Court of Appeal for Ontario

Date: 20200428 Docket: C66737

Simmons, Pepall and Trotter JJ.A.

BETWEEN

IAP Claimant H-15019 Respondent (Plaintiff)

and

P. James Wallbridge, Lindsy McNicoll, Wallbridge, Wallbridge and The Attorney General of Canada Appellants (Defendants)

Counsel: Geoffrey D.E. Adair, Q.C., for the appellants W. Cory Wanless, for the respondents Catherine A. Coughlan, for the Attorney General of Canada

Heard: February 4, 2020

On appeal from the order of Justice Robbie D. Gordon of the Superior Court of Justice, dated March 13, 2019.

Reasons for Decision

[1] The main issue on appeal is whether the motion judge erred in dismissing a motion brought by the appellant lawyers under r. 21.01(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to dismiss the respondent's action against them as frivolous and vexatious and an abuse of process. On the motion, the appellants asserted that the respondent’s action was barred by a release and cause of action bar contained in a settlement agreement approval order. The motion judge found that the respondent’s action is not barred and dismissed the motion. For the reasons that follow, we dismiss the appeal.

Background

[2] The respondent is a member of Fort Albany First Nation and a survivor of St. Anne's Indian Residential School. He is also a class member of one of the Indian Residential Schools Survivors’ Class Actions that was settled subject to court approval in May 2006 by the Indian Residential Schools Settlement Agreement (the “IRSSA”). The IRSSA was approved by court order dated December 15, 2006 (the “Settlement Approval Order”). Among other things, the IRSSA established the Independent Assessment Process (“IAP”) as a modified adjudicative process for addressing claims and awarding compensation arising from physical, sexual or psychological abuse suffered by Indian Residential School survivors: Fontaine v. Canada (Attorney General), 2017 ONSC 2487, at para. 57.

[3] The respondent retained the appellant lawyers in 2009 to bring an IAP claim on his behalf. His initial claim was dismissed, as was a subsequent review, because his evidence was found not sufficiently reliable to meet the burden of proof. Eventually, the respondent retained a new lawyer who obtained a new hearing that resulted in a July 18, 2017 award granting the respondent significant compensation for what was found to be repeated serious abuse.

[4] On August 31, 2017 the respondent commenced an action against the appellants, another lawyer, and The Attorney General of Canada (“Canada”) for psychological harm he claims he suffered, not because of his mistreatment at St. Anne's, but rather as the result of: being disbelieved, the initial dismissals of his IAP claim and review, and having to undergo a further hearing. As against the lawyers, the respondent’s action is based on breach of contract, breach of fiduciary duty and negligence. As against Canada, the respondent’s action alleges breaches of Canada’s obligations under the IRSSA, the Settlement Approval Order and related orders to disclose documents and compile reports relating to St. Anne’s prior to his initial IAP hearing and review that were relevant to his IAP claim.

[5] The Settlement Approval Order contained a release and cause of action bar in favour of the Indian Residential Schools Class action defendants and other released organizations (collectively the “Class Action Defendants”). Under paragraph 15 of the Settlement Order, Indian Residential Schools Class Action class members (the “Class Members”) released the Class Action Defendants, including Canada, from claims “in relation to an Indian Residential School or the operation generally of Indian Residential Schools” (the “paragraph 15 release”).

[6] Paragraph 19 of the Settlement Order barred Class Members from commencing proceedings that might give rise to claims for contribution and indemnity or similar relief against Class Action Defendants in relation to the released claims (the “paragraph 19 cause of action bar”).

[7] Relying on the paragraph 15 release and the paragraph 19 cause of action bar, the appellants moved to have the respondent’s action against them dismissed as frivolous and vexatious and an abuse of process. As of the date of the motion, the appellants had not sought contribution or indemnity from Canada. However, pleadings had not closed and the appellants relied on the language of the paragraph 19 cause of action bar precluding proceedings against any person who “might” claim contribution and indemnity against the Class Action Defendants.

[8] In a motion heard the same day, Canada moved to have the action dismissed as an abuse of process based on the paragraph 15 release (the “Canada motion”). [1] In addition, Canada argued that the issues in the action against it had already been litigated as part of the respondent’s IAP proceeding. In the alternative, Canada asked that the action against it be stayed pending application to the Eastern Administrative Judge under the Court Administration Protocol to the Settlement Order. Canada asserted that under the terms of the Settlement Order, the respondent required leave to commence the action and, in any event, the action had to be initiated by a Request for Directions as it involved implementation or enforcement of the IRSSA.

[9] In separate reasons released on the respective motions, the motion judge determined that the respondent’s action against Canada is not barred by the paragraph 15 release. However, in his reasons on the Canada motion, he stayed the respondent’s action against Canada pending further order of the Eastern Administrative Judge. The motion judge found the action against Canada involved implementation and enforcement of the IRSSA and therefore should have been initiated by a Request for Directions.

[10] In his reasons on the appellant’s motion, the motion judge also found that the respondent’s claim against the appellants is not barred by the paragraph 19 cause of action bar and dismissed the appellants’ motion for a dismissal of the action as against them.

[11] The appellants appeal from the motion judge’s order dismissing their motion. Canada has not appealed from the motion judge’s order made on the Canada motion, nor has the formal order relating to its motion been taken out. Although counsel for Canada appeared at the oral hearing of this appeal and responded to questions from the panel, Canada did not file a factum and took the position it was not a party to the appeal.

The Paragraph 15 Release and Paragraph 19 Cause of Action Bar

[12] As paragraphs 15 and 19 of the Settlement Approval Order are central to the issue on appeal, we set them out in full. The paragraph 15 release reads as follows:

THIS COURT ORDERS AND DECLARES that, subject to the provisions of the Agreement, and in particular, section 4.06 thereof, each Class Member and his or her heirs, personal representatives and assigns or their past and present agents, representatives, executors, administrators, predecessors, successors, transferees and assigns, have released and shall be conclusively deemed to have fully, finally and forever released the Defendants and the Other Released Church Organizations and each of their respective past and present parents, subsidiaries and related or affiliated entities and their respective employees, agents, officers, directors, shareholders, partners, principals, members, attorneys, insurers, subrogees, representatives, executors, administrators, predecessor, successors, heirs, transferees and assigns from any and all actions, causes of action, common law and statutory liabilities, contracts, claims and demands of every nature or kind available, asserted or which could have been asserted whether known or unknown including for damages, contribution, indemnity, costs, expenses and interest which they ever had, now have or may have hereafter have [sic], directly or indirectly or any way relating to or arising directly or indirectly by way of any subrogated or assigned right or otherwise in relation to an Indian Residential School or the operation generally of Indian Residential Schools and this release includes any such claim made or that could have been made in any proceeding including the Class Actions and including claims that belong to the Class Member personally, whether asserted directly by the Class member or by any other person, group or legal entity on behalf of or as a representative for the Class Member. [Emphasis added.]

[13] The paragraph 19 cause of action bar reads as follows:

THIS COURT ORDERS AND DECLARES that each Class Member and each of his or her respective heirs, executors, administrators, personal representatives, agents, subrogees, insurers, successors and assigns shall not make any claim or take any proceeding against any person or corporation, including the Crown, in connection with or related to the claims released pursuant to paragraph 15 of this judgment, who might claim or take a proceeding against the Defendants or Other Released Church Organizations, in any manner or forum, for contribution or indemnity or any other relief at common law or in equity or under any other federal, provincial or territorial statute or the applicable rules of court. A Class Member who makes any claim or takes any proceeding that is subject to this paragraph shall immediately discontinue such claim or proceeding and this paragraph shall operate conclusively as a bar to any such action or proceeding.

The Motion Judge’s Reasons on the Appellants’ Motion

[14] In his reasons on the appellants’ motion, the motion judge found that it is “clear from the nature of the allegations against [the appellants] and Canada that [the appellants] might claim contribution or indemnity from Canada”. However, he concluded that the respondent’s action was not barred by the Settlement Approval Order essentially for two reasons.

[15] First, although the language of the paragraph 15 release was broad and general, in the motion judge’s view, causes of action and damages were treated differently. While the release specifically included future damages, it did not include causes of action arising in the future. He said:

The release at paragraph 15 of the Approval Order, when speaking to causes of action, provides for the release of “…any and all actions, causes of action… asserted or which could have been asserted whether known or unknown… and this release includes any such claim made or that could have been made in any proceedings…”. It does not specifically include causes of action arising in the future.

This is to be contrasted with the release provisions pertaining to damages, which provide for the release of “damages…which they ever had, now have or may hereafter have, directly or indirectly…”. [Emphasis in the original.]

[16] Thus, he concluded that the wording of the paragraph 15 release “does not include causes of action which arise after the effective date of the release even if in some way related to an Indian Residential School or the operation generally of Indian Residential Schools”.

[17] Second, the motion judge held that even if he was incorrect in his interpretation of the language of paragraphs 15 and 19, a release of claims for solicitor negligence in the prosecution of IAP claims could not reasonably have been within the contemplation of the parties when the IRSSA was made. In reaching this conclusion the motion judge adopted language from the respondent’s factum:

It is inconceivable that in 2006, in the context of settling a class action brought by Indian Residential survivors against those who established and operated Indian Residential Schools … for the various abuses and harms suffered by the survivors when they were students at these schools [the parties] intended to draft a release that provides total and blanket immunity to future IAP claimant lawyers for malpractice claims that would deprive survivors from their right to sue their IAP lawyers…

The Appellants’ Position on Appeal

[18] On appeal, the appellants acknowledge that the motion judge correctly set out the principles that apply to the interpretation of a release. Nonetheless they assert he made extricable errors of law and a palpable and overriding error of fact in his interpretation.

[19] First, the appellants say the motion judge erred by failing to consider the words of paragraph 15 in the context of the factual matrix, namely, the IRSSA, which led to the Settlement Approval Order.

[20] The appellants point to several provisions of the IRSSA, which they say make it clear that the parties intended to release the Class Action Defendants not only from existing causes of action, but also from any causes of action arising in the future in any way arising in relation to an Indian Residential School or the operation of Indian Residential Schools, whether directly or indirectly. This, they say, clearly evidences an intent to release the respondent’s claim against Canada.

[21] For example, the appellant’s point to the following language in the preamble of the IRSSA which they say patently contemplates a release of future causes of action:

the Parties agree that all actions, causes of action, liabilities, claims and demands whatsoever of every nature or kind for damages, contribution, indemnity, costs, expenses and interest which any Class Member … ever had, now has or may hereafter have arising in relation to an Indian Residential School or the operation of Indian Residential Schools … will be finally settled … and the Releasees will have no further liability except as set out in this Agreement. [Emphasis added.]

[22] Similarly, Article 4.06 (d) reads as follows:

4.06 Approval orders will be sought:

(d) ordering and declaring that … all class members … have released each of the defendants … from any and all actions they have, may have had or in the future may acquire against any of the defendants … arising in relation to an Indian Residential School or the operation of Indian Residential Schools. [Emphasis added.]

[23] Further, Article 11.01(1)(a) stipulates:

11.01(1) The Approval Orders will declare that in the case of Class members …

Each Class Member … has fully, finally and forever released each of the Releasees from any and all actions, causes of action … claims and demands of every nature or kind available, asserted or which could have been asserted whether known or unknown including for damages, contribution, indemnity, costs, expenses and interest which any Class Member … ever had, now has, or may hereafter have, directly or indirectly arising from or in any way relating to … an Indian Residential School or the operation of Indian Residential Schools … [Emphasis added.]

[24] By failing to consider these provisions when interpreting the paragraph 15 release, the appellants say the motion judge committed an extricable error of law.

[25] Second, the appellants say the motion judge erred in failing to consider the whole of the wording of paragraph 15 when interpreting it. In particular, they say the motion judge erred in failing to take account of the words “contribution and indemnity” in paragraph 15. Those words they say make it clear that the future claims intended to be released by the phrase "including for damages, contribution, indemnity … which they ever had, now have or may have hereafter have [sic]” were not limited to claims for damages. Rather they modified the earlier phrase "cause of action". Read as a whole, the wording of the release makes it clear that post-agreement causes of action against Canada, such as the respondent’s claim against Canada, were intended to be released.

[26] Finally, the appellants argue that the motion judge erred in considering whether a solicitor’s negligence claim was within the contemplation of the parties when the Settlement Approval Order was made. As the paragraph 19 cause of action bar is derivative of the paragraph 15 release, they say the only relevant claim for consideration is the claim against Canada. In relation to that claim, they argue that the Settlement Approval Order implemented the IRSSA, which documented a complex settlement that unequivocally released all claims, including claims arising post-IRSSA, whether arising directly or indirectly out of Indian Residential Schools – all in exchange for a comprehensive compensation process funded by Canada.

[27] Particularly in light of the oversight levels, such as the Request for Directions process that resulted in an order for Canada to produce documents, the appellants say there is no basis for concluding that a breach of duty or slip by Canada in performing its obligations under the IRSSA was not within the contemplation of the parties. In any event, what was within the contemplation of the parties must turn on the language of the IRSSA and Settlement Approval Order within the context of the factual matrix. Here they say there is no basis for concluding the claim against Canada was not within the contemplation of the parties.

Discussion

[28] As we have said, the appellants acknowledge that the motion judge correctly set out the principles applicable to interpreting a release. The motion judge relied on this court’s decision in Biancaniello v. DMCT LLP, 2017 ONCA 386, 138 O.R. (3d) 210, to summarize those principles.

[29] As acknowledged by this court, the guiding principle was set out in London and South Western Railway v. Blackmore (1870), L.R. 4 H.L. 610: “The general words in a release are limited always to the thing or those things which were specifically in the contemplation of the parties at the time the release was given.”

[30] In Biancaniello, this court set out five principles for determining what was in the contemplation of the parties when interpreting a broadly worded release:

1. One looks first to the language of the release to find its meaning.
2. Parties may use language that releases every claim that arises, including unknown claims. However, 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 thing or things that were specifically 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.
5. One can look at the circumstances surrounding the giving of the release to determine what was specially in the contemplation of the parties.

[31] In his related reasons on the Canada motion, apart from his conclusion that the paragraph 15 release did not release claims for factual situations that had not yet occurred, the motion judge gave one further reason for saying the respondent’s claim against Canada was not barred by the paragraph 15 release.

[32] At para. 22 of his reasons on the Canada motion, the motion judge opined that it could not have been the intention of the parties to release Canada from obligations it was assuming under the IRSSA. He said:

Even if I am incorrect in this interpretation of the release provisions, it is my view that the release of all claims relating to compliance by Canada of its obligations under the IRSSA could not reasonably have been in the contemplation of the parties. Surely, claimants cannot, by the same agreement that imposes obligations on Canada, be taken to have released it from those very obligations. [Emphasis added.]

[33] We agree with the motions judge that compliance by Canada of its obligations under the IRSSA would not be encompassed by the release. This conclusion is dispositive of this appeal.

[34] For ease of reference, we repeat the central language of the paragraph 15 release:

THIS COURT ORDERS AND DECLARES that, subject to the provisions of the Agreement, and in particular, section 4.06 thereof, each Class Member and his or her heirs, personal representatives and assigns … have released and shall be conclusively deemed to have fully, finally and forever released the Defendants … from any and all actions, causes of action, common law and statutory liabilities, contracts, claims and demands of every nature or kind available, asserted or which could have been asserted whether known or unknown including for damages, contribution, indemnity, costs, expenses and interest which they ever had, now have or may have hereafter have [sic], directly or indirectly or any way relating to or arising directly or indirectly by way of any subrogated or assigned right or otherwise in relation to an Indian Residential School or the operation generally of Indian Residential Schools and this release includes any such claim made or that could have been made in any proceeding including the Class Actions …

[35] The language is undoubtedly broad. That said, the key concept is that the claims released are those “arising directly or indirectly … in relation to an Indian Residential School or the operation generally of Indian Residential Schools”. Here the respondent’s claim against Canada is not a claim in relation to an Indian Residential School or the operation of Indian Residential Schools, either directly or indirectly. Rather, it is a claim for psychological harm suffered by the respondent because his evidence was adjudged insufficiently reliable to meet the burden of proof in an alternative adjudicative process as a result of Canada’s alleged failure to satisfy its disclosure obligations under the IRSSA.

[36] As the motion judge said, it cannot have been within the reasonable contemplation of the parties that Class Members would give up any rights they could have arising from Canada’s failure to fulfill its obligations under the IRSSA or the Settlement Approval Order.

[37] Based on the foregoing reasons, we conclude that the respondent’s claim against Canada is not barred by the paragraph 15 release, and, as a corollary to that conclusion, that the respondent’s claim against the appellants is not barred by the paragraph 19 cause of action bar.

[38] During the appeal hearing, the panel raised questions about the motion judge’s finding in the Canada motion that the respondent’s claim against Canada is not barred by the paragraph 15 release, in particular, whether that finding is final for the purpose of the respondent’s action against Canada, and the impact, if any, of that finding and Canada’s failure to appeal that finding on this appeal.

[39] The parties did not agree on whether that finding is final for the purpose of the respondent’s action against Canada. Assuming the finding is final, we have reached the same conclusion as the motion judge in any event. Even if the finding is not final, as a party to the same proceeding, Canada attended but chose not to seek the right to participate in this appeal.

[40] Finally, we note that the parties did not address whether the absence of privity of contract would prevent the appellants from relying on the release and cause of action bar: Van Patter v. Tillsonburg District Memorial Hospital (1999), 45 O.R. (3d) 223 (C.A.); Owen v. Zosky, [2000] O.J. 4838 (C.A.); Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108. Nothing in these reasons should be taken as commenting on that issue. Nor of course do we comment on the merits of the respondent’s action against the appellants or Canada.

Disposition

[41] Based on the foregoing reasons, the appeal is dismissed with costs to the respondent on a partial indemnity scale in the agreed upon amount of $10,000 inclusive of disbursements and applicable taxes.

“Janet Simmons J.A.”

“S.E. Pepall J.A.”

“Gary Trotter J.A.”

[1] The respondent filed a copy of the motion judge’s reasons on the Canada motion in a respondent’s compendium. However, the Canada motion record was not before us and we have discerned the relief sought based only on the motion judge’s reasons.