Executive Summary: Key Legal and Evidentiary Issues

• Central question was whether a prior release signed during a human rights settlement barred a subsequent disability benefits claim against a third-party insurer.

• The insurer argued the release extended to it, justifying dismissal of the plaintiff’s claim as an abuse of process.

• The court examined whether Blue Cross, as a non-signatory to the release, could benefit from it under exceptions to the privity of contract doctrine.

• Interpretation of the release turned on the ambiguity of language and the lack of clarity about whether benefits referred to insured disability coverage.

• The court applied the plain and obvious test and found the ambiguity precluded striking the claim without a full hearing.

• Evidence from the release, surrounding circumstances, and case law (notably Corner Brook v Bailey) did not definitively support the insurer’s position.

Background and employment context

Dariusz Czernewcan was employed as a long-haul truck driver by Ron Foth Trucking and Q-Line Trucking, who operated as joint employers. His employment ended in 2016 after several disputes and deteriorating health, allegedly linked to workplace conditions. Following his termination, Czernewcan filed complaints under the Canadian Human Rights Act and the Canada Labour Code. These complaints were later settled for $25,000, with the plaintiff signing a release waiving further claims against the employers.

Claim for long-term disability benefits

After signing the release, the plaintiff pursued long-term disability benefits from Blue Cross Life Insurance Company of Canada. Blue Cross was the provider of group disability insurance for Q-Line employees. The plaintiff’s claim was based on the fact that he had previously received short-term disability benefits and believed he remained eligible for long-term benefits under the same policy.

Motion to strike by the insurer

Blue Cross brought a motion to strike the plaintiff’s statement of claim on the grounds that the release he signed in 2017 barred him from bringing the current action. The insurer argued the release should be interpreted to include third parties such as insurers, especially since the plaintiff had agreed not to pursue further claims relating to the provision or extension of benefits by the employers. It also invoked legal doctrines like issue estoppel, collateral attack, and abuse of process.

Legal analysis and interpretation of the release

The court conducted a detailed review of the release and the legal standards governing its interpretation. Relying on principles set out in Corner Brook (City) v Bailey, the court emphasized that general release language must be evaluated in context and that surrounding circumstances matter. While the release referred to the “provision or extension of benefits,” it did not explicitly include Blue Cross or define “benefits” clearly. The release also failed to contain any reservation of rights or claim-over clauses that could definitively exclude or include insurers.

The court further analyzed whether Blue Cross could benefit from the release under exceptions to the privity of contract doctrine, such as those recognized in London Drugs and Fraser River. However, it found that it was not plain and obvious that the release extended to Blue Cross, especially given the ambiguous wording and absence of direct reference to third-party insurers.

Outcome and implications

Justice Elson dismissed Blue Cross’s application to strike. He found that the interpretation of the release was not clear-cut and involved factual and legal uncertainties that must be resolved through a trial or summary judgment. As the claim could not be struck under the plain and obvious test, the court held that the plaintiff’s action did not constitute an abuse of process. Costs were awarded to the plaintiff.

This decision allows the plaintiff’s long-term disability claim to proceed and underscores the importance of precise language in release agreements, particularly when third-party protections are at issue.