CHAPTER 5: Interpretation of Releases

5.1 General Interpretation of Contracts

Canadian courts have made clear that a release is a contract. Accordingly, Canadian case law on the interpretation of releases is much like a subset of the vastly larger body of law on general principles of contract interpretation. rlaw.online will not tackle the broad subject of general contract interpretation, but instead will highlight certain of the general principles that tend to take on particular importance in cases involving the interpretation of releases.

There are many decisions of the Supreme Court of Canada to which one can look for guidance on general principles of contract interpretation. These decisions include Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII) , [2014] 2 SCR 633 and Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37 (CanLII), [2016] 2 SCR 23. Sattva, in particular, has often been referred to in Canadian decisions involving the interpretation of releases.

In Sattva, the Supreme Court said (at paragraph 47) that:

… the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”, (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27, per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 64-65, per Cromwell J.). To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning … .

The Supreme Court quoted the following statement from the judgment of Lord Hoffmann in Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98 (H.L.), at page 115:

The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.

Lord Hoffmann referred to the meaning that the words of a contract would convey to a reasonable person because he was describing the objective approach to contractual interpretation, which does not aim for a determination of the subject intentions of contracting parties.

In short, the Supreme Court indicated in Sattva (paragraph 49) that the goal of contractual interpretation is to ascertain the objective intent of the parties – a fact-specific goal – through the application of legal principles of interpretation.

A number of years after the Sattva decision, the Supreme Court directly addressed the interpretation of releases: see Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) . In this case that squarely brought into issue the interpretation of a release, the court referred (at paragraph 20) to the following aspects of Sattva:

Sattva directs courts to “read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract”: para. 47. This Court explained that “[t]he meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement”, but that the surrounding circumstances “must never be allowed to overwhelm the words of that agreement”: paras. 48 and 57. “While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement”: para. 57. This Court also clarified that the relevant surrounding circumstances “consist only of objective evidence of the background facts at the time of the execution of the contract…, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting”: para. 58.

5.1.1 General Contract Interpretation Principles Apply to Releases

As stated above (section 2.5.2.2), the decision of the Supreme Court of Canada in Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) is the leading Canadian authority on the interpretation of releases. The short-form identifier Corner Brook used in rlaw.online refers to the decision of the Supreme Court released on July 23, 2021.

The Supreme Court of Canada confirmed in Corner Brook, at paragraph 21, that a release is a contract and the general principles of contract interpretation apply to releases. More particularly, the court said there is no special interpretive principle that applies to releases: Corner Brook, at paragraphs 3, 34 and 43. The court said there is no principled reason to have a special rule applicable only to releases, in light of the contemporary approach to contract interpretation: Corner Brook, paragraph 33. This uniform understanding of the principles of contractual interpretation is consistent with the Supreme Court’s guidance in Sattva that “the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction”: Corner Brook, paragraph 34, quoting from Sattva paragraph 47.

It comes as no surprise that there has been much discussion of Corner Brook by legal commentators. See, for example, Alicja Puchta and Andrew Bernstein, Shall I Be Released? – The Supreme Court’s Decision in Corner Brook v. Bailey (2022) 53 Adv. Q. 1.

In the decisions below that pre-dated Corner Brook, Canadian courts pointed out that general principles of contract interpretation apply to the interpretation of releases.

McNichol v. Co-operators General Insurance Company, 2006 NBCA 54 (CanLII)

The Court of Appeal allowed an appeal from the decision of a motion judge dismissing this action. With respect to a release relied upon by the defendant, the appellate court said that what the release covers stands to be determined by the application of the well-settled principles that govern contractual interpretation and that an elucidation of the context may be pivotal to that determination.

Precision Remodelling v. Soskin, 2008 CanLII 31411 (ON SC)

The claim against one of the defendants in this case raised issues of contract interpretation with respect to whether the release provision in minutes of settlement was binding as between the plaintiffs and that defendant. Minutes of settlement are contracts and the principles of contract interpretation apply.

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

The interpretation of releases proceeds on the same basis as that of other written agreements entered into for consideration, that is, on the basis of ordinary contractual principles.

G. Wilson Construction Co. Ltd. v. Westeinde, 2012 BCSC 1356 (CanLII)

In considering the interpretation of a release, the court referred to the “ordinary principles of contractual interpretation” summarized in Jardine v. General Hydrogen Corporation, 2007 BCSC 119 (CanLII).

Canadian Energy Services Inc v Secure Energy Services Inc, 2020 ABQB 473 (CanLII) , appeal dismissed, Secure Energy Services Inc. v Canadian Energy Services Inc., 2022 ABCA 200 (CanLII)

The court said that the release in this case must be interpreted using standard principles of contract interpretation. The court referred to Sattva, where, as noted above, the Supreme Court said, that “…a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.”

5.2 General Principles of Interpretation -Releases

The issues at the core of the Corner Brook decision of the Supreme Court of Canada related to a principle articulated many years ago in London and South Western Railway v. Blackmore, (1870), 39 L.J. Ch. 713, [1870] 4 H.L. 610. According to Blackmore, the general words of a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given. Although the Blackmore decision dates from 1870, it continued to be followed by Canadian courts up to the time of the Supreme Court’s decision in Corner Brook.

In a decision of the House of Lords issued about twenty years before Corner Brook, Lord Nicholls indicated that there was no longer any occasion for the application of special rules of interpretation to releases. More specifically, in Bank of Credit and Commerce International v. Ali [2001] UKHL 8 , at paragraph 26, he said:

…there is no room today for the application of any special ‘rules’ of interpretation in the case of general releases. There is no room for any special rules because there is now no occasion for them. A general release is a term in a contract. The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made. This general principle is as much applicable to a general release as to any other contractual term. Why ever should it not be?

Until Corner Brook, however, it was not clearly established in Canadian law that there are no special rules of interpretation for releases. In the Imperial Tobacco decision summarized in section 5.2.1 below, the Blackmore principle was referred to as a special rule that applies to the interpretation of releases. In a 2020 British Columbia Supreme Court decision, it was said that the Blackmore principle applies to the interpretation of releases “in addition to” general principles of contract interpretation: see LeRoy v. TimberWest Forest Corp., 2020 BCSC 978 (CanLII) , appeal on other grounds dismissed, 2021 BCCA 326 (CanLII) , which also is summarized in section 5.2.1 (The Blackmore Rule and Case Law Pre-Dating Corner Brook).

The unanimous judgment of the Supreme Court Canada in Corner Brook was delivered by Rowe J. He referred to the principle from the Blackmore case that was applied by Canadian courts for many years as the “Blackmore Rule”. He said that the Blackmore Rule has been overtaken by the general principles of contract law set out in Sattva, above: it has outlived its usefulness, he said, and should no longer be referred to. (See Corner Brook, at paragraph 3.) Rowe J. elaborated on this conclusion in the following paragraphs (17-19) of the Supreme Court decision:

Sattva marked a significant change in the jurisprudence. Traditionally, the interpretation of contracts was a matter of law, not mixed fact and law. This was because interpretation was seen primarily as an exercise in giving meaning to words. Circumstances were generally relevant to interpretation only where there was an ambiguity.

The Blackmore Rule was formulated in the traditional period to which I have just referred. In that view, courts were reluctant to have regard to the facts surrounding the formation of a contract, as an aid to its interpretation. The words of a contract were given their “black letter” meaning. This was problematic from the view of releases; the Blackmore Rule addressed this problem.

But 150 years after the Blackmore decision, things have changed. The facts surrounding the formation of a contract are relevant to its interpretation. The jurisprudential concerns that gave rise to the rule in Blackmore no longer exist. It is no longer needed. It has outlived its usefulness and should no longer be referred to.

Rowe J. went on to say more about why the Blackmore Rule has outlived its usefulness. He said (at paragraph 23):

Lord Hoffmann observed in Ali [above] that judges in the 18th and 19th centuries were “less sensitive to context” and “were reluctant to admit what was called ‘extrinsic evidence’, that is to say, evidence of background which would put the language into context” … . While the Blackmore Rule would no doubt have had utility within that “black letter” framework, this is no longer the case. In Sattva, this Court directed judges to look to the surrounding circumstances known to the parties at the time of contract in interpreting the meaning of the words of a contract: para. 47. The Blackmore Rule, which allowed courts to consider factual context when that was not the general rule, has been overtaken by a general rule that factual context is considered in interpreting contracts.

The determination by the Supreme Court of Canada that the Blackmore Rule should no longer be referred to was reiterated in Corner Brook: see paragraphs 3, 19 and 33. Rowe J. also said (at paragraph 33) that “the jurisprudence pursuant to” the Blackmore Rule should no longer be referred to. Because the Blackmore Rule so thoroughly permeated Canadian case law on the interpretation of releases prior to the Corner Brook decision, it is important that cases pre-dating Corner Brook be read and understood in light of the Supreme Court’s decision. For this reason, the pre-Corner Brook case law below dealing with general principles of interpreting releases is gathered under a heading that identifies it as law pre-dating Corner Brook. (See section 5.2.1, The Blackmore Rule and Case Law Pre-Dating Corner Brook.)

Rai v. Sechelt (District), 2021 BCCA 349 (CanLII) , application for leave to appeal dismissed, Elliot Held, et al. v. District of Sechelt, et al., 2022 CanLII 26230 (SCC)

As the Supreme Court of Canada recently confirmed in Corner Brook, releases are contracts subject to the ordinary approach to contractual interpretation set out in Sattva Capital Corp. v. Creston.

Grouette-McDougall v. Loran Scholars Foundation, 2021 ONSC 7801 (CanLII)

The plaintiff was informed by the defendant that she had been selected as a finalist for a scholarship. She was invited to attend “National Selections” in Toronto. She signed a “Release of Liability, Waiver of Claims and Assumption of Risk” in respect of her participation in the National Selections. The parties agreed that the release was a contract and the court said it must be interpreted in accordance with the relevant principles of contractual interpretation. The court quoted contract interpretation principles enunciated in Sattva Capital Corp.

Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

In Biancaniello v. DMCT LLP, 2017 ONCA 386, this court set out the interpretive principles that specifically apply to a release, which include that the court must “look first to the language of a release to find its meaning”, that “[w]hen a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them”, and that “[o]ne can look at the circumstances surrounding the giving of the release  to determine what was specially in the contemplation of the parties”.

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

The Supreme Court of Canada set out the current approach to contractual interpretation in Sattva. These general principles of contractual interpretation apply to releases (citing Corner Brook).

Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII)

The Supreme Court of Canada set out the current approach to contractual interpretation in Sattva. These general principles of contractual interpretation apply to releases (citing Corner Brook). However, the Supreme Court noted in Corner Brook that tension between the ordinary meaning of the words and the surrounding circumstances can arise more often in the context of the interpretation of a release.

L. & V. Enterprises Ltd. v Dave’s Diesel Ltd., 2022 SKQB 87 (CanLII)

In Corner Brook, the Supreme Court of Canada addressed interpretation of releases. The Supreme Court held that the rules of contractual interpretation set forth in Sattva Capital will apply to interpretation of releases. The principles set out in Sattva may be distilled to the following: (a) the goal is to determine the objective intent of the parties – interpretation must be grounded in the text, in light of the entire contract; (b) a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract; (c) surrounding circumstances may be relied on for interpretation of provisions, but not to deviate from the text so as to create a new agreement – consideration of surrounding circumstances must never be allowed to overwhelm the words of the agreement; and (d) evidence of surrounding circumstances should consist only of objective evidence of the background facts at the time that would have been within the knowledge of both parties. Because releases have elements that are unique to them, Corner Brook identified several principles concerning interpretation of releases, including: (a) a release may cover an unknown claim if the language is sufficient; and (b) though courts have tended to interpret releases narrowly, that is a product of the tendency for releases to be expressed in the broadest possible words. According to Corner Brook: “The ultimate question is whether the claim is of the type of claim to which the release is directed. This will depend on the wording and surrounding circumstances of the release in each case.”

Shannon v Shannon, 2023 ABCA 79 (CanLII)

A resolution agreement, however brief, is a contract. A release based on a settlement is also a contract. The Supreme Court of Canada said, in Corner Brook, that as to interpretation of a release, “[t]he ultimate question is whether the claim is of the type of claim to which the release is directed.” And not exclusively to whether the claim is known.

Caron v. Bluteau, 2023 ONSC 429 (CanLII)

In Corner Brook, the Supreme Court of Canada held that the general principles of contractual interpretation apply to a release, which is a contract. Contractual interpretation requires courts to give the words of a contact their ordinary and grammatical meaning in a manner that is consistent with the surrounding circumstances of which the parties were aware at the time they formed the contract (citing Corner Brook and Sattva Capital). Where the ordinary meaning of the words and the surrounding circumstances come into tension, a court must decide whether to rely on the surrounding circumstances to refine the meaning of the words. It is impermissible to rely on the surrounding circumstances where they would overwhelm the words of the agreement, in which case the ordinary meaning of the words must prevail. In this case, the plaintiff’s hearsay evidence of surrounding circumstances (that she was assured she could sue the defendant for negligence after signing a release) was not sufficient to overwhelm the plain meaning of the words used and for which consideration was given.

ALC v. Bergmark Guimond et al., 2023 PESC 48 (CanLII)

The approach to the interpretation of contracts laid out in Sattva is equally applicable to exclusions and releases (citing Corner Brook and Tercon).

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

In this decision involving the interpretation of a release, the court said that the applicable law was not controversial. The leading case in Canada is Corner Brook. There is no special rule of contractual interpretation that applies only to releases. Rather, the same principles governing the interpretation of contracts generally, as set out in Sattva, will apply to releases as well. It was held in Sattva that, in interpreting a contract, the court should strive to discern the parties’ common intention, having regard to the contract as a whole, giving the words their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time the contract was entered into. Nevertheless, the Supreme Court acknowledged in Corner Brook that the nature of a release may sometimes call for a stricter than usual interpretation of its terms. In this case, the court agreed that the words of a clause setting out an exclusion from the scope of the 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)

The defendants sought a declaration that a waiver and release signed by the plaintiff applied to a mountaineering trip during which an incident occurred which resulted in injuries to the plaintiff. The court said that determining whether the waiver applied to the mountaineering trip was an exercise in contractual interpretation and that the ordinary rules of contractual interpretation apply to releases (citing Corner Brook). The overriding goal when interpreting a contract is to determine the intent of the parties and the scope of their understanding at the time the contract was made. The contract must be read as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time the contract was formed. The central question is what was the parties’ mutual and objective intention as expressed by the words of the contract. 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” (citing Corner Brook and Bank of British Columbia Pension Plan ). In this way, the proper approach to interpreting releases under the ordinary principles of contractual interpretation prescribed by Sattva is consistent with the approach to releases formerly applied using the Blackmore Rule (citing Corner Brook).

Tk’emlúps te Secwépemc First Nation v. Canada, 2023 FC 327 (CanLII)

The court was asked to approve a settlement agreement reached in a class proceeding in which the plaintiffs sought reparations for the loss of language and culture caused to First Nation bands by the residential schools system. The only objection raised with regard to the approval of the settlement related to the wording of the release in the settlement agreement. The concern about the language of the release was that, in view of the ongoing discovery of unmarked graves and burial sites at former residential school sites, the release might prevent future efforts to hold Canada to account for these discoveries. The court said that, based on Corner Brook and Leonard v The Manufacturers Life Insurance Company, 2020 BCSC 1840, it must consider the release language as against the surrounding circumstances including the claims advanced in the pleadings and the common issues certified. The language in the pleadings and the certified common questions informed the parameters and legal reach of the release provisions. The release language was specifically crafted to apply only to the claims raised in the class proceeding. The court was satisfied that the release provisions of the settlement agreement did not release, impair, or otherwise restrict any claims that might be brought against Canada relating to unmarked graves or children who died or disappeared while attending residential schools. The release provisions were carefully crafted and would act as a bar to any claims based upon the same pleadings or the same common issues raised in this class proceeding. However, they would not act as a bar to claims grounded in another cause of action.

5.2.1 The Blackmore Rule and Case Law Pre-Dating Corner Brook

As stated above (section 5.2), in Corner Brook, the Supreme Court of Canada referred to the principle emerging from Directors of London and South Western Railway Company v. Blackmore (1870), 39 L.J. Ch. 713, [1870] 4 H.L. 610 as the “Blackmore Rule”. This “rule” was that the general words of a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given.

The Blackmore Rule was followed by Canadian courts up to the time of the Supreme Court’s decision in Corner Brook. But, in Corner Brook, the Supreme Court said (at paragraph 33), that “[t]he Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to”.

While the Supreme Court said in Corner Brook that the Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to, the Court recognized (at paragraph 29) that, in “purporting to apply” the Blackmore Rule, some Canadian courts had followed an approach that was “no different from ordinary principles of contractual interpretation”. In its discussion of this point, the Supreme Court referred to three decisions of provincial appellate courts, Bank of British Columbia Pension Plan, Re, 2000 BCCA 291 (CanLII) , Biancaniello v. DMCT LLP, 2017 ONCA 386 (CanLII) (summarized below) and Privest Properties Ltd. v. Foundation Co. of Canada, 1997 CanLII 11546 (BCCA) .

With respect to the Bank of British Columbia and Biancaniello decisions, the Supreme Court noted (at paragraphs 29 and 30 of Corner Brook) that each decision had used wording, as in the Blackmore Rule, about matters within or outside the contemplation of the parties. But the Court said that “the way the Blackmore Rule [had been] formulated and applied in both these cases reveal[ed] no inconsistency with the general principles of contractual interpretation”. As for the treatment of the Blackmore Rule in Privest Properties – and the Supreme Court’s own decision in Hill v. Nova Scotia (Attorney General), 1997 CanLII 401 – the Court said that the same conclusion could have been reached in these cases by simply applying the principles set out in Sattva. (The Sattva decision is addressed in section 5.1, above).

Indeed, even in respect of the case before it, the Supreme Court said in Corner Brook (at paragraph 33) that the application judge’s conclusion about what the parties “contemplated” (the Blackmore Rule) was synonymous with language from Sattva about what the parties mutually, objectively intended.

Thus, the Supreme Court concluded in Corner Brook (paragraph 28) that, given a narrow interpretation of the Blackmore Rule, and in light of Sattva, which explicitly directs decision-makers to consider the meaning of the words in the surrounding circumstances when interpreting any contract, “the Blackmore Rule no longer adds to or deviates from the general principles of interpretation that apply to all contracts”. The Court agreed that the Blackmore Rule “is entirely consistent with the law of contractual interpretation generally”. (See Corner Brook, at paragraph 28, referring to Hall, Geoff R., Canadian Contractual Interpretation Law, 4th ed. Toronto: LexisNexis, 2020, at page 286.)

The reason for this somewhat detailed review of the Supreme Court’s comments about the Blackmore Rule is to bring out that Canadian court decisions prior to Corner Brook in which the Blackmore Rule plays a part must be read with careful attention to what the Supreme Court said in Corner Brook. On one hand, the Supreme Court said, in no uncertain terms, that the Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to. On the other hand, the Court recognized that the treatment of the Blackmore Rule in leading cases on the interpretation of releases prior to Corner Brook had resulted in an approach that was “no different from ordinary principles of contractual interpretation”.

With the caveat that they are to be read with great care, Canadian court decisions on the interpretation of releases which pre-date Corner Brook have been gathered below.

Maiklem v. Springbank Oil & Gas Ltd., 1994 CanLII 9089 (AB QB)

A release, even a general release, only extends to the matters in the contemplation of the parties at the time the release is executed. At the time when a release of the plaintiff was signed, the defendant company did not have full knowledge of matters later raised in the company’s counterclaim, because of the plaintiff’s failure to provide full and complete disclosure and his misleading representations.

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. The proper meaning of a release should be determined according to the usual rules of interpretation: Sceptre Resources Ltd. v. Deloitte Haskins & Sells, 1988 CanLII 3576 (AB QB), appeal dismissed and cross-appeal allowed on other grounds, Sceptre Resources Limited v. Deloitte Haskins & Sells, 1991 ABCA 320 (CanLII).

484887 Alberta Inc. v. Faraci, 2002 ABQB 406 (CanLII)

It is well established that a release operates to cover what the parties had in contemplation at the time when it was executed. The release in this case was a generic one containing wide general words of release, but even wide general words of release are limited by what the parties had in contemplation. Releases exchanged in connection with the buyout of the defendant’s shares in the plaintiff corporation did not preclude an action against the defendant for breach of fiduciary duty founded on the defendant’s failure to make known the “criminal past” of an employee. Since the other directors of the corporation did not know about the “criminal history”, they could not be said to have had it in contemplation when the releases were exchanged.

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

The Master referred to the principle set out in Blackmore that the general words in a release are limited always to those things which were specially in the contemplation of the parties at the time when the release was given. He said that, in determining those things that were specially “in contemplation of the parties,” the case law reveals that the court has to consider the language of document itself, the circumstances surrounding its execution and evidence of the intention of the parties. As to the last of these three considerations, the Master later said that, in assessing what was in the contemplation of the parties at the time of the release, the court must look at objective evidence of intent (citing Abundance Marketing Inc. ).

Rankin v. Alberta Curling Federation Appeals Committee, 2005 ABQB 938 (CanLII)

One of the often cited canons of contractual interpretation of releases is that releases, by their nature, will be narrowly interpreted to include only those matters in contemplation of the parties. In this case, there was nothing in a general damage release that would justify an interpretation that it was intended to prevent judicial review of a disciplinary decision of a curling federation. Express wording would have been required to indicate that ousting the court’s supervisory jurisdiction was within the contemplation of the parties. General catch-all phraseology pertaining to damages was not adequate to do so.

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

In this case, the trial judge noted that a release, when read in isolation, appeared to be very broad. While it lacked the “formal, sometimes convoluted and archaic language often seen in releases drafted by lawyers”, the trial judge said that the release was, if anything, clearer for having been written in everyday language. Nevertheless, the trial judge considered “what the parties had in their contemplation” and, as noted by the Court of Appeal, it was “critical to his reasoning” that matters raised by the plaintiff were “all clearly in the contemplation of the parties”. The appellate court could see no principled basis to interfere with the trial judge’s conclusions in this regard.

Beck v. Johnston, Meier Insurance Agencies Ltd., 2010 BCSC 719 (CanLII), affirmed on other grounds, 2011 BCCA 250 (CanLII)

Like any contract, a release must be interpreted by the words used, considering the document as a whole and in the context in which it was executed. As to general principles of interpretation the court referred to Tercon (above), Dawson v. Tolko Industries Ltd., 2010 BCSC 346 (CanLII), White v. Central Trust Co. , Hannan v. Methanex Corp. and Bank of British Columbia Pension Plan v. Kaiser .

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

The scope of a release will be limited to those things which were in contemplation of the parties at the time when the release was given. It is perhaps fitting that release clauses are owed a slightly more narrow interpretation than other contractual clauses given the broad language they typically employ. Regardless, the words of the release themselves are a good indicator of what was in the contemplation of the parties. This applies a fortiori where the party signing the release was represented by counsel. In considering what was in the contemplation of the parties, a court may also consider the context, including the circumstances surrounding the execution of the document and objective evidence of the intention of the parties.

P.C. Devlin Law Corporation v. 403827 B.C. Ltd., 2011 BCSC 1255 (CanLII)

The court referred to the principles of interpretation of releases set forth in Bank of British Columbia Pension Plan v. Kaiser , Hannan v. Methanex Corp. and White v. Central Trust Co. .

R. v. Imperial Tobacco Canada, 2012 ONSC 6027 (CanLII) , affirmed on other grounds, Ontario v. Imperial Tobacco Canada Ltd., 2013 ONCA 481 (CanLII)

Releases are subject to the same principles that guide contractual interpretation, subject to a special rule derived from the decision in Blackmore. The rules governing the analysis are neatly summarized in Bank of British Columbia Pension Plan v. Kaiser .

Toscana Ventures Inc. v. Sundance Plumbing, Gas & Heating Ltd., 2013 ABQB 289 (CanLII)

The Master referred to principles of contract interpretation in the specific context of releases, as set out in leading cases including Bank of British Columbia Pension Plan v. Kaiser , White v. Central Trust Co. , Hill v. Nova Scotia (Attorney General) and Blackmore.

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

The interpretation of releases is guided by contract law and governed by the written text. The relevant principles to be applied when interpreting a release are listed in Bank of British Columbia Pension Plan v. Kaiser . Where a document is truly capable of two or more interpretations, the more reasonable one – that which produces a fair result – must be taken as the interpretation which promotes the intention of the parties.

Terwillegar Towne Residents Association v. Brookfield Residential (Alberta) LP, 2015 ABQB 14 (CanLII)

The Master cited the summary of case law on the interpretation of a release set out in Bank of British Columbia v. Kaiser .

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

The key principle of contractual interpretation is that the words excluding liability must not be read in isolation but rather considered in harmony with the rest of the agreement and in light of its purposes and commercial context (relying on the Tercon case with respect to contractual exclusion of liability provisions).

LeRoy v. TimberWest Forest Corp., 2015 BCSC 2005, affirmed on appeal, 2016 BCCA 448 (CanLII)

As broadly as a release may appear to be drafted, the rule in Blackmore requires consideration of a broad range of evidence to ascertain the relevant circumstances at the time the release was executed. The context often provides a limiting background to a release worded in a broad and general fashion.

Biancaniello v. DMCT LLP, 2017 ONCA 386 (CanLII)

The seminal decision on the proper approach to the interpretation of a release Is the decision of the House of Lords in the Blackmore case. The principle of the Blackmore decision was cited with approval in Hill v. Nova Scotia (Attorney General) and this approach was addressed again by the House of Lords in the Bank of Credit and Commerce v. Ali decision. The following principles can be distilled from the decision in the Ali case: 1) one looks first to the language of a release to find its meaning; 2) parties may use language that releases every claim that arises, including unknown claims, but courts will require clear language to infer that a party intended to release claims of which it was unaware; 3) general language in a release will be limited to the things specially in the contemplation of the parties when the release was given; 4) when a release is given as part of the settlement of a claim, the parties want to wipe the slate clean between them; and 5) one can look at the circumstances surrounding the giving of the release to determine what was specially in their contemplation.

Yeung v Chan, 2017 ONSC 3138 (CanLII)

Contracts are to be interpreted according to some basic principles. In particular, the court said, the release in this case must be considered: (1) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective; (2) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the “cardinal presumption” that they intended what they have said; (3) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and (4) in a fashion that accords with sound commercial principles and good business sense, and that avoids a commercial absurdity.

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

Whether interpreting a signed release or considering the scope of the release that the parties have agreed to sign, the matters that were specially in contemplation of the parties at the time the release was agreed to are relevant.

Sumas Remediation Services Ltd. v. Crowe MacKay LLP, 2018 BCSC 782 (CanLII)

A fundamental proposition is that a release is to be interpreted so that it covers only those matters which were specifically in the contemplation of the parties at the time the release was given (citing LeRoy, above, and Blackmore).

Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736 (CanLII)

The defendant brought a motion for summary judgment on three grounds, one of which was that the claims advanced in the action were discharged by a release given by the plaintiff to the defendant. The court said that Biancaniello, above, summarizes the interpretive principles to be applied when assessing “what was in the contemplation of the parties” in entering into a release. The court concluded that there was insufficient evidence to conduct the analysis specified in Biancaniello and that there were genuine issues not capable of being determined on a summary motion.

Crosstown Transit Constructors v. Metrolinx, 2018 ONSC 4650 (CanLII), affirmed on other grounds, 2019 ONCA 240 (CanLII)

The Biancaniello case, above, identifies five principles to guide the interpretation of a release.

Peters v. Soares, 2019 BCSC 189 (CanLII)

A release is to be interpreted so that it covers only those matters which were specifically in the contemplation of the parties at the time when the release was given. 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 court found that the parties did not have the competition in contemplation when the plaintiff signed the membership agreement.

LeRoy v TimberWest Forest Corp., 2020 BCSC 978 (CanLII) , appeal on other grounds dismissed, 2021 BCCA 326 (CanLII)

When interpreting a release, the general principles governing the interpretation of contracts apply (referring to Sattva for an articulation of these principles). In addition to these general principles, however, releases are subject to the interpretive principle originally articulated in Blackmore, and since adopted widely by Canadian courts, that the general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given. In determining what was in the contemplation of the parties, the court cannot consider the parties’ subjective understandings. Rather, as in regular contractual interpretation, evidence of surrounding circumstances should only consist of objective evidence of the background facts at the time of the execution of the release, or “knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting” (citing Sattva). The defendants are entitled to deny liability for claims, while entering into a settlement, or compromise agreement. The focus of the assessment in determining whether the claim is barred by a release is not whether the parties agreed to the substance or merit of the claims, but whether the facts on which the claims would arise were in the contemplation of the parties prior to signing the release.

Bailey v. Temple, 2020 NLCA 3 (CanLII) , appeal from Temple v. Bailey, 2018 NLSC 177 (CanLII) , appeal allowed, Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII)

The analytical structure for the interpretation of a release was outlined in Bank of British Columbia Pension Plan v. Kaiser , above. The judicial tendency is to interpret releases narrowly.

IAP Claimant H-15019 v. Wallbridge, 2020 ONCA 270 (CanLII) , application for leave to appeal dismissed, P. James Wallbridge, et al. v. IAP Claimant H-15019, 2020 CanLII 94499 (SCC)

The Court of Appeal said, first, that the guiding principle to the interpretation of a release was set out in Blackmore, namely, that the general words in a release are limited always to the thing or those things which were specially in the contemplation of the parties at the time the release was given, and, second, that Biancaniello sets out five principles for determining, when interpreting a broadly worded release, what was in the contemplation of the parties.

Briggs v. Durham Regional Police Services, 2021 ONSC 414 (CanLII) , appeal dismissed, Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

The Ontario Divisional Court referred to the principles of interpretation of a release set out in Biancaniello. The court said that, in interpreting the release at issue in this case, it was important to remember that the release could not be looked at in a vacuum. What was contemplated by the parties must be considered having regard to related minutes of settlement as a whole together with the surrounding circumstances or factual matrix (citing Hill v. Nova Scotia (Attorney General) ).

5.3 Objective Approach to Interpretation

As noted above, the Supreme Court of Canada indicated in the Sattva decision that the goal of contractual interpretation is to ascertain the objective intent of contracting parties through the application of legal principles of interpretation. In Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59 (CanLII), the Ontario Court of Appeal adopted the following description of the process of interpreting contracts given by Lord Justice Steyn in “The Intractable Problem of the Interpretation of Legal Texts” (2003) 25 Sydney L. Rev. 5, at page 8:

In sharp contrast with civil legal systems the common law adopts a largely objective theory to the interpretation of contracts. The purpose of the interpretation of a contract is not to discover how the parties understood the language of the text, which they adopted. The aim is to determine the meaning of the contract against its objective contextual scene. By and large the objective approach to the question of construction serves the needs of commerce.

(See Dumbrell, paragraph 56.)

The Court of Appeal gave two reasons why, at least in the context of commercial relationships, it is not helpful to frame the interpretive analysis in terms of the subjective intentions of contracting parties. These reasons (from paragraph 50 of Dumbrell) are as follows:

First, emphasis on subjective intention denudes the contractual arrangement of the certainty that reducing an arrangement to writing was intended to achieve. This is particularly important where, as is often the case, strangers to the contract must rely on its terms. They have no way of discerning the actual intention of the parties, but must rely on the intent expressed in the written words. Second, many contractual disputes involve issues on which there is no common subjective intention between the parties. Quite simply, the answer to what the parties intended at the time they entered into the contract will often be that they never gave it a moment’s thought until it became a problem… .

The decision of the Supreme Court of Canada regarding the interpretation of a release in Corner Brook (above) refers (at paragraph 49) to the objective theory of contract law and the reasoning in the decision repeatedly brings attention to the objective intentions of contracting parties: see, for example, paragraphs 32, 36, 38, 41, 46 and 48 of the decision.

An objective test also applies when, in considering the requirements for establishing the existence of a binding contract, the courts determine whether there was consensus ad idem at the time of contract formation. As stated in Salminen v. Garvie, 2011 BCSC 339 (CanLII), at paragraph 27, the test for determining consensus ad idem is an objective one: if a reasonable person would find that the parties were in agreement as to a contract and its terms, then a contract would exist at common law. The court went on to say in Salminen (paragraph 27) that the test’s focus on objectivity animates the principal purpose of the law of contracts, which is to protect reasonable expectations engendered by promises. These comments have been repeated in many British Columbia decisions, including Berthin v. Berthin, 2016 BCCA 104 (CanLII), at paragraph 46, Shannon v Gill, 2018 BCSC 135 (CanLII), at paragraph 35, Fairchild Developments Ltd. v. 575476 B.C. Ltd., 2020 BCCA 123 (CanLII), at paragraph 51, 1001790 BC Ltd. v. 0996530 BC Ltd., 2021 BCCA 321 (CanLII), at paragraph 41, and C.W.C. v L.A.W, 2021 BCSC 1774 (CanLII), at paragraph 115. As to the proposition that the goal of contractual interpretation is to discern the parties’ reasonable expectations, see section 5.8, Reasonable Expectations, below. As to case law on whether parties to a release reached a consensus ad idem, see Chapter 9, Challenging a Release, section 9.9, No Consensus Ad Idem.

The objective approach to interpretation is confirmed in the decisions below involving the interpretation of releases.

Precision Remodelling v. Soskin, 2008 CanLII 31411 (ON SC)

The claim made in this case against a lawyer raised issues of contractual interpretation, namely, whether the release provisions of minutes of settlement were binding as between the plaintiffs and the lawyer. The court said that minutes of settlement are contracts and, as such, principles of contract interpretation apply to them. The court went on to refer to a number of authorities setting out the objective approach to interpretation, including Dumbrell, above, 3869130 Canada Inc. v. I.C.B. Distribution Inc., 2008 ONCA 396 (CanLII), quoting from Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust 2007 ONCA 205 (CanLII), and SimEx Inc. v. IMAX Corp. 2005 CanLII 46629 (ON CA).

MHR Board Game Design Inc. v. Canadian Broadcasting Corporation, 2013 ONSC 4457 (CanLII), appeal dismissed, 2013 ONCA 728 (Can LII), leave to appeal refused, 2014 CanLII 25874 (SCC)

The parties in this case agreed that the proper approach to interpretation of a consent and release was to determine the intent of the parties objectively by reference to the words they used in their contract, read in light of the surrounding circumstances.

Cooper v. Blackwell, 2017 BCSC 1991 (CanLII)

After a liability release agreement was signed in respect of a hunting excursion, the releasees considered that another hunt about nine months later was a continuation or extension of the earlier excursion. However, the subjective rationale and intent of the releasees was not admissible evidence, whether under the guise of “surrounding circumstances” or otherwise, informing the proper interpretation of the agreement.

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

On a motion for summary judgment based entirely on the terms of a waiver and release of liability signed by the plaintiff, the court said that waivers of liability are to be construed contra proferentem, narrowly, carefully, and applied for their objectively determined meaning.

Jauch v. Kuratli, 2022 NSSC 228 (CanLII)

The court said that, in interpreting the words of release in a termination and mutual release agreement, as with any contract, it must look at the entire document in order to ascertain the meaning of the document. Further, the surrounding circumstances (context or factual matrix) are important in interpreting the words as such evidence would assist the court’s understanding of the mutual and objective intentions of the parties as expressed in the words. However, the subjective intent of the parties is not a consideration.

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 court said that determining whether the waiver applied to the mountaineering trip during which the incident occurred was an exercise in contractual interpretation and that the ordinary rules of contractual interpretation apply to releases, citing Corner Brook. 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’ proposed interpretation of the waiver invited the court to do exactly that which is not permitted by Sattva: allow the surrounding circumstances as they were subjectively understood by Mitchell to overwhelm the words of the waiver by adding to, varying or contradicting a written contract.

5.4 Reading Release or Agreement Containing Release as a Whole

It is a fundamental principle of the interpretation of releases, as with other contracts, that the document must be read as a whole. In its decision regarding the interpretation of a release, the Supreme Court of Canada said that Sattva (above) directs courts to “read the contract as a whole … ‘. (See Corner Brook, above, at paragraph 20, referring to Sattva, at paragraph 47.)

Sceptre Resources Ltd. v. Deloitte Haskins & Sells, 1988 CanLII 3576 (AB QB), appeal dismissed and cross-appeal allowed on other grounds, Sceptre Resources Limited v. Deloitte Haskins & Sells, 1991 ABCA 320 (CanLII)

Like other written documents, one must seek the meaning of a release from the words used by the parties. Though the context in which it was executed may be useful in interpreting the words, it must be remembered that the words used govern. As in all other cases, the document must be read as a whole to determine its interpretation.

Hampshire Holdings Ltd. v. Surrey (City of), 1996 CanLII 3454 (BC SC)

After referring to the operative words of a release, the court said that these provisions of release were to be read in their full context which, if anything, gave them the widest scope possible. This intention, the court said, was evident from the preamble to the release, which, among other things, said that the parties had mutually agreed to compromise all claims that had arisen, or might arise in the future, by reason of or in any way connected with “all their business dealings” including, without limiting the generality of the foregoing, certain agreements and all claims made in the action that the parties had agreed to settle.

Maiklem v. Springbank Oil & Gas Ltd., 1994 CanLII 9089 (AB QB)

The court must seek the meaning of a release from the words used by the parties. The document must be read as a whole to determine its interpretation.

1103785 Alberta Ltd. v. Exxonmobil Canada Ltd., 2008 ABQB 581 (CanLII), appeal on other grounds dismissed, 1103785 Alberta Ltd. v. ExxonMobil Canada Ltd., 2009 ABCA 283 (CanLII)

The words in releases govern the interpretation of those releases, but release documents must be read as a whole.

Valic v. Workers’ Compensation Board, 2010 NWTSC 97 (CanLII)

In interpreting a release, the written text must be read as a whole and in the context of the circumstances as they existed when the settlement was reached.

Simpson v. Ontario, 2010 ONSC 2119 (CanLII)

In the interpretation of releases contained in settlement agreements, the provisions of the agreements as a whole must be considered. According to the words of the release provisions contained in settlement agreements entered into by the parties in this case, the releases were confined to causes of action relating to the plaintiffs’ employment, termination of employment or reinstatement of employment. The settlement agreements did not by their terms release the plaintiffs’ tort claims (defamation and misfeasance of public office).

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

Reading a document as a whole is particularly important to bear in mind in construing releases, the operative parts of which are often written in the broadest terms.

Montor Business Corporation v. Goldfinger, 2016 ONCA 407 (CanLII) , application for leave to appeal dismissed, 1830994 Ontario Ltd. v. A. Farber & Partners Inc., the Trustee of the Bankruptcy Estate of Montor Business Corporation, Annopol Holdings Limited and Summit Glen Brantford Holdings Inc., 2016 CanLII 89830 (SCC)

The Court of Appeal said that the language and wording of the release in this case had to be reviewed, construed and assigned meaning. The release had to be considered as a whole. Such an approach was not evident from the reasons of the trial judge and this was an error.

Applied Industrial Technologies, LP v. Sirois, 2018 ABQB 818 (CanLII)

Releases must be interpreted to give meaning to all the words to the extent possible.

Worsley Rusholme Limited v. Imperial Oil, 2018 ONSC 5591 (CanLII)

The plaintiff purchased a property from Imperial Oil on which a gas station was previously located. During the course of excavation for the purpose of building a condominium complex, the plaintiff discovered petroleum contamination on the property.  The plaintiff claimed in this action that Imperial Oil was responsible for causing the contamination. Imperial Oil moved for summary judgment dismissing the action on the basis that a release in the agreement of purchase and sale between the parties precluded any claims of any kind related to environmental contamination of the property. The court said that the release was very broad and clearly encompassed the claim made in this action; it was hard to imagine how the wording of the release provisions in the agreement could have been broader. As part of the agreement, Imperial Oil also provided a “comfort letter” to the plaintiff that addressed issues of liability for environmental contamination on adjoining properties. The agreement of purchase and sale provided that the comfort letter was a schedule to, and formed part of, the agreement. While the plaintiff agreed that the wording of the agreement of purchase and sale on its own would release its claim, it argued that the terms of the comfort letter modified the agreement of purchase and sale such as to carve out the claim made in this case. The court found that neither the wording of the comfort letter nor the evidence of surrounding circumstances supported the plaintiff’s position.

3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235 (CanLII)

The Court of Appeal said that the motion judge failed to interpret a release as a whole and give meaning to all of its terms, which is a fundamental principle of contractual interpretation. His reasons did not advert to or analyze an important exception in the release. This was an extricable legal error and the motion judge’s interpretation of the release was not subject to deference.

5.5 Inclusive Interpretation

The decision summarized below suggests that it may be appropriate to interpret a release in an inclusive fashion in order to avoid a result which would effectively allow a party to a settlement to represent a desire to settle when actually having no intention of reaching a settlement.

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

The plaintiffs reached a settlement of a fire loss claim under a fire insurance policy and signed a proof of claim including a release. Subsequently, the plaintiffs commenced an action against the insurer alleging that the insurer had breached its duty of good faith and fair dealing. The judge hearing motions for summary judgment said that there were two approaches to the release. The plaintiffs argued that a claim for breach of a duty of good faith is a claim independent of the insurance contract and the proof of claim related only to the claim for coverage and not the administration of the claim. The contrasting argument was that without a fire loss, there would be no claim to administer, and therefore, the release was properly written to include both the claim for coverage and the claim for breach of a duty of good faith. The motion judge said there was merit in interpreting the release in an inclusive fashion since to do otherwise would allow one party (the releasor) to represent to the other party (the releasee) that it wished to settle a claim when in fact the releasor had no intention of doing so. However, the motion judge said that the language of the release was potentially capable of at least two interpretations and the interpretation of that clause of the proof of loss was better left for trial when the court would be given more information as to the circumstances surrounding its execution.

5.6 Surrounding Circumstances/Factual Matrix/Context

The general law of contract tells us that the circumstances surrounding the making of a contract are to be considered in the interpretation of the contract. Of course, the surrounding circumstances do not take on the same level of importance in all cases of contractual interpretation. In particular, the decision of the Supreme Court of Canada in Ledcor Construction v. Northbridge Indemnity, above, at paragraph 28, indicates that the understanding of the factual matrix that is crucial to the interpretation of many contracts is often less relevant for standard form contracts. But there seems little doubt about the importance of considering the factual matrix when the contract to be interpreted is a broadly-worded release because all too often the all-encompassing words of a general release are in discord with the apparent intentions of the parties: see The Law of Releases in Canada, at pages 83-90.

The interpretive exercise of giving due consideration to the surrounding circumstances of a contract was explained at some length by the Ontario Court of Appeal in Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59 (CanLII), where, at paragraphs 52-54, the court said:

No doubt, the dictionary and grammatical meaning of the words (sometimes called the “plain meaning”) used by the parties will be important and often decisive in determining the meaning of the document. However, the former cannot be equated with the latter. The meaning of a document is derived not just from the words used, but from the context or the circumstances in which the words were used. … The text of the written agreement must be read as a whole and in the context of the circumstances as they existed when the agreement was created. The circumstances include facts that were known or reasonably capable of being known by the parties when they entered into the written agreement … . A consideration of the context in which the written agreement was made is an integral part of the interpretative process and is not something that is resorted to only where the words viewed in isolation suggest some ambiguity. To find ambiguity, one must come to certain conclusions as to the meaning of the words used. A conclusion as to the meaning of words used in a written contract can only be properly reached if the contract is considered in the context in which it was made … .

The Court of Appeal also said in Dumbrell, at paragraph 55, that, insofar as written agreements are concerned, the context, or as it is sometimes called the “factual matrix”, clearly extends to the genesis of the agreement, its purpose, and the commercial context in which the agreement was made. Similarly, in Sattva, at paragraph 48, the Supreme Court referred to “contextual factors”, including the purpose of an agreement and the nature of the relationship created by the agreement.

Sattva sounded a note of caution about excessive reliance on surrounding circumstances in the interpretive process. The Supreme Court said (paragraph 57) that consideration of surrounding circumstances must never be allowed to overwhelm the words of an agreement and that surrounding circumstances cannot be relied on to deviate from the text of an agreement, such that the court effectively creates a new agreement. As stated by the court: “The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract. The interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract … .”

In Corner Brook (above), the Supreme Court considered how the general principles of contractual interpretation set out in Sattva apply to a release. The court concluded (at paragraph 34) that there is no special rule of contractual interpretation that applies only to releases. In his judgment on behalf of the court, Rowe J. noted the comment in Sattva that contractual interpretation requires courts to give the words of a contract their ordinary and grammatical meaning, in a way that is consistent with the surrounding circumstances known to the parties at the time of contract formation. (See Corner Brook at paragraph 35, referring to Sattva, at paragraphs 47-48). Rowe J. also relied on a statement from Sattva that sometimes the ordinary meaning of the words and the surrounding circumstances come into tension, and courts must decide whether to rely on the surrounding circumstances to refine the meaning of the words, or whether doing so would impermissibly overwhelm the words of the agreement, in which case the words must override. (See Corner Brook, at paragraph 35, referring to Sattva, at paragraph 57.)

Rowe J. said that this tension may arise when interpreting releases, for two reasons. The first reason, Rowe J. said, is that, while a general release, if interpreted literally, could prevent the releasor from suing the releasee for any reason forever, the circumstances may often indicate that such extreme consequences are not what the parties objectively intended. The context can serve as a limiting factor to the breadth of wording found in a release see Corner Brook, at paragraph 36. (The second reason for the tension referred to by Rowe J. is that parties to a release are often trying to account for risks that are unknown at the time when the release is given. As to unknown claims, see Chapter 6: Scope and Application of Releases, section 6.4, Unknown and Future Claims or Events.)

Below are decisions in which Canadian courts have discussed the extent to which consideration should be given to surrounding circumstances, or the “factual matrix”, when interpreting a release or a related document. Of course, all decisions below that pre-dated Corner Brook must now be read and understood in light of the Supreme Court’s decision. To the extent that any of these decisions rely on Blackmore or apply the Blackmore Rule, it is important to bear in mind that the Supreme Court of Canada said in Corner Brook (at paragraph 33) that the Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to.

Note that, when courts are called upon to decide whether issues arising from reliance on a release should be determined in a summary manner or at trial, the factual context or surrounding circumstances may have an important bearing on this decision as well: see Chapter 10: Jurisdiction, Procedure and Remedies in Release Cases, section 10.2.3, Summary Determination of Issues Regarding a Release.

Rai v. Sechelt (District), 2021 BCCA 349 (CanLII) , application for leave to appeal dismissed, Elliot Held, et al. v. District of Sechelt, et al., 2022 CanLII 26230 (SCC)

The Supreme Court of Canada recently confirmed in Corner Brook that releases are contracts subject to the ordinary approach to contractual interpretation set out in Sattva Capital Corp. v. Creston. As noted in Corner Brook the Supreme Court, in Sattva, directed judges to look to the surrounding circumstances known to the parties at the time of contract in interpreting the meaning of the words of a contract. This imperative has long been part of our law.

Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

The Divisional Court set aside a decision of the Human Rights Tribunal of Ontario that was based on a finding of no ambiguity in a release. The Divisional Court found that the tribunal had failed to take account of the full factual matrix. On appeal, the Ontario Court of Appeal recognized that significant deference was owed by the courts to the tribunal decision and that, superficially, the wording of the release could support the conclusion reached by the HRTO. However, as held in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (CanLII), one of the considerations in performing a reasonableness review is whether the decision conforms to the applicable legal and factual constraints. Here, the tribunal was required to apply the common law principles of contract interpretation. This required an examination of the full factual matrix at the time the parties entered into the agreement and not to focus only on isolated words in one provision of the agreement. In the circumstances of this case, while cognizant of the deference owed to the tribunal’s decision, the Court of Appeal agreed with the Divisional Court that the tribunal’s decision was unreasonable.

Vista Hospitality Co., Canada, Inc. v. SST Group of Construction Companies Limited, 2021 ONSC 5605 (CanLII)

The plaintiff Vista Sudbury Hotel Inc. hired a general contractor, SST, for a parking garage rehabilitation project and SST hired a sub-contractor, T.H.A.T., to provide engineering and consulting services for the project. A flood occurred at the site of the project and it was substantially agreed that the flood occurred due to the actions, errors, and omissions of SST and T.H.A.T., although their respective degrees of liability were the subject of dispute. The insurer for the plaintiff Vista Hospitality Co., Canada, Inc. paid the costs of repair and remediation (less the deductible under the insurance policy). Vista Sudbury and SST entered into a settlement and release agreement settling claims under the contract that included the work giving rise to the flood. In this action, a subrogated claim by Vista’s insurer was made, in the name of the plaintiffs, against defendants including SST and T.H.A.T. SST brought a motion for summary dismissal of the claim against it and it argued that the settlement and release agreement operated to bar the plaintiffs’ action. The court concurred with the plaintiffs’ submission that the critical issue to be determined on the motion was the correct interpretation of the scope of the agreement. The court referred to Busgos v Khamis  for the proposition, quoted in Busgos from 9 Halsbury’s (4th Edition), that: “[G]eneral words of release will be construed with reference to the surrounding circumstances and as being controlled by recitals and context so as to give effect to the object and purpose of the document.” The court made a number of findings of fact based on a review of the factual matrix surrounding the negotiation and drafting of the agreement. The court said that to suggest that an object and purpose of the agreement was to release subrogated insurance claims flew in the face of evidence from the CEO of SST that he took no interest or role in the insurance claims beyond reporting the matter to his insurer. It was clear from the evidence that the insurance claim and the negotiations between the parties regarding their liabilities to one another beyond the insurance claim were conducted parallel to one another. It was apparent that, in the negotiation of the agreement, all of the items addressed were out-of-pocket, uninsured expenses which the plaintiffs planned to back charge directly to SST out of future progress draws in the absence of an agreement. The court found that the agreement did not operate to bar any subrogated claims by the plaintiffs or their insurer against SST and its insurer.

Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII)

The Supreme Court noted in Corner Brook that tension between the ordinary meaning of the words of a contract and the surrounding circumstances can arise more often in the context of the interpretation of a release, for two reasons. First, releases are often expressed in the broadest possible words.  Second, parties to a release are often trying to account for risks that are unknown at the time of contract, and there is an imprecision inherent in this task that can give rise to disagreement as to what was intended. Thus, while releases signed in the course of a settlement of a dispute are often worded in a broad and general fashion, they must be considered in the context of the dispute, which can serve as a limiting factor to the breadth of wording found in a release.

Jauch v. Kuratli, 2022 NSSC 228 (CanLII)

The parties reached an agreement of purchase and sale with regard to the purchase of a property and business known as Best View Cabins. During the course of their discussions prior to reaching the agreement, the plaintiffs agreed to advance 50,000 Swiss francs to the defendants so that the defendants’ son could build a house. The Best View Cabins transaction did not close and the parties signed a termination and mutual release of agreement of purchase and sale. The termination agreement provided that the parties released each other from all obligations and claims arising out of the agreement of purchase and sale “together with any rights and causes of action that each party may have had against the other”. The court said that, in interpreting the words of release in the termination agreement, as with any contract, it must look at the entire document in order to ascertain the meaning of the document. Further, the surrounding circumstances (context or factual matrix) are important in interpreting the words as such evidence would assist the court’s understanding of the mutual and objective intentions of the parties as expressed in the words. The words “together with any rights and causes of action that each party may have had against the other” could not, in the circumstances, be taken to cover the 50,000 SFR that was advanced by the plaintiffs.  The words must be construed according to the particular purpose for which the agreement was made. The purpose was to terminate the agreement of purchase and sale and return the deposit of $2,500. The circumstances in which the agreement was drawn clearly suggested that the release was only to apply to claims relating to the specific subject matter of the failed transaction. The termination agreement was not a general release negotiated by the parties in relation to any and all matters in issue between them. It was a form specific to the terminated transaction set out in the agreement of purchase and sale.

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 did not accept this argument. As a starting point, the court said that what the plaintiff and MItchell “indicated to the outside world” was to be determined “within the four corners of the contract”. On its face, the waiver expressly applied to a climb on June 18, 2021. The date “June 18, 2021” inserted by the plaintiff into the “trip date” field of the waiver was clearly and unequivocally to that effect.  Interpreting the waiver in light of the surrounding circumstances did not yield a different result. Rather, 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’ proposed interpretation of the waiver invited the court to do exactly that which is not permitted by Sattva: allow the surrounding circumstances as they were subjectively understood by Mitchell to overwhelm the words of the waiver by adding to, varying or contradicting a written contract.

5.6.1 Pre-Corner Brook Case Law on Consideration of the Factual Matrix

Maiklem v. Springbank Oil & Gas Ltd., 1994 CanLII 9089 (AB QB)

The court must seek the meaning of a release from the words used by the parties. The document must be read as a whole to determine its interpretation. It is perfectly proper, and indeed it may be necessary, to look at the surrounding circumstances in order to ascertain what the parties were contracting about.

Halagan v. Reifel, 2001 BCCA 434 (CanLII)

The Court of Appeal held that the trial judge correctly interpreted a release. The language of the release was plain, admitting of only one meaning. The “factual matrix” should not, in such circumstances, be relied upon to vary, alter, or interpret the words used.

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

The Master referred to the principle set out in Blackmore that the general words in a release are limited always to those things which were specially in the contemplation of the parties at the time when the release was given. Citing Abundance Marketing Inc. , the Master said that, in assessing what was in the contemplation of the parties at the time of the release, the court must look at objective evidence of intent. It is only by looking at the surrounding facts as the court did in Abundance Marketing that the court can determine the objective evidence of intent.

Aljmja Holdings Inc. v. Proper Ford Lincoln Ltd., 2006 CanLII 6080 (ON SC)

Interpretation must begin with the words of the contract, but the general context that gave birth to the document or its factual matrix will provide the court with useful assistance. In this case, the context of a release was a contractual clause terminating all aspects of the relations between the parties and their principals.

Precision Remodelling v. Soskin, 2008 CanLII 31411 (ON SC)

The court found that certain parties to minutes of settlement intended that they would receive a full and final release from each other and that the factual matrix and subsequent conduct of the parties supported this interpretation of the words used in the agreement.

Chapman v. King, 2010 MBQB 249 (CanLII)

In interpreting a release provided in connection with a settlement, the written text must be read as a whole and in the context of the circumstances as they existed when the settlement was reached. The context in which the settlement was reached is essential to the interpretation process (citing Dumbrell, above).

Valic v. Workers’ Compensation Board, 2010 NWTSC 97 (CanLII)

In interpreting a release, the written text must be read as a whole and in the context of the circumstances as they existed when the settlement was reached. The context in which the settlement was reached is essential to the interpretation process (citing Dumbrell).

Forbes v. Manufacturers Life Insurance Company et al, 2010 ONSC 4931 (CanLII)

The text of the written agreement must be read as a whole and in the context of the circumstances as they existed when the agreement was reached. The consideration of context is an integral part of the interpretive process. It is not something that is resorted to only where the words viewed in isolation suggest some ambiguity (citing Dumbrell).

Toscana Ventures Inc. v. Sundance Plumbing, Gas & Heating Ltd., 2013 ABQB 289 (CanLII)

Presumably, the more general the release the more important the context or factual matrix of the document becomes (citing Abundance Marketing Inc. v. Integrity Marketing Inc. ).

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

The broader the terms used in a release, the more important it becomes for a court to consider the surrounding circumstances.

Terwillegar Towne Residents Association v. Brookfield Residential (Alberta) LP, 2015 ABQB 14 (CanLII)

The Master acknowledged that there are instances in other jurisdictions of very general releases being given a wide interpretation. However, all of these cases considered contextual evidence. Sometimes the language of the release is wide enough to limit the external enquiry, such as the language of the release in Gwininitxw v. British Columbia (Attorney General), 2013 BCSC 1972 (CanLII), but in this case the release included no such language.

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

The fact that courts have diverged in the enforcement of similarly worded waivers says more about differences in the factual matrices of these cases than any differences in the contracts themselves.

0803589 B.C. Ltd. (formerly Ralph’s Auto Supply (B.C.) Ltd.) v. Ken Ransford Holding Ltd., 2015 BCSC 1428 (CanLII); Ralph’s Auto Supply (B.C.) Ltd. v Ransford, 2019 BCSC 171 (CanLII), appeal allowed in part on other grounds, Ralph’s Auto Supply (B.C.) Ltd. v. Ken Ransford Holdings Ltd., 2020 BCCA 120 (CanLII)

This series of decisions arose from two applications for dismissal of a claim for want of prosecution. On the first application, the court concluded that concerns about the effect of delay on the evidence were not likely to impact trial fairness because the central dispute was about the interpretation of a release. The wording of the document itself would be the primary evidence and in that regard the evidence was unaffected by delay. On the second application, the court found that, while it would be possible to interpret the release, doing so fairly and confidently had been imperilled by delay. This was because of the importance of the surrounding circumstances to the process of interpretation. The claim was dismissed for want of prosecution. Although an appeal from the second decision was successful on another ground, the Court of Appeal upheld the dismissal of the claim for want of prosecution.

LeRoy v. TimberWest Forest Corp., 2015 BCSC 2005, affirmed on appeal, 2016 BCCA 448 (CanLII)

The rule in Blackmore requires consideration of a broad range of evidence to ascertain the relevant circumstances at the time a release was executed. The context often provides a limiting background to a release worded in a broad and general fashion.

100193 P.E.I. Inc. v. Canada, 2015 FC 932 (CanLII) , appeal allowed in part on other grounds, Canada v. 100193 P.E.I. Inc., 2016 FCA 280 (CanLII) , application for leave to appeal dismissed, 100193 P.E.I. Inc., et al. v. Her Majesty the Queen, 2017 CanLII 32942 (SCC)

The words of a release take their meaning from the context in which they are used and the intent of the parties. In considering what was in the contemplation of the parties, a court should consider the context, including the circumstances surrounding the execution of the document and evidence of the intention of parties (citing Arcand v Abiwin Co-Operative Inc., 2010 FC 529).

Crosstown Transit Constructors v. Metrolinx, 2018 ONSC 4650 (CanLII), affirmed on other grounds, 2019 ONCA 240 (CanLII)

In this case, the motion judge said that, if one were to focus solely on the language of the release under consideration, the applicant’s position would certainly be arguable: that is, if the parties had intended to restrict the release to particular items, as contended for by the respondent, they could have, and should have, drafted the release to make that clear. Nevertheless, taking into account the circumstances of the release as part of the factual matrix and viewing the applicant’s position in the context of a larger settlement between the parties, the motion judge did not accept the applicant’s arguments. The Court of Appeal concluded that the restriction on the scope of the release was not unclear or ambiguous, but said that, even if the language was ambiguous, it did not find any error in the analysis and conclusion of the motion judge.

Rossman v. Canadian Solar Inc., 2018 ONSC 7172 (CanLII) , appeal on other grounds dismissed, 2019 ONCA 992 (CanLII)

On a motion for summary judgment, the motions judge said that the meaning of the release provision of an agreement was wide; it used the general wording that “all previous agreements…are terminated and cancelled and each of the parties’ releases and forever discharges the other of and from all…claims…in respect of any agreement.” However, the court said these words were not to be looked at in a vacuum and the surrounding circumstances could be considered to understand the meaning of the release. There was no evidence that the goal was to wipe the slate clean between the plaintiff and the defendants and indeed the evidence was to the contrary. There was therefore a genuine issue requiring a trial as to what was in the contemplation of the parties at the time of the execution of the agreement.

Filkow et al v D’Arcy & Deacon LLP, 2019 MBCA 61 (CanLII)

The application judge in this case found that a settlement agreement was set out in an email and a final release. With regard to the interpretation of the agreement, he held that there was no lack of clarity or other factors that would justify the consideration of extrinsic material purporting to reflect the subjective intent of the parties. The Court of Appeal said that the application judge took too narrow a view of what was admissible evidence of surrounding circumstances in the interpretation of the settlement agreement. The Court of Appeal referred to its previous decision in Elias et al v Western Financial Group Inc, 2017 MBCA 110, for the proposition that courts are required to consider the surrounding circumstances in interpreting a contract regardless of whether the contract may be ambiguous. The court also referred to the law regarding interpretation of a release as stated in G.R. Hall, Canadian Contractual Interpretation Law (cited above) and the Sattva decision (above). The court concluded that the application judge conflated the issues of subjective intent and surrounding circumstances with the result that he failed to consider the surrounding circumstances regarding the formation of the settlement agreement. This approach caused him to fail to consider significant undisputed evidence regarding the nature of the relationship between the parties, the general nature of the negotiations preceding the agreement, the knowledge of the parties when they entered into it and the purpose of the settlement agreement.

 

Canadian Energy Services Inc v Secure Energy Services Inc, 2020 ABQB 473 (CanLII) , appeal dismissed, Secure Energy Services Inc. v Canadian Energy Services Inc., 2022 ABCA 200 (CanLII)

The court said that the release in this case must be interpreted using standard principles of contract interpretation. The court referred to Sattva, where the Supreme Court said that “…a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.” While the surrounding circumstances may be considered when interpreting a contract, they cannot be used to deviate from the words used to such an extent that the court may be said to have crafted a new contract (referring to Sattva and IFP Technologies (Canada) Inc v EnCana Midstream and Marketing, 2017 ABCA 157). The court found that to use the corporate defendants’ version of the surrounding circumstances to exclude a particular issue from the scope of the release would be to craft a more restricted release than the parties themselves agreed to.

LeRoy v TimberWest Forest Corp., 2020 BCSC 978 (CanLII) , appeal on other grounds dismissed, 2021 BCCA 326 (CanLII)

Assessing the factual matrix may be particularly essential in construing the scope of a release because releases are often worded “in the broadest of terms”. The issue is what the parties contemplated when the release was signed.

Inglis v. Medway Pines Stables, 2020 NSSC 97 (CanLII)

On a motion for summary judgment, there was a dispute as to the nature and extent of a pre-emptive release relied on by the defendants in connection with injuries allegedly suffered by the plaintiff while riding a horse at the defendants’ stable. The contractual interpretation of the release required a consideration of the context, that is, the surrounding circumstances of its execution. This would be necessary whether or not the release was ambiguous on its face. Such an endeavor, contractual interpretation in light of a factual dispute and potential ambiguity, could not be described as summary. That was not to say that contractual interpretation could never be dealt with on a summary judgment motion, but it could not be dealt with in this particular case.

Briggs v. Durham Regional Police Services, 2021 ONSC 414 (CanLII) , appeal dismissed, Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

The Ontario Divisional Court said that, in interpreting the release at issue in this case, it was important to remember that the release could not be looked at in a vacuum. What was contemplated by the parties must be considered having regard to related minutes of settlement as a whole together with the surrounding circumstances or factual matrix (citing Hill v. Nova Scotia (Attorney General) ).

5.6.1.1 Reasons for Giving Weight to the Words Actually Used in a Release

In the case below, which was decided prior to the Supreme Court of Canada decision in Corner Brook, above, the court considered the circumstances surrounding the signing of a release, but gave “considerable weight” to the actual words of the release because the parties were represented by counsel, their bargaining power was approximately equal and they co-drafted the release.

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

The words of a release themselves are a good indicator of what was in the contemplation of the parties. This applies a fortiori where the party signing the release was represented by counsel. Here, the court gave considerable weight to the words of the release, not only because the parties were fully represented by counsel, but also because the parties had approximately equal bargaining power and co-drafted the document.

5.6.2 What Surrounding Circumstances Are To Be Considered

The Supreme Court of Canada stated in Sattva, above, at paragraph 58, that: “…the nature of the evidence that can be relied upon under the rubric of ‘surrounding circumstances’ will necessarily vary from case to case. It does, however, have its limits. It should consist only of objective evidence of the background facts at the time of the execution of the contract … that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting.”  Subject to these requirements and the parol evidence rule, this includes “absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man” (citing Lord Hoffmann, Investors Compensation Scheme, above, at page 114).

In Corner Brook, above, Rowe J. said that the subjective knowledge, or lack thereof, of one party to the release under consideration regarding other, related litigation was irrelevant under an objective theory of contract law, because unless that knowledge was communicated to the other party, it is not a “surrounding circumstance” within the “common knowledge” of the parties: Corner Brook, at paragraph 49, referring to Sattva, at paragraph 58. What was privately in the mind of one party could not affect how that party’s conduct would appear to a reasonable observer in the position of the other: Corner Brook, at paragraph 49, referring to Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, at paragraph 33.

Rowe J. said he would make no comment on the possibility that the law may provide a remedy for the sharp practice of a releasee who intentionally does not disclose the existence of a claim to the releasor, referring to Bank of Credit and Commerce International v. Ali [2001] UKHL 8, per Lord Nicholls, at paragraphs 32-33, and per Lord Hoffmann, at paragraphs 67-71. However, Rowe J. said:

…the fact that the … releasor … may have had private knowledge of a claim is irrelevant in interpreting the release to determine whether or not she accidentally released that claim. As Lord Hoffmann observed in Ali, at para. 49: “It would be contrary to basic principles of construction for the meaning of a document to be affected by facts which were known to one party but not reasonably available to the other.”

(See Corner Brook, at paragraph 49.)

Both the judge at first instance and the Newfoundland and Labrador Court of Appeal considered pre-contract negotiations as they came to (differing) conclusions in the Corner Brook case about the intentions of the parties to the release: see the Supreme Court decision, at paragraph 56. On the appeal to the Supreme Court of Canada, the parties did not put into issue whether there was anything wrong with this approach. But Rowe J. noted the “longstanding, traditional rule that evidence of negotiations is inadmissible when interpreting a contract”, referring to authorities such as the dissenting judgment of Côté and Brown JJ in Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, at paragraph 100. As pointed out by Rowe J., Justices Côté and Brown observed in Resolute that this rule “sits uneasily” next to the approach from Sattva that directs courts to consider the surrounding circumstances in interpreting a contract.  However, Rowe J. left for another day the question of whether, and if so, in what circumstances, negotiations will be admissible in interpreting a contract because that issue needed to await a case where it would be fully argued and necessary in order to decide an appeal: Corner Brook, paragraph 57.

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

This decision involving the interpretation of a release says that courts are limited to considering only objective evidence of intent. The parties cannot rely solely on their own direct evidence of what their intention was. The test is the intention a reasonable person would have had if placed in the situation of the parties, referring to Abundance Marketing Inc. v. Integrity Marketing Inc. .

P.C. Devlin Law Corporation v. 403827 B.C. Ltd., 2011 BCSC 1255 (CanLII)

In considering the interpretation and scope of a release in a settlement agreement, the court referred to general principles of the interpretation of releases and the general principle governing the interpretation of contracts. The court interpreted the contract in the light of the surrounding circumstances. It quoted from Penderville Apts. Development Partnership v. Cressey Development Corp., 1990 CanLII 170 (BC CA), where Southin J.A. said: “The matrix does not include either party’s own reasons for wanting a particular clause or form of words used in a document or any particular subject addressed by it. The matrix is the genesis, aim and object of the whole transaction – the sort of thing that was once contained in recitals to instruments.

York University v. Michael Markicevic, 2013 ONSC 378 (CanLII)

The case law is consistent in stating that when considering the circumstances surrounding the negotiation of a contract, including a release, a court cannot admit evidence of the parties’ subjective intentions. The surrounding circumstances do not include either party’s own reasons for wanting a particular clause or form of words. As to the admissibility of evidence of pre-contract negotiations, the Canadian case law has held that the factual matrix does not include evidence of negotiations except perhaps in the most general of terms, such as to understand the genesis, aim or reason for the negotiations.

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

With regard to an agreement containing a pre-emptive release, the judge on a motion for summary judgment said that, if the contents of the document are contrary to what the ordinary person would expect, or the circumstances are such that it should be clear the person signing it did not know the terms, then the party seeking to rely on the document will have reason to know that the person signing did not intend to agree to the terms. As a result, the circumstances and conditions under which the plaintiff in this case was required to sign the agreement were of fundamental importance.

Cooper v. Blackwell, 2017 BCSC 1991 (CanLII)

After a liability release agreement was signed in respect of a hunting excursion, the releasees considered that another hunt about nine months later was a continuation or extension of the earlier excursion. However, the subjective rationale and intent of the releasees was not admissible evidence, whether under the guise of “surrounding circumstances” or otherwise, informing the proper interpretation of the agreement.

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 are facts known or facts that reasonably ought to have been known to both parties at or before the date of contracting, citing Sattva and Wade v. Duck, 2018 BCCA 176. As Sattva makes clear, the surrounding circumstances or factual matrix within which the contract was formed are considered when interpreting a contract, but must not be allowed to overwhelm the words of the contract within the interpretation exercise. The court agreed with the plaintiff that the circumstances of this case were akin to those of Cooper v. Blackwell, above. In Cooper, the court noted that a party’s subjective rationale or intent is inadmissible evidence when informing the proper interpretation of a release and it rejected the same argument advanced in this case by Mitchell that he subjectively intended the waiver would apply to all of his trips with the plaintiff over the summer of 2021. The evidence in this regard was limited to Mitchell’s subjective intention that the waiver would apply to any guided outings he and the plaintiff might do together over the course of the summer, which he never communicated to the plaintiff. The surrounding circumstances of this case supported a finding that the mutual intent of the plaintiff and Mitchell, objectively determined, was that the waiver applied to the June 18th climb.

5.6.3 Context

As noted above, the Ontario Court of Appeal said, in Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59 (CanLII), at paragraph 54, that consideration of the context in which a written agreement was made is an integral part of the interpretive process. In Corner Brook (above), at paragraph 36, the Supreme Court of Canada said that context can serve as a limiting factor to the breadth of wording found in a release. Note that giving due regard to the context of a release is not necessarily a uni-directional exercise that serves to limit the interpretation of broad wording. Evidence of the surrounding circumstances may support the position of a party resisting a narrow interpretation: see The Law of Releases in Canada, page 87.

In the cases set out below, which pre-dated Corner Brook, the courts confirmed that a release is to be interpreted in the context in which it was given. For case law more specifically addressing the proposition that context may serve as a limiting factor in the interpretation of the broad wording of a release see section 5.7.2, Broad/General Words Limited by Consideration of Context.

McNichol v. Co-operators General Insurance Company, 2006 NBCA 54 (CanLII)

In this case, the Court of Appeal allowed an appeal from the decision of a motion judge dismissing the action. With respect to a release relied upon by the defendant, the appellate court said that what the release covers stands to be determined by the application of the well-settled principles that govern contractual interpretation and that an elucidation of the context may be pivotal to that determination.

Gallant v. Fanshawe College of Applied Arts and Technology, 2009 CanLII 50755 (ON SC)

The court said that one of the defendants had made it clear to students at an introductory motorcycle riding course that they would be learning in a safe environment, with safe equipment and “by implication safe instructors”. With respect to whether the words in a waiver of liability signed by a student were broad enough to encompass the negligence of the defendants found by a jury, the court said that a party cannot make promises and then later attempt to withdraw those promises in a release unless it is done in clear and unambiguous language. It would be unfair and unreasonable to give effect to the waiver and thereby exonerate the defendants from responsibility for their failure to live up to the very promises they gave at the time of the signing of the waiver.

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

A release is a contractual clause which often limits or precludes a party from commencing an action in the future. It is simply one type of promise which can be reduced to writing and to which the general rules of contract law apply. At issue in the present case is the meaning of the words of the release. Words in a contract take their meaning from the context in which they are used and the intent of the parties. 

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

As is the case with other types of contractual provisions, the meaning of a release must be determined from the words used by the parties within the context of the entire document and the contextual evidence. The more general the release, the more important the context or factual matrix of the document becomes.

The Owners, Strata Plan BCS 327 v. IPEX Inc., 2014 BCCA 237 (CanLII)

While releases signed in the course of settlement of a dispute are often worded in a broad and general fashion, appearing to cover the end of the world, they must be considered in the context of the dispute. This dispute often provides a limiting background from which an inference may readily be made that the parties meant the release to apply to the claims from the dispute.

Gottfriedson v. Canada, 2015 FC 706 (CanLII)

A release must be considered in context. In order to interpret the wording of a release, one must look at the intention of the parties and the context in which the release was prepared.

100193 P.E.I. Inc. v. Canada, 2015 FC 932 (CanLII) , appeal allowed in part on other grounds, Canada v. 100193 P.E.I. Inc., 2016 FCA 280 (CanLII) , application for leave to appeal dismissed, 100193 P.E.I. Inc., et al. v. Her Majesty the Queen, 2017 CanLII 32942 (SCC)

The words of a release take their meaning from the context in which they are used and the intent of the parties.

Coburn and Watson’s Metropolitan Home v BMO Financial Group, 2018 BCSC 1183 (CanLII) , notices of appeal and leave to appeal quashed, Coburn and Watson’s Metropolitan Home, 2019 BCCA 308 (CanLII) , application for leave to appeal dismissed, Home Depot of Canada Inc. v. Coburn and Watson’s Metropolitan Home dba Metropolitan Home, et al., 2020 CanLII 23626 (SCC)

The law is clear that, while releases are often worded in a broad and general fashion, appearing to cover the end of the world, they must be considered in the context of the dispute. The context often provides a limited background from which an inference may readily be made that the parties meant to apply it only to the claims from the dispute (citing The Owners, Strata Plan, above).

PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2021 ABCA 16 (CanLII) , application for leave to appeal dismissed, Susan Riddell Rose, et al. v. PricewaterhouseCoopers Inc., et al., 2021 CanLII 58908 (SCC)

A release must not be interpreted in a vacuum, but rather according to the context in which it was drafted, having regard to the intention of the parties (citing Hill v Nova Scotia ).

5.6.4 Contextual Documents

This section sets out summaries of decisions in which the courts addressed the relevance of contextual documents to the interpretation of releases.

Bow Valley Husky (Bermuda) Ltd. v. Saint John Shipbuilding Ltd., 1997 CanLII 307 (SCC) , [1997] 3 SCR 1210

It was argued in this case that the general release language of a settlement letter should be restrained by the limiting language in an earlier letter. But, except for one specific matter, no reservations were made in the settlement letter and the court need not go beyond the unambiguously stated purpose of the settlement letter which was to constitute full and final settlement of the subject contract.

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

The Ontario Divisional Court considered an argument that the releases at issue in this proceeding did not constitute the entire agreement before the court and that a letter relied on by the appellants was prepared in lieu of an amendment to the releases “as a convenience”. The court referred to evidence that the appellants never intended the letter to impact the releases and to a paragraph of the releases which, it said, “connotes” an entire agreement clause. The court did not give effect to the arguments of the appellants.

Sands Motor Hotel Ltd. v. Edmonton (City), 2005 ABCA 402 (CanLII)

The appellant in this case appealed from a decision of the Alberta Land Compensation Board. The appellant argued that the Board erred in its interpretation of certain documents, including a release and waiver, but the Court of Appeal held that the Board’s reasons disclosed no error. The appellate court said that the appellant’s construction of a release clause was not supported when the clause was read in its entirety and it was also not supported when the agreement was read in conjunction with other documents.

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

The court found in this case that the execution of a release was conditional on matters contained in an exchange of correspondence intended to clarify or provide an interpretive aid to the release. The court said that the exchange of correspondence narrowed the extension of what might be covered by the release, but did not contradict it. The court held that, 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.

Drader v. Abbotsford (City), 2013 BCCA 376 (CanLII)

The court said that three documents entered into when an action was settled, namely, the minutes of settlement, a right of way agreement and a release, along with the consent dismissal order, were intended to be read together. Further, the court said that portions of the settlement agreement, when read together with the statement of claim in the action that was settled, indicated that the release was intended to operate prospectively.

The Owners, Strata Plan BCS 327 v. IPEX Inc., 2014 BCCA 237 (CanLII)

A settlement was reached in respect of matters set out in a statement of claim. The Court of Appeal said that a review of the statement of claim and the correspondence between counsel amply demonstrated the objective intention of the settlement and the ensuing release. The Court of Appeal also said that the correspondence formed most of the context of the settlement and that the chambers judge erred when he concluded that the correspondence did not add anything to the context of the settlement.

Southlake Regional Health Centre v. Beswick Group Properties Inc., 2014 ONSC 1319 (CanLII)

In addressing arguments regarding the interpretation of minutes of settlement and a release, the court said that the minutes of settlement and the release could not be read in isolation from one another. Further, the court said that, in addition to the contractual documents, it was also important to consider an email exchange between counsel regarding the drafting of the release.

Cobb v Long Estate, 2017 ONCA 717 (CanLII)

At issue in this case was the extent to which the amount of a settlement with a Statutory Accident Benefits (SAB) insurer was deductible from the amount of the jury’s verdict in an action arising from a motor vehicle collision, where the settlement may have included an unspecified amount settling a claim against the insurer for “damages for bad faith” in addition to the plaintiff’s SAB entitlements. In support of their allegation that the settlement may have included compensation for a claim of “bad faith”, the plaintiffs relied on the language of a release signed as a condition of obtaining the settlement funds. The wording of the release covered not only the SAB entitlements but also claims for “aggravated, exemplary and punitive damages or damages for alleged bad faith”. A settlement disclosure notice signed by the parties divided the total settlement compensation stated in the release into amounts for income replacement benefits, medical benefits and “other items”. Correspondence from the settlement negotiations indicated that, before executing the release, the plaintiff had agreed to an allocation of the total compensation into the same specific amounts as in the disclosure notice for income replacement benefits, medical benefits and costs. The Court of Appeal said that the reference in the release to claims for “aggravated, exemplary and punitive damages or damages for alleged bad faith” was standard language in any form of release. The Court of Appeal concluded that there was no reviewable error in the trial judge’s determination that the disclosure notice accurately stated the allocation of the settlement.

Briggs v. Durham Regional Police Services, 2021 ONSC 414 (CanLII) , appeal dismissed, Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

The Ontario Divisional Court said that, in interpreting the release at issue in this case, it was important to remember that the release could not be looked at in a vacuum. What was contemplated by the parties must be considered having regard to related minutes of settlement as a whole, together with the surrounding circumstances or factual matrix (citing Hill v. Nova Scotia (Attorney General) ).

L. & V. Enterprises Ltd. v Dave’s Diesel Ltd., 2022 SKQB 87 (CanLII)

Sattva and Corner Brook direct the court to consider surrounding circumstances in interpreting any contract, including a release. The release in this case was incapable of operating as a stand-alone document. The parties agreed to unwind a purchase transaction and there was no single document that set out the terms of the unwinding transaction; rather the terms were found in exchanges of letters and emails and in a mutual release. The parties had agreed to an unwinding agreement, of which the release constituted one part.

Caponero v Alberta Human Rights Commission (Office of the Chief of the Commission and Tribunals) and Kaizen Auto Group Ltd., 2024 ABKB 2 (CanLII)

A Human Rights Tribunal decided that a release signed by the applicant at the time of termination of his employment was valid, that the applicant had settled his human rights claim against his former employer and therefore that there were no grounds upon which the applicant’s human rights claim could proceed. An application for judicial review of the decision of the Tribunal was dismissed. On the application for judicial review, the applicant argued, among other things, that the release he signed was ambiguous and therefore ought not to be enforced. According to the applicant, because the release document included amounts paid pursuant to the Employment Standards Code, and amounts paid in exchange for the release, it was unclear whether he had to sign the release to obtain payment of his entitlements pursuant to the Employment Standards Code. But the release was one of three separate documents that comprised the package received by the applicant at the time his employment was terminated. The court said that, when considered as a whole, the plain wording of the documents presented to the applicant was clear and unambiguous. There was no question that he did not have to sign the release if he did not accept the additional severance pay over and above the statutory pay he was entitled to pursuant to the Employment Standards Code. It was also clear what the applicant was giving up in terms of claims if he accepted the offer of severance and signed the release. The court also said that reference to the entirety of the termination package rather than looking at the release in isolation was not a violation of the parol evidence rule. While the parol evidence rule precludes evidence of the subjective intentions of the parties and other fabricated or unreliable evidence to attack a written contract, it does not preclude evidence of the surrounding circumstances. Even if the release was considered to be a stand-alone contract, it was reasonable to consider the information in the other documents that formed the termination package when determining the meaning and intent of the release.

5.6.5 Whether Release Extends Beyond Matters Directly in Issue

In the particular circumstances of each case below, an issue for consideration was whether a release was to be interpreted as encompassing matters beyond those that were directly in issue between the parties at the time when the releases were given.

The case law summarized in section 4.6.3 of Chapter 4: Releases and Settlement of Claims, above, deals with issues that arise when parties have reached agreement on the essential terms of a settlement, but differ on the terms of a release that will be provided to complete the settlement. In this context, the courts have considered arguments about whether such a release should capture claims or matters not pleaded in the litigation: see in particular section 4.6.3.3, Claims or Matters Not Pleaded or at Issue in Litigation that Has Been Settled.

McLennan v. Armstrong Cork Canada, 1956 CanLII 563 (BC CA)

The respondent claimed damages for alleged faulty manufacture of a product purchased by the respondent from the appellant. The respondent had given a release of a claim against a shipping company for damage to the goods in transit. While the whole damage suffered by the respondent was claimed from the shipper, it was a fair inference that, when making that claim for its full damage, the respondent did not know that it had a claim against the appellant for alleged faulty manufacture. There were separate and distinct causes of action against different defendants unconnected by privity of any kind. The release had reference only to damage to the respondent’s goods on board ship while this action had no reference to damage to the goods on board ship. The respondent was entitled to give a release in any amount it saw fit and the appellant was in no way concerned with the settlement of that claim or in the amount thereof. The respondent sought to establish, if it could, that some part of the damage was due to faulty manufacture and, in the circumstances, the release did not deprive the respondent of that right.

British Columbia v. Clearwater (Canada) Hatcheries Ltd., 1994 CanLII 894 (BC SC)

The defendant Heimenberg sold his interest in a business and he insisted on and obtained from the purchasers an indemnity agreement that was separate from the share purchase agreement. Later, Heimenberg brought an action under the share purchase agreement claiming a share of the balance of the purchase price and all six defendants in that action counterclaimed. The claim and counterclaim were settled and the parties signed a mutual release. When the claim in this case on a promissory note was made against Heimenberg and others, Heimenberg made a third party claim under the indemnity agreement. The third parties pleaded the release in defence of Heimenberg’s claim for indemnification. The court noted that there was no mention of the indemnity agreement in the pleadings in the settled action, in the correspondence between the parties’ lawyers leading to the settlement, or in the release. The issue was the meaning to be assigned to words in the release that referred to claims” arising out of or in any way connected with” the share purchase agreement. The court said that the release must be interpreted in light of the claims and counterclaims giving rise to it. There was no evidence that Heimenberg bargained away or intended to bargain away his contractual right to be indemnified by the third parties. The court concluded from the whole of the surrounding circumstances that the parties simply did not call the indemnity agreement to mind. The court held that Heimenberg was entitled to a declaration that the indemnity agreement survived the release and that the third parties were still bound by its terms.

 

Halagan v. Reifel, 2001 BCCA 434 (CanLII)

The Court of Appeal held that the trial judge correctly interpreted a release. The trial judge had said that, no matter how tortured a reading given to the wording of the release, it could not be taken to apply to certain “escrow shares” about which there was no dispute at the time the release was signed.

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

The appellant signed a release upon the termination of his employment with the respondents. The New Brunswick Court of Appeal determined that the respondents were under a duty to disclose information about the pension consequences of electing either a lump sum or an installment separation pay option and went on to consider whether the release precluded the appellant from suing in tort for negligent misrepresentation. The Court of Appeal said 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. The true purpose or import of the release was to limit the respondents’ liability in contract for damages for wrongful dismissal.

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

The Master noted that a release given in connection with the settlement of earlier legal proceedings was not confined strictly to the claims advanced in those actions alone. The language was much broader than that; it referred to “all manner of actions” and to “any or all matters”. The Master quoted from the decision in Hampshire Holdings Ltd. v. Surrey, 1996 CanLII 3454 (BC SC) , above, where, in respect of a comprehensively-worded release, it was said that “…[the] provisions of release are of course to be read in their full context which, if anything, gives them the widest scope possible”.

Antoncic v. Ontario (Community Safety and Correctional Services), 2009 CanLII 15649 (ON PSGB)

In this decision, the Ontario Public Service Grievance Board considered the terms of settlement of a grievance concerning dismissal for cause, including, in particular, a release provision in the memorandum of settlement. The Board said it was very clear that a civil action for conspiracy and defamation launched by the grievor was a claim or matter “regarding the grievor’s past employment” within the meaning of such words in the memorandum of settlement and it granted a declaration that the grievor had breached the terms of the memorandum. Referring to The Law of Releases in Canada, the Board said it is not at all unusual, or unenforceable, for parties to a settlement to include issues going beyond the specific dispute which would have been litigated if the settlement had not occurred. A similar statement was made by the Board in its decision in Bingham v. Ontario (Government Services), 2011 CanLII 10255 (ON PSGB).

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

The fact that claims have their origin in the same incident as the claim covered by a settlement and release does not make them the same claim. Here, the causes of action were different. After the plaintiff’s vehicle was destroyed in an accident, he settled his action for insurance benefits and for damages in relation to an alleged breach of privacy, and he signed a release. The plaintiff commenced a subsequent action alleging that the defendants negligently investigated the accident and maliciously caused the plaintiff’s criminal prosecution and the Master dismissed a motion for an order striking out the statement of claim in the second action.

5.6.6 Parol Evidence Rule

In the Sattva decision discussed above, the Supreme Court of Canada made clear that consideration of the surrounding circumstances for the purposes of interpretation of a contract does not offend the parol evidence rule. Specifically, the court said (at paragraphs 59-60 of Sattva) that:

The parol evidence rule precludes admission of evidence outside the words of the written contract that would add to, subtract from, vary, or contradict a contract that has been wholly reduced to writing … . To this end, the rule precludes, among other things, evidence of the subjective intentions of the parties … . The purpose of the parol evidence rule is primarily to achieve finality and certainty in contractual obligations, and secondarily to hamper a party’s ability to use fabricated or unreliable evidence to attack a written contract … .

The parol evidence rule does not apply to preclude evidence of the surrounding circumstances. Such evidence is consistent with the objectives of finality and certainty because it is used as an interpretive aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words. The surrounding circumstances are facts known or facts that reasonably ought to have been known to both parties at or before the date of contracting; therefore, the concern of unreliability does not arise.

The Supreme Court took note of the suggestion by some authorities and commentators that the parol evidence rule is an anachronism or of limited application due to a myriad of exceptions. For the purposes of the appeal before it, however, the court considered it sufficient to say (paragraph 60 of Sattva) that the parol evidence rule does not apply to preclude evidence of surrounding circumstances when interpreting the words of a written contract.

Below are decisions in which Canadian courts have addressed the application of the parol evidence rule when interpreting the words of releases.

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

The defendants in this case argued that the parol evidence rule has special application when a release contains an entire agreement clause. The court found that, while the release did contain an entire agreement clause, the execution of the release was conditional on matters contained in an exchange of correspondence that was intended to clarify or provide an interpretive aid to the release. This, the court said, was distinguishable from situations where the parol evidence rule is invoked to exclude as evidence pre-agreement negotiations, draft agreements, et cetera, where negotiations result in a later agreement. 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.

Ferguson (Ferguson Barristers LLP) v. North, 2009 CanLII 55724 (ON SC)

Evidence of discussion purporting to carve out categories of dispute that continued notwithstanding a full and final release was contrary to the unambiguous terms of the documents signed by the parties. The court therefore found the evidence to be inadmissible as being contrary to the parol evidence rule.

Caponero v Alberta Human Rights Commission (Office of the Chief of the Commission and Tribunals) and Kaizen Auto Group Ltd., 2024 ABKB 2 (CanLII)

A Human Rights Tribunal decided that a release signed by the applicant was valid, that the applicant had settled his human rights claim and therefore that there were no grounds upon which the human rights claim could proceed. An application for judicial review of the decision of the Tribunal was dismissed. On the application for judicial review, the applicant argued, among other things, that the release he signed was ambiguous and therefore ought not to be enforced. The release was one of three separate documents that comprised the package received by the applicant at the time his employment was terminated. The court said that reference to the entirety of the termination package rather than looking at the release in isolation was not a violation of the parol evidence rule. While the parol evidence rule precludes evidence of the subjective intentions of the parties and other fabricated or unreliable evidence to attack a written contract, it does not preclude evidence of the surrounding circumstances. Even if the release was considered to be a stand-alone contract, it was reasonable to consider the information in the other documents that formed the termination package when determining the meaning and intent of the release.

5.6.7 Relevance of Subsequent Conduct

In Shewchuk v. Blackmont Capital Inc. 2016 ONCA 912 (CanLII), the Ontario Court of Appeal addressed whether evidence of the conduct of contracting parties subsequent to the making of their agreement is part of the factual matrix, or surrounding circumstances, which may be considered when a court interprets the contract. The Court of Appeal referred to Sattva, above, at paragraph 58, where the Supreme Court of Canada indicated that the factual matrix consists only of objective evidence of the background facts at the time of the execution of the contract, that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting. The Court of Appeal concluded, at paragraph 41 of Shewchuk, that the scope of the factual matrix is temporally limited to evidence of facts known to the contracting parties contemporaneously with the execution of the contract and that evidence of the behaviour of the parties after the execution of the contract is not part of the factual matrix.

In the Shewchuk decision, the Court of Appeal went on to discuss the dangers associated with reliance on evidence of subsequent conduct. The court said that these dangers, together with the circumscription of a contract’s factual matrix to facts known at the time of its execution, militate against admitting evidence of subsequent conduct at the outset of the interpretive exercise. Evidence of subsequent conduct should be admitted only if the contract remains ambiguous after considering its text and its factual matrix.

In short, the Court of Appeal accepted that, despite its dangers, evidence of subsequent conduct can be useful in resolving ambiguities. The evidence may help to show the meaning the parties gave to the words of their contract after its execution, and this may support an inference concerning their intentions at the time they made their agreement.

The Court of Appeal referred to Re Canadian National Railways and Canadian Pacific Limited, 1978 CanLII 1975 (BC CA) affirmed, 1979 CanLII 229 (SCC) as the leading Canadian case in this area of law and then went on to quote the following statement from the decision of Lambert J.A. in that case:

 

In Canada the rule with respect to subsequent conduct is that if, after considering the agreement itself, including the particular words used in their immediate context and in the context of the agreement as a whole, there remain two reasonable alternative interpretations, then certain additional evidence may be both admitted and taken to have legal relevance if that additional evidence will help to determine which of the two reasonable alternative interpretations is the correct one.

According to Shewchuk, the inherent dangers of evidence of subsequent conduct mean that when such evidence is admitted it must be used cautiously and its weight will vary from case to case. The court set out a number of factors that may affect the weight to be given to evidence of subsequent conduct in a particular case. Among other things, the court said that: (1) in the usual course, evidence of subsequent conduct will be more reliable if it is evidence of acts that are the acts of both parties, are intentional, are consistent over time, and are acts of individuals rather than agents of corporations; (2) evidence of subsequent conduct will have greater weight if it is unequivocal in the sense of being consistent with only one of the two alternative interpretations of the contract that generated the ambiguity triggering its admissibility; and (3) evidence of subsequent conduct may also be given greater weight in proportion to the proximity of the subsequent conduct to the time of the contract’s execution. (See the Shewchuk decision, paragraphs 51 to 56.)

Below are cases in which Canadian courts have commented on the relevance of subsequent conduct to the interpretation of releases, or agreements related to the provision of releases.

Campbell-MacIsaac v. Deveaux, 2002 NSSC 286 (CanLII)

The nature and scope of a settlement was reflected in the contents of a partial release, which in turn reflected the intent set out in prior correspondence. Informal statements made in a different context in correspondence almost three years after the date of the partial release ought not be relied upon in order to interpret, or re-interpret, the nature or scope of the settlement.

Precision Remodelling v. Soskin, 2008 CanLII 31411 (ON SC)

The court found that certain parties intended that they would receive a full and final release from each other and that the factual matrix and subsequent conduct of the parties supported this interpretation of the words used.

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

The Court of Appeal said that the trial judge did not err in declining to consider the parties’ conduct after a release letter was signed. The appellate court agreed with the trial judge’s conclusion that the document had only one reasonable meaning and that, absent ambiguity, subsequent conduct was not relevant.

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

While not determinative, the subsequent conduct of a party to a release agreement may be considered when interpreting the release.

Celadon Canada, Inc. v. Hoss Cartage & Distribution Systems Inc. et al, 2015 ONSC 4089 (CanLII)

In this case, the fact that the parties intended, by a release, to bring an end to any right of the applicant to occupy a leased property was confirmed by the parties’ conduct after the release agreement was entered into. The court said the jurisprudence is clear that the subsequent conduct of contracting parties may aid in interpreting the meaning of a contract.

Briggs v. Durham Regional Police Services, 2021 ONSC 414 (CanLII) , appeal dismissed, Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

An ambiguity is where there are two or more possible interpretations of the word or words in issue. In the event ambiguity exists, evidence of subsequent conduct of the parties is admissible to assist in contractual interpretation. As discussed in Shewchuk, above, there are some dangers in relying on post-contractual conduct such as changes in behaviour over time, ambiguity in the evidence itself or self-serving conduct which the court must be cognizant of before relying on it. The weight to be given to such evidence therefore depends on the circumstances. The Divisional Court set aside a decision of the Human Rights Tribunal of Ontario that was based on a finding of no ambiguity in a release provided for in minutes of settlement. Having found the minutes ambiguous as to the scope of the release, the court said that post-settlement evidence could be admitted, subject to weight, to assist in determining the intention of the parties. After considering the surrounding circumstances along with the minutes as a whole, together with the post-settlement evidence of the parties’ conduct, the court reached a conclusion with regard to the scope of the release. On appeal, the Ontario Court of Appeal said that it saw no reason to interfere with the Divisional Court’s assessment of the post-settlement conduct.

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. One of the defendants’ alternative arguments was that the “Trip Date” field of the waiver was ambiguous and that the court could look to the subsequent conduct of the parties to resolve the ambiguity. The court said that there was no ambiguity in the date of June 18, 2021 in the Trip Date field of the waiver. The court also said that, where the wording of a contract is clear, subsequent conduct of the parties cannot be used to create an ambiguity, citing  Chung v. Quay Pacific Property Management Ltd., 2020 BCSC 714 and Wade v. Duck, 2018 BCCA 176. As such, recourse to subsequent conduct was unnecessary and impermissible.

5.6.8 Entire Agreement Clause

An entire agreement clause alone does not prevent a court from considering admissible evidence of the surrounding circumstances at the time of contract formation; the surrounding circumstances are relevant in interpreting a contract exactly because “words alone do not have an immutable or absolute meaning”: see Ontario First Nations (2008) Limited Partnership v. Ontario Lottery and Gaming Corporation, 2021 ONCA 592 (CanLII), at paragraph 62, citing Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at paragraph 47. See also IFP Technologies (Canada) v. EnCana Midstream and Marketing, 2017 ABCA 157, at paragraph 124, and Chow v. Russell, 2021 ONSC 6525 (CanLII), at paragraph 35.

The cases below involved interpretation issues relating to releases and, in this context, the courts dealt with arguments about the effect of an entire agreement clause on consideration of the factual matrix and contextual documents.

Aljmja Holdings Inc. v. Proper Ford Lincoln Ltd., 2006 CanLII 6080 (ON SC)

One of the issues before the court in this case was whether a management services agreement survived the closing of a share buyout transaction and the delivery of a release. In response to an argument that each of the four agreements under consideration contained an entire agreement clause, the court said that such clauses do not preclude consideration of the factual matrix of the contract. Further, the court said that there is authority for going beyond an agreement which contains an entire agreement clause in circumstances where other contracts or agreements form part of the transaction.

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

The defendants in this case argued that the parol evidence rule has special application when a release contains an entire agreement clause. The court found that, while the release did contain an entire agreement clause, the execution of the release was conditional on matters contained in an exchange of correspondence that was intended to clarify or provide an interpretive aid to the release. The court also disagreed with an argument that the exchange of correspondence, if admitted, would contradict the terms of the release: the exchange of correspondence narrowed the extension of what might be covered by the release, but did not contradict it.

5.7 Limiting Broad/General Words of a Release

A distinctive feature of releases is that they are often expressed in the broadest possible words: Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII) , at paragraph 36, and 1420041 Ontario v. 1 King West, 2015 ONSC 252 (CanLII) , at paragraph 48. In Re iAnthus Capital Holdings, Inc., 2020 BCSC 1442 (CanLII) , at paragraph 58, for example, the court said that the release before it used broad language “even for a release”.

The words of a typical general release, if read literally and without limitation, can be understood to express the releasor’s intention to relinquish points of dispute (claims, actions, causes of action and so on) of any nature and kind whatsoever. And it is not uncommon for the scope of a release to be expressed in very broad language even when the parties seemingly were concerned with a specific claim or matter.

In Corner Brook, at paragraph 38, Rowe J. said on behalf of the Supreme Court of Canada that “releases may tend to lead to dissonance between the words of the agreement on their face and what the parties seem to have objectively intended based on the surrounding circumstances, with greater regularity than other types of contracts”. Rowe J. went on to say:

In resolving this tension, courts can be persuaded to interpret releases narrowly more so than other types of contracts, not because there is any special rule of interpretation that applies to releases, but simply because the broad wording of releases can conflict with the circumstances, especially for claims not in contemplation at the time of the release. The broader the wording of the release, the more likely this is to be so.

Thus, Rowe J. concluded (at paragraph 43), any judicial tendency to narrow the meaning given to broad wording is not the function of any special rule, but rather a function of the context in which releases are given.

Canadian case law on the interpretation of releases brings out a number of approaches that, in appropriate cases, will serve to limit the broad wording of a release. These approaches may resolve the discord between the broad operative words typically used in a general release and circumstances where the parties are concerned with a more narrow claim or matter at the time of signing of the release.

Note that the contra proferentem doctrine, discussed below in section 5.10, is sometimes referred to when courts speak of releases being interpreted narrowly. In Arksey v Sky Zone Toronto, 2021 ONSC 4594 (CanLII) , which involved a motion for summary judgment based entirely on the terms of a waiver and release of liability signed by the plaintiff, the court said that waivers of liability are to be construed contra proferentem, narrowly, carefully, and applied for their objectively determined meaning. See also the MHR Board Game Design Inc. decision summarized in section 5.10.1.

In Manulife Bank of Canada v. Conlin, 1996 CanLII 182 (SCC), [1996] 3 SCR 415, at paragraph 9, the Supreme Court of Canada referred to a text on the law of guarantee which described the contra proferentem rule as a method for restricting the scope of broad words of a guarantee. Specifically, the court quoted a passage from McGuinness on The Law of Guarantee, 2nd Edition (Scarborough, Ont.: Carswell, 1996), at pages 612-13, that included the following discussion of the rule:

 . . . the contra proferentum rule of construction … provides one method through which the courts can restrict the scope of extremely broad provisions which purport to eliminate the rights of the surety. The justification for giving such provisions a narrow construction is clear: it is one thing to say that a party may, if he so chooses, agree to assume an excessive burden, and to waive the rights which the law generally recognizes as existing for his protection. It is quite another thing to assume that parties necessarily intend to enter into such obligations. The more natural assumption is the exact opposite. Where the guarantee was drafted by the creditor, and there is any ambiguity or imprecision in the terms of a provision which purports to limit the rights of a surety, it is only fair that the ambiguity be resolved against the party who prepared the document. If the creditor wishes to take away a right belonging to the surety, he should use clear language in the document.

It is not difficult to see parallels to releases in this discussion of “extremely broad provisions” and the use of appropriate language to “take away a right”. All the same, though, the point of the contra proferentem rule is to guide the interpretation of ambiguous provisions of a contract, regardless of how broad or narrow they may be, and it is not solely an interpretive tool for restricting the scope of broad contractual provisions. Hence, in rlaw.online, cases on the contra proferentem doctrine are presented in section 5.10, Ambiguity or Errors in a Release, rather than this section on limiting the broad words of a release.

Rai v. Sechelt (District), 2021 BCCA 349 (CanLII) , application for leave to appeal dismissed, Elliot Held, et al. v. District of Sechelt, et al., 2022 CanLII 26230 (SCC)

There exists no special dictate requiring releases to be interpreted more narrowly than other forms of contractual agreements, so long as the plain words of the agreement are in basic harmony with the parties’ intentions, as shown by the circumstances surrounding the contract’s execution (referring to Corner Brook). Broad wording in a release can conflict with the circumstances if the claims were not in contemplation at the time the release was executed (again referring to Corner Brook). But that was not the case here.

Grouette-McDougall v. Loran Scholars Foundation, 2021 ONSC 7801 (CanLII)

The plaintiff was informed by the defendant that she had been selected as a finalist for a scholarship. She was invited to attend “National Selections” in Toronto. She signed a “Release of Liability, Waiver of Claims and Assumption of Risk” in respect of her participation in the National Selections. The defendant argued that the release contained a broad release of liability. The defendant pointed to Corner Brook, which affirmed a broadly worded release is enforceable and “does not necessarily need to particularize with precision the exact claims that fall within its scope”. The court said it was persuaded by the defendant’s argument that the release was to be broadly interpreted. The court said that, while there was no question the release did deal with specific potential circumstances like a candidate being injured while swimming, it was “worded in plain English”. The intent of the release to protect the defendant from lawsuits was clear on its face

5.7.1 Limiting Broad/General Words – Interpretative Approach

Until the decision of the Supreme Court of Canada in Corner Brook, the Blackmore Rule (see sections 5.2 and 5.2.1 above) stood as a core interpretative tool available to Canadian courts to limit broad, general words of a release. According to the Blackmore Rule, the general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given: Directors of London and South Western Railway Company v. Blackmore (1870), 39 L.J. Ch. 713, [1870] 4 H.L. 610.

The Supreme Court noted in Corner Brook (at paragraph 35) that releases are often expressed in the broadest possible words and that “a general release, if interpreted literally, could prevent the releasor from suing the releasee for any reason, forever”. While such a release may not be enforceable for other reasons, the Court said, “the circumstances may also often indicate that such extreme consequences are not what the parties objectively intended.”

As pointed out by the Supreme Court (Corner Brook, paragraph 18), the Blackmore Rule was formulated during a period when “courts were reluctant to have regard to the facts surrounding the formation of a contract, as an aid to interpretation of the contract”. The words of a contract were given their “black letter” meaning. This was “problematic from the view of releases” – because the consequences of giving effect to the literal words of a broad, general release so often would be at dissonance with what the parties objectively intended – and “the Blackmore Rule addressed this problem”. It did so by limiting the scope of the general words in a release to that thing or those things which were specially in the contemplation of the parties at the time when the release was given.

The Supreme Court went on to say (Corner Brook, paragraph 19) that “150 years after the Blackmore decision, things have changed”. It is now beyond doubt in Canadian law that “[t]he facts surrounding the formation of a contract are relevant to its interpretation” and “[t]he jurisprudential concerns that gave rise to the rule in Blackmore no longer exist”.

The Supreme Court concluded in Corner Brook (see, for example, paragraph 33) that the “Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to”.

The Supreme Court could not have been more clear in Corner Brook that a release is a contract and that the general rules of contract interpretation apply to releases. At the same time, though, the Court recognized that releases have distinctive features which set them apart from other contracts. In the words of the Court (paragraph 35): “Releases tend to have certain features that may give rise to careful interpretations.” More specifically, the Court noted that sometimes the ordinary meaning of the words of a contract and the surrounding circumstances “come into tension” and this tension “may more often arise when interpreting releases”. (Underlining added.)

The question, then, is what happens when the general principles of contract interpretation are applied to this distinctive form of contract, a release. The Supreme Court provided some guidance on this question in Corner Brook (paragraph 38). The Court said that, in resolving the tension between the words of a release on its face and “what the parties seem to have objectively intended based on the surrounding circumstances, courts can be persuaded to interpret releases narrowly more so than other types of contracts”. (Underlining added to emphasize the apparent connection between the words “more so” used here and the words “more often” referred to in the preceding paragraph.) Courts will do so, “not because there is any special rule of interpretation that applies to releases, but simply because the broad wording of releases can conflict with the circumstances, especially for claims not in contemplation at the time of the release”. And, the Supreme Court said, “[t]he broader the wording of the release, the more likely this is to be so”.

In short, Canadian courts are to apply general principles of contract interpretation when interpreting releases and, in doing so, consideration of what the parties objectively intended based on the surrounding circumstances may more frequently lead to a narrowed interpretation of the words of a general release than might be expected with other contracts. This is “simply because” the broad wording of a general release can conflict with the circumstances, especially for claims not in contemplation at the time of the release.

For case law dealing with consideration of the surrounding circumstances – in accordance with general principles of contract interpretation – when interpreting releases, see above, section 5.6, Surrounding Circumstances/Factual Matrix/Context.

It has been suggested that, in Corner Brook, the Supreme Court said that the words of releases are to be construed “more narrowly” than other contracts: see, for example, You Oughta Know: The General Principles of Contractual Interpretation Apply to Releases, S. Bower, P. Bell, R. Agarwal, C. Mackey and P. Schembri, CanLII Connects, July 27, 2021. Although this may be seen by some as merely a point of semantics, the Supreme Court did not actually speak of releases being interpreted “more narrowly”; the Corner Brook decision indicates that courts may be persuaded to interpret releases narrowly “more so” than other types of contracts.

Again, given that, as compared to other contracts, there is a heightened likelihood of tension between the words of a general release and the objective intentions of the parties based on the surrounding circumstances, it presumably follows that courts will be persuaded to interpret the words of general releases narrowly more often than other types of contracts. Whether this means that courts are to interpret releases “more narrowly” is perhaps open to debate. In one of the decisions summarized below, Robinson v. Canfor, the court drew from Corner Brook the proposition that the nature of a release may call for a “stricter than usual” interpretation.

L. & V. Enterprises Ltd. v Dave’s Diesel Ltd., 2022 SKQB 87 (CanLII)

Because releases have elements that are unique to them, Corner Brook identified several principles concerning interpretation of releases, including: (a) a release may cover an unknown claim if the language is sufficient; and (b) though courts have tended to interpret releases narrowly, that is a product of the tendency for releases to be expressed in the broadest possible words. According to Corner Brook: “The ultimate question is whether the claim is of the type of claim to which the release is directed. This will depend on the wording and surrounding circumstances of the release in each case.”

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

In this decision involving the interpretation of a release, the court said that the applicable law was not controversial. The leading case in Canada is Corner Brook. There is no special rule of contractual interpretation that applies only to releases. Nevertheless, the Supreme Court acknowledged in Corner Brook that the nature of a release may sometimes call for a stricter than usual interpretation of its terms.

Manson v Mitchell, 2023 BCSC 723 (CanLII)

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” (citing Corner Brook and Bank of British Columbia Pension Plan ). In this way, the proper approach to interpreting releases under the ordinary principles of contractual interpretation prescribed by Sattva is consistent with the approach to releases formerly applied using the Blackmore Rule (citing Corner Brook).

5.7.2 Broad/General Words Limited by Consideration of Context

A court’s interpretation of the broad, general words of a release may be limited by consideration of the context in which the release was given. As stated by the Supreme Court of Canada: “…context can serve as a limiting factor to the breadth of wording found in a release.” (See Corner Brook, above, at paragraph 36.)

It is important to recognize, however, that consideration of the context or surrounding circumstances of a release is not necessarily an exercise that limits or narrows the interpretation of broad words in the release. As stated in section 5.6.3, above, evidence of the surrounding circumstances may support the position of a party resisting a narrow interpretation. In Rai v. Sechelt (District), 2021 BCCA 349 (CanLII) , application for leave to appeal dismissed, Elliot Held, et al. v. District of Sechelt, et al., 2022 CanLII 26230 (SCC) , the British Columbia Court of Appeal said (at paragraph 55) that, once the factual matrix evidence in that case was considered, it was clear that the parties objectively intended a release clause of a covenant on title to have a broad scope. The Court of Appeal said that its interpretation of the release was compelled by the factual matrix, and was entirely in accord with the principles enunciated by the Supreme Court in Corner Brook.

In addition to the decisions summarized below, note that cases discussed above under heading 5.6, “Surrounding Circumstances/Factual Matrix/Context” include examples of situations where the interpretation of broad general words of a release was limited by reference to the context in which the release was given.

Dabbs v. Sun Life Assurance Co. of Canada, 1998 CanLII 14855 (ON SC)

In considering approval of a settlement agreement reached in a class action, the court addressed an objection that the terms of the release to be given under the agreement were broad. The court said that a release in such terms consequent upon a settlement was not unusual or unexpected, and in any event, it was subject to being interpreted in accordance with recognized legal principles. Among other things, the court said it is well established that a release must be interpreted with reference to the context in which it was drafted.

1420041 Ontario v. 1 King West, 2015 ONSC 252 (CanLII)

The plaintiff agreed to purchase condominium units from the defendant but disputed the adequacy of construction both of common elements and of the units. The plaintiff commenced an action for specific performance of the contract, or an abatement of the purchase price, or damages. The defendant brought a motion for summary judgment and relied on a release given in an action commenced by the condominium corporation on its own behalf and on behalf of unit owners. The court noted that the release did not mention the plaintiff’s action and that the condominium corporation did not have authority to settle the plaintiff’s “distinct action” for specific performance; as a result, the court found that the release should be interpreted narrowly and should not apply to the plaintiff’s action.

Vista Hospitality Co., Canada, Inc. v. SST Group of Construction Companies Limited, 2021 ONSC 5605 (CanLII)

The court referred to Busgos v Khamis  for the proposition, quoted in Busgos from 9 Halsbury’s (4th Edition), that: “[G]eneral words of release will be construed with reference to the surrounding circumstances and as being controlled by recitals and context so as to give effect to the object and purpose of the document.”

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

While releases signed in the course of a settlement of a dispute are often worded in a broad and general fashion, they must be considered in the context of the dispute (citing Corner Brook).

Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII)

The Supreme Court noted in Corner Brook that tension between the ordinary meaning of the words of a contract and the surrounding circumstances can arise more often in the context of the interpretation of a release, for two reasons. First, releases are often expressed in the broadest possible words.  Second, parties to a release are often trying to account for risks that are unknown at the time of contract, and there is an imprecision inherent in this task that can give rise to disagreement as to what was intended. Thus, while releases signed in the course of a settlement of a dispute are often worded in a broad and general fashion, they must be considered in the context of the dispute, which can serve as a limiting factor to the breadth of wording found in a release.  

5.7.2.1 Considering the Purpose of a Release or Related Transaction

As set out in section 5.2, above, Lord Nicholls said, in Bank of Credit and Commerce International v. Ali [2001] UKHL 8 , at paragraph 26, that the meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the “purpose” of the contract and the circumstances in which the contract was made. And, he said, this principle is as much applicable to a general release as to any other contractual term. In Sattva Capital v. Creston, above, at paragraph 48, the Supreme Court of Canada indicated that the meaning of the words of a contract is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.

Also, in a case involving an exclusion clause in a tendering contract, Cromwell J. said, on behalf of the majority of the Supreme Court of Canada, that the key principle of contractual interpretation is that the words of the provision must not be read in isolation, but should be considered in harmony with the rest of the contract and in light of its “purposes” and “commercial context”. See Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 (CanLII), [2010] 1 SCR 69, and section 5.9, Commercial Context and Avoiding Commercial Absurdity, below.

A passage from a decision of the High Court of Australia on the subject of releases is quoted in The Law of Releases in Canada, at page 84. The quotation includes a statement that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction: see Grant v. John Grant & Sons Pty. Ltd. (1954), 91 C.L.R. 112, at paragraph 14.

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

In its reasons for concluding that a release signed by the appellant upon the termination of his employment did not exclude or limit the potential tort liability of the respondents, the New Brunswick Court of Appeal said that the true purpose or import of the release was to limit the respondents’ liability in contract for damages for wrongful dismissal.

McNeill v. McKinley, 1998 CanLII 6568 (BC SC)

In this case, the court noted an agreement of counsel that, as had been stated in numerous authorities, the court may have regard to the aim or object or purpose that reasonable individuals in the situation of the parties would have in mind, as an aid to the interpretation of a release. However, the court found this general proposition to be of little assistance in resolving the issue before it.

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

The court denied the defendant’s application for summary dismissal of this action based on, among other things, a pre-emptive release signed by the plaintiff. The court said that the key principle of contractual interpretation is that the words excluding liability must not be read in isolation but rather considered in harmony with the rest of the agreement and in light of its purposes and commercial context (citing Tercon).

1420041 Ontario v. 1 King West, 2015 ONSC 252 (CanLII)

A releasee “must not use the general words of a release as a means of escaping the fulfillment of obligations falling outside the true purpose of the transaction” (referring to the quotation at page 84 of the The Law of Releases in Canada from the decision of the High Court of Australia in Grant v. John Grant & Sons Pty. Ltd., above).

Filkow et al v D’Arcy & Deacon LLP, 2019 MBCA 61 (CanLII)

The Court of Appeal said that the application judge in this case took too narrow a view of what was admissible evidence of surrounding circumstances in the interpretation of a settlement agreement that was set out in an email and a final release. This approach caused the application judge to fail to consider significant undisputed evidence regarding, among other things, the nature of the relationship between the parties and the purpose of the settlement agreement.

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

On a motion for summary judgment based entirely on the terms of a waiver and release of liability signed by the plaintiff, the court said a narrow interpretation of exclusion clauses generally is adopted so as to avoid inconsistency with the purpose of the agreement. The exclusions should not be read expansively and should not overwhelm the rights bargained for by the parties.

5.7.3 Broad/General Words Limited by Specific Wording

The scope of the broad, general words of a release may be limited by other, more specific words in the same document. This of course is consistent with the principle of contract interpretation that the document must be read as a whole: see section 5.4, Reading Release as a Whole, above.

In D’Addario v. EnGlobe Corp., 2012 ONSC 1918 (CanLII), appeal dismissed, 2014 ONCA 376 (CanLII), two releases were signed in accordance with the terms of a settlement agreement. The first release provided that all the parties to it released each other from any actions or claims and the second was a release between parties referred to by the court as “the D’Addario’s” and certain other named parties. The court said that the general language of the second release “must give way to” the specific language of the first mutual release, which contained a precise list of settled litigation.

McNeill v. McKinley, 1998 CanLII 6568 (BC SC)

This action related in part to the will of a testator who was predeceased his by wife. His wife had two daughters from a previous marriage and, after her death, the daughters signed a release of claims in respect of their mother’s estate. The testator was one of the releasees named in the release and it referred broadly to matters relating to “the affairs of” the testator and his wife and to any claims under legislation relating to the administration of estates and the variation of wills. It was argued that the daughters had released any claim to the estate of the testator. The court held that, although the release was expressed in general terms, it was stated to apply to “any fact, matter or thing arising to the date [t]hereof”, which negated the assertion that the daughters were releasing any claim, howsoever arising, in relation to the estate of the testator.

Hadwen v. Husky Oil Operations Limited, 2009 SKCA 109 (CanLII)

The estate of John Holland was the owner of certain lands that were occupied and farmed by Gregory Grodaes; the Holland estate and Mr. Grodaes were jointly referred to by the court in this decision as the “Owners”. Husky Oil Operations Limited had installed various natural gas well sites, roadways and flow lines on the lands. After Mr. Holland wrote to Husky and made a complaint about the adequacy of Husky’s reclamation efforts with respect to flow lines, Husky and the Owners executed a series of agreements styled Receipt and Release for Damages. The opening language of each release was very broad and purported to relieve Husky of effectively all liability in relation to 2005 pipeline construction for a specified number of dollars. The second part of each release was a Damage Statement. The Surface Rights Board of Arbitration regarded the releases as having resolved compensation for “loss of use” as that term was used in section 47(1)(b)(i) of the Surface Rights Acquisition and Compensation Act. An appeal from the Board’s decision was dismissed. The appellate court said that the Releases might be construed in any one of three ways: first, they might be seen as fully barring the Owners from successfully advancing any additional claims against Husky in relation to flow lines; second, they might be read as dealing exclusively and finally with the issue of crop/pasture loss but with nothing else; and third, as suggested by the Owners, they might be seen as no more than receipts for amounts paid by Husky and as not precluding the Owners from seeking further or additional compensation. The court said that the content of the Damage Statements indicated that the matter of loss of land use was addressed very directly and very specifically in the negotiation of the releases. In light of the particularity of the damage calculations, it was difficult to read the releases as being anything other than a resolution of “loss of use” claims.

Andrews v. McHale, 2016 FC 624 (CanLII)

The operative paragraph of a release contained very broad words: “of and from any and all actions, causes and causes of actions, claims, suits, debts, dues, sums of money, expenses, claims of indemnity, and any and every kind and nature whatsoever, at law or in equity, in contract or under any statute, for or by reason of any matter, cause or thing whatsoever”. The paragraph concluded with a phrase that was more specific: “for or by reason of any matter, cause or thing whatsoever, existing up to and inclusive of the date of this Release … by reason of or in any way arising or related to” the termination of an agreement and the removal of the applicant as the director of a company. The respondents argued that the concluding phrase did not modify the broad language of the release. The court considered this to be a strained interpretation of the language of the release. While the operative paragraph was a lengthy sentence, the concluding phrase served to qualify the breadth of the release. This interpretation was consistent with the language of the release and in accord with sound commercial principles. To accept the respondents’ interpretation would mean that the broad language was completely unqualified in time, such that even claims arising from future events would be released.

Bailey v. Temple, 2020 NLCA 3 (CanLII) , appeal allowed, Corner Brook (City) v. Bailey, 2021 SCC 29 (CanLII)

The Newfoundland and Labrador Court of Appeal cited “numerous specific references” in the release at issue in this case that were of assistance to the interpretation of the release. The court said that this language represented specific words which served to limit the general words used earlier in the release.

5.7.3.1 Recitals

According to the decisions set out below, the recitals to a release, or an agreement containing a release, may limit the scope of broad, general words in the release. By way of contrast, note that, in Wong v. Lok’s Martial Arts Centre Inc., 2009 BCSC 1385 (CanLII), the court said that the initial sentence of a pre-emptive release was in the nature of a recital and the court did not accept the argument that these initial words limited the scope of the release. Also, in Hampshire Holdings Ltd. v. Surrey (City of), 1996 CanLII 3454 (BC SC) , the court indicated that it was evident from the preamble to a release that the intention was to give the widest scope possible to the operative provisions of the release.

Simpson v. Ontario, 2010 ONSC 2119 (CanLII)

The court found that, according to the words of the release provisions contained in settlement agreements entered into by the parties in this case, the releases were confined to causes of action relating to the plaintiffs’ employment, termination of employment or reinstatement of employment. The court said that the provisions of the settlement agreements as a whole must be considered and it made reference to the wording of the recitals in the settlement agreements.

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. Reading a document as a whole is particularly important to bear in mind in construing releases, the operative parts of which are often written in the broadest terms. Reference is frequently made to recitals to determine the specific matters upon which the parties have focused to confine the operation of general words. Because releases are often drafted broadly, the confining effects of recitals are especially significant.

Vista Hospitality Co., Canada, Inc. v. SST Group of Construction Companies Limited, 2021 ONSC 5605 (CanLII)

The court referred to Busgos v Khamis  for the proposition, quoted in Busgos from 9 Halsbury’s (4th Edition), that: “[G]eneral words of release will be construed with reference to the surrounding circumstances and as being controlled by recitals and context so as to give effect to the object and purpose of the document.”

5.7.3.2 Reservation of Rights or Carve-Out from a Release

The scope of the broad, general words of a release may be limited by a reservation of rights in the document. Not infrequently, when considering whether the scope of a release is subject to a particular limitation or exception, Canadian courts refer to the absence of an explicit statement of any such limitation. Decisions in which courts have done so are set out below in Chapter 6: Scope and Application of Releases, section 6.10, Express Exceptions from and Limits on the Scope of a Release.

Summarized in this section are decisions on the interpretation of releases that include comments about a reservation of rights or carve-out from the matters covered by a release. As to a costs carve-out from a release, see Chapter 10: Jurisdiction, Procedure and Remedies in Release Cases, section 10.9.9, Costs Carve-Out from Release.

Dreco Energy Services Ltd. v. Wenzel Downhole Tools Ltd., 2010 ABQB 252 (CanLII)

It is not necessary for a settling party to reserve rights to pursue other parties as this is a recognized legal right in any event. The settlement agreement and release in this case clearly referred to other litigation and, while the action before the court was not specifically mentioned, the reference could only have meant this action. The court could see nothing in the settlement agreement and release, nor in a consent judgment, which could be interpreted as meaning the plaintiffs accepted a specified dollar payment in full satisfaction of their claims.

Morgan v. Sun Peaks Resort Corporation, 2013 BCSC 1668 (CanLII)

The plaintiff signed a release at the time of purchasing a ski pass for the ski resort owned by the defendant. She was injured by an approaching chair lift when it did not stop in time and she relied on an exception clause in the release that applied in respect of mechanical breakdown or failure. In considering whether employee negligence in the operation of the lift could fit within the wording about mechanical breakdown or failure, the court said that the commercial context of the release must be considered. Further, the court said that, if the exception clause in the release was interpreted broadly to include employee error alone without related equipment failure, it would significantly undermine the commercial purpose of the release and it would be difficult to reconcile this interpretation with the whole of the language of the release.

Clearway Construction Inc. v. The City of Toronto, 2018 ONSC 1736 (CanLII)

On a motion for summary judgment, the court said that its “interpretive task” was to assess what was exempted or “carved out” of the “general nature” of a release given by the plaintiff to the defendant. The court concluded that there were genuine issues as to whether matters were “exempted from” the release and that these issues could not be determined on a summary motion.

Low Murchison Radnoff LLP, et al v. Hallas, 2018 ONSC 1858 (CanLII)

After the seizure of vehicles from a property, one of the applicants in this proceeding offered to pay a sum of money to the respondent, the party on whose behalf the seizure was made, in full satisfaction of all claims to two of the vehicles. The applicant and the respondent reached a settlement on this basis and they signed a release which contained a warranty that the two vehicles were in the same condition as when they were seized. The release went on to set out the agreement of the parties that any claims arising from the breach of the warranty would survive the release and that any potential claim for compensation with respect to such a breach was specifically reserved. The two vehicles were returned to the applicant, but he refused to pay the settlement funds based on his contention that the vehicles were not in the same condition as when they were seized. As stated by the court, nowhere did the release say that payment could be held back for any reason including, but not limited to, a claim that the vehicles were not in the same condition as when seized. The court agreed with the contention that the remedy of the party who had refused payment was to commence an action for damages pursuant to the warranty in the release.

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

In this decision involving the interpretation of a release, the court said that the applicable law was not controversial. The leading case in Canada is Corner Brook. The court found that the words of a clause setting out an exclusion from the scope of the 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.

5.8 Reasonable Expectations

In Ledcor Construction v. Northbridge Indemnity, above, at paragraph 58, the majority of the Supreme Court of Canada concluded, with respect to the interpretation of an insurance policy, that the application of general principles of contract interpretation pointed to one interpretation that was consistent with the reasonable expectations of the parties and commercial reality. The discussion of reasonable expectations in Ledcor has been picked up in later decisions which give voice to the proposition that the goal of contractual interpretation is to discern the parties’ reasonable expectations with respect to the meaning of contractual provisions: see the decision of Côté and Brown JJ. in Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60 (CanLII), at paragraph 74, and Vesturland Development Ltd et al v Gimli (Rural Municipality) et al, 2021 MBCA 45 (CanLII), at paragraph 37.

In Salminen v. Garvie, 2011 BCSC 339 (CanLII), the court discussed the objective test that applies when determining whether there was a meeting of the minds at the time of formation of a contract and said (paragraph 27) that the test’s focus on objectivity animates the principal purpose of the law of contracts, which is to protect reasonable expectations engendered by promises. The court’s comment about reasonable expectations has been repeated in many British Columbia decisions, including Berthin v. Berthin, 2016 BCCA 104 (CanLII), at paragraph 46, Shannon v Gill, 2018 BCSC 135 (CanLII), at paragraph 35, Fairchild Developments Ltd. v. 575476 B.C. Ltd., 2020 BCCA 123 (CanLII), at paragraph 51, 1001790 BC Ltd. v. 0996530 BC Ltd., 2021 BCCA 321 (CanLII), at paragraph 41, and C.W.C. v L.A.W, 2021 BCSC 1774 (CanLII), at paragraph 115. See Chapter 9, Challenging a Release, section 9.9, No Consensus Ad Idem.

An Ontario court addressed the reasonable expectations of a party to a release in another context: the court was not engaged in an exercise of interpreting the words of the release, but was considering an argument that the release was not enforceable because it was unconscionable. The court said:

A release, of the nature used in this case, is commonly used when parties settle employment disputes. It was fully set out in one-page, and its terms were not hidden in complex schedules or appendices. While legal language is used, it would not be beyond comprehension for someone who has some experience with legal systems. If not fully understood by [the releasor] at the time of signing, it would have been quickly understood had he obtained legal advice which he was encouraged to obtain. There is nothing uncommon or unusual about the Release. While [the releasor] may now object to its terms, it cannot be said that its contents would have defied the reasonable expectations of a person in the shoes of [the releasor] or that it would have resulted in an unfair surprise.

See Bayes v. RBC, 2021 ONSC 6836 (CanLII) , at paragraph 61.

Below are other decisions involving releases in which courts have referred to the reasonable expectations of the parties (or the intentions of similarly-situated, reasonable people).

McNeill v. McKinley, 1998 CanLII 6568 (BC SC)

In this case, the court noted an agreement of counsel that, as had been stated in numerous authorities, the court may have regard to the aim or object or purpose that reasonable individuals in the situation of the parties would have in mind, as an aid to the interpretation of a release. However, the court found this general proposition to be of little assistance in resolving the issue before it.

Companies’ Creditors Arrangement Act (ON), Re, 2006 CanLII 32429 (ON SC)

The release at issue in this case was explicitly stated to be executed and delivered pursuant to the terms of a settlement. The court said that, in its view, releases were exchanged on the premise that the reasonable expectations created by the settlement agreement would be fulfilled. That is to say, the contemplated “full and final release” was dependent upon the settlement being implemented in accordance with the parties’ mutual reasonable expectations. The court interpreted the settlement as obligating one of the parties to make certain payments and the release was not fully operative unless and until this was done.

Leonard v. Dunn, 2006 CanLII 33419 (ON SC)

The plaintiff had signed a “game sheet” containing a waiver/release as a condition of playing recreational, non-contact hockey in a sports facility. The court said that a consideration of the ambit of the waiver required an examination of the reasonable expectations of a player playing in a league of this kind in a facility of this kind. For the waiver to operate in the circumstances of the case, it would be necessary to find that an unprovoked battery is an element of the reasonable expectations of an adult recreational hockey player playing in this non-contact league. The court said that it had no hesitation in finding it was not.

Neinstein v. Marrero, 2007 CanLII 13939 (ON SC)

In this case, the applicants sought a determination of their rights under minutes of settlement, including a declaration regarding the proper language for a release. The court said that settlement agreements must be interpreted in a manner to ascertain the reasonable expectations of the parties, as expressed by the language that they have chosen and as understood with reference to the surrounding circumstances, or factual matrix, in which the agreement was concluded. The court’s ultimate conclusion on the issue regarding the release was based on the interpretation of the minutes of settlement that was most consistent with the reasonable expectations of the parties as expressed in that document.

Stein v. Exec-U-Fit Personal Fitness, 2007 CanLII 16447 (ON SC)

The plaintiff claimed damages for injuries suffered while rock climbing; one of the defendants moved for summary judgment, relying on a release and waiver signed by the plaintiff (as well as voluntary assumption of risk). The motion judge said it was not clear on the face of the release whether the defendant was covered as a “participant” in the activity. The judge said that two earlier decisions regarding parties protected by a release, Lafontaine and Quick , can be reconciled on the basis of the expectations of the parties. The issue of whether the particular defendant in this case was protected by the release was dependent on findings of fact with respect to the reasonable expectations of the parties in all the circumstances, which could not be resolved on a motion for summary judgment.

Fracassi v. Cascioli, 2011 ONSC 178 (CanLII)

The defendants argued that the plaintiffs’ claims in this case were barred by contract, namely, a share purchase agreement and a release. The court said that, absent an express and deliberate provision, claims for fraudulent misrepresentation may not be avoided due to a contractual release. Absent fraud, there should be some finality associated with agreements of purchase and sale. The court said that, in the circumstances of this case, the language of the contract should be respected; such a conclusion was consistent with the reasonable expectations of any objective observer and the intentions of the parties.

Borre v. St. Clair College, 2011 ONSC 1971 (CanLII)

On a motion for summary judgment, the court said there was a genuine issue for trial regarding a waiver as it applied to the plaintiff. Among the questions raised, but not determined, by the motion judge was whether the waiver was within the reasonable expectations of the parties at the time when they entered into a contract.

Sheriff v. Apps et al, 2012 ONSC 565 (CanLII)

Settlement agreements and releases are contracts and therefore must be interpreted with the reasonable expectations of the parties in mind, citing Neinstein v. Marrero, above.

 

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

On a motion for judgment involving a pre-emptive release, the motion judge said that the plaintiff’s subjective understanding of the contract is not necessarily relevant in and of itself. The law of contract seeks to protect reasonable expectations, not the subjective beliefs of the parties. An enforceable contract can be entered into without the parties having actual concurrence of intention.

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

The plaintiff signed a release and waiver in connection with her participation in a continuing education course for physiotherapists. The court said that, given the circumstances surrounding the signing of the waiver, a clause excluding liability for negligence would run contrary to the normal and reasonable expectations of the course participants. In contrast to inherently risky recreational and sporting activities, it is unlikely that a participant in a physiotherapy training course would expect that it was a condition of participation to assume responsibility for the negligence of the professional organization and its agents.

Tassone v. 407 ETR, 2019 ONSC 6999 (CanLII)

The court should have regard to the reasonable expectations of the parties when interpreting agreements such as the release in this case.

5.9 Commercial Context and Avoiding Commercial Absurdity

In Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 (CanLII), [2010] 1 SCR 69, the Supreme Court of Canada considered the interpretation of an exclusion clause in a tendering contract between the appellant, which was the bidder, and the respondent, which had issued the tender call. Cromwell J. said (at paragraph 64) that the key principle of contractual interpretation in the circumstances before the court was that the words of the provision must not be read in isolation, but should be considered in harmony with the rest of the contract and in light of its purposes and “commercial context”.

The authorities also make clear that contracts should be interpreted so as to avoid a “commercial absurdity”. In Vesturland Development Ltd et al v Gimli (Rural Municipality) et al, 2021 MBCA 45 (CanLII), the Manitoba Court of Appeal said, at paragraph 42, that:

…contractual interpretation requires courts to consider the principle of commercial reasonableness and efficacy. Contracts are to be interpreted in accordance with sound commercial principles and good business sense … .  The interpretative principle of commercial efficacy—and its corollary, avoiding interpretations that result in a commercial absurdity—is one of several tools used by courts to give an accurate meaning to the parties’ intentions as stated in a contract … .

This passage from the decision of the Manitoba court of Appeal reflects the law stated in a long line of Canadian decisions, including 2484234 Ontario Inc. v. Hanley Park Developments Inc., 2020 ONCA 273 (CanLII), Atos IT Solutions v Sapient Canada Inc, 2018 ONCA 374 (CanLII), Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205 (CanLII), Kentucky Fried Chicken Canada v. Scotts Food Services Inc., 1998 CanLII 4427 (ON CA), Scanlon v. Castlepoint Development Corporation, 1992 CanLII 7745 (ON CA), Consolidated-Bathurst v. Mutual Boiler, 1979 CanLII 10 (SCC), [1980] 1 SCR 888, and Toronto (City) v. W. H. Hotel Ltd., 1966 CanLII 8 (SCC), [1966] S.C.R. 434.

As they endeavour to interpret commercial contracts in accordance with sound commercial principles and good business sense, the courts have emphasized that care must be taken to do this objectively rather than from the perspective of one contracting party or the other, since what might make good business sense to one party would not necessarily do so for the other: see, for example, the Kentucky Fried Chicken decision, above, at paragraph 27. For more on the objective approach to contract interpretation, see section 5.3, Objective Approach to Interpretation, above.

British Columbia v. Clearwater (Canada) Hatcheries Ltd., 1994 CanLII 894 (BC SC)

Absent specific wording in a release, it should not be interpreted in such a way as to bring about a commercially illogical result.

Ferguson (Ferguson Barristers LLP) v. North, 2009 CanLII 55724 (ON SC)

The idea that a broadly worded settlement and release carved out a particular exception with the words “existing up to the date” was nonsensical: it would leave open matters for a future dispute such as to rob the agreement of any finality or certainty. The only commercially reasonable interpretation of the phrase “existing up to the date” would be the sensible limitation excluding events occurring in the future, but not claims arising out of past relationships.

Beck v. Johnston, Meier Insurance Agencies Ltd., 2010 BCSC 719 (CanLII), affirmed on other grounds, 2011 BCCA 250 (CanLII)

In this case, upon settlement of a claim under an insurance policy, the claimant gave a release to the insurer. The court came to interpret the provisions of the release in the context of an action against an insurance broker that relied on the release as a defence to claims made against it. The court said that it would first analyze the plain words of the release and then the commercial context in which it was executed. The court said that the commercial context of the release was that it was provided by the plaintiff in exchange for settlement monies paid by the insurer. The court made findings of fact based on the language and commercial context of the release and concluded that the insurance broker was not released from the claims against it.

G. Wilson Construction Co. Ltd. v. Westeinde, 2012 BCSC 1356 (CanLII)

The releasee argued that a release, if interpreted literally, was commercially absurd. The court did not give effect to this argument: the problem, it said, was that the release and a related settlement agreement were clear on their face, they were unambiguous and they formed a coherent whole. With respect to the meaning of a “commercial absurdity”, the court quoted from Jardine v General Hydrogen Corporation, 2007 BCSC 119 (CanLII), where it was said that: “…the term means a result brought about by the literal interpretation of the words which is so ludicrous that no sensible business person in negotiating the agreement, if he or she had directed their mind to the point, would have agreed to it. A consequence stipulated in an agreement will not constitute a commercial absurdity if a reasonable business person would have agreed to it in the prevailing circumstances because he or she was confident that the event giving rise to the consequence would not occur.”

Federation Insurance Co. of Canada v. Markel Insurance Co. of Canada, 2012 ONSC 1875 (CanLII)

The court agreed with the respondent’s interpretation of a settlement agreement and release, which the court said was straightforward and gave a particular term of the release business efficacy.

Williams-Sonoma Inc. v. EllisDon Corporation, 2013 ONCA 441 (CanLII)

The Court of Appeal concluded that the parties to a lease intended to extend the benefit of a release and waiver in the lease to the respondent (a contractor engaged by the landlord to perform construction work) and it indicated that any other interpretation of the interplay of the release and waiver with certain other provisions of the lease would be inconsistent with the overall scheme of risk allocation envisaged by this part of the lease and would not make commercial sense.

Morgan v. Sun Peaks Resort Corporation, 2013 BCSC 1668 (CanLII)

The plaintiff signed a release at the time of purchasing a ski pass for the ski resort owned by the defendant. She was injured by an approaching chair lift when it did not stop in time and she relied on an exception clause in the release that applied in respect of mechanical breakdown or failure of ski lifts. The defendant argued that the exception clause related to equipment failure, not employee error. The court said that this was an interpretation issue only and that the commercial context of the release needed to be considered. The court also said that the commercial context was such that it must have been evident to the user of the ski hill that there are dangers associated with getting on and off a chair lift and this was brought home in the wording of the release. Further, the court said that, if the exception clause in the release was interpreted broadly to include employee error alone without related equipment failure, it would significantly undermine the commercial purpose of the release and it would be difficult to reconcile this interpretation with the whole of the language of the release.

MHR Board Game Design Inc. v. Canadian Broadcasting Corporation, 2013 ONSC 4457, appeal dismissed, 2013 ONCA 728 (Can LII), leave to appeal refused, 2014 CanLII 25874 (SCC)

In this case, the motion judge on a motion for summary judgement did not accept the plaintiff’s submission that the failure to use the specific word “negligence” in an exclusion of liability clause allowed the plaintiff to advance a claim framed in negligence. The broad language of the consent and release was clearly intended to cover all causes of action and it would be robbed of its effect if it did not cover negligence.

First Queensborough Shopping Centres Limited v. Wales McLelland Construction Company (1988) Ltd., 2014 BCSC 764 (CanLII)

In this case, the court considered an appeal from a decision with respect to whether a waiver and release clause in a construction contract extinguished the respondent’s entitlement to interest on unpaid accounts. The appellant was a shopping centre developer and the respondent, identified in the contract as the design builder, operated a construction business. The release clause in the contract provided that, as of the date of the final certificate of payment, the design builder released the owner from all claims against the owner, subject only to two specified exceptions. The appellant argued that the release clause unambiguously extinguished all claims existing at the date of the final certificate for payment, including claims for interest. The respondent argued, among other things, that the appellant’s interpretation of the release clause made no commercial sense: the appellant’s interpretation would mean that all of the appellant’s obligations, including the monies due under the final payment certificate, would be extinguished at the date of that certificate. The court said that the appellant’s literal interpretation of the clause was completely against rational commercial principles and good business sense and, when considered in light of the entire contract, the meaning contended by the appellant did not objectively reflect the parties’ intention. The contract required the appellant to pay the full contract price at the end of the contract; this amount should rationally include the accrued interest and any amounts that became due after the final payment certificate was issued. The parties could not have intended that triggering the appellant’s obligation to pay the contract price would simultaneously extinguish the obligation to pay the full contract price.

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

The plaintiff claimed that she was injured during her participation in a continuing education course. The defendant made an application for summary dismissal of the action and relied, among other things, on a pre-emptive release signed by the plaintiff. In reaching its decision to deny the application, the court applied the legal framework set out in Tercon, above, and Karroll and its first step was to consider the construction of the release itself. The court said that the key principle of contractual interpretation is that the words excluding liability must not be read in isolation but rather considered in harmony with the rest of the agreement and in light of its purposes and commercial context (citing Tercon).

Andrews v. McHale, 2016 FC 624 (CanLII)

The court found that the concluding phrase of the operative paragraph of a release served to qualify the breadth of the release. The court said that this interpretation was consistent with the language of the release and in accord with sound commercial principles.

Montor Business Corporation v. Goldfinger, 2016 ONCA 407 (CanLII) , application for leave to appeal dismissed, 1830994 Ontario Ltd. v. A. Farber & Partners Inc., the Trustee of the Bankruptcy Estate of Montor Business Corporation, Annopol Holdings Limited and Summit Glen Brantford Holdings Inc., 2016 CanLII 89830 (SCC)

At issue in this case was whether claims by a company were caught by a release even though the company was not named in the release and was not incorporated when the release was given. The Court of Appeal found that, when the release as a whole was properly construed, the company was captured by the definition of the parties encompassed by the release. This result made practical and commercial sense, because it would be bizarre if a person could circumvent the ambit of a release simply by establishing a nominee company in his or her stead.

Kaptor Financial Inc. et al v. SF Partnership, LLP et al, 2016 ONSC 5459 (CanLII)

In its decision with respect to whether a particular corporation came within the meaning of the words “related and affiliated companies” in a release, the court said that, on a commercially reasonable interpretation of the release, the corporation must be a related company.

Applied Industrial Technologies, LP v. Sirois, 2018 ABQB 818 (CanLII)

A nonsensical and absurd result must be avoided unless compelled by the language of the release.

Crosstown Transit Constructors v. Metrolinx, 2018 ONSC 4650 (CanLII), affirmed on other grounds, 2019 ONCA 240 (CanLII)

The motion judge did not accept the applicant’s position regarding the scope of a release and, in the course of his reasoning on this issue, he said he did not think that the applicant’s position made commercial sense.

PricewaterhouseCoopers Inc v Perpetual Energy Inc, 2021 ABCA 16 (CanLII) , application for leave to appeal dismissed, Susan Riddell Rose, et al. v. PricewaterhouseCoopers Inc., et al., 2021 CanLII 58908 (SCC)

Where the intent was clear that the new owners of a company were to take the company they were purchasing “as is”, the intention obviously was to relieve a former director of any claims that arose before the closing of the transaction, whether they were known or unknown, and the commercial efficacy of a resignation and mutual release required that it cover unknown claims.

Aeon Sodding Corp. v. The Royal Bank of Canada, 2020 ONSC 4520 (CanLII)

In this litigation relating to charges on a credit card issued by the defendant bank, the bank relied on a verification clause in its agreement with the plaintiff. The clause said that “[i]f you do not contact us within 30 days of the last day of the relevant statement period, the Visa Statement and our records will be considered correct and you may not later make a claim against us in respect of any charges on the Visa Account”. The court said that to construe the verification clause narrowly in this case would lead to a commercially unreasonable result by shifting the risk of loss from the plaintiff, who was in a better position to detect fraudulent activity than the bank who was not privy to the dealings between the plaintiff and the person to whom the plaintiff made payments with the credit card. The court found that the verification clause was a complete bar to the plaintiff’s claim.

Levesque v Edmonton Regional Airports Authority, 2022 ABQB 411 (CanLII)

On an appeal from a Master’s decision dismissing an application for summary judgment, the court said that, at first blush, the first portion of a release contained in leases signed by the plaintiffs seemed to apply directly to the claims made in this litigation. It provided simply that the plaintiffs expressly released the defendant from any claims whatsoever that they would be entitled to advance but for the release. An ambiguity arose, however, when one considered the next portion of that sentence, according to which the plaintiffs agreed to indemnify and hold the defendant harmless from and against any claims whatsoever advanced by any person. The plaintiffs argued that the inclusion of that second phrase meant that the overall intent of the release was only to compel the plaintiffs to indemnify the defendant against claims brought by third parties – the classic indemnity provision included in many contracts. Citing Sattva, the court said that it is to take a practical, common-sense approach to the interpretation of contracts to determine the “intent of the parties and the scope of their understanding”. The meaning of the words of the contract is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement. In this case, the contracts in question were leases for space at an airport to permit tenants to operate certain permitted businesses. It would make no commercial sense to the plaintiffs to sign leases preventing them from holding the defendant to account in the event of the defendant’s breach of contract. It would effectively prohibit the plaintiffs from enforcing their rights under the leases against the defendant in any way. The court therefore concluded that the indemnity wording could be interpreted as only compelling the plaintiffs to indemnify the defendant for claims advanced by third parties and to prohibit claims for contribution or indemnity by the tenant against the defendant. The court therefore could not conclude that the release and indemnity provision clearly prohibited the claims against the defendant.

5.10 Ambiguity or Errors in Release

Note that, as discussed above, it is not only when the words of an agreement viewed in isolation suggest some ambiguity that a court will consider the context in which the agreement was made; rather, consideration of surrounding circumstances is an integral part of the interpretive process. To find ambiguity, one must come to certain conclusions as to the meaning of the words used and a conclusion as to the meaning of words used in a written contract can only be properly reached if the contract is considered in the context in which it was made: Dumbrell v. The Regional Group of Companies Inc., 2007 ONCA 59 (CanLII), at paragraph 54.

The contra proferentem doctrine holds that, when the words of an agreement are ambiguous, they should be interpreted against the interests of the party who wrote or provided them. As noted by Estey J. of the Supreme Court of Canada, the contra proferentem doctrine “finds much expression in our law”: Consolidated-Bathurst v. Mutual Boiler, 1979 CanLII 10 (SCC), [1980] 1 SCR 888, at page 900. In a later case involving a guarantee, the Supreme Court made the following comments about the doctrine:

When interpreting guarantees, like other contracts, the court may apply the contra proferentem rule where the wording of the guarantee supports more than one meaning. According to this rule, the ambiguity will be resolved in favour of the party who did not draft the contract. This is an interpretive rule of last resort, to be used only when all other means of ascertaining the intentions of the parties, as expressed by their written contract, have failed.

See Manulife Bank of Canada v. Conlin, 1996 CanLII 182, [1996] S.C.R. 415, at paragraph 80.

The Supreme Court’s decision in Manulife refers to the proposition that the contra proferentem doctrine is of special importance where the contractual provision being construed creates an exemption, exclusion or limitation of liability: Manulife, at paragraph 9, referring to Fridman, G. H. L.  The Law of Contract in Canada, 3rd Edition (Scarborough, Ont.: Carswell, 1994), at pages 470-71. Similarly, in one of the decisions summarized in section 5.10.1 below, the motion judge accepted the principle that the contra proferentem rule of interpretation is particularly important when dealing with a clause seeking to exclude liability. See MHR Board Game Design Inc. v. Canadian Broadcasting Corporation, 2013 ONSC 4457 (CanLII), at paragraph 9, appeal dismissed, 2013 ONCA 728 (Can LII), leave to appeal refused, 2014 CanLII 25874 (SCC).

As discussed above in section 5.6.7, the Ontario Court of Appeal has addressed whether evidence of the conduct of contracting parties subsequent to the making of their agreement is part of the surrounding circumstances which may be considered when a court interprets the contract. The Court of Appeal came to the view that evidence of subsequent conduct should be admitted only if the contract remains ambiguous after considering its text and its factual matrix. The Court accepted that, despite its dangers, evidence of subsequent conduct can be useful in resolving ambiguities: Shewchuk v. Blackmont Capital Inc. 2016 ONCA 912 (CanLII). Among the decisions gathered in section 5.6.7, Relevance of Subsequent Conduct, are cases in which it was argued that, due to alleged ambiguity of a release, evidence of subsequent conduct should be considered for the purposes of interpreting the release.

McGarry v. McGarry, 2006 CanLII 16370 (ON SC)

The plaintiffs alleged that a partnership existed between them and the defendants and they claimed, among other things, an accounting from the defendants. The court said that a release relied on by the defendants was not the obvious product of a typically prudent commercial legal expert. While the court found nothing contradictory in the words of the release, and was not “offended” by the lack of specific reference to claims for an accounting, the release was ambiguous and arguably might not be effective in respect of the plaintiffs’ partnership interest claims, even though the words “all claims” might seem to be crystal clear. The court said that, on a motion for summary dismissal, it should not be asking what the release was for or what it was meant to release. The plaintiffs had raised a genuine issue for trial in respect of whether the release barred the plaintiffs’ claims.

Briggs v. Durham Regional Police Services, 2021 ONSC 414 (CanLII) , appeal dismissed, Briggs v. Durham (Police Services Board), 2022 ONCA 823 (CanLII)

An ambiguity is where there are two or more possible interpretations of the word or words in issue. In order to determine whether an ambiguity exists, the words of a contract together with the factual matrix must be considered. The authorities are clear that ambiguity is not determined on objective evidence of one party’s intention. In the event ambiguity exists, evidence of subsequent conduct of the parties is admissible to assist in contractual interpretation. The Divisional Court set aside a decision of the Human Rights Tribunal of Ontario, because, in reaching the conclusion that there was no ambiguity in a release, the HRTO failed to consider whether, having regard to the wording of related minutes of settlement as a whole, and the factual matrix, there was an ambiguity in what the release covered. The court found that, having regard to the surrounding circumstances and the wording of the minutes as a whole, together with the wording of the release, there was ambiguity regarding the scope of the release. The court said that, having found the minutes ambiguous as to the scope of the release, post-settlement evidence could be admitted, subject to weight, to assist in determining the intention of the parties. After considering the surrounding circumstances along with the minutes as a whole, together with the post-settlement evidence of the parties’ conduct, the court reached a conclusion with regard to the scope of the release.

Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII)

The release considered in this case incorporated by reference a series of letters written by counsel. The court said that, while it may have been lazy drafting to simply include a list of letters at the beginning of the release instead of incorporating in the release itself the information contained in the letters that needed to be incorporated, the difficulties created by this lazy drafting did not justify ignoring the letters and relying exclusively on a particular paragraph of the release.  The reference to the letters created an ambiguity. The court said that, in light of the words of the release and the letters attached to it, as well as the objective surrounding circumstances, the release was ambiguous as more than one interpretation was possible in relation to the central issue before the court. The court turned to extrinsic evidence and found that this evidence resolved the ambiguity and confirmed the intention of the parties.

HSBC Bank Canada v. 1481396 Ontario Inc., 2023 ONCA 762 (CanLII)

On appeal from a decision of a motion judge, the appellants argued that the motion judge should have invoked the contra proferentem principle to interpret a release in their favour. The Court of Appeal said, however, that contra proferentem only applies as a tool of last resort in the interpretation of a truly ambiguous contract, citing Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37. The motion judge found that the release was not ambiguous and the Court of Appeal agreed. Contra proferentem therefore could not apply.

5.10.1 Releases Found Not to be Ambiguous

While certain of the decisions summarized in this section refer to the doctrine that ambiguous wording of an agreement will be interpreted against the interests of the maker of the agreement, in each instance the court found no ambiguity in a release.

Rankin v. Alberta Curling Federation Appeals Committee, 2005 ABQB 938 (CanLII)

Releases are often drafted by one of the parties. One of the often-cited canons of contractual interpretation is that contractual wording that is ambiguous will be interpreted against the author as long as there is a true ambiguity, that is a clause which, on its face, can be interpreted in two different ways. In this case the court found that there was no ambiguity in a general damage release: more particularly, there was nothing in the release that would justify an interpretation that it was intended to prevent judicial review of a disciplinary decision of a curling federation.

Forbes v. Manufacturers Life Insurance Company et al, 2010 ONSC 4931 (CanLII) and 2010 ONSC 5530 (CanLII)

The court said that an insurer drafted the release in this case and any ambiguity must be resolved in favour of the insured. The release, however, was not ambiguous and the plain words were determinative. The plaintiff’s action was dismissed. The court heard submissions on costs and the plaintiff argued that the defendant was not “entirely blameless” because it relied on a release that was ambiguous and contradictory. The court said (again) that the release was not ambiguous; it was exactly the sort of release that defendants “rely on every day”. It released the defendant from all liability with respect to the accident in question.

MHR Board Game Design Inc. v. Canadian Broadcasting Corporation, 2013 ONSC 4457 (CanLII), appeal dismissed, 2013 ONCA 728 (Can LII), leave to appeal refused, 2014 CanLII 25874 (SCC)

The contra proferentem rule of interpretation has been held to be particularly important when dealing with a clause seeking to exclude liability, so that a clause excluding liability must be interpreted even more narrowly. The motion judge on a motion for summary judgment accepted this legal principle, but not its application to the facts of this case: the clauses in the contract relied upon by the defendant were clear and unambiguous, the express terms provided exceptionally broad protection against any liability and, rather than being hidden in fine print, the protection was crystal clear.

5.10.2 Resolving Ambiguity/Contra Proferentem Doctrine

Below are decisions which confirm that ambiguous words of a release will be interpreted against the interests of the party who wrote or provided the words.

Halagan v. Reifel, 2001 BCCA 434 (CanLII)

The Court of Appeal held that the trial judge correctly interpreted a release. It was the defendant who created the release, which was reviewed by the defendant’s lawyer. The Court of Appeal said that, if the release had been intended to include certain “escrow shares”, as contended for by the defendant, it was the responsibility of the defendant and his lawyer to ensure that that inclusion was clear.

Lehner v. Revere (Paul) Life Insurance Co. et al, 2003 BCSC 251 (CanLII)

Because an insurer drafted and required a release in the context of the settlement of a claim, the contra proferentem rule of construction should apply so that any ambiguity in the wording of the release is resolved in favour of the insured.

Imperial Oil Limited v. Atlantic Oil Workers Union, 2004 NSSC 201 (CanLII) and 2006 NSCA 100 (CanLII) , application for leave to appeal dismissed, Imperial Oil Limited and McColl-Frontenac Inc. v. Atlantic Oil Workers Union, Local No.1, and the Individuals listed in Schedule A, 2007 CanLII 6823 (SCC)

Having reached a conclusion about the plain meaning of a release, the lower court judge stated, alternatively, that, if the release did not have the plain and ordinary meaning which he attributed to its words, he would deem it ambiguous, apply the contra proferentem rule, and construe its terms against the plaintiffs, who authored the document.  The Court of Appeal said that, in light of its conclusion about the interpretation of the release, it did need not to consider the alternative ground relied on by the lower court.

Leonard v. Dunn, 2006 CanLII 33419 (ON SC)

The defendant was a player in a recreational, non-contact hockey game who relied on a waiver/release in a “game sheet” that the plaintiff had signed as a condition of playing hockey in the sports facility where the game occurred. The court said that the release should be construed contra proferentem and strictly, particularly vis a vis the defendant, whose position was derivative of the facility and who arguably had given no consideration.

Okihiro v. 572412 B.C. Ltd., 2008 BCSC 1161 (CanLII)

The plaintiff rented a golf cart and signed a credit card receipt that included a paragraph under the heading “Cart Liability”. The waiver was ambiguous and any ambiguity was to be construed against the golf course defendants who prepared it. A reasonable person in the plaintiff’s circumstances would understand the waiver to relate to claims arising from the negligent use of the cart and would conclude that, if the cart was used properly, no claims could be made against the user of it. It was highly unlikely that a reasonable person reading the waiver would understand it to be a waiver of any rights against the golf course, whether arising from negligence or breach of duty as occupier.

Van Hooydonk v. Jonker, 2009 ABQB 8 (CanLII)

A release will always be strictly construed against the party that drafted it, but any interpretation must not be a strained interpretation.

Gallant v. Fanshawe College of Applied Arts and Technology, 2009 CanLII 50755 (ON SC)

The onus of proving the validity of an exclusion clause or waiver lies on the party who claims it. The defendants drafted the waiver in this case and any ambiguity is resolved against the drafter.

Dawson v. Tolko Industries Ltd., 2010 BCSC 346 (CanLII)

The court said that the awkward grammar and omnibus language of certain releases combined to create ambiguity. This ambiguity could not be resolved by considering the language as a whole or the wording in the releases. The releasee drafted the releases. The court said that, pursuant to the principle of contra proferentem, the ambiguity must be resolved by construing the releases in favour of the interests of the releasors.

Whitehorse Condominium Corporation No. 95 v. 37724 Yukon Inc., 2013 YKSC 4 (CanLII)

A condominium corporation applied for a permanent injunction prohibiting the condominium developer from proceeding with the construction of apartment buildings on land owned by the developer, alleging that the apartment buildings were contrary to the declaration and plan of the condominium corporation. The condominium developer opposed the application on a number of grounds; among other things, the developer relied on a release and waiver clause in the condominium corporation’s bylaw. The court said that any interpretation of this provision would require consideration of the principle of contra proferentem as the provision was prepared by the condominium developer without input from the owners.

Colette v. AMV Enterprises Ltd., 2014 BCSC 816 (CanLII)

Any ambiguity in a release must be resolved in the releasor’s favour as the document was prepared by the lawyers for the principal of the releasee.

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

A motion for summary judgment was dismissed where a full and complete context of the signing of an agreement containing a pre-emptive release and waiver of liability was necessary in order to interpret the agreement. The court said that, under the principle of contra proferentem, any ambiguity in the agreement required the clause to be interpreted against the party who drafted the agreement.

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

A release and waiver signed by the plaintiff was not sufficiently clear or specific such that it necessarily encompassed negligence; it admitted of ambiguity in this regard. Applying the principle of contra proferentem, the ambiguity should be resolved against its drafters and in favour of the plaintiff.

Jensen v. Fit City Health Centre Inc., 2015 ONSC 6326 (CanLII)

Since the defendant drafted the waiver at issue in this case, any ambiguity must be resolved against it.

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

While various courts have said that a rule of strict construction applies to exclusion of liability clauses, that proposition must not turn strict construction into strained construction.

5.10.2.1 Contract Excluding Application of Contra Proferentem Doctrine

The parties to a release may explicitly agree that their contract is not to be construed against the interests of either (or any) party by reason of their respective roles in the negotiation or drafting of the contract.

Worsley Rusholme Limited v. Imperial Oil, 2018 ONSC 5591 (CanLII)

The plaintiff purchased a property from Imperial Oil on which a gas station was previously located. During the course of excavation for the purpose of building a condominium complex, the plaintiff discovered petroleum contamination on the property.  The plaintiff claimed that Imperial Oil was responsible for causing the contamination. Imperial Oil moved for summary judgment dismissing the action on the basis that a release in the agreement of purchase and sale between the parties precluded any claims of any kind related to environmental contamination of the property. The court said that the release was very broad and clearly encompassed the claim made in this action. As part of the agreement, Imperial Oil also provided a “comfort letter” to the plaintiff that addressed issues of liability for environmental contamination on adjoining properties. The agreement of purchase and sale provided that the comfort letter was a schedule to, and formed part of, the agreement. While the plaintiff agreed that the wording of the agreement of purchase and sale on its own would release its claim, it argued that the terms of the comfort letter modified the agreement of purchase and sale such as to carve out the claim made in this case. The plaintiff also relied on the doctrine of contra proferentem. The court said that, even if it had found ambiguity (which it did not), the plaintiff explicitly bargained away its ability to argue that any ambiguities in the agreement should be interpreted in its favour on the basis of the contra proferentem doctrine. The agreement included a provision stating that it was to be deemed and considered for all purposes as prepared through the joint efforts of the parties and was not to be construed against one party or the other as a result of the preparation, submittal or other event of negotiation or drafting.

5.10.3 Interpretation that may Render Element of Agreement Meaningless

A point of consideration in the decisions summarized below was whether, due to a perceived contradiction or inconsistency, a particular interpretation of a release could render an element of the parties’ agreement meaningless.

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. Thus, an indemnity is neither meaningless nor necessarily inconsistent with a release.

Manitoba Securities Commission v. Crocus Investment Fund, 2012 MBQB 282 (CanLII)

Former officers and directors of the Crocus Investment Fund sought indemnification for legal expenses and costs incurred by them in responding to a motion by the receiver and manager of Crocus for court approval of a disposition of funds. The receiver relied on a release given by the directors which related to any obligation of Crocus to pay indemnification. However, the release specifically excepted indemnity claims from its application, including legal costs incurred in pursuing such indemnity claims. The court said that, on a cursory reading of the release, its terms appeared contradictory, but that acceptance of the argument that such claims for indemnification were excluded would render the exception meaningless. The court referred to other circumstances of this case and found that the release did not apply to the directors’ request for indemnification.

5.10.4 Grammatical and Wording Errors

Releases are not known for being documents written in easy-to-follow language. What is more, courts sometimes are called upon to interpret releases with wording errors or grammatical shortcomings. As can be seen from decisions summarized below, the effort to interpret releases with wording or grammatical problems has brought Canadian courts to consider the implications of release wording that is not comprehensible or “understandable”.

In Cohen v. Woodcliffe Corporation, 2022 ONSC 5599 (CanLII) , summarized above in section 5.10, Ambiguity or Errors in Release, the court considered what it called “lazy drafting” (including a list of letters in a release rather than incorporating information from the letters in the release).

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

The court said that one of the paragraphs of the release in this case was virtually incomprehensible, presumably because of missing words and poor punctuation. Nevertheless, the release, taken in its entirety, was sufficiently clear on its face to convey its meaning.

Van Hooydonk v. Jonker, 2009 ABQB 8 (CanLII)

The plaintiff argued that a number of grammatical errors in a release and waiver made it so confusing as to be unintelligible and unenforceable. With respect to the plaintiff’s first point about the wording of the release, the court said that a phrase, although admittedly out of place, did not make the particular sentence uninterpretable. On the plaintiff’s second point, the court agreed that the release included a sentence fragment, but said “the grammatical structure of a release is not what needs to be determined”. As for the plaintiff’s third point, the court agreed that the words of one sentence were awkward and that the defendants could not rely on this sentence to shield them from liability, but said that the entire release could not be struck down on one erroneous sentence. The court held that the first paragraph of the release stood and was sufficient to cover the alleged conduct of the defendants.

Gallant v. Fanshawe College of Applied Arts and Technology, 2009 CanLII 50755 (ON SC)

The plaintiff argued that a release was ambiguous because it did not include the words “for any” prior to “property damage, bodily injury …” and it did not refer to protection from claims arising “from negligence or howsoever arising”. The words “liability” and the phrase “howsoever arising from” were also absent. The court concluded that the waiver was ambiguous because of the missing words, such as “for any” and “negligence” or “liability” or “howsoever caused”. It was necessary to insert words into the waiver to make it understandable and this was not the job of the court.

Dawson v. Tolko Industries Ltd., 2010 BCSC 346 (CanLII)

The court said that the awkward grammar and omnibus language of certain releases combined to create ambiguity. This ambiguity could not be resolved by considering the language as a whole or the wording in the releases and the court applied the contra proferentem principle.

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

A motion for summary judgment was dismissed where a full and complete context of the signing of an agreement containing a pre-emptive release and waiver of liability was necessary in order to interpret the agreement. The plaintiff argued that, as a result of the typographical error of “Releasee” being misspelled more than once in the agreement as “Release,” it was unclear who was being released from liability. Among other things, the plaintiff also argued that it was unclear what specific rights were being waived because the final clause of the agreement stated “I AM AWARE I AM WAIVING LEGAL RIGHTS” rather than “I AM AWARE I AM WAIVING ALL LEGAL RIGHTS.” The court found that a complete factual record was required in order to determine the legal rights which were being waived, especially due to issues including the typographical errors in the agreement and the fact that there was not a description of the legal rights that were being waived.

5.11 Avoiding a Strained or “Artful” Interpretation

In Hunter Engineering Co. v. Syncrude Canada Ltd., 1989 CanLII 129 (SCC), [1989] 1 SCR 426, the judgments delivered by Dickson C.J. and Wilson J. both discuss the decision of the House of Lords in Photo Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827. And both judgments quote the following words from the decision of Lord Diplock in Photo Production:

In commercial contracts negotiated between business-men capable of looking after their own interests and of deciding how risks inherent in the performance of various kinds of contract can be most economically borne (generally by insurance), it is, in my view, wrong to place a strained construction upon words in an exclusion clause which are clear and fairly susceptible of one meaning only . . . .

In her judgment, Wilson J. went on to say that:

…exclusion clauses, like all contractual provisions, should be given their natural and true construction. Great uncertainty and needless complications in the drafting of contracts will obviously result if courts give exclusion clauses strained and artificial interpretations in order, indirectly and obliquely, to avoid the impact of what seems to them ex post facto to have been an unfair and unreasonable clause.

These statements by Wilson J. were later quoted by Binnie J. in his dissenting judgment in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 (CanLII), [2010] 1 SCR 69, at paragraph 127.

Similar views about the interpretation of an exclusion clause were expressed in a Federal Court decision, Dryburgh v. Oak Bay Marina (1992) Ltd., 2000 CanLII 17162 (FC), [2001] 1 FC 192. In that decision, the court referred to authorities including Chitty on Contracts, 28th Edition (1999) and said that the rules of construction which apply to any written contract are equally applicable to exemption clauses in order to determine the meaning the words were intended to bear. Moreover, the court said:

…Chitty on Contracts goes on to point out, relying upon Photo Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827 (H.L.), at pages 846 and 851, that “If the clause is expressed clearly and unambiguously, there is no justification for placing upon the language of the clause a strained and artificial meaning so as to avoid the exclusion or restriction of liability contained in it” … In effect there is nothing in an exclusionary provision which is inherently evil. I therefore ought to interpret an exculpatory clause, subject to it being unconscionable or unreasonable, just as I would any other contractual provision, giving effect to the intention of the parties and if, and only if, there is an ambiguity, should I invoke the doctrine of contra proferentem.

Chitty on Contracts, 33rd Edition, Volume 1 (London: Sweet & Maxwell, 2018) sets out the proposition relied on in Dryburgh to the effect that there is no justification for placing a strained and artificial meaning on the language of an exemption clause that is expressed clearly and unambiguously. The Photo Production case is cited in support of this proposition, as well as other cases, such as Nobahar-Cookson v. Hut Group Ltd [2016] EWCA Civ 129, at paragraph 19.

In section 5.7 above, we have seen that there are a number of approaches that serve to limit the broad, general words of a release. And we have seen that the contra proferentem doctrine may be applied when the wording of a release reasonably supports more than one meaning. The case law makes clear, though, that courts should avoid a strained interpretation when these interpretive tools are used to determine the meaning of the words of a release. In Smith v. Horizon Aero Sports Ltd., 1981 CanLII 300 (BC SC) , the court said, with respect to a pre-emptive release and waiver, that “[t]his type of agreement will be strictly construed by a Court against the party who drew it and required its execution from the other, but that is not to say that a strained construction will be forced upon the words”.

Van Hooydonk v. Jonker, 2009 ABQB 8 (CanLII)

A release will always be strictly construed against the party that drafted it, but any interpretation must not be a strained interpretation.

Andrews v. McHale, 2016 FC 624 (CanLII)

The broadly-worded operative paragraph of a release concluded with a phrase that was more specific: “for or by reason of any matter, cause or thing whatsoever, existing up to and inclusive of the date of this Release … by reason of or in any way arising or related to” the termination of an agreement and the removal of the applicant as the director of a company. The respondents argued that the concluding phrase did not modify the broad language of the release. The court considered this to be a strained interpretation of the language of the release. To accept the respondents’ interpretation would mean that the broad language was completely unqualified in time, such that even claims arising from future events would be released. The concluding phrase served to qualify the breadth of the release.

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

While various courts have said that a rule of strict construction applies to exclusion of liability clauses, that proposition must not turn strict construction into strained construction.

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

On a motion for summary judgment based entirely on the terms of a waiver and release of liability signed by the plaintiff, the court said it did not understand the law to be that waivers of liability are unenforceable or illegal. Nor are they to be circumvented by artful interpretation. Rather, they are to be construed contra proferentem, narrowly, carefully, and applied for their objectively determined meaning.

5.12 Interpretation of Particular Words

Decisions of Canadian courts provide guidance on the interpretation of particular words used in releases, as can be seen from the cases below.

McNeill v. McKinley, 1998 CanLII 6568 (BC SC)

Although the release in this case was expressed in general terms, it was stated to apply to “any fact, matter or thing arising to the date [t]hereof”, which negated an assertion that the release applied in respect of any claim, howsoever arising, to the estate of a testator who died after the execution of the release.

Robichaud et al v. Pharmacie Acadienne de Beresford Ltée et al, 2008 NBCA 12 (CanLII)

In the context of language stating that a lessee waives, releases and discharges all rights, claims and demands arising out of damage to or destruction of a building or any part thereof, the Court of Appeal considered the meaning of the words “arising out of”. The court said that these words are typically used in insurance-related contexts to describe a broad connection between an occurrence and damage. Few would argue with the proposition that this phrase is broader in scope than “occasioned by”.

Ferguson (Ferguson Barristers LLP) v. North, 2009 CanLII 55724 (ON SC)

The idea that a broadly worded settlement and release carved out a particular exception with the words “existing up to the date” was nonsensical: it would leave open matters for a future dispute such as to rob the agreement of any finality or certainty. The only commercially reasonable interpretation of the phrase “existing up to the date” would be the sensible limitation excluding events occurring in the future, but not claims arising out of past relationships.

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

William Choi and Nuri Fisher agreed to purchase shares of Piscine Energetics and incorporated NumberCo as the nominal purchaser. Piscine made a loan to fund, in part, the purchase, and the loan was secured by a promissory note. Choi and Fisher found that they could not work together and they entered into an agreement providing for Fisher to purchase Choi’s shares in NumberCo. The share purchase agreement included a release of NumberCo by Choi that encompassed all claims in any way arising out of any cause, matter or thing existing up to the date thereof. When Piscine demanded payment of the note, Choi claimed indemnity or contribution from NumberCo. The summary trial judge held that Choi’s claim was not a “cause, matter or thing” existing as of the date of the release. The Court of Appeal held that this interpretation failed to give effect to the explicit language of the release: the claim for indemnity arose out of the obligation assumed by Choi when he signed the note, an obligation existing at the date of the release. The Court of Appeal said that it would give effect to the release and it dismissed Choi’s claim for indemnity from NumberCo.

Ontario v. Imperial Tobacco Canada Ltd., 2013 ONCA 481 (CanLII)

The Ontario Court of Appeal considered the interpretation of the terms “Released Claim”, “Releasing Entities” and “Released Entities” as defined in the provisions of a comprehensive agreement that had been reached to settle claims arising out of alleged tobacco smuggling. On the wording of the agreement, the court concluded that, although the claims asserted in a proposed class action might come within the definition of Released Claims, only claims within the definition of Released Claims that belonged beneficially to a Releasing Entity were released. The party making the claims in the class action was not asserting a Released Claim belonging beneficially to a Released Entity and was not acting as a Releasing Entity within the meaning of the agreement.

3113736 Canada Ltd. v. Cozy Corner Bedding Inc., 2020 ONCA 235 (CanLII)

The definition of released claims in a class action release referred to “any and all manner of claim” and also to “liabilities of any nature whatsoever”. The Court of Appeal said that this language was broad enough to capture a claim for equitable set-off. The court did not accept the appellant’s argument that equitable set-off fell outside of the language of the release because it is a defence rather than a claim. Although equitable set-off is a defence, it is one that arises from the defendant having a “cross-claim” that is closely connected to the plaintiff’s claim; it is often referred to as a “claim for equitable set-off”.

5.12.1 Title of Release

The title of a release may inform a court’s interpretation of the document.

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

The release in this case was entitled Full and Final Release and the Master said that these words informed the interpretation of the document. The Master quoted from Taberner v. World Wide Treasure Adventures Inc. , where the B.C. Court of Appeal said that “more importantly [a] release [was] stated to be a full and final release and … must be given a very liberal interpretation because of the kind of release it was intended to be”.

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

The release in this case was titled “FULL AND FINAL RELEASE”. Such a title will militate toward a more broad interpretation of the release.

5.12.2 “Cause of Action”

According to the Supreme Court of Canada, a cause of action is “a set of facts that provides the basis for an action”: Markevich v Canada, 2003 SCC 9 (CanLII), at paragraph 27. The same court has also said that a cause of action “comprises certain facts which, if proven, establish a plaintiff’s right to the remedy sought from the defendant”: Air Canada v McDonnell Douglas Corp, 1989 CanLII 54 (SCC), [1989] 1 SCR 1554 at 1564. After quoting from these and other authorities, the Alberta Court of Appeal said that: “A cause of action is, therefore, a set of facts which are said to entitle the claimant to relief from a court”. See Sherwood Steel Ltd v Odyssey Construction Inc, 2014 ABCA 320 (CanLII), at paragraph 24.

Given that a release is the relinquishment or abandonment, in whole or in part, of a right or claim, it is typical for a release to refer to the release of a “cause of action”, that is, a release of the basis for the releasor to bring an action and seek a remedy as against the releasee.

Applied Industrial Technologies, LP v. Sirois, 2018 ABQB 818 (CanLII)

The court considered the interpretation of a release of claims arising out of “any cause, matter or thing” whatsoever existing up to the present time. It said that a “cause or matter” generally connotes a collective series of events giving rise to a claim. A claim based on a series of events that did not exist when the release was delivered did not fall within the “temporal restriction” of the release.

IAP Claiming H-15019 v. P. James Wallbridge, 2019 ONSC 1617 (CanLII) , affirmed on other grounds, IAP Claimant H-15019 v. Wallbridge, 2020 ONCA 270 (CanLII)

The motion judge in this case said that, although the wording of the releases under consideration was broad and general, their proper interpretation required a careful analysis of the distinction made between a “cause of action” and “damages”. A cause of action may be defined generally as a factual situation entitling a person to obtain a remedy against another in court. Damages are often the remedy sought and arise out of the cause of action. Depending on the cause of action, damages may address past, present and/or future losses arising therefrom

5.12.3 “Claims” and “Demands”

Just as it is typical for a release to refer to the release of a “cause of action”, it is also typical for other words, such as “claims” and “demands”, to be used to describe what is being relinquished by the releasor. The intention of referring to “demands” – if not “claims” – is presumably to make clear that the releasor will be in breach of the release even when, short of taking steps to enforce a cause of action, the releasor puts forward an assertion about recourse or relief sought from the releasee.

The words “claim” and “demand” often are given as synonyms for one another. And general dictionary definitions of the word “claim” suggest that use in a release of the word “claims”, like “demands”, implies, or at least includes, something done by the releasor that falls short of actually taking steps to enforce a cause of action in court.

However, the decision of the Ontario Court of Appeal below regarding the interpretation of indemnity provisions draws a clear distinction between “claims” and “demands” and, further, the decision indicates that a claim means a court action. This is consistent with rules of civil practice and procedure which provide for the commencement of an action by means of a statement of claim, or a claim. On this view of the word “claim”, and as stated by the Court of Appeal, a claim is different from a demand. In the context of the indemnity provisions considered by the Court of Appeal, a claim was seen to be, in effect, the court action brought to assert or enforce a cause of action (or at least what the plaintiff believes to be a cause of action). The court was supported in this interpretation by other provisions of the documents before it, including a clause using the words “if a claim is commenced”.

Intact Insurance Company v. Kisel, 2015 ONCA 205 (CanLII)

This case involved the interpretation of hold harmless and indemnity provisions in a settlement agreement and did not directly involve the interpretation of the release given in connection with the settlement. As stated by the Court of Appeal, the hold harmless agreements provided an indemnity from “any claims”, not from any demands for payments. The court went on to say that claims and demands are different: a claim means an action, not a demand letter. In support of this interpretation of the hold harmless provisions, the court referred to the terms of the release to the effect that the releasee was released and forever discharged from, among other things, “claims and demands for Statutory Accident Benefits”. In other words, the court said, the release distinguished between claims and demands. Letters making “demands” for payment were not “claims”.

5.12.4 “Compensation”

In the case below, the court considered the nature of the relief encompassed in the word “compensation” as used in connection with the settlement of a previous complaint by the applicant.

Bashir v. Canada (Attorney General), 2020 FC 278 (CanLII)

The applicant was a member of the Canadian Armed Forces who made a complaint to the Canadian Human Rights Commission in respect of a refusal of a request for leave on a Muslim holiday (the “AWOL incident”). The complaint was settled prior to a hearing. In the minutes of settlement, the applicant acknowledged that the settlement was in full and final “compensation” for the matters alleged in the complaint and he gave a release of all claims arising out of or connected to the complaint. Following his release from the Armed Forces, the applicant filed two grievances that were referred to, and dismissed by, the Chief of Defence Staff. On this application for judicial review of the decision of the CDS, the applicant argued that the minutes of settlement only resolved his claims for financial compensation and specifically permitted him to proceed with his grievances insofar as he was seeking non-monetary relief, including with respect to the AWOL incident. The court acknowledged that the release provisions were potentially ambiguous but said that the word “compensation” was unqualified, and could reasonably be understood to encompass both monetary and non-monetary relief. A further provision of the minutes of settlement specifically identified the forms of non-monetary relief that were not encompassed by the general release of claims for compensation.

5.12.5 “Remise”

The meaning of the word “remise” seems to align closely with the effect, in law, of a release. Indeed, in the context of the law of releases, the verbs “remise” and “release” could be seen to mean virtually, or even exactly, the same thing. Given this correspondence between the meaning of “remise” and “release”, one might question the seeming redundancy of the phrase “remise, release and forever discharge”, which is commonly used in releases.

The verb “release”, though, serves many different purposes and, in everyday usage, it has a range of meaning that extends beyond its connotation when it appears in a release. By comparison, “remise” is a word of some precision with relatively little range of meaning beyond that which serves to convey rather well the intended effect of a release.

And perhaps another valid view-point is that the phrase “remise, release and forever discharge” has been used for so long and so frequently in documents treated by courts as full and final releases that continued use of the wording conveys an intention that a particular release be viewed in the same, consistent manner when interpreted by a court.

The decisions below offer different perspectives on the use of the word “remise” in a release.

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.

Operation 1 Inc. v. Phillips, 2004 CanLII 48689 (ON SC)

A release given by certain parties to a transaction used the words “remise, release and forever discharge”, while an otherwise similar release executed by other parties contained only the operative word “remise”. The court noted that Black’s Law Dictionary and The Shorter Oxford English Dictionary give, as meanings for “remise”, “surrender”, “give up”, “release” and “make over”.

5.12.6 Words Used to Describe Releasor and Releasee

Particularly in circumstances involving multiple actors, releases often use expansive descriptions of either or both of the releasor and the releasee. For example, a release of a claim against a corporation may refer to the release of the corporation, its affiliates, successors, officers, employees, representatives, agents and anyone claiming through them (collectively, the “Released Parties”). The decisions below deal with the interpretation of particular words used in releases to give an expanded scope to the description of the releasor or the releasee beyond simply naming one or more specific parties.

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

In this case, the court considered the meaning of the terms “associates”, “partners” and “heirs” in a release. The court said that the general nature of a release does not mean that the general terms should be given their broadest meanings and it expressed doubt about whether, without meaningful contextual evidence, a release of a corporate party can be extended to all of its shareholders simply by inserting the term “associates”.

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. The court said that, in plain words, the description of “released party” in the release referred to “people who have something to do with all the myriad of arrangements necessary to authorize and stage the race”. A motorist driving on a roadway where the race was permitted to occur was not among the “released parties”.

5.11.6.1 “Agents”

Radvar v. Canada (Attorney General), 2005 CanLII 45412 (ON SC) , appeal dismissed, Radvar v. Canada (Attorney General), 2007 ONCA 137 (CanLII)

A release given by the plaintiff to an insurance company specifically provided that it applied to “agents” of the insurer. The Court of Appeal said that this therefore included investigators retained by the insurer to carry out background enquiries about the plaintiff.

Dawson v. Tolko Industries Ltd., 2010 BCSC 346 (CanLII)

In this case, the releasing plaintiffs settled wrongful dismissal claims and the court found that they intended to resolve all disputes with the defendant Tolko. The court concluded that no release was granted to agents of Tolko, but, in the event it was wrong, the court considered whether other defendants, referred to as the Towers defendants, were “agents” of Tolko as that term was used in the releases. The court said that Canadian law recognizes multiple definitions of “agent”, both broad and narrow. The court found that the parties intended a more limited definition of agency, based in part on the context in which the parties sought and obtained the releases. A release of “anyone who did something for Tolko for remuneration or not” would have been beyond the reasonable contemplation of the parties. The category of potential releasees would be huge and this could not have been the intent of either party. The intention of the parties was to provide a release to agents who represented Tolko in such a way as to be able to affect its legal position in respect of strangers to the relationship, including agents who represented Tolko in activities that were similar to the making of contracts or disposition of property. Since most of the allegations of breach of duty by the Towers Defendants related to activities performed by them when they were not acting within the restricted definition of agent, the Towers defendants were not fully released by virtue of falling within the definition of “agents” as that term was used in the releases.

Beck v. Johnston, Meier Insurance Agencies Ltd., 2010 BCSC 719 (CanLII), affirmed on other grounds, 2011 BCCA 250 (CanLII)

In this case, after settling with an insurance company and giving a release to the insurer, the plaintiff brought an action against the broker which arranged the insurance coverage. The defendant argued that the release precluded claims by the plaintiff against it, because the insurer and its agents (among others) were released and the defendant, as an insurance broker, was an agent of the insurer. The court referred to Dawson v. Tolko Industries Ltd., above, for the proposition that, if the concept of releasee’s agent is interpreted so widely as to cover all claims against anyone who in some capacity acts as agent for the releasee, it would have absurd effects. There were several relevant facts in this case which indicated that the meaning of “agent” in the release given to the insurer was meant to be a limited meaning. The court found that the use of the word “agents” in the release was not meant to apply so widely that it would apply to claims of any nature against all persons who in a limited capacity might have been agents of the insurer at one time or another. 

Demessey Ltd. v. Cassels Brock & Blackwell LLP, 2011 ONSC 6696 (CanLII) , varied on appeal, Demessey Limited v. Cassels Brock & Blackwell LLP, 2012 ONCA 423 (CanLII)

The Court of Appeal disagreed with the conclusion of a motion judge regarding the interpretation of the word “agents” in a release. The releasee was a partner in a law firm and the motion judge found that, by reason of the reference to his agents in the release, the law firm was released from any claim based on his conduct. The Court of Appeal said that the lawyer was an agent of the law firm of which he was a partner and that, in the normal course, partners are agents of each other and of their law firm. That did not mean, however, that the law firm was also an agent for its individual partners. This was not to say that, for some purposes and in some circumstances, a law firm would not properly be considered an agent of the individual partner. However, nothing in the language of the release in this case supported that interpretation of the word “agent” as used in the release. 

Sheriff v. Apps et al, 2012 ONSC 565 (CanLII)

The plaintiff executed a release that included as releasees a company’s “related, subsidiary, parent, or affiliated companies, and any and all of their and its representative officers, directors, agents and employees and their and its respective heirs, personal representatives, successors and assigns”. The defendants were lawyers who acted for the company in connection with events that were the subject of this litigation and they argued that the plain and ordinary meaning of the word “agents” in the release included them. Citing Neinstein, above, the court said that releases must be interpreted with the reasonable expectations of the parties in mind. The company’s lawyer was acting in his capacity as agent for the company. The court said it was clear that the company reasonably expected that the term “agents” in the release would cover their lawyer. The plaintiff should have reasonably expected the same.

Gwininitxw v. British Columbia (Attorney General), 2013 BCSC 1972 (CanLII)

In this case, the court addressed whether a release given to the defendant Roxgold and its agents extended to the proposed defendant Alan Raven. The court said that Dawson, above, was particularly pertinent in that it discussed the intended scope of a release through examination of the term “agent”. It was determined in Dawson that a broad definition of agent was beyond the reasonable contemplation of the parties in that case. The definition intended by the parties was necessarily limited to agents who represented Tolko and were able to affect Tolko’s legal position in respect of strangers to the relationship. With the foregoing framework in mind, the court said the question in this case was whether, at the time the release was signed, Mr. Raven fell within the definition of agent intended by the parties, such that he had the authority to change Roxgold’s legal position and should therefore be covered by the release. The evidence in this case placed Mr. Raven continually within the definition of agent, as someone able to affect the legal position of Roxgold through the disposition of Roxgold’s property. Accordingly, the court found that Mr. Raven fell within the intended scope of the term “agent” when the release was executed.

Ntakos Estate v. Ntakos, 2021 ONSC 2492 (CanLII)

According to the words of a release, the “released persons” included “agents and representatives, current or former” of certain companies. This would include the companies’ lawyer.

5.11.6.2 “Affiliates” and Related Companies

P.C. Devlin Law Corporation v. 403827 B.C. Ltd., 2011 BCSC 1255 (CanLII)

On the issue of whether a particular corporation was an “affiliate” within the meaning of that word in a release, the court considered the definition of “affiliate” in business corporations legislation, certain decisions dealing with statutory definitions of “affiliate” and the definition of the word in the context of the specific contract in which it was used. On the basis of the contractual relationship in this case and the statutory definition, the court held that the corporation was an affiliate and “therefore able to benefit from the release to the same extent as any other defendant”.

Seanco Investments Inc. v. Betovan Construction Limited, 2014 ONCA 778 (CanLII)

The entities bound by a release included Normart Management, its affiliates, associates and assigns. Normart was entirely controlled by an individual who also entirely controlled the appellant. Having regard to the factual matrix surrounding the creation of the broadly worded release, the control by this individual established the necessary connection between Normart Management and the appellant, such as to render the appellant an affiliate or associate of Normart. The Court of Appeal said that it did not need to address the argument that the appellant was also an assign within the terms of the release. 

Kaptor Financial Inc. et al v. SF Partnership, LLP et al, 2016 ONSC 5459 (CanLII)

The plaintiffs brought a motion to have a claim by a corporation filed in bankruptcy proceedings declared to be barred on the ground that it had been released in a settlement agreement. The release bound the signatories and their related and affiliated companies and the issue was whether the corporation was a related or affiliated company. The release gave no definition of related or affiliated companies, but the court referred to definitions of “related persons” in bankruptcy and business corporations legislation. The court said that the corporation was “bound to the release” under these definitions. The court also drew on a dictionary definition of “related” and, further, it held that the corporation was bound by the release because the release bound the releasors and their assigns.

5.11.6.3 “Other Persons”

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

A release expressly discharged all claims against certain named parties and “all other persons”. The Court of Appeal said that Her Majesty in Right of the Province of Nova Scotia was a “person” within the scope of the release. Regardless of debate about whether the Crown is a natural person, embodied by Her Majesty, or a corporation sole, Her Majesty in Right of the Province is, either way, a “person”.

5.11.6.4 “Successors” and “Assigns”

Gwininitxw v. British Columbia (Attorney General), 2013 BCSC 1972 (CanLII)

In this case, the language of a release expressly released a named company “and its … assigns” from all claims that arose directly or indirectly from an earlier action. The court referred to Montreal Trust Company of Canada v. Birmingham Lodge Limited, 1995 CanLII 438 (ON CA), where, citing National Trust Co. v. Mead, 1990 CanLII 73 (SCC), it was said that: “The word ‘assign’ has, of course, a broader meaning [than ‘successor’]. An ‘assign’ is anyone to whom an assignment is made and presumably, but for the specific reference to ‘successors’, would include both individuals and corporations.”