Ignorance is bliss when it comes to signing releases

Abundance Marketing Inc. v. Integrity Marketing Inc., 2002 CarswellOnt 3273 (Ont. S.C.J.)

Gina Broccolo worked for Abundance Marketing Inc. as vice-president of sales and marketing. Her brother, Michael Broccolo, also worked for Abundance and was a co-defendant in this action. After the termination of Gina and Michael’s employment with Abundance, they both initiated claims under the Employment Standards Act for unpaid commissions.

The claims were settled for a monetary amount which Gina and Michael received from Abundance in return for the execution of releases.

Abundance then started an action against Gina and Michael seeking an injunction and damages, alleging the pair had started an entity which manufactured and marketed a product similar to that manufactured and marketed by Abundance. Gina counterclaimed for damages for wrongful dismissal.

Abundance brought a motion for summary judgment in respect of Gina’s counterclaim on the basis she had signed a release which precluded her from any future claims against Abundance relating to her hiring or termination.

The issue before the court was whether or not the release in question made Gina’s counterclaim unsustainable. The court held that the question of whether the release was enforceable required the determination of a trial judge and therefore the motion for summary judgment was dismissed.

In particular, there were a number of factors surrounding the execution of the release which would have to be assessed at trial in order to determine enforceability. The court stated the only way the release could eclipse the counterclaim and produce a finding there was no genuine issue for trial was if the context in which the release was produced was ignored.

The court made note of the following facts with respect to the manner in which the release was executed: Gina and Michael signed the release without the benefit of independent legal representation; and they spent only 10 minutes reading the releases before the releases were executed.

The employment standards officer who was responsible for handling Gina and Michael’s claim did not review the release before it was signed. Neither Gina nor Michael were particularly knowledgeable in the law, let alone the nature of releases. Finally it was alleged by Gina that she did not understand from counsel for the employer that the release precluded her from pursuing an action for wrongful dismissal and, if she had understood this, she would not have signed it.

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