August 14, 2020 by Greg Meckbach
The legal status of a release that excludes a personal injury claimant from pursuing further claims arising out of the incident “of any kind or nature whatsoever” against the City of Corner Brook, Nfld., is headed to the Supreme Court of Canada.
The city contends that the release shields it from a third-party lawsuit initiated by the claimant’s auto insurer over an accident that injured a city worker. The central issue is whether a release signed by Mary Bailey, when she settled her personal injury claim against the city, stops her and her husband from filing a third-party claim against the city.
Among other things, the release precludes any further claims arising from the incident “of any kind or nature whatsoever.” Canada’s top court announced Thursday it will hear an appeal from the city.
The accident caused multiple lawsuits. The Baileys are being sued by David Temple, the Corner Brook city employee who was a pedestrian at the time he was hit by the Baileys’ car on Mar. 3, 2009.
Thus far, allegations that any party is at fault have not been proven in court.
Mary Bailey sued the city for her injuries and settled. The Baileys’ auto insurer is claiming the city is at fault for the accident. So in 2016, the Baileys’ insurer issued a third-party notice against the city claiming the city is liable for damages to Temple. In the alternative, the Baileys’ insurer claims that if the Baileys were liable, they are entitled to contribution from the city.
The third-party claim against the city was initially thrown out of court in 2018. That was on the grounds of the release Mary Bailey signed with the city when the city paid her $7,500 to settle her own claim against the city.
In his 2018 ruling in Bailey v. Temple, Supreme Court of Newfoundland and Labrador Justice George Murphy ruled that the release between the Baileys and the City of Corner Brook not only precludes the Baileys from claiming against the city for their own losses or damages, but also precludes the Baileys from making a third-party claim against the city in connection with the accident.
Justice Murphy’s ruling was reversed on appeal in a Court of Appeal of Newfoundland and Labrador decision released Feb. 4, 2020. The City of Corner Brook applied for leave to appeal to the Supreme Court of Canada, which announced Aug. 13, 2020 it will hear the city’s appeal.
The 2011 release the Baileys signed with the city is nearly 600 words long.
In that release, Mary Bailey agreed to “indemnify and save harmless” the City of Corner Brook “from any further claim or demands of any kind or nature whatsoever which she might bring or which might be brought by or on behalf of her or in her name against the City for or in respect of the claims and demands of any kind or nature whatsoever in respect of which she had released the City,” Justice Murphy wrote in his original 2018 ruling.
But in a case like this, a judge must also determine what was specifically contemplated by both parties on entering into the agreement, wrote Court of Appeal of Newfoundland and Labrador Justice Gillian Butler.
The focus of the release and was on the Baileys’ own claims against the city and does not contemplate losses unrelated to the Baileys’ damages, Justice Butler wrote for the appeal court in its unanimous ruling.
“It was not sufficient that the broad general wording of the release potentially covered a subsequent third-party action for contribution if the surrounding circumstances suggested otherwise,” she wrote.
In his 2018 ruling, Justice Murphy noted there was nothing in the words of the release the Baileys signed with the city that limits the release only to Mary Bailey’s personal injury and property damage claims.
“To the contrary, the wording is such that it covers all claims and demands of any kind or nature whatsoever arising out of or related to the said accident,” wrote Justice Murphy.
In overturning the decision of Justice Murphy, Justice Butler cited the Supreme Court of Canada’s 2014 ruling in Sattva Capital Corp. v. Creston Moly Corp., which arose not from an insurance claim but from the purchase of mining property in Mexico. In that case, Sattva capital was entitled under a contract to be paid a finder’s fee in shares of Creston Moly, but the parties disagreed as to which date should be used to determine the value of the Creston Moly shares.
What Sattva means for the property and casualty insurance industry is that, when presented with contract disputes, courts need to determine the intent of the parities, said insurance and transportation lawyer Rui Fernandes, partner with Fernandes Hearn LLP, during a 2016 conference of the Canadian Board of Marine Underwriters. Fernandes was commenting in general at the time and not on Bailey v. Temple or any other case.
The interpretation of contracts “has evolved towards a practical common-sense approach not dominated by technical rules of construction,” Justice Marshall Rothstein wrote in 2014 in Sattva.
The Sattva ruling “did a little bit of a turn-around in saying courts can also look at the surrounding circumstances that existed when the contracts were made,” Fernandes told the CBMU attendees in 2016. “You can now introduce evidence of the surrounding circumstances.”
The full text of the release that Mary Bailey signed with the City of Corner Brook in 2011 is reproduced below:
The Releasors, on behalf of themselves and their heirs, dependents, executors, administrators, successors, assigns, and legal and personal representatives, hereby release and forever discharge the Releases their servants, agents, officers, directors, managers, employees, their associated, affiliated and subsidiary legal entities and their legal successors and assigns both jointly and severally, from all actions, suits, causes of action, debts, dues, accounts, benefits, bonds, covenants, contracts, costs, claims and demands whatsoever, including all claims for compensation, loss of use, loss of time, loss of wages, expenses, disability, past, present or future, and any aggravation, foreseen or unforeseen, as well as for injuries presently undisclosed and all demands and claims of any kind or nature whatsoever arising out of or relating to the accident which occurred on or about March 3, 2009, and without limiting the generality of the foregoing form all claims raised or which could have been raised in the action entitled 2011 04G 0062, between MARY BAILEY, as First Plaintiff, GERALD BAILEY, as Second Plaintiff, and THE CORNER BROOK CITY COUNCIL as Defendant, which was commenced in the Supreme Court of Newfoundland and Labrador, Trial Division (General) (the “Action”), including but not restricted to claims for:
– special damages to be proven at trial, including property damages to the motor vehicle of the First Plaintiff and Second Plaintiff;
– general damages to be proven at trial;
– costs of this action including cost of Discoveries;
– prejudgment and post-judgment interest;
– such further and other relief as this Honourable Court may deem just.
AND for the consideration aforesaid, the Releasors on behalf of themselves and their heirs, dependents, executors, administrators, successors, assigns and both legal and personal representative hereby covenant, agree and undertake to indemnify and save harmless and to keep indemnified the Releasees, their servants, agents, officers, directors, managers, employees, their associated, affiliated and legal entities and their legal successors and assigns, both jointly and severally, from any further claims, demands, actions or suits which may be brought by or on behalf of or in the name of the Releasors against the Releasees, their servants, agents, officers, directors, managers, employees, their associated, affiliated and legal entities and their legal successors, either jointly or severally, for and in respect of any of the matters or things hereinbefore set forth;
AND for the consideration aforesaid Releasors further agree not to make any claim or take any proceedings against any other person, corporation or entity who might claim contribution or indemnity or other relief against the Releasees, their servants, agents, officers, directors, managers, employees, their associated, affiliated and legal entities and their legal successors and assigns, either jointly or severally, under the provisions of any applicable law or at equity in relation to any causes, matters or things released hereunder;
AND the Releasors hereby declare that at all times relative hereto they have been represented by legal counsel of their own choosing who has advised them concerning this Release and that they fully understand the terms of this Release, and that in executing this Release they have done so with full knowledge of any and all rights which they may have as against the Releasees and the issues raised in the Action, and that the aforesaid consideration is accepted by them voluntarily in order to make a full and final compromise, adjust and resolution of all claims, causes, matters and things released hereunder
Feature image via iStock.com/golibtolibov
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