The Attorney General of Canada brought a motion to rectify a mutual release signed with Elmara Construction Co. Limited, asserting it was mistakenly drafted as mutual instead of a one-sided release from Elmara to Canada, contrary to their settlement agreement.
Elmara did not oppose the rectification.
AC Metal Fabricating Limited, a plaintiff in the broader litigation, opposed the motion, arguing the mutual release was intended or that their own mutual release with Canada already precluded Canada's future warranty claims against Elmara.
The court found that the mutual release failed to accurately record the parties' prior agreement, which intended a one-sided release from Elmara to Canada, preserving Canada's warranty rights.
The court held that the mistake was common to Canada and Elmara, or alternatively, a unilateral mistake by Canada that Elmara knew or ought to have known about, and allowing Elmara to benefit would be unconscionable.
The motion for rectification was granted.