City of Corner Brook wins court case

Central issue was the interpretation of a release signed by a resident in a settled claim from a 2009 accident

CORNER BROOK — A Newfoundland lawyer is certain a decision by the Supreme Court of Canada in a case involving the City of Corner Brook centred around the interpretation of releases will have far-reaching implications.

Erin Best, a partner with Stewart Mckelvey Lawyers in St. John’s, was the counsel for the City of Corner Brook in the civil matter that saw the country’s highest court rule in the city’s favour on July 23.

The case is related to a 2009 accident in which Corner Brook resident Mary Bailey struck a city employee with her vehicle while the employee was performing roadwork.

That employee later commenced legal action against Bailey, who then commenced action against the city for alleged property damage and physical injury arising from the accident.

Bailey settled her claim with the city and in doing so signed a release in August 2011 releasing the city from all claims of any kind or nature arising out of the accident.

In March 2016, when her lawyers filed a defence in the employee’s action, they also issued a third-party notice to the city. If she was found liable in the employee’s action, Bailey wanted the city to pay part or all of any amount that was awarded.

The city took the position that the release she signed precluded such a claim, and applied to the Newfoundland and Labrador Supreme Court in Corner Brook to have it dismissed.

The trial judge stayed the thirdparty claim against the city on the basis of the broad language of the release. That decision was later reversed by the Newfoundland and Labrador Court of Appeal.

The matter then moved to the Supreme Court of Canada. The appeal was heard on March 23, and on July 23 the judgment allowing the city’s appeal was granted, with an order to overturn the Court of Appeal decision and reinstate the decision of the trial judge.

It was a unanimous decision of the court’s nine judges, with the reasons for the judgment written by Justice Malcolm Rowe, the first judge from this province to be appointed to the court.

In making their review the judges considered the legal precedents of Sattva and the 150-year-old Blackmore Rule, both of which deal with contract interpretation.

“The Blackmore Rule and the jurisprudence pursuant to it should no longer be referred to, as the function that it had served has been subsumed entirely by the approach set out in Sattva,” Rowe wrote in the decision.

While the Court of Appeal ruled that the application judge made three errors on extricable questions of law, Rowe disagreed that any of them constituted an error warranting appellate court intervention.

“I see no reviewable error in the application judge’s conclusion that the wording of the release encompasses Mrs. Bailey’s third-party claim.”

He quoted the release as including “all actions, suits, causes of action … foreseen or unforeseen … and claims of any kind or nature whatsoever arising out of or relating to the accident which occurred on or about March 3, 2009.”

The employee’s action against Bailey had been started prior to her signing the release.

Best said the Supreme Court of Canada doesn’t hear many civil cases and that alone makes this an important decision, and, as the highest court in the land, other courts are required to follow its guidance.

“What the court has done here is that they’ve clarified the law with the respect to the interpretation of releases in Canada,” she said.

“And they’ve done something quite new as well. They’ve dispensed with the confusing 150-years-old interpretive rule (the Blackmore Rule) that was still being referred to by many of the courts in Canada.”

She said the decision also clarified the standard of review that applies to the interpretation of contracts, and she expects it will be cited in the future decisions of all courts.

Best said this type of guidance from the Supreme Court of Canada is good for everyone when drafting a contract or a release because it helps everyone understand how that release will be interpreted.

Best said she was particularly pleased that the decision was a unanimous one, because it’s unusual for that to happen.

“It’s been split on these types of issues for a while now.”

To argue the case before the Supreme Court of Canada, which doesn’t hear many cases in general and not a lot of civil cases, was a great experience for Best, who said the COVID-19 pandemic added a different dynamic, as the case was heard virtually.

“We were given full and fair opportunity to present our case. Nothing was missed or lacking as a result of having appeared virtually.”

Alex Templeton, of Mcinnes Cooper in St. John’s, who acted as counsel for Bailey, said he is reviewing the decision and his client was not in a position to comment on it.

The decision made no reference to the status of the action launched by the city employee against Bailey.