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CIVIL PROCEDURE - Settlements - Releases

Monday, March 16, 2020 @ 9:20 AM  


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Appeal by B from summary judgment staying their third-party claim against the City. B struck T with her motor vehicle while T performed road work for the City. T commenced an action against B for injuries suffered. B then commenced an action against the City for alleged property damage and physical injury suffered by them in the incident. B’s action settled, and B signed a release. Subsequently, B’s automobile insurers filed a defence in T’s action and issued a third-party notice to the City claiming that the City, and not B, was liable to T or, if B was liable, she was entitled to contribution from the City. Relying upon the Release, the City applied for summary judgment. The trial judge concluded that the Release covered the third-party claim filed by B’s automobile insurers against the City in T’s action. The judge concluded that because the words were broad and general, the parties must have contemplated releasing both first party and third-party claims.

HELD: Appeal allowed. The trial judge’s reasons reflected an incorrect application of the interpretative principles cited by the trial judge. What was in the contemplation of the City in drafting the Release was not determinative of mutual intent. It was in fact necessary to determine what was specifically contemplated by both parties. 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. The trial judge was required to assess the surrounding circumstances to determine what an objective bystander would conclude was the specific intent of both parties, and the scope of their understanding. The words used, the context and the exchange of correspondence were all consistent with the Release being interpreted as a release only of B’s claims in B’s action and not a claim to recover damages of a third party.  The trial judge erred in putting too much weight on the broad, general language of the Release, in failing to consider those things that were specifically in the contemplation of the parties at the time when the Release was given and in considering a dispute that had not emerged or a question that had not at all arisen when the Release was signed as relevant to the interpretation of the Release.

Temple v. Bailey, [2020] N.J. No. 23, Newfoundland and Labrador Court of Appeal, J.D. Green C.J.N.L., F.P. O'Brien and G.D. Butler JJ.A., February 4, 2020. Digest No. TLD-March162020001