragraphs 19 to 24. The court said that:

The practice of sealing documents is one which is centuries old and which predates much of our modern legal history. Originally, it was used as a means of authenticating a document when most individuals were unable to sign their names. However, as time passed, the seal became a symbol of the solemnity of a promise and began to serve an evidentiary function. The seal rendered the terms of the underlying transaction indisputable, and thus rendered additional evidence unnecessary:  see L. Fuller, “Consideration and Form” (1941), 41 Colum. L. Rev. 799, at p. 802. A contract under seal derived, and still derives, its validity from the form of the document itself: [citing, among other authorities, the Report on Deeds and Seals].

The Supreme Court went on to discuss (at paragraph 20) the differences between a contract under seal and a simple contract. The court said that because the former derives its validity from its form alone, there are several incidents of such a contract which differ from those of a simple contract. The fundamental difference is in relation to the doctrine of consideration: the law will enforce a contract under seal even without consideration and, accordingly, a gratuitous promise in an instrument under seal is enforceable.

On the subject of consideration, the Report on Deeds and Seals notes that each party must receive something of value – that is, consideration – under a contract before the contract will be binding. The Report goes on to say that: “A promise which is not supported by consideration is referred to as a ‘gratuitous obligation’ and it is not binding. … The only method of entering into a binding gratuitous obligation is by deed. … It is sometimes mistakenly asserted that a seal “imports” consideration. This view is the result of [a] flawed attempt to rationalize contracts and deeds. The lineage of covenant pre-dates and is wholly distinct and separate from today’s law of contract. … The seal relates to the authenticity of an agreement. Consideration, in its broadest terms, is the motive or reason for making the agreement. The seal and consideration do, however, perform similar functions. The law requires more than a mere promise before a transaction will be enforceable. Without consideration it is the solemnity of affixing the seal that has been required.”

In the Friedmann case, the Supreme Court found that the sealed contract rule was “clearly still a part of the common law in Canada”, but the appellant asked the court to “abolish” the rule: Friedmann, paragraphs 24 and 25. The court addressed at some length the implications of abolishing the sealed contract rule, and it agreed with the reasoning of a number of U.S. authorities, in reaching the conclusion that the rule should not be abolished: Friedmann, paragraphs 40 to 52.

Incidentally, the Supreme Court took note of the difference between a corporate seal and the seal of an individual. The seal of a corporation is, in many circumstances, equivalent to the signature of a natural person and it may not in all cases be evidence of an intention to create a sealed instrument, within the meaning of the sealed contract rule: Friedmann, paragraph 37. The court indicated that it is necessary to “examine the instrument itself and the circumstances surrounding its execution to determine whether the corporation intended to create a sealed instrument by affixing its corporate seal”, while recognizing (at paragraph 38) that “statutory provisions may have the effect of rendering a corporation’s intent to create a sealed contract irrelevant”.

2.2.1 Requirements for a Release Given Under Seal

The B.C. Law Reform Commission Report on Deeds and Seals says that: “Whether a deed is binding on its maker depends upon whether he intended to execute and be bound by it as his deed. This he signifies by executing the document under seal, which raises the issue of what is a sufficient act of sealing. Affixing a seal does not in itself make an instrument a deed. That must be determined from the circumstances, such as the acts and words of the instrument’s maker.” The Milano and Sheard Estate decisions summarized below reflect consideration of the circumstances of releases said to have been signed under seal.

Common law authorities indicate that a deed must be delivered, but it is important to understand that this does not mean physical delivery of the document. In Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at page 247, footnote 6, it is said that: “The extent of ‘delivery’ is not entirely clear; but it does not require physical delivery to the obligee and may be indistinguishable from the obligor’s intention to be bound.” The Huggard decision summarized below confirms that physical delivery is not required for a release given by deed.

Huggard v. Ontario and Saskatchewan Land Company, 1908 CanLII 146 (SK CA)

It was argued in this case that there was no delivery of a release by the plaintiffs. The court said that delivery is entirely a question of intention. A person may keep a deed and still it may be held that there has been a complete execution of it. When the plaintiffs executed this instrument what, as a matter of fact, was their intention? Their intention was that whatever power or right of action they had in respect to certain contracts were given up in so far as they were individually concerned. In Xenos v. Whickkam (1867), L.K. 2 H.L. (36 L.J.C.P. 313, 16 L.T. 800), at p. 309, Pigott, B., quoting from Doe d. Garnons v. Knight (1826), 5 B.C. 671, stated the following: “Where an instrument is formally sealed and delivered and there is nothing to qualify the delivery but the keeping the deed in the hands of the executing party, nothing to shew that he did not intend it to operate immediately, it is a valid and effectual deed, and the delivery to the party who is to take by it, or to any person for his use, is not essential.”

Gaignard v. Hillis, 2002 CanLII 41535 (ON SC)

A release, although containing a recital stating it to be under seal, was in fact and law not under seal. The court referred to South-West Oxford (Township) v. Bailak, 1990 CanLII 6929 (ON SC) and 872899 Ontario Inc. v. Iacovoni et al., 1998 CanLII 7129 (ON CA), leave to appeal refused [1998] S.C.C.A. No. 476), which indicate that, where there is nothing to indicate a sealing beyond recitals of sealing, the mere recitals are not sufficient to create a contract under seal.

Milano v. Alton et al, 2011 ONSC 4504 (CanLII)

No seal had been placed on the release that was considered in this case. The fact that the release stated that a seal had been affixed to it did not make it a document under seal. The court cited Freidman Equity Developments Inc. V. Final Note Ltd., 2000 SCC 34 (CanLII) where, the Supreme Court said that, at common law, a sealed instrument, such as a deed or a specialty, must be signed, sealed and delivered; the mere inclusion of these three words is not sufficient, and some indication of a seal is required.

Sheard Estate, 2013 ONSC 7729 (CanLII)

It was argued in this case that releases were given without consideration and not signed under seal. The court said that the releases on the record all appeared to have been signed under seal. All were witnessed, and all contained the words: “signed, sealed and delivered”. The court concluded that the releases were all executed under seal and “therefore [had] consideration”.

2.2.2 Consideration

A general description of consideration seen often in the case law is, as articulated in Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at page 223, that: “Consideration supporting a promise is said to be given when either (i) the promisor obtained a benefit in consequence of making the promise or (ii) the promisee suffered a detriment on the basis of (or in reliance on) the promise.” This benefit/detriment view of consideration can be seen, for example, in Taske Technology Inc., v. Prairiefyre Software Inc., section 2.2.2.3 below. Halsbury’s goes on to say, at pages 223-4, that: “To overcome conceptual problems caused by the definition of consideration as a benefit or detriment, it has been proposed, and accepted by some courts, that an act or forbearance of one party (or the promise thereof) is the price for which the promise of the other party is bought; the promise thus given for value is enforceable.”

2.2.2.1 Release Supported by Consideration

In each of the decisions summarized in this section, the court found consideration for a release in the dealings between the parties to the release.

MacDonald Realty Kelowna (1995) Ltd. v. Narrows Development Ltd., 2007 BCSC 1089 (CanLII)

The defendant was the developer of a multi-unit strata project and it entered into a contract with the plaintiff pursuant to which strata lots in the development were listed for sale. Later, the parties entered into a further agreement in which, among other things, the plaintiff agreed to take less than it was otherwise entitled to under the listing agreement in respect of certain units that had been contracted for sale and the defendant agreed to a particular timing of payments for the plaintiff’s release of its “listing interest”. The court said that the plaintiff’s agreement to take less than it was entitled to represented good consideration passing to the defendant. The parties gave up their respective rights and obligations under the multiple-listing contract in return for the fresh obligations the parties undertook by the release.

Guarantee Company of North America v. Resource Funding Limited, 2008 CanLII 56006 (ON SC)

The plaintiffs were sureties and insurance companies which issued bonds on behalf of Canada 3000 Airlines Limited. The parent company of Canada 3000, Resource Funding Limited, provided an indemnity to the plaintiffs. As stated by the court, the main issue in this action was whether RFL had been released from its indemnity. Among other arguments, the plaintiffs contended that no consideration was given by RFL for a release from its indemnity. The court found that not causing Canada 3000 to seek its bonding facilities from another source was a benefit given by RFL to the sureties and thus consideration. The fact that this was not communicated to the sureties did not mean that no consideration was given by RFL. The court referred to authority for the proposition that, even without an express promise made in exchange, consideration can be found in the promisee doing something of value for the promisor. The court also said that, apart from the consideration given by RFL, the mutuality of promises between Canada 3000 and the sureties was sufficient consideration for the release of RFL to be binding. So long as someone from among various promisees provides consideration, a contract will be enforceable (citing Fridman, The Law of Contract in Canada).

Albu v. The University of British Columbia, 2014 BCSC 239 (CanLII) , appeal dismissed, 2015 BCCA 41 (CanLII)

The petitioner signed a letter agreement setting out a settlement that she reached with the defendant university and she signed an accompanying release. The petitioner was the only one to execute the letter agreement and the release, because the letter agreement only imposed obligations on her, as the releasor, with consideration flowing from the university as it allowed her to repeat an assignment on terms set out in the letter agreement.

Downer v. Pitcher, 2017 NLCA 13 (CanLII)

Following a collision between her taxicab and the appellant’s vehicle, the respondent accepted amounts paid by the appellant that were arrived at by reference to the damage to her cab and her lost income and she signed a release of all claims. She argued that, inasmuch as the payments pursuant to the settlement were only for property damage and income loss, there was no consideration furnished for the release of her personal injury claim. The Court of Appeal agreed that the calculation of the amount of the settlement was based on the extent of the property damage and income loss, but noted that the amounts paid were expressed to be consideration for the release of all claims. The appellant incurred a detriment in return for the total release. As the promisee, he had furnished consideration. It could not be said therefore that there was no consideration furnished for the release of the personal injury claim.

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. The original contract contemplated paving in accordance with specifications, and the release contemplated paving outside of specifications. The defendant argued that it did not receive consideration for this new contract. The court said that the release permitted the defendant to direct the plaintiff to proceed with the work that was outside the parameters of the original contract and therefore the defendant received consideration for entering into the new contract.

New Vision Renaissance MX Ltd. v. The Symposium Café Inc., 2020 ONSC 1119 (CanLII)

In this case a release was given by the plaintiffs in the context of settlement of a potential dispute over their inability to close the purchase of a franchise due to their lack of the funds needed to close. The plaintiffs argued that there was no consideration for the release. They asserted that a loan arranged for them was a sham orchestrated to take advantage of their vulnerable position and to secure a release from them for prior disclosure deficiencies. The court found that the plaintiffs received consideration, in that they were relieved of the obligation to pay the funds due on closing. The plaintiffs also asserted that they only agreed to the loan because of an unjustified demand by the defendants for payment of amounts that were not owing on closing. The court found that, even on the plaintiffs’ own theory, there was an amount owing on closing that they could not pay and for which they needed a loan that was given in exchange for the release.    

2.2.2.2 Release Unsupported by Consideration

In the decisions summarized below, arguments placing reliance on a release, or put forward to justify a demand for a release, were not successful because there was found to be no evidence of consideration for any such release.

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. A release signed by the plaintiff stipulated that the consideration was two particular documents signed by the defendant. It was clear that the consideration was to be these two documents. The uncontradicted evidence of the plaintiff was that these documents were never given or delivered to him. He never received or saw them. At the trial the documents were introduced in evidence by the defendant. The only inference that could be made was that they had throughout remained in the defendant’s possession and custody. Where forbearance on the part of an injured person is claimed by a tortfeasor, the right of action cannot be extinguished by mere agreement. The agreement to release the tortfeasor must be supported by consideration. The consideration must pass from the tortfeasor to the injured person and the injured person must accept same. In this case there was no evidence of any consideration having passed to or been accepted by the injured person. It followed that there was no accord and satisfaction and, therefore, no valid and binding release.

Adelaide Capital Corporation v. Offshore Leasing Inc., 1996 NSCA 24 (CanLII) , application for leave to appeal dismissed on this issue, [1996] S.C.C.A. No. 245 (QL)

The appellant was one of the guarantors of a debt owed by another corporation; the principal security for the debt was a second mortgage. The appellant denied responsibility under its guarantee based on a number of alternative assertions, including an allegation that there had been an agreement to release the guarantee. The trial judge found that such an agreement had been reached, but there was no consideration for it and, since it was not an agreement in writing and under seal, the creditor was not bound by it. The appellant submitted that the consideration for the release of guarantee was an agreement of the principal debtor to renew the mortgage. The Court of Appeal said that the appellant incorrectly characterized the renewal as a new loan. If in fact there was an agreement to release the guarantor, there was no consideration for such agreement given to the creditor. There was no additional payment made on the mortgage. There was no additional security given. The other guarantors did not increase the percentage of the debt for which they would be responsible. In short, the appellant could point to no benefit received by the creditor.

Royal Bank of Canada v Hrenyk, 2014 SKQB 15 (CanLII)

The defendant alleged that the plaintiff had agreed to release her from a guarantee. The court said it was significant that the defendant had presented no evidence of any value passing from her to the plaintiff in consideration for the release she claimed to have been given. Even if wrong on the implausibility of the plaintiff having gratuitously accepted a full and absolute withdrawal of the guarantee, the court found the absence of consideration, by itself, was “sufficient to negate the defendant’s position.”

Smith v. Coca-Cola Bottling Company, 2017 ONSC 396 (CanLII)

As a result of his injuries in a car accident, the plaintiff made claims against the tortfeasor, against his accident benefits insurer and against short and long term disability benefit carriers. His employer, Coca-Cola, was responsible to pay short term disability benefits, which were administered by Sun Life. All three claims were settled and Coca-Cola sought a broad release on the basis that a global settlement had been achieved. The court held that there was no global settlement: settlement of each of the three separate actions was negotiated separately. Insofar as Coca-Cola was concerned, the parties were focused solely on the short term disability claim and the release demanded by Coca-Cola was not contemplated nor demanded as part of the settlement. The court said that there was no consideration for such a release as between these parties.

2.2.2.3 Release With Acknowledgment of Consideration

The wording of a release will often include an explicit acknowledgment that consideration for the release has been received by the party who has agreed to relinquish claims or rights. For example, it is common for releases to contain one of many different variants of the following general form of words: “In consideration of the sum of $1.00, and other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the releasor releases and forever discharges the releasee from all actions, causes of action and claims.”

According to Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at pages 231-2, a statement or declaration of consideration in a commercial agreement adds nothing to the enforceability of the agreement and a recital or declaration that there is consideration in an agreement that is not a commercial one, such as a gratuitous promise or a gift, does not transform the promise into an enforceable commercial agreement.

The extent to which an explicit acknowledgment of consideration in a release will be accepted by courts as proof of consideration is discussed in the decisions summarized below.

The release considered in the Leger v. Arsenault decision summarized in section 2.2.2.6 of this chapter included an explicit acknowledgment of consideration of $1, as well as other good and valuable consideration. The court referred to the consideration for the release as “at best nominal” and seemingly implied that the existence of consideration was questionable on the evidence before it. In any event, though, the court went on to say that “[e]ven allowing the enforceability of the release on the consideration given”, there were other grounds for giving effect to an objection to the release.

Halsbury’s distinguishes between the use of a declaration of consideration and the use of nominal consideration. It indicates that: “The issues raised when the promisor has provided nominal consideration are similar to those raised by the use of the seal on the one hand, and by the use of gratuitous promises on the other.” See Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at page 232.

Taske Technology Inc., v. Prairiefyre Software Inc., 2004 Can LII 66295 (ON SC), appeal dismissed, [2005] O.J. No. 2683 (Div. Ct.)

A full and final release is a valid contract. In order for a contract to be binding between the parties there must be consideration. As a matter of law, consideration is generally regarded as a benefit to the promisor or a detriment to the promisee. On a motion for partial summary judgment dismissing the plaintiffs’ claims against the defendant Teasdale, the plaintiffs argued that a release given in connection with the settlement of earlier multi-party litigation did not prevent them from pursuing their claims because the plaintiffs received no benefit and Teasdale suffered no detriment for the release of claims. The Master said the document was clear and unambiguous that each of the parties had received consideration, the sufficiency of which was acknowledged. The Master also said that, if the plaintiffs’ argument were to be accepted, whenever a release is executed by multiple parties arising out of a number of contentious issues, the courts would be required to deconstruct the plain language of the release to determine what consideration flowed to which party with respect to which claim. It would always be open to one party to make a claim of “no consideration” for “my claim”. This would undermine the very policy reasons for enforcing releases and a party to a release could never take any comfort from its plain wording.

Piscine Energetics Inc. v. Choi, 2011 BCCA 244 (CanLII)

In respect of the consideration given for a release, the Court of Appeal said that there was no basis to question the consideration of $10.00 acknowledged on the face of the release.

Milano v. Alton et al, 2011 ONSC 4504 (CanLII)

The release in this case referred to consideration in the sum of two dollars, and other good and valuable consideration, and to the receipt and sufficiency of this consideration. The only evidence before the court about consideration for the release was contained in the affidavit of the plaintiff, who deposed that he did not receive the two dollars nor any other good and valuable consideration. The evidence in the plaintiff’s affidavit rebutted the statement in the release about the receipt and sufficiency of consideration.

2.2.2.4 Whether Alleged Consideration Would Have Been Received Anyway

The decisions summarized in this section bear on whether the consideration for a release can be found in a promise to pay an amount which the releasor is otherwise legally entitled to receive, or something else that would have been received by, or available to, the releasor regardless of whether the release was signed.

King Craft Division of Polk Canada Ltd. v. Burnett, 2000 CanLII 8874 (ON LRB)

If an employer dismisses an employee, even constructively, the employer is entitled to give working notice under the old terms of employment. But the employer cannot demand a release in order for the employee to receive the notice to which he is entitled. And the employer cannot claim the employee refused to work the notice period if it required such a release.

Yanez v. Canac Kitchens, 2004 CanLII 48176 (ON SC)

Upon the dismissal of an employee, asking for a release for payment of statutory entitlements may expose the employer to the argument that the release must fail for want of consideration (citing Hobbs v. TDI Canada Ltd., 2004 CanLII 44783, where the Ontario Court of Appeal said that the requirement of consideration to support an amended agreement is especially important in the employment context where, generally, there is inequality of bargaining power between employees and employers).

Hobbs v. Robertson, 2006 BCCA 65 (CanLII)

This action arose from the death in hospital of a patient who was a Jehovah’s Witness and who had signed a document entitled “Refusal to Permit Blood Transfusion”. The document included a release from responsibility for consequences of the patient’s refusal to permit the use of blood or its derivatives. On appeal from a decision that the action was barred by the release, the Court of Appeal concluded that such a decision should not have been made on the basis of the record before the court. In the course of its reasons, the Court of Appeal made comments on the issue of consideration. The judge at first instance found that the consideration moving from the hospital to the patient in return for her signing the Refusal was her admission to the hospital. But there was no evidence that the hospital would not have admitted the patient if she did not sign the Refusal. This point was of such great significance that it should not have been left in doubt. The parties could have and should have obtained evidence from the hospital as to whether it was a condition of the patient’s admission that she sign the Refusal.

Wyllie v. Larche, 2015 ONSC 4747 (CanLII)

In this case, the defendant dismissed the plaintiff from his employment and sought to negotiate a release of the plaintiff’s claims against it by offering the compensation to which the plaintiff was entitled under the Canada Labour Code. Had the plaintiff signed the release in these circumstances, the court said it likely would have been unenforceable, because of the inequality of their bargaining positions. An employee’s refusal to sign a release does not relieve the employer from its statutory obligation to pay severance.

2.2.2.5 Past Consideration

When parties have entered into a contract, and the provision of a release is neither an express nor an implied term of the contract, a subsequent request or requirement that one party sign a release may give rise to an argument that there must be fresh consideration to support the release. This argument takes force from the legal principle that “past consideration does not make a promise enforceable”. (As to the legal principle, see Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at page 234.)

Issues about fresh consideration may arise, for example, in the context of a pre-emptive release: see Manitoba Law Reform Commission, Waivers of Liability for Sporting and Recreational Injuries (Report #120, January 2009), 2009 CanLIIDocs 275, at page 11. Specifically, fresh consideration emerges as a point of contention when participants in an activity allege that, after they believed they had completed arrangements to engage in the activity, they learned that a pre-emptive release was a requirement for participation. In this regard, see Chapter 8: Anticipatory or Pre-Emptive Releases, section 8.3.3.1, When Fresh Consideration is Required. The decision referred to below involved issues about fresh consideration was required for a release that was not a pre-emptive release.

As a general rule, a creditor cannot cause a debtor to revive an obligation from which the debtor was released, unless the creditor offers fresh consideration, although, it is arguable that a debtor may freely agree to revive a discharged debt in exchange for the creditor’s provision of goods or services: see Alberta (Attorney General) v. Moloney, 2015 SCC 51 (CanLII), [2015] 3 SCR 327, per Gascon J., citing Wood, Roderick J. Bankruptcy and Insolvency Law. Toronto: Irwin Law, 2009, at page 301.

Hall v. Quicksilver Resources Canada Inc., 2015 BCCA 291 (CanLII)

The plaintiff’s employment with the defendant Quicksilver was terminated without cause. The plaintiff claimed that was entitled to notice of termination commensurate with the length of his service with his previous employer, Catalyst. Quicksilver had purchased from Catalyst the site of a decommissioned pulp mill, where the plaintiff had been employed all his working life. The plaintiff had entered into an agreement with Catalyst, referred to as a termination agreement, and he signed a release. After his employment with Quicksilver began, the plaintiff signed another release of all claims against Catalyst arising from his employment and the termination thereof. The trial judge found that there was no new consideration provided to the plaintiff by Catalyst for the new release. The Court of Appeal did not agree that fresh consideration was necessary to support the new release – or that the release was otherwise invalid. The appellate court said it was not referred to any evidence to suggest that the form signed by the plaintiff was not a “standard form” of Catalyst – which the plaintiff had agreed to sign several months before – and the plaintiff’s past service had been fully recognized in the payment he received. The plaintiff proceeded to sign the release in consideration of the “settlement” and did not plead non est factum or seek rectification.

2.2.2.6 Other Cases on Releases and Consideration

The decisions summarized in this section deal with other issues about consideration arising in the context of a release.

J.L. Coulter Ltd. v. Spycher Estate, 1982 ABCA 239 (CanLII)

The respondent was the administrator of the estate of Jack Spycher, who had arranged with the appellant to move a modular home. During the course of moving the home, Spycher was told that the home would not be taken over a particular bridge unless Spycher signed a document relieving the appellant of responsibility for damage done to the home while it was being transported over the bridge. Spycher signed the document. The trial judge found that there was no consideration for the release. On appeal, the appellant relied on equitable estoppel to overcome the finding that there was no consideration for the release. The Court of Appeal said that this could only put him in the position he would have been in had the learned trial judge found consideration for the release. But the Court of Appeal held that the wording of the release was not sufficiently broad to relieve against the appellant’s liability for negligence.

 

Leger v. Arsenault, 1992 CanLII 7163 (NB QB)

The applicant sought an order declaring void a release he had signed which stated that he irrevocably waived his right to apply for a taxation of his lawyer’s account. The court said that there must be consideration for a waiver of a right of action or at the very least reliance on the promise to waive that has been given; in this case, consideration for the waiver was at best “nominal” and there was no evidence to support a conclusion that the applicant should be estopped from withdrawing his promise.

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).

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, Volume 14, Equity, Release and Waiver, at pp. 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.”

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. 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 or that the landlord received any consideration from them to grant it.

Castleform Development Inc. v. Chiem, 2019 ONSC 238 (CanLII)

On a motion for summary judgment, it was submitted that the dispute between the parties was settled and that the settlement was evidenced by a release. The court said that the issue at hand was whether there was a settlement: if there was no settlement agreement, there was no exchange of consideration. The court concluded that issues raised by the supposed release, including whether there was a settlement and whether the document in question was a release, required a trial.

Sigma Capital Management Group Inc. v. Benzer Limited, 2022 ONSC 3926 (CanLII) , appeal on other grounds dismissed, 2023 ONCA 65 (CanLII)

The court concluded that a release given in settlement of earlier litigation against KPMG LLP was only intended to apply between KPMG, on the one hand, and the plaintiffs in the litigation against KPMG. The release was not meant to apply as among the plaintiffs. A number of factors led the court to this conclusion, including the fact that the release referred to consideration paid by KPMG, but there was no reference to consideration provided by the plaintiffs to each other.

2.2.3 Whether Informed Consent is Required

While a general requirement of informed consent for a valid release has not been broadly recognized in Canadian case law, the Newfoundland and Labrador Court of Appeal said, in one of the decisions summarized below, that, in order for a release to be valid, “it must be executed on an informed basis”: Best v Hendry, 2021 NLCA 43 (CanLII) , at paragraph 101. In contrast, Jamieson v. Whistler, also summarized below, indicates that the concept of “informed consent” is not an appropriate basis upon which to assess the adequacy of a release – more specifically, in the circumstances of Jamieson, a pre-emptive release.

As can be seen from other decisions set out in this section, specific fact situations in which there are reasons for elevated concern about full information being made available to the releasor may bring into play informed consent, or something much like it, as the courts consider the validity or enforceability of a release. Although the Newfoundland and Labrador Court of Appeal made a general statement about execution of a release “on an informed basis” in Best v. Hendry, that case involved a release given by the beneficiaries of an estate in favour of the executor; thus, Best v. Hendry could be seen as a case in which, on its facts, fully informed consent by the releasors took on a special importance.

In Urbanson v Western Canadian Place Ltd, 2016 ABQB 32 (CanLII), a claim was made by a patron of a fitness facility who had signed a pre-emptive release in a document with the heading “Informed Consent and Agreement and Release Form”, but the issues before the court were decided without any discussion of informed consent.

According to the law of waiver set out above (Chapter 1: Introduction to Releases, section 1.5, Waiver and Release), even if the jurisprudence does not explicitly speak of “informed consent”, it seems that a party said to have waived rights must done so “on an informed basis”. More specifically, the Supreme Court of Canada has held that waiver will be found only where the evidence demonstrates that “the party waiving” had a full knowledge of rights and an unequivocal and conscious intention to abandon them: Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 SCR 490.

Note that issues about full disclosure of material facts may arise when a release is given in circumstances governed by a particular statutory scheme: see, for example, Chapter 11: Releases in Particular Situations, section 11.6, Franchises.

Allison v. Noranda Inc., 2001 NBCA 67 (CanLII)

In considering whether a release signed by the appellant upon the termination of his employment precluded him from suing in tort for negligent misrepresentation, the New Brunswick Court of Appeal said that surely an employer is under an obligation to make sufficient disclosure to enable an employee to make an informed decision in cases where the employer asks an employee to make an election with respect to separation pay options that impact significantly on pension benefits. This comment ultimately did not bear on the validity of the release, though, because the court concluded that the release dealt with separation pay and that the potential tort liability of the respondents was neither excluded nor limited by an express term of the release, nor did anything in the document implicitly absolve the respondents of tortious liability.

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 referred to the lawyer’s implication that the beneficiary’s entitlement was conditional on forwarding the release and said that this practice had been criticized in Brighter (see Chapter 1, section 1.12.2, above). The court also noted that the lawyer owed a fiduciary duty to the beneficiary in respect of her beneficial interest. 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”. There was no evidence that the beneficiary executed the release knowing that double charges for the trustee’s work had been made against the estate, nor was there evidence that the beneficiary knew that the lawyer charged the estate more for legal and trustee’s services than would arguably be allowed on a quantum meruit basis. The release was not a fully informed one and it could not be enforced against the beneficiary.

Bronson v. Hewitt, 2010 BCSC 169 (CanLII) , appeal allowed on other grounds, 2013 BCCA 367 (CanLII)

A trustee submitted that a beneficiary’s claim with respect to an alleged breach of trust relating to a sale of shares by the trustee was barred by a release signed by the beneficiary. The court said that, if a beneficiary acquiesces in a breach of trust after its occurrence, the beneficiary is barred from suing the trustee in the event of a loss from the breach. The beneficiary, who acquiesces, however, must have full information of all pertinent facts and circumstances and must understand his or her rights in what he is consenting to, concurring in or acquiescing to. In this case, the beneficiary did not know that the trustee was not authorized to sell the shares; this information had been carefully concealed from the beneficiaries. In the face of his non-disclosure, the trustee could not rely on the release.

Goodswimmer v. Canada (Attorney General), 2016 ABQB 384 (CanLII), appeal dismissed, Goodswimmer v Canada (Attorney General), 2017 ABCA 365 (CanLII), application for leave to appeal dismissed, Chief Melvin Goodswimmer, et al. v. Attorney General of Canada, et al., 2018 CanLII 61050 (SCC)

The plaintiff Band entered into a Treaty Land Entitlement Agreement with Canada, resolving certain claims arising out of a treaty. The Treaty Land Entitlement Agreement incorporated very general release wording, referring to “claims or demands of whatsoever nature or kind”. The court at first instance considered allegations in the statement of claim that the Band did not provide informed consent and that Canada obtained the Band’s consent through “breach of trust, fiduciary duty, equitable fraud, deceit or negligent misrepresentation”. The court said there was no evidence that the agreement and the releases contained in the agreement were obtained by fraud, misrepresentation or a failure to disclose material information. The court concluded that there was informed consent.

Arvanitis v. Slater Vecchio, 2016 BCSC 1612 (CanLII)

The plaintiff, who had asserted claims for injuries suffered in two automobile accidents, commenced this litigation against her former lawyers. At issue was whether the lawyers discharged their obligation to use reasonable care and diligence to secure for her, from the Insurance Corporation of British Columbia, rehabilitation or treatment benefits, known as Part 7 benefits. The plaintiff had signed a release of all claims against ICBC including Part 7 benefits for both accidents. In this context of a negligence claim by the plaintiff against her former lawyers, the court considered whether there was “informed consent” on the plaintiff’s part when she released ICBC for Part 7 benefits. After a detailed review of the evidence, the court found that the plaintiff understood she was releasing her claim to Part 7 benefits.

Jamieson v. Whistler Mountain Resort Limited Partnership, 2017 BCSC 1001 (CanLII)

A pre-emptive release given in advance of events or activities that could result in injuries or damages does not operate like informed consent. The two concepts are distinct. Filtering the facts of a case through the lens of “informed consent” cannot be the measure by which to test the adequacy of a release.

Gastle v. Gastle, 2017 ONSC 7797 (CanLII)

When Arthur Gastle passed away, he was survived by two sons, Calvin and Robert. The deceased and Robert had five joint bank accounts. Arthur’s will provided for the residue of his estate to be divided equally between Calvin and Robert and, pursuant to the will, Calvin and Robert were appointed as co-executors of their father’s estate. Robert signed a certificate and warranty regarding the estate in which he certified that, to his knowledge, the interim distribution statement that was attached accurately described all of the realizable assets of the estate. The next day, Calvin executed a release and indemnity which released Robert and others. The same interim distribution statement was attached to both Robert’s certificate and Calvin’s release. Subsequently, Calvin found out about the five joint bank accounts. Calvin argued that the joint accounts should be distributed through the estate and Robert relied on the release. The court said the evidence was clear that Calvin did not know about the existence of the joint accounts until after signing the release and Robert should not be entitled to rely on that release to defend Calvin’s application. Calvin was clearly not fully informed as the certificate upon which he relied when he signed the release did not disclose the existence of the joint accounts.  His signing of the release reflected his partially informed intention to be legally bound by what was disclosed in the incomplete and patently false certificate.

Milne v. Milne, 2019 ONSC 459 (CanLII)

The applicant brought an application for spousal support against her former common law partner. Spousal support had been finally settled by way of a separation agreement which contained full spousal support and property releases. The applicant argued that the agreement was signed by her as a result of duress. Citing Melnyk v. Melnyk, 2010 MBQB 121, the court referred to duress as circumstances “sufficient to negative informed consent of the wife”. The court said that informed consent is essential to the formation of an agreement; obviously pressure brought to bear that robs an individual of that informed consent would vitiate the agreement at common law and allow it to be set aside under the Family Law Act.

Aberback v. Bellin, 2019 ONSC 3866 (CanLII)

The respondent brought a motion for summary judgment based on an alleged settlement of litigation between the parties involving claims for spousal support, equalization and exclusive possession of the matrimonial home and its contents. The court determined that the parties had not entered into a binding settlement agreement for a number of reasons. One of the reasons was that the applicant was not afforded an opportunity to obtain independent legal advice. In the context of this family law litigation, the court said that, when one party is self-represented, that party must be afforded an opportunity to obtain independent legal advice. Such advice would ensure that the litigant “has informed consent”. Informed consent would include the nature of general release conditions and the necessity for Miglin releases in the context of spousal support resolutions. (As to Miglin, see Chapter 11: Releases in Particular Situations, section 11.4, Family Law.) The court did not believe, in the absence of independent legal advice, that the applicant “had informed consent”.

Best v Hendry, 2021 NLCA 43 (CanLII)

In her will, the testatrix bequeathed her home and contents to one of her nieces, Ms. Hendry, and the residue of her estate to another niece, Ms. Best. She appointed the lawyer who prepared the will as executor of her estate. Prior to her death, the testatrix moved from her own home to a care home and the house was sold. Almost three years later, the testatrix passed away. As stated by the Court of Appeal, this appeal concerned the distribution of an estate where property that was the subject of a specific bequest was not in the estate at the time of the death of the testator. This circumstance engaged the doctrine of ademption, according to which, if property that is the subject of a specific bequest in a will does not exist in a testator’s estate at the time of the testator’s death, the bequest adeems, or fails. In this case, the executor of the estate proposed to the beneficiaries that Ms. Hendry receive cash equal to the sale proceeds from the house and Ms. Best receive the cash balance after deduction of his fees. The beneficiaries made a private arrangement for Ms. Hendry to give $40,000.00 to Ms. Best and they told the executor that they were content with his proposal. The executor presented a release to them, which they both signed. The Court of Appeal said that, in order for a release to be valid it must be executed on an informed basis. The court cited Bank of British Columbia Pension Plan where the British Columbia Court of Appeal adopted views expressed in Chitty on Contracts, Vol. 1 (London:  Sweet and Maxwell Ltd., 1994) at 1074-1075, including the proposition that a release will not be construed as applying to facts of which the party making the release had no knowledge at the time of its execution or to objects which must then have been outside the party’s contemplation. The court said Ms. Best executed the release on the basis of incomplete and legally irrelevant information respecting the disbursement of the estate which was provided to her by the executor. The executor could not be excused from liability on the basis that he gave her the opportunity to seek independent legal advice when the basis on which he suggested she do so was uninformed.  As stated in Kaiser, the release could not be construed to apply to facts of which Ms. Best had no knowledge when she signed it.  Accordingly, the executor could not rely on the release to escape liability.

2.2.4 Intention to Abandon Rights

An intention to abandon rights is a key element of a waiver of rights under Canadian law. As discussed above, the Supreme Court of Canada has indicated that waiver will be found only when the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them: see Chapter 1: Introduction to Releases, section 1.5, Waiver and Release and, specifically, the decision in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC) referred to there.

In Canada, the law as it relates to releases is by no means the same as the law applicable to waivers. While, in particular situations, Canadian courts have considered whether releases were given with informed consent (see above, section 2.2.3, Whether Informed Consent is Required), Canadian law does not support the general proposition that the Saskatchewan River requirements for proof of waiver – full knowledge of rights and an unequivocal intention to abandon those rights – apply equivalently to releases.

But a relinquishment of rights can readily be framed and worded as both a release and a waiver. Indeed, it is very common for pre-emptive releases to take the form of both a release and a waiver. (See Chapter 8: Anticipatory or Pre-Emptive Releases.) As can be seen from the decisions set out below (involving pre-emptive releases), when Canadian courts consider the enforceability of a relinquishment of rights, and especially one that combines the concepts of release and waiver, the Saskatchewan River requirements may come into play.

Cooper v. Blackwell, 2017 BCSC 1991 (CanLII)

The deceased husband of the plaintiff, Jeffrey Cooper, had signed release from liability agreements for hunting excursions in 2009, 2012 and 2013. The agreements stated that Cooper accepted and assumed all risks of personal injury or death or loss or damage to property and relinquished any and all rights against the defendant Blackwell and their employees, agents and associates. The defendants relied on a “course of dealing” principle of contract law in support of an argument that a liability release should be implied in respect of a 2014 hunting excursion. The court rejected this argument on a number of grounds, one of which was that waiver requires an unequivocal and conscious intention to abandon rights and there was no evidence of such an intention.

Manson v Mitchell, 2023 BCSC 723 (CanLII)

This action arose out of injuries suffered by the plaintiff as a result of a mountaineering incident in July of 2021. The defendants sought a declaration that a waiver and release signed by the plaintiff applied to the mountaineering trip during which the incident occurred and was a full defence to the claim. The plaintiff argued that the waiver and release did not apply to the mountaineering trip during which the incident occurred because it was expressly date-specific and therefore applied only to an earlier climb on June 18, 2021. The court said that limiting the applicability of the waiver to the June 18th climb was consistent with the requirement that as a matter of law, a waiver requires an unequivocal and conscious intention to abandon rights, citing Cooper v. Blackwell, above, and Sandhu v. Mangat, 2018 BCCA 454, where the B.C. Court of Appeal set out the Saskatchewan River requirements for waiver. The July expedition had not even been raised at the time when the waiver and release was signed and thus was not within the plaintiff’s contemplation at that time.

2.3 Parties or Signatories to a Release

2.3.1 Capacity of Parties to Release

In order for an agreement to take effect as a legally binding contract, the parties must have the capacity to agree to the terms of a contract. The general principles of capacity to contract are outlined in Halsbury’s Laws of Canada, 1st Edition (Toronto: LexisNexis, 2017), Contracts (2017 Reissue), at page 335, where it is said that: “To create a contract, a person, whether a natural or legal person, must have the capacity to enter into a contract. The general rule is that, outside two limited classes of protected individuals, individuals are free to enter into any contract as long as it is not prohibited. … corporations have the same capacity to contract as any individual, but this capacity can be limited by the corporation or by the legislation which creates the corporation. Moreover, special rules govern any pre-incorporation contracts, that is, contracts entered into on behalf of the corporation prior to its creation … .”

The “two limited classes of protected individuals” referred to in the passage from Halsbury’s are minors and individuals of unsound mind. As well, individuals who, at the time of entering into a contract, were so intoxicated as to be unable to understand what they were doing also lack capacity to contract; intoxication is treated, in effect like a temporary mental disorder: see Fred D. Cass, Releases, Intoxication and Unconscionability (2008) 35 Adv. Q. 19 and Chapter 9: Challenging a Release, section 9.7.2, Intoxication and Impairment. With regard to pre-emptive releases given by or on behalf of minors, see Law of Infant Waivers: Wong v. Lok’s Martial Arts Centre Inc., (2011) 44 UBC L Rev 407, at page 421 (case comment by P. Bowal, T. Brierton and J. Rollett).

When considering whether an individual has the capacity to enter into a contract, it is important to be aware of any applicable legislation in the particular jurisdiction. In Ontario, for example, section 1 of the Age of Majority and Accountability Act provides that every person attains the age of majority and ceases to be a minor on attaining the age of eighteen years. Subsection 2(1) of the Substitute Decisions Act establishes a presumption of capacity to contract in respect of any person who has reached the age of majority. Specifically, it provides that a person who is eighteen years of age or more is presumed to be capable of entering into a contract. Subsection 2(3) of the statute goes on to say that a person is entitled to rely upon the presumption of capacity with respect to another person unless he or she has reasonable grounds to believe that the other person is incapable of entering into the contract or of giving or refusing consent.

Insofar as releases are concerned, issues about the capacity of a party generally arise in the context of a challenge to the validity or enforceability of a release. For example, it may be argued that a release was not understood by the releasor at the time when it was signed, because the releasor’s thinking ability was impaired. In circumstances like these, a challenge to a release may be based on the incapacity or disability of the releasor as well as other grounds, such as unconscionability. Thus, in rlaw.online, capacity is generally addressed in the context of grounds for challenging a release: see Chapter 9, below, section 9.5, Disability and Incapacity.

De Smedt v. Chesire et al., 2023 ONSC 249 (CanLII)

In its decision regarding the capacity of a deceased person at the time when he signed a will, the court said that, If the deceased did not have capacity to sign a will, he certainly could not have understood the nature or significant implications of a direction and authorization signed by him that included a release.

2.3.2 Unidirectional and Mutual Releases

A release may be given by one party, or group of parties, to another, or parties may exchange releases in favour of each other. When parties exchange releases in favour of each other, the document used for this purpose is known as a mutual release. According to the definition in Black’s Law Dictionary, 11th Edition (St. Paul MN: Thomson Reuters, 2019), at page 1543, a mutual release is: “A simultaneous exchange of releases of legal claims held by two or more parties against each other.” Although seemingly less a definition than an explanation of the manner in which a typical release operates, the following statement about a mutual release was made in Disera v. Bernardi, 2014 ONSC 4500 (CanLII) : “A valid mutual release typically releases the other parties to the agreement from any subsequent claims related to the claims that have been released in exchange for valuable consideration.”

As can be seen from the cases below, issues may arise about the intention of parties when a mutual release is sought or there is a dispute about whether a mutual release was given. In the Chater decision, the court distinguished between “unilateral” and mutual releases. The description of a release as “unilateral” perhaps sits uneasily with Canadian case law which makes clear that a release is a contract: see for example, Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) , at paragraph 21.

Bastarache J. of the Supreme Court of Canada expounded on the concept of a “unilateral contract” in his judgment on behalf of the majority of the court in Sail Labrador Ltd. v. Challenge One (The), 1999 CanLII 708 (SCC), [1999] 1 SCR 265, at paragraph 33. Among other things, Bastarache J. said that: “…a unilateral contract is one in which a party makes a promise in return for the performance or forbearance of an act. There is no counter-promise to perform this act or forbearance. In this way, a unilateral contract is a contract in which only one party undertakes a promise. This promise takes the form of an offer which can only be accepted by performance of the required act or forbearance. Such performance provides the other party’s consideration, allowing it to enforce the original promise.” It cannot be said that releases, whether “uniteral” or “mutual”, are consistently formed in this manner.

While it may not necessarily be a distinct improvement on the description of a non-mutual release as “unilateral”, the term used here is a “unidirectional” release. Using the descriptor “unidirectional” should at least avoid any misapprehension that a “unilateral release” is to be understood by reference to the broader concept of a “unilateral contract”.

Jameson House Properties Ltd. (Re), 2011 BCSC 965 (CanLII) is a case in which purported releases truly were “unilateral”, in that the “beneficiary” of the releases had no involvement whatsoever in the creation of the documents. In the circumstances of this case, the court said it could not treat the releases as genuine and it gave them no weight. See Chapter 9: Challenging a Release, section 9.15, Authenticity and Legitimacy of a Release.

Chater v. York Central Hospital, 2009 CanLII 33022 (ON SC)

In this case, the court granted a motion by certain of the defendants to enforce a settlement of an action alleging medical negligence. The defendants were physicians who were involved in the care and treatment of one of the plaintiffs. The court indicated that mutual releases were to be executed pursuant to the settlement, but questioned the insistence of the plaintiffs on mutual releases. The court said that, in the context of a malpractice action, it would be unusual for the doctors to sue or have any reason to initiate action against the patient and, in this situation, it was difficult to understand what advantage was gained by the insistence on mutual releases.

Castleform Development Inc. v. Chiem, 2019 ONSC 238 (CanLII)

The defendants in this case moved for summary judgment on the basis of an alleged release. In response to questions about the parties and signatories to the release, the defendants submitted that the release was not mutual; rather, only the alleged releasor was releasing claims he might have against the defendants. The court said there was nothing in the language of the document to suggest, much less unequivocally demonstrate, “this one-sided proposition”. For a number of reasons, the court decided that the supposed release raised issues requiring a trial and it dismissed the motion for summary judgment.

2.3.3 Whether Release Has Been Signed By Releasor or Releasee

Canadian courts have repeatedly indicated that a release is a contract, but, unlike most contracts that take the form of a signed document, a release typically is not executed by all parties, unless it is a mutual release. A unidirectional (unilateral)l release usually is signed only by the releasor or releasors. The Albu decision summarized below confirms that, where obligations are imposed only on the releasor, a release need not be signed by the releasee.

In the Adelaide Capital case below, it was not clear whether a draft written release had actually been signed by the releasor, but the court said that the releasor had, implicitly or explicitly, agreed to give a release.

McMurachy v. Red River Valley Mutual Insurance Co., 1994 CanLII 10984 (MB CA)

Upon the settlement of an action, the defendant McMurachy assigned her cause of action against an insurer to the plaintiff Pritchard. An assignment and release was executed which provided that the assignee released the assignor in accordance with the terms of an attached release, a copy of which the assignee agreed to execute and return to the assignor. In this subsequent action against the insurer, the court noted that an actual release was never executed, but said it was common ground that this was simply a technical oversight upon which nothing turned.

Adelaide Capital Corporation v. Toronto-Dominion Bank, 2006 CanLII 39459 (ON SC) , appeal allowed on other grounds, South Holly Holdings Limited v. The Toronto-Dominion Bank, 2007 ONCA 456 (CanLII)

In settlement of a judgment against them obtained by the defendant bank, the third parties in this proceeding reached an accord and satisfaction with the bank, pursuant to which the third parties paid the bank $2,500 and sought a release from the bank. A draft release was prepared, but it was not clear from the pleadings whether that release was actually executed by the bank. The court said that the bank agreed, implicitly or explicitly, to release the third parties from future claims arising from the settlement of the judgment.

Albu v. The University of British Columbia, 2014 BCSC 239 (CanLII) , appeal dismissed, 2015 BCCA 41 (CanLII)

The petitioner argued that a letter agreement setting out a settlement that she reached with the defendant university was not approved nor executed as required by the British Columbia University Act. The letter agreement and accompanying release were signed by the petitioner and her lawyer signed the release as witness. The letter agreement did not require execution by the Senate or Board of Governors of the university because neither was obliged to do anything by its terms, and accordingly neither was required to execute the agreement or the release. The petitioner was the only one to execute the letter agreement and the release, as the releasor, because the letter agreement only imposed obligations on her.

2.3.4 Issues About Execution of Release by All Intended Signatories

In the Alfaiate decision summarized below, the court addressed the required signatories to a release in view of the terms of a settlement agreed to by the parties. For cases in which Canadian courts have more generally considered the terms of a release to be provided in order to complete a settlement, see Chapter 4: Releases and Settlement, section 4.6.3.

Alfaiate v. 1014784 Alberta Inc, 2018 ABQB 666 (CanLII)

The parties settled this action using the formal offer process under the Alberta rules of court. The formal offer accepted by the plaintiff provided for the plaintiff to execute a release which would also be signed by the plaintiff’s spouse, but a dispute arose about whether the plaintiff’s spouse must deliver a release. The court directed that the plaintiff was obliged to deliver the contractually required release properly executed by him and his spouse. It was up to the plaintiff to satisfy himself that he could deliver the release before accepting the offer.

Yeung v Chan, 2017 ONSC 3138 (CanLII)

Following an aborted purchase of a condominium unit by the respondents from the appellant, the parties signed a mutual release. The court’s interpretation of the release was that the parties intended that it be signed by the realtor involved in the sale of the unit.  The court said that such an interpretation was in accord with the wording on the face of the release and also made good business sense, in view of the exposure of the appellant to a potential claim by the realtor for commissions. The release was not signed by the realtor and the court concluded that it had not been properly executed.

2.4 Legal or Other Advice

It must be said, though, that a recent re-statement of the law on unconscionable transactions by the Supreme Court of Canada has significantly diminished the weight given to independent legal advice in cases such as Cain v. Clarica Life Insurance Company, 2005 ABCA 437 (CanLII) . In Cain, at paragraph 55, the Alberta Court of Appeal indicated that, where unconscionability or undue influence is alleged, independent legal advice is usually a complete answer to the claim. But the majority of the Supreme Court in Uber Technologies Inc. v. Heller 2020 SCC 16 (CanLII) said, at paragraph 83, that: “Independent advice is relevant only to the extent that it ameliorates the inequality of bargaining power experienced by the weaker party …. It, for example, can assist a weaker party in understanding the terms of a contract, but might not ameliorate a weaker party’s desperation or dependence on a stronger party …. Even where advice might be of assistance, pro forma or ineffective advice may not improve a party’s ability to protect their interests … .”

Taske Technology Inc., v. Prairiefyre Software Inc., 2004 Can LII 66295 (ON SC), appeal dismissed, [2005] O.J. No. 2683 (Div. Ct.)

In the context of a settlement of litigation reached at a mandatory mediation session, the Master said that the presence of legal advice is critical in enforcing a release, citing Ysselstein v. Tallon , Albert Bloom Ltd. v. Intermetco Ltd. and Abundance Marketing Inc. v. Integrity Marketing Inc. .

C.E.W. v. G.D.W. et al, 2007 BCSC 550 (CanLII)

In the course of finding that a release was the product of an unconscionable transaction, the court commented on appropriate independent legal advice in the family law context.

Hodaie v. RBC Dominion Securities et al., 2011 ONSC 6881 (CanLII) , appeal dismissed, Hodaie v. RBC Dominion Securities, 2012 ONCA 796 (CanLII)

The plaintiff sought to distinguish certain principles of settlement formation and completion on the basis that, unlike the circumstances in other cases, he was not represented by counsel. The court said the plain fact is that a settlement agreement is a contract and lay people are competent to enter into contracts. It was true that the release sent to the plaintiff went beyond what was necessary and he was not obliged to sign it as drafted. But this did not entitle him to avoid the settlement agreement.

Thompson v. Rogers Communications Inc., 2013 ONSC 6975 (CanLII)

The releasor brought a motion to set aside a release entered into as part of a settlement agreement. The release stated that counsel for the releasees had advised the releasor to seek independent legal advice and that the releasor had decided not to seek such advice. The release was held to be binding on the releaser. The court said that lack of independent legal advice is not a freestanding defence.

Sheard Estate, 2013 ONSC 7729 (CanLII)

In this case, the court said that, although it might have been better for the lawyer representing estate trustees to suggest independent legal advice to beneficiaries before the beneficiaries signed releases, this was not fatal to the enforceability of the releases.

Taplin v Walsh, 2016 ONSC 2998 (CanLII)

The parties entered into a separation agreement and a full and final release of claims including any claim for spousal support. The applicant commenced an application to set aside the separation agreement. In addressing the applicant’s arguments, the court said that the absence of independent legal advice is not a ground in and of itself to set aside an agreement.

Sigma Capital Management Group Inc. v. Benzer Limited, 2022 ONSC 3926 (CanLII) , appeal on other grounds dismissed, 2023 ONCA 65 (CanLII)

The court concluded that a release given in settlement of earlier litigation against KPMG LLP was only intended to apply between KPMG, on the one hand, and the plaintiffs in the litigation against KPMG. The release was not meant to apply as among the plaintiffs. A number of factors led the court to this conclusion, including the fact that, had the release been intended to operate as among the plaintiffs in the litigation against KPMG, an issue would have arisen with respect to the fact that they were all represented by the same law firm.  One would have expected, at a minimum, that they would have been advised to seek independent legal advice regarding the release. There was no evidence that this happened.

2.4.1 Acceptance of Release by Counsel

In the decision summarized below, a lawyer’s acceptance of a release was held to be binding on the lawyer’s client.

Vengroff v. Transamerica Life Insurance Company of Canada, 2008 CanLII 22912 (ON SC)

A settlement was reached in respect of a matter involving insurance policies purchased by the plaintiff from the defendants. One of the defendants refused to sign a release because he was concerned about eliminating any claim he might have for commissions arising out of the insurance policy. The defendant’s counsel had expressed his approval of the release that the defendant refused to sign. The court said that counsel’s “clear acceptance of the release” was binding on his client.

2.5 Wording and Provisions of a Release

Canadian jurisprudence provides guidance to the drafter of a release both as to the general form of words necessary to constitute a release and as to specific release provisions and wording.

2.5.1 Form of Words to Constitute a Valid Release

No particular form of words is necessary to constitute a valid release; any words which show an evident intention to renounce a claim or discharge the obligation are sufficient. This proposition was one of a number of principles on the interpretation of releases adopted by the British Columbia Court of Appeal in Bank of British Columbia Pension Plan v. Kaiser from Chitty on Contracts, 27th Edition, Volume 1 (London: Sweet & Maxwell, 1994). The principles adopted in Bank of British Columbia have been quoted in many other Canadian decisions: see, for example, Sumas Remediation Services Ltd. v Crowe MacKay LLP, 2018 BCSC 782 (CanLII), at paragraph 33, Quilichini v Wilson’s Greenhouse, 2017 SKQB 10 (CanLII), at paragraph 20, and R. v. Imperial Tobacco Canada, 2012 ONSC 6027, at paragraph 27, appeal dismissed, Ontario v. Imperial Tobacco Canada Ltd., 2013 ONCA 481 (CanLII) .

Although no particular form or words is required to constitute a valid release, it does not follow that there is no need for the words of a contractual document to be clear and explicit in expressing the intention that they will take effect as a release. In Dallas Transport Ltd. v. Atlas Plastics Inc. and Kenco Transportation Services Inc. (third party), 2001 MBQB 167 (CanLII), at paragraph 27, the court said it did not accept suggestions that, because a purchaser of equipment had signed bills of lading when the equipment arrived at its premises, the purchaser had somehow released any claims it might have against the trucking company that transported the equipment for the reasonable cost of repairing damage that occurred during transport. The wording on the bills of lading was not sufficient to constitute a waiver or release: “If they want a waiver or release and if they can convince a consignee to sign it, they still must use clear and express wording and they should be sure that when people sign these documents they understand that they are giving a release or waiver.”

Consistent with the proposition that no particular form of words is necessary to constitute a valid release, a release need not actually use the word “release”, as can be seen from the cases below. In Sutherland v. Collett (Estate), 2017 YKSC 36 (CanLII) , a Settlement Conference Order which resolved issues relating to the division of communal assets between parties who were former common law spouses stated: “There shall be no further claims by either party arising from this relationship.” The court referred to this as a “release clause” and it took the view that the intention of the release clause was to make the SCO a final order, bringing the litigation and all claims arising from the relationship to an end. On a motion for summary judgment in Castleform Development Inc. v. Chiem, 2019 ONSC 238 (CanLII) , the defendants relied on a document which they said was a release, although the document did not use the word “release” (nor did it use similar words like “remise” or “discharge”). The court said (at paragraph 6) that the “supposed release” raised issues requiring a trial and that whether the document in question was a release would be an issue at any trial. The court went on to say (paragraph 10) that, to be clear, it was not prepared to find that the document was not a release, only that this posed a question which raised genuine issues requiring a trial.

Keefer Laundry Ltd. v. Pellerin Milnor Corporation, 2009 BCCA 273 (CanLII)

A document signed by the plaintiff said that a payment to the plaintiff was to cover all outstanding claims including certain stated categories of claims “(in other words, everything)” and that the defendant’s only “obligation and/or guarantees” would be a standard parts warranty running from specified dates. The trial judge referred to the principles on the interpretation of releases adopted in Bank of British Columbia , including the proposition that no particular form of words is necessary to constitute a valid release. The trial judge found that the defendant was entitled to rely on the document as an effective release of the plaintiff’s claim. 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.

IAMAW v. Air Canada et al, 2011 ONSC 2368 (CanLII); IAMAW v. Air Canada et al , 2011 ONSC 3190 (CanLII)

These two decisions concerned issues arising from the sale by Air Canada of part of its heavy maintenance operations and the transfer of employees from Air Canada to the respondent Aveos Fleet Performance Inc. The parties did not agree on whether Aveos was a separate employer for purposes of the Canada Labour Code and the IAMAW filed a complaint with the Canada Industrial Relations Board regarding what it contended were failures in providing it with access to information. The complaint was placed in abeyance, the parties attempted to negotiate a resolution of several matters and a memorandum of agreement was signed. The MOA included a clause in which the parties agreed that the terms of the MOA, together with the award of an arbitrator and related orders or directions of the CIRB, were exhaustive of the rights of any Air Canada employee affected by the sale of the business and that no party would assert any claim, demand or grievance related or arising from the transitioning of Air Canada employees to Aveos except in accordance with the MOA. While this clause did not explicitly use the word “release”, it was referred to as a release, and treated as such, in both of the court’s decisions.

3746292 Manitoba Ltd. et al v. Intact Insurance Company et al, 2016 MBQB 210 (CanLII) , appeal dismissed on other grounds, 2018 MBCA 59 (CanLII)

A proof of claim in respect of a fire loss claim under an insurance policy said that the insurer was discharged from all further claims in respect of the loss. The motion judge and the Court of Appeal referred to this as a release and treated it as a release. (See, for example, paragraph 16 of the decision of the Court of Appeal.)

2.5.1.1 Whether Contractual Terms Operate as Release Provisions

In the decisions summarized below, the courts considered whether particular terms of a contract would take effect as a release. Again, it can be seen from some of these decisions that it is not necessary that the word “release” be used in order for a contractual provision to have the effect of a release.

Two of the decisions seemingly come to different results on the question of whether the phrase “indemnify and hold harmless” (or “save harmless”) means or implies a release. These apparently different interpretations may perhaps be understood to depend on the context in which the phrase is used. In Dyck v. Manitoba Snowmobile Association, 1985 CanLII 27 (SCC), [1985] 1 SCR 589 , the entry form for a snowmobile race set out the agreement of participants to save harmless and keep indemnified a snowmobile association and its agents and representatives from all liability, howsoever caused, in connection with taking part in the race. It was argued that the waiver clause was worded in the form of an indemnity rather than a release. However, the Supreme Court of Canada said that the context clearly revealed that a release was what the parties had in mind. Indeed, the court said, at one point the particular clause was referred to in the entry form as a waiver of claim and earlier waiver clauses underlined that this was the parties’ intention.

Salmon River Co. v. Burt Bros., 1953 CanLII 36 (SCC) , [1953] 2 SCR 117

The contract considered in this case provided that certain truckers were to “indemnify and save harmless” a logging company from specified consequences. In his judgment, Rand J. posed the question: To what consequences are these words appropriate? Rand J. went on to say that we do not “indemnify and save harmless” from or against our own claims or for damage done to us by others. To give the words that effect would be to interpret them as an anticipatory release or a declaration that no claims would arise or could be made by the truckers against the company. But this familiar phrase must be given its well established meaning. To indemnify and save harmless is to protect one person against action in the nature of claims made or proceedings taken against him by a third person, and it would distort that plain meaning to attribute any other signification to it.

Attila Dogan Construction v. AMEC Americas Limited, 2015 ABQB 120, appeal on other grounds dismissed, 2015 ABCA 406 (CanLII)

An agreement provided that each “Member” of a joint venture would be “solely responsible for and would defend, indemnify and hold harmless” the other “Member” against losses, damages, costs and expenses suffered by the indemnifying Member to the extent arising from delay in the performance of work on a construction project. On an application seeking summary dismissal of the plaintiff’s claim arising from work on the project, the plaintiff argued that, contrary to the defendant’s characterization, this provision of the agreement did not constitute a mutual release. The plaintiff argued further that the provision was ambiguous, in that the indemnifying party was responsible to indemnify the second party for the indemnifying party’s own loss. The court said that, while the provision could have been more clearly written, there was no doubt about its intention and effect. The plaintiff had promised that it would indemnify the defendant – i.e., ensure that the defendant did not pay for – losses, damages, costs or expenses suffered by the plaintiff arising from any delay in the performance of the work. It might have been preferable to use the term “release”, but the effect was the same. Referring to Black’s Law Dictionary, 10th Edition, the court said that, although “hold harmless” is among the synonyms for “indemnify”, it also means to absolve (another party) from any responsibility for damage or other liability. The court found that the provision was, in effect, a mutual release.

Destaron Property Management v. Hindmarsh, 2017 ONSC 4444 (CanLII) , appeal dismissed, Destaron Property Management Ltd. v. Hindmarsh, 2018 ONCA 200 (CanLII)

The defendant was a tenant in an apartment building owned by one of the plaintiffs and managed by the other. After a fire in the defendant’s apartment unit, the plaintiffs commenced an action against him alleging that the fire was caused by his negligence. The defendant moved for summary judgment dismissing the action on the basis that provisions of an agreement regarding the termination of his tenancy constituted a release from liability for the fire. The agreement stated that no further charges would be applied to the defendant’s account and damages would be dealt with between insurance companies. The court referred to a number of provisions of the agreement and said that, although the document did not use the word release, that was its legal effect. The court said that the plain and ordinary meaning of the termination agreement was to release the defendant from liability for the fire in his unit.

Ottawa Humane Society v. Ontario Society for the Prevention of Cruelty to Animals, 2017 ONSC 5409 (CanLII)

As noted by the court, the OSPCA entered into funding agreements with affiliates to govern the enforcement work performed by the affiliates under the supervision of the OSPCA, and the funding relationship between the parties. The funding agreement included a “non-suit” clause, which provided that the affiliate would not initiate any legal action or claims against, among others, the OSPCA. The applicants argued that the non-suit clause interfered with the administration of justice and was contrary to public policy. Their argument was that attempts to oust the court’s jurisdiction in civil matters are illegal at common law with very circumscribed exceptions that did not apply in this case. The court concluded that the better approach was to consider the non-suit clause as functioning as a release.

2.5.2 Phraseology of a Release

An important goal of the drafter of a release may be to achieve finality and certainty (See Chapter 3: Effectiveness and Enforcement of Releases). In an effort to achieve this goal, the drafter may be hesitant to depart from wording that has been characteristic of releases for many years – and yet may look to add wording in order to make the release “stronger”. The predictable result of these efforts, as described in one of the decisions summarized in section 2.5.2.1, below, is the “formal, sometimes convoluted and archaic language often seen in releases drafted by lawyers”. Given the lengthy, complicated and even duplicative wording often used in releases, it comes as no surprise that discussion of the merits of plain language emerges from time to time in Canadian case law on releases. And, as can be seen in sections 2.5.2.2 and 2.5.2.3, a decision of the Supreme Court of Canada has provided direction regarding particularization of the general words of a release.

2.5.2.1 Plain Language

In the Chamberlin case summarized below, the defendants argued that the simplicity of a pre-emptive release and waiver supported its enforceability. As authority for their arguments, the defendants relied on one release case, Redshaw v. CCI Thermal, below (release given after termination of employment), and other cases that did not involve releases, Arnold v. Bekkers Pet Care Inc. [2010] O.J. No. 2153 (contractual exclusion clause), Atlantis Marine Inc. v. Beaudoin Holdings & Management Ltd., 2003 ABPC 77 (CanLII) (exclusion of liability clause in lease) and Marathon Canada Limited v. Enron Canada Corp., 2008 ABQB 408 (CanLII) (natural gas purchase agreement).

Note that, in the context of pre-emptive releases, Canadian courts have commented favourably on wording that is short, easy to read and not complicated: see, for example, Karroll v. Silver Star Mountain Resort Ltd. (1988) CanLII 3094 (BC SC) and Blomberg v. Blackcomb Skiing Enterprises Ltd, 1992 CanLII 191 (BC SC). The Karroll decision was distinguished in Kettunen v. Sicamous Firemen’s Club, 1999 CanLII 2555 (BC SC), where, among other things, the court did not find the wording of a release to be short and easy to read. As to pre-emptive releases, see Chapter 8, below.

Ermineskin Cree Nation v. Foureyes, 2005 ABQB 522 (CanLII)

The court said that certain words used in the release in this case, while valid in law, were not all in plain language. For example, the court said that the word “remise”, although perfectly intelligible to any French-speaking person or anyone who has a Black’s law dictionary handy, is not a commonly used word in English and should presumably be avoided in a contract developed in 2004 for signature by an individual who is not represented by a lawyer. Nevertheless, the release, taken in its entirety, was sufficiently clear on its face to convey its meaning.

Keefer Laundry Ltd. v. Pellerin Milnor Corporation, 2009 BCCA 273 (CanLII)

The trial judge said that, while a release lacked the “formal, sometimes convoluted and archaic language often seen in releases drafted by lawyers”, it was, if anything, clearer for having been written in everyday language. 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.

Redshaw v. CCI Thermal Technologies Inc., 2010 AHRC 2 (CanLII)

The Alberta Human Rights Commission said that a release relied upon by the respondent did not stand up well “in the current legal drafting era of plain language and avoiding verbiage”. Nonetheless, the Commission said that the release distinctly set out its terms, both visually and textually, and that the language of the document was not overly complex or of such a nature that the releasor could not understand its meaning.

Chamberlin v. Canadian Physiotherapy Association, 2015 BCSC 1260 (CanLII)

The defendants argued that a pre-emptive release and waiver was written in “simple, easy-to-understand language” rather than “complicated, dense legal jargon” and that the simplicity of the release supported its enforceability. The court did not comment explicitly on these arguments, but found that the release in issue was not sufficiently clear or specific such that it necessarily encompassed negligence and that the ambiguity of the release in this regard should be resolved against the drafters of the document.

McCallum v. Jackson, 2019 ONSC 7077 (CanLII)

On the issue of whether the defendants took reasonable steps to bring the content of a release, specifically, indemnity provisions, to the attention of the plaintiff, the court said that the wording was “dense legalese” such that by its prolixity it lost its quality of plain language. There was so much “legalese” in the indemnity clause that it failed to say what it meant, leading the court to conclude that a reasonable person should have known that the plaintiff was not consenting because the provisions had no discernable meaning. The court went on to say that many cases determining whether a contract should be upheld include in their analysis the factor of plain language.

2.5.2.2 Whether General Words of a Release Need to be Particularized

The decision of the Supreme Court of Canada in Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) is now the leading Canadian authority on the interpretation of releases. In that case, Rowe J. delivered the unanimous judgment of all nine judges of the Supreme Court. As well as providing direction regarding the principles of contractual interpretation applicable to releases, Rowe J. discussed the inclusion of wording in a release in order to particularize the clearly-expressed, broad and general words of the release. His decision leaves little room for doubt that the Supreme Court does not consider such particularization to be necessary.

The release before the court in Corner Brook encompassed “all actions, suits, causes of action . . . foreseen or unforeseen . . . and claims of any kind or nature whatsoever” arising out of a motor vehicle accident. Rowe J. said that, if this wording was insufficient to include a claim arising out of the accident, it would be hard to imagine what wording would be sufficient, “aside from listing every type of claim imaginable one by one (third party claims, cross claims, counter claims, subrogated claims, claims in equity and common law, statutory claims, etc.)”. Rowe J. plainly stated that “[t]here is no principled reason to require parties to particularize the scope of the release in this fashion”: Corner Brook, at paragraph 51.

The Corner Brook decision also clarified Canadian law as to the language needed in order for a release to encompass unknown claims. In his discussion of this issue, Rowe J. quoted a comment about “grosser excesses of verbiage” and, again, he downplayed the need for particularization. On this subject, see section 2.5.2.3 immediately below.

2.5.2.3 Language Used to Describe the Scope of a Release

The Supreme Court of Canada decision in Corner Brook, above, addresses the language needed in order for a release to encompass unknown claims. In his judgment delivered on behalf of the court, Rowe J. said that: “A release can cover an unknown claim with sufficient language, and does not necessarily need to particularize with precision the exact claims that fall within its scope.” (See Corner Brook, paragraph 27.) Rowe J. referred with approval to a comment by Lord Hoffmann (from a dissenting judgment in Bank of Credit and Commerce International SA v. Munawar Ali, Sultana Runi Khan and Others [2001] UKHL 8) that the answer is not to encourage “grosser excesses of verbiage”. He also quoted an observation from The Law of Releases in Canada to the effect that one hopes it is not to be expected that a release will catalogue with specificity all possible claims.

Rowe J. indicated that a “sensible approach” is to use wording that makes clear whether the release will cover unknown claims and whether the claims must be related to a particular area or subject matter. He added that releases narrowed to a particular time frame or subject matter are less likely to give rise to tension between the words and what the surrounding circumstances indicate the parties objectively intended: Corner Brook, paragraph 41.

The decision summarized below provides guidance with regard to wording that may be effective to extend the scope of a release to future, unknown claims. For cases addressing whether future and unknown claims are within the scope of a release, see Chapter 6: Scope and Application of Releases, section 6.4, Unknown and Future Claims and Events.

Wood Buffalo Housing & Development Corporation v. Flett, 2014 ABQB 537 (CanLII)

This decision addressed whether the wording of a waiver and release provision of a contract extended to unknown, future claims. The court said that the contract included an “acknowledgment of future unknowns”, in that its wording specified an express waiver and release of claims “including those without limitation that might arise”. Further, if there were any doubt about these words extending to claims yet unknown, the words “without limitation” made it clear that they covered all claims, “thereby not excluding those yet unknown, discovered or discoverable”.

2.5.3 Recitals

The interplay between the recitals and the operative words of a release was considered in the decisions summarized below.

Jam’s International Ventures Ltd. v. Westbank Holdings Ltd., 1999 CanLII 3647 (BC SC) , appeal allowed, 2001 BCCA 121 (CanLII)

The recitals in a release might have been more complete but that in no way created any ambiguity in the operative wording of the release. It was clear beyond question.

Wong v. Lok’s Martial Arts Centre Inc., 2009 BCSC 1385 (CanLII)

In this case, the court considered a parental waiver signed by the parent of an infant who allegedly was injured in the course of a sparring match at a Hapkido school. The pre-emptive release began with the words “[i]t is expressly agreed that all exercises and treatments and use of all facilities shall be undertaken at the student’s sole risk”. The plaintiff argued that these initial words limited the scope of the release and that the sparring match could not be described as “exercise”, “treatment”, or “use of facilities”. The court said that this sentence was in the nature of a recital. It was followed by a statement that the Hapkido school would not be liable for injuries, damages, actions or causes of action whatsoever. The court said a release from “any causes of action whatsoever” has usually been considered to be broad enough to constitute a general release of claims in negligence.  The wording of the release in this case was broad enough that if it was effective to bind the infant plaintiff, the claim should be dismissed.

Doig River First Nation and Blueberry River First Nations v. Her Majesty the Queen in Right of Canada, 2014 SCTC 2 (CanLII)

Contracting parties use recitals to confine the operation of general words. Because releases are often drafted broadly, the confining effects of recitals are especially significant.

2.5.4 Description of Releasor and Releasee

In the case below, objections to wording that gave a broad compass to the identification or description of the releasees in a release were not successful. The goal of achieving finality supported a broad view of the parties entitled to the benefit of the release. As to finality, see Chapter 3: Effectiveness and Enforcement of Releases, section 3.3, Finality. As to the releasees entitled to the benefit of a release, see also Chapter 5: Interpretation of Releases, section 5.12.6, Words Used to Describe Releasor and Releasee, and Chapter 6: Scope and Application of Releases, section 6.7, Parties Protected/Third Party Beneficiaries.

Gregory v. KPMG LLP, 2012 BCSC 1387 (CanLII)

The plaintiff in this case submitted that the list of releasees in a release proposed by the defendants went well beyond those who might generally or normally be included in a form of release. The court said that, to ensure that the release achieved the goal expressed in the settlement reached by the parties, that is, to terminate effectively the parties’ action and provide a finality to their dispute, it was necessary that the releasees listed in the release include those in the version of the document drafted by the defendants. The plaintiff also submitted that the defendants were attempting to include an “other persons clause” in the release, which the plaintiff asserted was a clause that must be specifically negotiated (citing Norwich Union Life Insurance Co. (Canada) v. MGM Insurance Group Inc. ). The court concurred with the defendants’ position on the ground that the release addressed and finalized all aspects of the parties’ dispute.

2.5.5 Indemnity or Protection from a Claim Over Against the Releasee

The goal of achieving finality is referred to above in the discussion of releases that are worded so as to broadly identify or describe the releasees. Finality may also come into play in respect of wording of a release that is intended to protect the releasee should the releasor make a claim against some other party that gives rise to a claim over by that other party against the releasee. A provision of a release that is intended to protect the releasee from such a claim over is referred to in rlaw.online as a “no-claim-over clause”. The releasee may also be protected by a provision in which the releasor agrees to indemnify the releasee from any further claims that may be made against the releasee in respect of the matters set forth in the release. For further discussion of no-claim-over clauses and indemnity provisions, see Chapter 7: Releases and Potential Multi-Party Liability, section 7.5, Claim Over or Indemnity Provisions of a Release.

Global Resorts International v. McCarthy, 2003 CanLII 24272 (ONSC)

The court concluded that the release to be provided to complete a settlement reached by the parties would include the “standard protection” demanded by the defendant, namely, a no-claim-over clause. The plaintiff was concerned that legitimate claims it wished to pursue in a foreign state could be defeated by a frivolous claim over against the defendant which would cause the plaintiff’s claim to be stayed under the no-claim-over clause. The court said that the risk of a “mischievous interpretation” of the release could be avoided by a requirement that it be interpreted by an Ontario court according to Ontario law and the court determined that the release proposed by the defendant was to be executed with that additional provision.

Orlandello v. Nova Scotia (Attorney General), 2005 NSCA 98 (CanLII)

The chambers judge dismissed applications for summary relief in this case on the basis of a release, because an indemnity which followed the release appeared to be inconsistent with it. He reasoned that there was ambiguity about whether the claim was truly released because the indemnity would be meaningless If the claims were released. The Court of Appeal disagreed. Even though the claim was fully released, the releasors could still file an originating notice. The releasees would incur defence expenses notwithstanding that the claim ultimately would be dismissed because of the release. An indemnity is neither meaningless nor necessarily inconsistent with a release.

 

Brager v. Ontario (Natural Resources), 2017 ONSC 1759 (CanLII)

The inclusion of a contribution and indemnity clause (in respect of a claim over against the releasee) in a release is standard in virtually every release entered into by parties engaged in litigation. Without such a clause, the release would not be a full and final release.

Pomeroy v. Couprie et al, 2017 ONSC 6906 (CanLII)

A no-claim-over clause is part of the standard LawPro release and would have been in the contemplation of the parties when they agreed on a settlement that provided for the parties to sign a mutual release “in LawPro’s standard form”. On the facts of this case, the court said that the no-claim-over clause must be included in the mutual release, but amended to reflect the ongoing litigation which was only being partially settled.

Extreme Venture Partners Fund LLP v. Seven Hills Group LLC, 2018 ONSC 6092 (CanLII)

The court said that it shared the view expressed in Brager, above, that a “standard” release includes a claims bar/indemnity regarding claims over.

McCallum v. Jackson, 2019 ONSC 7077 (CanLII)

When completing the online registration process to enter a racing event, the plaintiff electronically accepted a release and waiver of liability, assumption of risk and indemnity agreement. He did not contest that he had waived his right to sue certain organizations that claimed the protection of the release, but he did not accept that he was required to indemnify those organizations in the event of a crossclaim against them by another party. The court found that the release document was valid and binding on the plaintiff and that he had waived his right to sue, as he had conceded, but found that there was no valid indemnity clause binding on the plaintiff as relied upon by the organizations.

Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577 (CanLII)

Claims over/contribution and indemnity clauses are usual elements of a standard general release. The court will therefore imply these types of provisions as terms of standard general releases, unless expressly carved out or narrowed by the parties prior to reaching a settlement. If there is to be any narrowing in scope of these types of provisions, it must be specifically negotiated, agreed upon and reflected in the settlement agreement. This conclusion is supported by the case law and informed by a purposive analysis of general releases. The jurisprudence establishes that claims over clauses, preventing the releasor from commencing or maintaining any claims arising from the matters in the pleadings in the settled proceeding that could give rise to a claim against the releasee, and language requiring that the releasor indemnify the releasee in the event any such claim against the releasee is brought, are “part of and parcel” of a standard full and final releases.

2.5.6 Reservation of Rights by Releasor

A reservation of rights provision can be used to express the agreement of the parties on a specific carve-out from the scope of a release. When a reservation of rights is not included in a general release and the releasor asserts a limitation on the scope of the release, courts often point out the need for an express reservation of rights: this can be seen from decisions summarized below. See also Chapter 6: Scope and Application of Releases, section 6.2.3, Whether Specific Words are Needed to Express Limits on Scope.

Stemeroff v. Swartz, 2003 CanLII 11680 (ON SC) , appeal allowed on other grounds 2005 CanLII 18183 (ON CA)

Given the obvious attempt in a release to address all probable, if not possible, contingencies, were a claim in the character of that later made by the plaintiff contemplated, it ought to have been explicitly addressed.

Doug Newton v. Catherine Allen, 2005 NBQB 192 (CanLII)

After a formal judgment was entered and paid and a release was signed in respect of an action claiming property damage, lost wages and other expenses resulting from a motor vehicle accident, the releasor brought an action claiming general damages for pain and suffering, future loss of income and other losses. The second action was dismissed on the basis of cause of action estoppel. The court said that the release was not limited to property damage only and, before the court could invoke any special circumstances on which to base an exercise of discretion to “waive the estoppel”, the releasor should be able to demonstrate that he made his intention to pursue a claim for personal injuries clear throughout the process.

Arcand v. Abiwin Co-operative Inc., 2010 FC 529 (Can LII), appeal dismissed, 2011 FCA 170 (CanLII)

Releases are generally enforced in accordance with their terms. If a party wants to reserve or exclude a particular claim or right, that party must expressly exclude it from the terms of a general release (quoting from Keats v. Arditti ). If parties A and B agree to enter into a settlement and a full and final release in regards to a longstanding and multi-faceted dispute and party A wishes to keep open the possibility of claiming damages in a different type of action but in relation to the same basic facts, he or she ought to exclude specifically that cause of action from the settlement and release. If party A chooses not to do so, party B is entitled to rest assured that the dispute has been resolved in full.

Shoaai v. The Attorney General of Canada et al, 2013 MBQB 110 (CanLII)

Where causes of action originate in the same incident, the releasor may have an obligation to put the releasees on notice that settling one cause of action does not end the matter.

Brager v. Ontario (Natural Resources), 2017 ONSC 1759 (CanLII)

An application seeking rectification of the title of real property was settled by the parties by way of minutes of settlement which required the parties to provide each other with a full and final release. The respondent proposed a draft release with a no-claim-over clause and the applicants sought to exclude from this clause a claim made against the original surveyor of the property. This was the first time the respondent was informed of the action against the surveyor. It was incumbent on the applicants to inform the respondent of the other action if the applicants intended to seek an exception to the usual no-claim-over clause prior to entering into the minutes of settlement. Without a no-claim-over clause, the release would not be a full and final release. The court required the applicants to enter into a full and final release as contemplated by the minutes of settlement.

Pomeroy v. Couprie et al, 2017 ONSC 6906 (CanLII)

On the facts of this case, the court said that a mutual release required to complete a settlement agreed on by the parties must include a no-claim-over clause amended to restrict the scope of the no-claim-over clause in order to reflect the ongoing litigation which was only being partially settled.

2.5.7 Confidentiality, Non-Disclosure and Non-Disparagement

In the cases referred to below, the courts considered whether a “standard” release includes confidentiality, non-disclosure or non-disparagement provisions or whether, in the absence of agreement of the parties, such a provision should be included in a release.

Excell Stamping Inc. v. Consolidated Recycling Incorporated (Metro Recycling), 2008 CanLII 12492 (ON SC)

The parties entered into binding minutes of settlement but could not agree on the inclusion of a confidentiality term in the release to be signed by the plaintiff. The court found that the plaintiff was not bound to sign a release containing a confidentiality clause. In contrast to the authorities cited by the defendant, this was not a case where the settlement agreement expressly or impliedly provided for a confidentiality clause. The filing of the minutes of settlement with the court negated the implication that the parties intended the terms of settlement to be kept confidential. The general principle of law applies that a complete and full release does not entail the inclusion of a confidentiality clause. Such a clause was not a necessary term of the agreement and must be negotiated.

Gregory v. KPMG LLP, 2012 BCSC 1387 (CanLII)

The parties reached a settlement of an action and the defendants proposed a release to be executed by the plaintiff. The plaintiff objected to a provision of the proposed release that he not disclose confidential records in his possession except as may be required by law. The court agreed with the plaintiff’s argument that this provision was unnecessary because it duplicated a provision of the order sought by the defendants and granted by the court.

Dube v. Shooman, 2013 ONSC 4348 (CanLII)

The plaintiff accepted a settlement offer which made no mention of non-disclosure as a term of settlement. The parties never discussed a non-disclosure clause before the offer to settle was accepted, but it was submitted that a confidentiality term was standard and fair and reasonable. The court held that no confidentiality clause was to be implied and the release should omit such a clause.

Jenneson v. Olson, 2019 BCSC 2367 (CanLII)

The defendant argued that a confidentiality clause is an implied term of any settlement agreement in a medical malpractice action: like a consent dismissal order or a release, it must be assumed to be part of any settlement. The court was not provided with case authorities in support of this proposition. The court found that a confidentiality clause was an essential term of the settlement in this case and that the defendant accepted the plaintiff’s offer to settle only on the condition that the plaintiff agreed to confidentiality terms.

Zou v. Sanyal, 2019 ONSC 1661 (CanLII)

In its decision regarding the costs of this action, the court considered an offer to settle made by the plaintiffs to which was attached a form of release with a non-disparagement provision. The court did not regard the non-disparagement provision to be a standard term of a release to be given as part of a settlement of an action for breach of contract, but it said that the inclusion of the non-disparagement provision in the form of release to be given upon acceptance of the offer to settle was not unreasonable.

Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577 (CanLII)

In Abouchar  v. Conseil scolaire de langue franaise d’Ottawa-Carleton , the court considered whether a non-disclosure clause was an implied term of the standard general release required by a settlement that was silent with respect to the required terms of the release. The key finding in Abouchar was that a non-disclosure clause is not a usual term of a general release. Accordingly, the court in Abouchar would not imply a non-disclosure clause into the standard general release because it was not specifically agreed upon in advance of the settlement.

2.5.8 Entire Agreement Clause

An entire agreement clause is a provision of a written contract which says that all of the terms of and conditions of the agreement are set out in their entirety in the written contract. Although, as discussed in section 2.1.3 of this chapter, releases are often given in conjunction with associated documents such as settlement agreements, entire agreement clauses are sometimes included in releases.

In the Xu case noted below, the court looked to an exchange of correspondence to assist it in ascertaining the agreement reached by parties to a release, notwithstanding that the release contained an entire agreement clause. So it cannot be assumed that including an entire agreement clause in a release will stop a court from looking outside the terms of the release as the court seeks to determine the intention of the parties. But, as can be seen from other cases below, if an entire agreement clause is not included in a release, a court may refer to the absence of the clause when deciding that the agreement of the parties is not confined only to the terms of the release.

This section is concerned with an entire agreement clause as a term of a release. Note, though, that, when a broader contract includes both a release and an entire agreement clause, these provisions may be relied upon together such that they both support a particular outcome determined on the basis of the agreement: Mazza v Ornge Corporate Services Inc., 2015 ONSC 7785 (CanLII) , at paragraph 96, appeal dismissed, 2016 ONCA 753 (CanLII) , Butera et al. v. Mitsubishi Motors et al., 2012 ONSC 4980 (CanLII) , at paragraph 24, appeal dismissed on other grounds, Butera v. Mitsubishi Motors Corporation, 2013 ONCA 99 (CanLII) and De Santis and Iacobucci v. Doublesee Enterprises Inc., 2018 ONSC 400 (CanLII), at paragraph 84. Indeed, an entire agreement clause has been described as a type of exclusion clause: see M. H. Ogilvie, Entire Agreement Clauses: Neither Riddle Nor Enigma, 2009 87-3 Canadian Bar Review 625, 2009 CanLIIDocs 128.

As to a release having the same effect as an entire agreement clause, see Chapter 1, Introduction to Releases, section 1.10, Other Cases on the Nature or Effect of a Release.

Metropolitan Toronto Condominium Corp. #1101 v. Ontario New Home Warranty Program, 2004 CanLII 33359 (ON SCDC)

The appellants argued that the releases at issue in this case did not constitute the entire agreement of the parties thereto. They relied on a letter which they said had been prepared in lieu of an amendment to the releases as a convenience and they said that the documents were executed simultaneously. The Divisional Court referred to evidence that the appellants never intended the letter to impact the releases. The court also referred to a paragraph of the release, which, the court said, “connotes an entire agreement clause”.  The court did not accept the argument made by the appellants.

Xu v. Ching, 2008 BCSC 1796, affirmed on appeal, 2009 BCCA 303 (CanLII)

The defendants argued that an exchange of correspondence was inadmissible with respect to the meaning of a release, as the correspondence directly contradicted the release and the entire agreement clause contained within the release. The court found that the execution of the release was conditional on matters contained in the exchange of correspondence, which was intended to clarify or provide an interpretive aid to the release. The exchange of correspondence narrowed the extension of what might be covered by the release, but did not contradict it. Whether the exchange was described as a clarification of the release, or a collateral agreement, or an agreed-upon interpretive aid, the effect was the same, namely, evidence regarding the exchange was admissible to assist the court in ascertaining the terms of the bargain.

Chinn v. Hanrieder, 2013 BCCA 310 (CanLII)

The Court of Appeal accepted an argument made by the plaintiffs/respondents in this case to the effect that certain releases did not set out all terms of the parties’ agreement. The Court of Appeal said that the respondents began by noting that the releases did not contain an entire agreement clause. The respondents argued, first, that the signed releases formed only part of an agreement that was partly oral and partly in writing. Alternatively, the respondents argued that the parties reached an agreement prior to the signing of the releases which could be characterized as an enforceable collateral agreement. The Court of Appeal found that both positions of the respondents could be sustained.

AIG Insurance Co. of Canada v. Canjam Trading Ltd, 2015 ONSC (CanLII)

After the applicant insurer had paid compensation to the respondent in respect of claims made under trade credit insurance policies, the parties entered into a release and assignment agreement. The respondent argued that the release replaced the policies and extinguished any entitlements the insurer may have had under the policies. The court concluded that the policies continued in force despite the release and that neither contract stood alone, rather the agreements mutually informed each other. The court found that the release, read as a whole and with consideration for the surrounding circumstances, reflected an understanding that the policies would continue to define the parties’ relationship and that certain provisions would remain in force. In its reasons for this finding, the court said, among other things, that the release did not contain an “entire agreement” clause, nor did it contain any other language purporting to exhaustively determine the parties’ rights and obligations

2.5.9 Other Documents Clause

The case referred to below dealt with whether a provision requiring a party to execute and deliver further reasonably-requested documentation should be included in a release, where not agreed upon by the parties.

Gregory v. KPMG LLP, 2012 BCSC 1387 (CanLII)

The parties reached a settlement of an action and the release proposed by the defendants required the plaintiff to execute and deliver such further documentation, and do further acts, as may be reasonably requested to give effect to the terms of the release. The court said that the defendants had not satisfied the onus of establishing that this term belonged in the release, it being neither included specifically in the settlement agreement nor a term necessarily included to give the release some purpose.

2.5.10 Other Cases on the Wording or Provisions of Releases

The decisions summarized below offer guidance on other release provisions not addressed in the earlier sections of this chapter.

Umholtz v. Umholtz, 2004 CanLII 36132 (ON SC)

In this family law proceeding, the court was satisfied that the parties had reached a final settlement. The issue considered here was what the parties intended in respect of non-disclosure. There was no express language in the settlement agreement from which mutual agreement could be inferred apart from this language: “each of the parties release the other from all claims, howsoever arising, including claims for spousal support and any other corollary relief”. The court said that a release of “all claims” does not include claims of fraud in respect to the settlement agreement itself, in the absence of express language to the contrary. While it is possible to release unknown, hidden claims, even based on fraud, that is not the usual position. The court also referred to standard release language such as the following: “all [claims] which were raised in or could have been raised in the [legal proceedings] existing up to the present time”. The court said that a broader release of claims not asserted in the proceedings, and both unknown and not reasonably knowable by a party, should surely require express agreement.

Romany v. Perry, 2006 CanLII 29283 (ON SC)

In this case involving the settlement of a “minor” motor vehicle claim, the court said it would be reasonable to expect a release to include an acknowledgment, first, that the plaintiff had not assigned any of her claims and, second, that the plaintiff had read and understood the release.

Malcolm v. Shubenacadie Tidal Bore Rafting Park Limited, 2014 NSSC 217 (CanLII)

A provision of a pre-emptive release stating that it was to be governed by, and interpreted solely in accordance with, the laws of Nova Scotia incorporated, rather than excluded, Canadian maritime law.

2.6 Court Determined or Deemed Releases

In some circumstances, courts will determine terms of a release, or deem a release, or grant an order that includes terms of a release. Below are summaries of decisions on the subject of court determined or deemed releases. On this subject, see also Chapter 4: Releases and Settlement, section 4.6.5, Deemed Release and Release by Court Order.

And further on this subject, it is important to note that proceedings in particular areas of the law frequently result in court approval of terms that include release provisions. For example, bankruptcy and insolvency is an area of the law where courts often deal with releases in the context of orders or approvals. See Chapter 11: Releases in Particular Situations, section 11.3, Bankruptcy and Insolvency. Another example is class proceedings, as to which see Chapter 11: Releases in Particular Situations, section 11.4, Class Actions.

Re Cikanek (Estate of), 2006 ABQB 916 (CanLII)

The former administrator of an estate sought to be discharged as administrator and an express acknowledgment that he had fully accounted to the estate and was released from any further claims by the estate. The court discharged him from his duties as an administrator of the estate but said that this discharge did not constitute a release from any claims against him by the estate. The court could find no basis for the argument that a discharge provides a trustee with wide-sweeping immunity from future litigation. The court went on to say that, even if a discharge does not automatically release a trustee from personal liability in any future litigation arising out of the trustee’s administration of the estate, it is possible that the court has inherent jurisdiction to make an express order to this effect. However, the court was aware of no authority supporting this form of inherent jurisdiction. The court did not believe that it possessed the power to preemptively excuse the administrator from future causes of action via a discharge, and, even if the court’s inherent jurisdiction did extend to permit such an order, the court said it would decline to exercise that jurisdiction.

Wasserman v. Kassam, 2006 CanLII 42368 (ONSC)

The parties agreed that a settlement had been reached, but the plaintiff refused to sign a release in the form that had been provided to his lawyer. The court found that the parties, through their respective lawyers, reached a consensus ad idem on the form of the release and it granted a declaration that the action had been settled in accordance with the terms of the release.

Dosanjh v. Nadon, 2009 BCSC 106 (CanLII)

Where the parties had reached a complete settlement, the court determined that a release would be deemed executed by the plaintiff and that the release would be deemed executed in the form provided by the lawyer for certain defendants because no objection was taken to the form of the release.

Coco Homes Inc. v. Caleron Properties Ltd, 2017 ABQB 15 (CanLII)

Where the terms of a release are not expressly agreed upon (almost always so in late settlements), the court can determine the terms according to what is commercially reasonable and issue a binding declaration to that effect.

Abuzour v. Heydary, 2015 ONCA 565 (CanLII)

The appellant lawyers brought an appeal from a motion judge’s refusal to set aside or vary an order enforcing a garnishment issued by the respondents against the insurer LawPro, which would exhaust the limits of LawPro’s insurance coverage for the law firm that employed the appellants. The appellants’ position was that, If the policy limits were paid out in partial satisfaction of the respondents’ claims, the appellants would be left without coverage to defend themselves in respect of claims by the respondents. The Court of Appeal varied the garnishment order by adding a term to the effect that, by payment of any insurance proceeds relating to LawPro insurance policies to the respondents, the respondents would thereby release claims against the appellants.

Sarazen Realty v. McTaggart and Bisson, 2017 ONSC 7659 (CanLII)

The defendants/plaintiffs by counterclaim had been ordered to sign and deliver a release. However, they refused to sign the release because they wanted to maintain a complaint against one of the defendants to their counterclaim. The court found them to be in contempt of court and imposed a fine on them. The court also made an order deeming the defendants to the counterclaim to be released from claims.

Molot v. Worldstrides Canada Inc., 2022 ONSC 3899 (CanLII)

The plaintiff moved for certification of a proposed class proceeding and approval of a proposed settlement (among other things). The plaintiff and the proposed class members were students who had paid for educational travel experiences but whose trips were cancelled due to the COVID-19 pandemic. The action was settled and two insurers named as defendants agreed to pay out all of the claims made by the class members. One of the insurers sought to have the wording of a full and final release included in the order dismissing the action. The court said that, although the agreement reached by parties was called a “settlement”, there was no element of compromise in it; each claimant would be made entirely whole. It was reasonable for the order implementing the settlement to also contain a release, as there was nothing left of the claim.

2.6.1 Jurisdiction to Order a Release Sought by a Non-Party

In the decision summarized below, the court found that it had no jurisdiction to order a release sought by a non-party to the litigation.

Anmar Mechanical and Electrical Contractors Ltd. V. Baffinland Iron Mines Corporation, 2022 ONSC 4516 (CanLII)

The defendant brought a motion to compel a non-party to produce its complete insurance adjuster’s file and the adjuster to attend an examination. The non-party advised that it would provide the file and arrange for a meeting if, among other things, the plaintiff and defendant each signed a release. The defendant agreed to these conditions, but the plaintiff would not agree to sign a release. One of the arguments made by the non-party on the motion was that, if the court ordered the adjuster’s file to be produced, it should be on terms including a narrow scope of production, denying any examinations and requiring the plaintiff and defendant to execute releases in favour of the non-party and its principals. The court concluded that there should be production of documents from the non-party on terms. But the court said it had no jurisdiction to order the plaintiff and defendant to execute releases in favour of the non-party. The court had not been referred to any applicable authority and it declined the non-party’s request that it order a release.

2.7 Release Taking Effect Pursuant to Common Law Principles

Parties may be released from obligations in accordance with principles or doctrines that are applied by the courts in particular areas of the law, such as the law of guarantees or the law relating to novation of a contract.

As stated by the majority of the Supreme Court of Canada in Manulife Bank of Canada v. Conlin, 1996 CanLII 182 (SCC), [1996] 3 SCR 415, at paragraphs 4-6, it has long been clear that a guarantor will be released from liability on the guarantee in circumstances where the creditor and the principal debtor agree to a material alteration of the terms of the contract of debt without the consent of the guarantor. A surety can contract out of the protection provided to a guarantor by the common law or equity; the issue as to whether a surety remains liable will be determined by interpreting the contract between the parties and determining the intention of the parties as demonstrated by the words of the contract and the events and circumstances surrounding the transaction as a whole.

Novation has been described as the technical term for the substitution of one person for another in a contractual relation – and a consequential release of the other: Angela Swan & Jakub Adamski, Canadian Contract Law, 3rd ed (Markham: LexisNexis Canada Inc., 2012), quoted in ALL-FAB Building Components Inc (NU-FAB Building Products) v Montreal Lake No. 354 (Montreal Lake Cree Nation), 2015 SKQB 407 (CanLII). In other words, novation of a contract results in the release of a contracting party from its obligations under the original contract.

It is not the intent of rlaw.online to explore in any depth areas of law such as the law of guarantees and novation of contracts. Obviously, this is better left to experts in these fields. That being said, though, one might reasonably take the view that a work on the Canadian law of releases would not be complete without some regard for circumstances in which a party may be released from obligations by reason of principles or doctrines applied in these other areas of law.

The release of a party in accordance with principles of the law of guarantees is addressed to a limited extent below in Chapter 11: Releases in Particular Situations, section 11.7, Guarantee and Indemnity. The release of a party in accordance with the law of novation of contracts is addressed briefly in the section that follows.

2.7.1 Novation

In National Trust Co. v. Mead, 1990 CanLII 73 (SCC), [1990] 2 SCR 410, the Supreme Court of Canada noted that, while the common law has long recognized that one may be free to assign contractual benefits to a third party, the same cannot be said of contractual obligations. When two parties have made a contract, one of those parties cannot, without the consent of the other, transfer its obligations under the contract to a third party. The law in this regard was set out in Tolhurst v. The Associated Portland Cement Manufacturers (1900), Limited, [1902] 2 K.B. 660, where, at page 668, Collins M.R. said:

It is, I think, quite clear that neither at law nor in equity could the burden of a contract be shifted off the shoulders of a contractor on to those of another without the consent of the contractee. A debtor cannot relieve himself of his liability to his creditor by assigning the burden of the obligation to someone else; this can only be brought about by the consent of all three, and involves the release of the original debtor … .  On the other hand, it is equally clear that the benefit of a contract can be assigned …

These comments in the Tolhurst decision refer to the release of an original contracting party that is an element of a novation of contract. According to the case law on releases canvassed in Chapter 1, above, a release extinguishes the cause of action or rights that are within its scope. (See Chapter 1: Introduction to Releases, section 1.2.1, Extinguishment of Claim and Bar to Action.) Canadian case law confirms that a novation extinguishes the obligations of a party under a contract. As the Supreme Court of Canada said in National Trust Co. v. Mead: “…contractual obligations which a party has freely assumed may be extinguished in certain circumstances and the doctrine of novation provides one way of achieving this. … A novation is a trilateral agreement by which an existing contract is extinguished and a new contract brought into being in its place.”

 

The Supreme Court went on to say in Mead that the burden of establishing novation is not easily met and that the test established by the courts for determining if novation has occurred consists of the following three parts: (1) the new debtor must assume the complete liability; (2) the creditor must accept the new debtor as principal debtor and not merely as an agent or guarantor; and (3) the creditor must accept the new contract in full satisfaction and substitution for the old contract.

In Quebec civil law, novation is effected when a debt is substituted for a former debt and with the consent of the creditor, a new debtor is substituted for the former debtor, who is discharged by the creditor: see Gingras v. The Queen, 2016 TCC 250 (CanLII), at paragraph 37.

Royal Bank of Canada v. Netupsky, 1999 BCCA 561 (CanLII)

A novation, as defined by the Supreme Court of Canada in National Trust Co. v. Mead, is “a trilateral agreement by which an existing contract is extinguished and a new contract brought into being in its place”. A novation, therefore, does not transfer a liability, but extinguishes it completely, providing an absolute release for the original debtor. In this case, the appellant Mary Netupsky sought summary judgment to dismiss the Bank’s claim against her in respect of a loan agreement that she signed together with her husband. She argued that a later loan agreement, signed only by her husband, represented a novation of the original agreement and had extinguished her liability to the Bank. The Court of Appeal said that the facts of this case did not meet the test for establishing a novation. The evidence did not establish that Mr. Netupsky intended to assume complete liability for the loan. Neither did the evidence indicate that the Bank accepted Mr. Netupsky as the principal debtor and intended to release Mrs. Netupsky from her obligations in this regard.

Gibralt Capital Corporation v. The Queen, 2002 CanLII 937 (TCC) , appeal dismissed, Gibralt Capital Corp. v. Canada, 2003 FCA 165 (CanLII)

The court said that, as explained in Carma Developers Ltd. v. The Queen, 96 DTC 1798: “A novation involves the creation of a new contractual relationship, generally where a debtor is released from its obligation to an obligee with the consent of the obligee and the assumption of the obligation by a third party so that a new obligation arises between the obligee and the third party.” The appellant submitted that when a debt was severed and allocated to different parties pursuant to a settlement agreement, and the other parties were subsequently released, this resulted in a novation, through which one of the parties, Provincial Credit Corp. Ltd., assumed a new debt which was legally distinct from the original debt. The court said that the “substitution of debtors” referred to in National Trust contemplates a complete substitution. In this case, there was an allocation of debt not a novation. Further, the allocation of a portion of the debt to Provincial could not be considered a complete substitution of Provincial for the original debtors as one of the original debtors was not fully released from his debt obligation.

Weyerhaeuser Company Limited v. Hayes Forest Services Limited, 2008 BCCA 69 (CanLII)

Novation can be established by proof of an express three-party agreement, or by proof of acceptance through post-substitution conduct of the second party to the original contract. What has to be proven at common law is set out in the test from Polson v. Wulffsohn (1890), 2 B.C.R. 39 (S.C.), as adopted in Mead. The court said it was clear that novation did not arise in this case. There was no trilateral agreement. No new contract was created. What the plaintiff purported to do was to transfer by assignment its rights and obligations under a contract. The novation cases did not apply. The defendant relied on authority for the proposition that only a novation can bring about a third party substitution of a contracting party for all purposes. The court did not extract such a broad proposition of law from the cases or from contracts textbooks.  The terms of the contract itself can accomplish substitution of a contracting party without creating a new contract.

Edmonton (City) v. TransAlta Energy Marketing Corporation, 2009 ABQB 709 (CanLII)

This case concerned the interpretation of a tripartite agreement called an Assignment and Novation Agreement. The plaintiff’s position was that, on a proper interpretation of the agreement, a novation did not occur. The court agreed that the Polson three-part test for novation referred to in Mead could not be dogmatically applied in the circumstances of this case. However, there was a trilateral agreement which on its face constituted a novation. Whether or not the facts of the case fit neatly into the Polson definition of novation, it was nonetheless necessary to consider the wording of the agreement and more particularly whether there was any ambiguity in it. The plaintiff argued that a plausible interpretation of the provisions of the agreement would result in it being able to sue the original contracting party in both contract and negligence. The court did not accept this argument. It found that the agreement was not ambiguous and that the agreement resulted in novation. 

AMT Finance Inc. v. Gonabady, 2010 BCSC 278 (CanLII)

The plaintiff sought judgment for amounts owing under an equipment lease. Each of the two defendants argued that the plaintiff had agreed to an assumption of the lease by the other. The court said that the principle of novation was explained in Bank of British Columbia v. Firm Holdings Ltd., 1984 CanLII 149 (BC CA). An express agreement is unnecessary: the novation may be established by the parties’ conduct, including letters, receipts, payment and the course of trade or business: British Columbia (Attorney General) v. Salter, 1938 CanLII 210 (BC CA). That being said, however, the bar to meet in demonstrating novation is a high one, particularly where a party seeks to demonstrate the creditor’s consent. While it was clear that the plaintiff was amenable to having the full payments under the lease paid by one of the defendants, there was no evidence that the plaintiff consented to release the other defendant from liability under the lease. As stated in Bank of British Columbia, for novation to take place, the creditor must accept the new contract as discharging the old contract. Given the “onerous burden” set out in National Trust Co. v. Mead and the fact that a creditor’s assent to the novation is crucial to a finding of novation, the court found that there was no novation in this case. The facts suggested that there was no meeting of the minds so as to create a new contract and the plaintiff never consented to release either of the defendants from liability under the lease.

AMT Finance Inc. v Saujani, 2014 ABCA 385 (CanLII)

The appellants argued that a novation of an equipment lease had occurred. They did not argue that there was an express novation agreement, but rather that there was one implied as a matter of law. The court referred to the three-part test for novation set out in the Mead decision. A clause of the lease stated that the lessees had no right to sell, transfer or assign the agreement without first obtaining the lessor’s written consent. No such express written consent was provided. Accordingly, the court said, while the lessor allowed payment on the lease to be made by a party to whom the appellants transferred the equipment, it in no way permitted a formal assignment of the lease. There being no valid assignment of the lease, the test for novation completely failed. The evidence did not support the contention that there was an implied novation agreement wherein the party to whom the equipment was transferred was accepted by the lessor as the new principal debtor. 

Community Futures Development Corp. v. Dore River Forest Products Ltd., 2016 BCSC 1465 (CanLII)

The plaintiff sought judgment in respect of money owing on a loan, but the defendant Young argued that, by its conduct, the plaintiff had accepted a company called National Choice Bio Fuels Industries Ltd. as the debtor, thereby effecting a novation and releasing him from liability. Young conceded he did not have any document to show a novation. The court said that the high standard of proof for novation established by conduct was not met in this case. At its highest, all that could be said in respect of Young’s position was that the plaintiff was hoping that National Choice would take over the loan and was prepared to go ahead with that proposal. No assumption agreement was ever negotiated or documented. Certainly nothing documenting a release was provided to Young. Accordingly, the plaintiff never released Young and National Choice never took over the loan.

2.8 Implied Release

The concept of an implied release has been recognized in specific areas of law. It is clear, for example, that an easement may be abandoned by way of an implied release. The Ontario Court of Appeal said in Remicorp Industries Inc. v. Metrolinx, 2017 ONCA 443 (CanLII), at paragraphs 47 to 49: “An easement may be abandoned by release which may be express or implied. The onus of proof is on the party asserting a release … An easement can be expressly released by the dominant owner, that is, the party who has received the grant of easement … An easement can also be released impliedly. Non-use coupled with an intention to abandon the easement may demonstrate implied release.” On the facts of the Remicorp case, the Court of Appeal allowed an appeal from the decision of an applications judge because, among other things, the applications judge had erred in finding an implied release of easement. See also, for example, Oakville (Town) v. Sullivan, 2021 ONCA 1 (CanLII) and Ma v. Abdullah, 2019 ONSC 6781 (CanLII).

In another specific area of law, a leading Canadian book contains a short section on the subject of implied release: see Kevin McGuinness, The Law of Guarantee, 3rd Edition (Markham ON: LexisNexis, 2013), at page 1026. According to this book, the release of a principal debtor “may be implicit in dealings between the creditor and the principal as well as express”. But, perhaps not surprisingly, “the courts seem reluctant to draw an inference” that a creditor has implicitly released a principal and “appear willing to do so” only when it is clear that a release was the intent of the creditor. As noted in this book (also at page 1026), the effect of a release of the principal debtor is to release the surety, unless the guarantee is a continuing one. In this regard, see below, Chapter 11: Releases in Particular Situations, section 11.7, Guarantee and Indemnity.

Outside specific areas of law such as these, the general concept of a release implied from the particular circumstances of a case has not been widely recognized, nor even widely discussed, in Canadian cases. All the same, though, arguments that the facts of a case support a finding of implied release are certainly not unheard of, as can be seen from some of the decisions noted below.

Park v. Park, 1991 CanLII 12870 (ON SC)

For a number of reasons, the court declined to accept an argument that it could construe a matrimonial agreement so as to imply a release of present and future property claims.

Zippy Print Enterprises Ltd. v. Pawliuk, 1994 CanLII 1756 (BC CA)

As stated by the court, one of the issues in this case related to the doctrines of acquiescence, waiver, election, estoppel and laches where the relationship between the parties continued for some time after the falsity of a pre-contractual representation had become apparent. The court’s discussion of the five doctrines led it to comment about the failure to assert a claim giving rise to “an inference that the claim has been released or abandoned and that the parties have continued their relationship on the basis that it will never be asserted”. The court referred to the concept of waiver of tort and said there is no reason in theory why a claim based in tort for negligent misrepresentation could not be waived, but such a waiver would require clear evidence. Merely allowing a relationship with the tort-feasor to continue and to modify itself while the claim is continuing would not amount to waiver of the claim. What would be required is some unequivocal act tantamount to a release of the claim. The court also said it is not the law that to allow time to pass without making a claim for breach of warranty, within the limitation period, even when one knows of the facts of misrepresentation and that those facts give rise to a claim for breach of warranty, constitutes an abandonment of the claim, unless there is something in the context of the relationship from which it must necessarily be implied that the warranty claim has been released and that the continuing relationship is necessarily being conducted on that basis. The court concluded that any defence based on a continuance of the relationship between the parties amounting to a release of the contractual warranties constituted by the misrepresentations could not be made out on the facts.

Adelaide Capital Corporation v. Toronto-Dominion Bank, 2006 CanLII 39459 (ON SC) , appeal allowed on other grounds, South Holly Holdings Limited v. The Toronto-Dominion Bank, 2007 ONCA 456 (CanLII)

In settlement of a judgment against them obtained by the defendant bank, the third parties in this proceeding reached an accord and satisfaction with the bank, pursuant to which the third parties paid the bank $2,500 and sought a release from the bank. A draft release was prepared, but it was not clear from the pleadings whether that release was actually executed by the bank. The court said that the bank agreed, implicitly or explicitly, to release the third parties from future claims arising from the settlement of the judgment.

Abdollahi v. Nickpour, 2013 BCSC 1853, appeal dismissed, 2014 BCCA 131 (CanLII)

The parties were shareholders of a company, the main asset of which was a hotel. The process under the “shotgun clauses” in their shareholders agreement was initiated and ultimately it was agreed that the appellant would sell his shares to the respondents. The appellant argued that the respondents failed to tender a release of the appellant’s guarantee of a mortgage on the hotel property and that business efficacy required the implication of a term that the appellant be released from his personal guarantee. The courts held that the business efficacy of the agreement did not require this term to be implied; the Court of Appeal noted that, in the closing agreement, the respondents accepted responsibility for payment of the financial obligations to the mortgagee.

Cooper v. Blackwell, 2017 BCSC 1991 (CanLII)

The deceased husband of the plaintiff had signed release of liability agreements for hunting excursions in 2009, 2012 and 2013. The defendants relied on a “course of dealing” principle of contract law in support of an argument that a liability release should be implied in respect of a 2014 excursion. The court rejected this argument because: (1) it doubted whether the previous “transactions” qualified as a “course of dealing”; (2) releases are subject to rigorous scrutiny before being enforced, express notice and clarity of language being essential; and (3) waiver requires an unequivocal and conscious intention to abandon rights and there was no evidence of such an intention.

Lennox v Lennox, 2019 BCSC 938 (CanLII)

The parties entered into a separation agreement that anticipated the sale of a property and a division of the proceeds of sale. The court said that the evidence supported a conclusion that the parties had mutually agreed to abandon this agreement and the court went on to describe the circumstances which evidenced an agreement to abandon. Although the agreement was not replaced or amended by a further agreement in writing, the court inferred from the parties’ conduct that there was a mutual release of obligations arising under the agreement.

2.9 Implying Terms of a Release

A court may imply non-essential terms of an agreement. A contractual term may be implied on the basis of the presumed intention of the parties where necessary to give business efficacy to the contract or where it meets the “officious bystander” test: Energy Fundamentals Group Inc. v. Veresen Inc., 2015 ONCA 514 (CanLII), quoting from M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC). As for the “officious bystander” test, see Shirlaw v. Southern Foundries (1926) Ltd., [1939] 2 K.B. 206, at p. 227, where the court said:

Prima facie that which in any contract is left to be implied and need not be expressed is something so obvious that it goes without saying. Thus, if while the parties were making their bargain, an officious bystander were to suggest some express provision for it in their agreement, they would testily suppress him with a common: “Oh, of course.”

Implication of a contractual term does not require a finding that a party actually thought about a term or expressly agreed to it. Often terms are implied to fill gaps to which the parties did not turn their minds: see, for example, Energy Fundamentals, above. But a court will not imply a term that contradicts the express language of the contract, or that is unreasonable: G. For Homes Ltd. v. Draft Masonry (York) Co. Ltd., 1983 CanLII 1719 (ON CA).

The decisions summarized below address implied terms in the context of releases. On the subject of whether a release is an implied term of a settlement of claims, see Chapter 4: Releases and Settlement, section 4.4.3, Release as an Implied Term of Settlement. Also in Chapter 4, see section 4.6.3, Terms of Release to be Provided to Complete a Settlement.

Cudmore Estate v. Deep Three Enterprises Ltd., [1991] O.J. No. 1453

Two scuba diving students perished while participating in ice diving. In connection with a pre-emptive release required by the National Association of Scuba Diving Schools Inc. to be signed by students participating in scuba diving activities and instruction, the court said that, in order for the waiver to be effective, it seemed reasonable to imply a condition that, since the emphasis was on safe scuba diving, a student was entitled to expect their instructor would be a properly qualified experienced ice scuba diver. The defendant NASDS failed in its obligation to make certain that this was the case and, as a result, the defendants could not “hide behind” the waiver.

Newsham v. Canwest Trade Shows Inc., 2012 BCSC 289 (CanLII)

The plaintiff rented booth space at a show and it was agreed that, in lieu of paying rental fees for the space, the plaintiff would perform at the show. The reverse side of the exhibitor’s contract signed by the parties contained a release of liability clause. The plaintiff was injured during a performance when he slipped on a stage. The court considered whether it was an implied term of the exhibitor’s contract that the defendant would provide a safe and secure environment for the plaintiff’s performances. The court held that such an obligation was imposed on the defendant in any event by occupiers’ liability legislation and that it was not necessary to imply this term to make the agreement effective.

Dube v. Shooman, 2013 ONSC 4348 (CanLII)

The plaintiff accepted a settlement offer which made no mention of a non-disclosure term. The parties never discussed a non-disclosure clause before the offer to settle was accepted, but it was submitted that a confidentiality term was standard and fair and reasonable. The court held that no confidentiality clause was to be implied and the release should omit such a clause.

Alfaiate v. 1014784 Alberta Inc, 2018 ABQB 666 (CanLII)

Formal releases commonly include indemnities in the event of claims over against released parties in actions brought by the releasors against others. These are not customary or implied in every case; rather the terms are dependent on the context and an indemnity might sometimes be implied. As for the plaintiff’s concern that the defendant’s lawyers might act on behalf of other clients making claims in respect of the home purchased by the plaintiff, the court said that it would not imply any provisions about the opposing lawyers’ other retainers, which is a topic usually governed by lawyers’ ethical obligations, the rules of court and the court’s inherent jurisdiction over lawyers acting in proceedings in the court.

Betser-Zilevitch v. Nexen Inc., 2018 FC 735 (CanLII) , appeal dismissed, 2019 FCA 230 (CanLII)

Non-essential terms may be implied into a settlement agreement. Where “assigns”, “joint venture partners” and “customers” were not explicitly included in a settlement agreement, to include them in a release would require implying a non-essential term into the settlement agreement. The honest, sensible business person, when objectively considering the matter, would reasonably conclude that the parties had agreed to the release of “assigns” and “joint venture partners”, but not “customers”.

Terranata Winston Churchill Inc. v. Teti Transport Ltd., et al., 2020 ONSC 7577 (CanLII)

When the parties to a settlement have agreed that a release will be executed, but the settlement agreement is silent as to the content of the release, the court will imply only those terms that are “standard” or “usual” as those terms have been interpreted in the jurisprudence. In determining what terms falls within the scope of a standard release, the jurisprudence has established that the test to be applied is objective, rather than the subjective intentions of the parties to the settlement. Two guiding principles driving this analysis are the general purpose of releases and the business efficacy of settlement agreements.

Robinson v Canfor Pulp Ltd., 2023 BCSC 581 (CanLII)

In this case, the court agreed that the words of a clause setting out an exclusion from the scope of a release captured the plaintiff’s claim and thus the claim was not barred by the release. The court did not agree with an argument that the exclusion clause was ambiguous on its face, nor did it agree that a qualification on the exclusion clause arose by necessary implication from the language of the release itself or from the context of prior litigation and settlement.

Manson v Mitchell, 2023 BCSC 723 (CanLII)

This action arose out of injuries suffered by the plaintiff as a result of a mountaineering incident in July of 2021. The defendants sought a declaration that a waiver and release signed by the plaintiff applied to the mountaineering trip during which the incident occurred and was a full defence to the claim. The defendants argued that, interpreting the waiver and release in light of the surrounding circumstances, the waiver was not limited to the specific date referred to in it (June 18, 2021); rather that date represented the first day of a series of guided outings the plaintiff and the defendant Mitchell were going to undertake together during the summer of 2021. The court said that the surrounding circumstances supported a finding that the mutual intent of the plaintiff and Mitchell, objectively determined, was that the waiver applied to the June 18th climb. The defendants argued in the alternative that the factual matrix leading to the execution of the waiver required that a term be implied in it to the effect that the waiver was intended to apply to the climbing and mountaineering activities within the contemplation of the parties in the summer of 2021. The court did not accept this argument for two reasons. First, the defendants were attempting to recast an argument that the court had rejected as an impermissible approach to contractual interpretation, namely, that Mitchell’s subjective intention ought to be preferred over the express language of the waiver objectively interpreted in light of the surrounding circumstances. Second, the July 2021 outing was not within the contemplation of the parties when the waiver was executed, so an implied term regarding activities “within the contemplation of the parties” would not in any event apply to the July 2021 incident.

2.10 Varying the Terms of a Release

After a release has been validly created in accordance with the case law discussed above, one or more of the parties to the release may seek to change its terms. The decisions summarized below make clear that a party to a release cannot unilaterally vary its terms and that the agreement of all parties is required to vary the terms of a release.

Paletta v. Paletta, 2003 CanLII 19580 (ON SC)

Litigation relating to an alleged partnership between brothers (“Larry” and “Pat”) was settled. The settlement included a mutual release of all claims between the parties and releases between those parties and additional parties. Subsequently, Larry commenced an action against lawyers who, he alleged, had failed in their duty to properly document the partnership. The lawyers commenced third party proceedings against Pat and some of his companies. The release signed by Larry as part of the settlement of the earlier litigation contained a no-claim-over clause in which Larry covenanted not to commence an action against any person that could result in a claim over against Pat. Larry gave an undertaking that any judgment he might obtain against the lawyers, in respect of which contribution or indemnity might be ordered against Pat, would not be enforced. The action against the lawyers was dismissed on the ground that it was precluded by the no-claim-over clause. In this action, Larry alleged that the settlement should be rescinded because of a fraudulent course of action by Pat. The court said that the action was completely inconsistent with, and contrary to, the terms of the written releases signed in furtherance of the written settlement. The undertaking given by Larry during the subsequent action did not change the plain and unambiguous meaning of the written settlement and the related releases. It did not, in effect, bring about an amendment to the written settlement.

Durish v. White Resource Management Ltd., 1998 ABQB 801 (CanLII)

Releases are a species of contract and, commensurately, the law of contracts applies to them. Variation of a contract requires the mutual agreement of all of the parties. Unilateral notification by one party to the other cannot constitute a variation of a contract. A later agreement between some of the parties, but without the consent of all parties, cannot vary the terms of a release.