Releases

Typically, releases are often drafted in very broad terms and it may be that the person claiming the benefit of a release may seek to rely on it in relation to claims not connected to the original transaction for which the release was given.

This issue was recently considered in the NSW Supreme Court of Appeal in Protheroe-v-Protheroe [2023] in NSWCA 328.

This was a dispute between a father and a son in relation to farming land where the son brought proceedings against the father alleging that the land in question was held by the father on a constructive trust for the son on account of promises made by the father to the son about the son’s entitlement to those properties given his work on the farm over many years.

Prior to this dispute the father and son had entered into a deed of settlement and release with a financier for the settlement of bank liabilities. That deed of settlement included a release of all parties to each other including as between the father and the son.

The father sought to assert that the release in the deed of settlement was a bar to the son now prosecuting his claim for an interest in the property by way of a constructive trust.

The Court held, reversing the decision of the primary judge, that on a proper construction of the deed of settlement the release within it it could not be said to be a release of the father by the son of future claims not connected to the circumstances in which the release was given.

The Court also discussed whether equity may relieve the releasor from an unconscientious reliance on the release by the releasee. This is a principle established in Grant-v-John Grant & Sons Pty Ltd (1954) 91 CLR 112.

In the Grant case the High Court articulated the principle that:

                “A releasee must not use the general words of a release as a means of escaping the

                fulfilment of obligations falling outside the true purpose of the transaction as

                ascertained from the nature of the instrument and the surrounding circumstances

                including the state of knowledge of the respective parties concerning the existence,

                character and extent of the liability in question and the actual intention of the releasor.”

In Protheroe the Court made the observation that the first step is to determine the meaning of the instrument on its true construction. If upon its true construction the claim sought to be released is within the terms of the release on its proper construction at law, only then do you go to the equitable principle set out in Grant’s case.

The take home message for people seeking to rely on a release is that a release will be confined to what was intended by the parties as identified in the release instrument.