The Respondent, Ms. Bailey, struck a city employee with her husband’s motor vehicle when the employee was performing road work. The employee commenced an action against her (“employee action”). She referred the matter to her insurer. Ms. Bailey and her husband then commenced a separate action against the Applicant, the City of Corner Brook (“City”) for alleged property damage and physical injury arising from the accident. The Baileys settled their claim with the City; they executed a release through their respective legal representatives and discontinued their action. Four years later, in the course of the employee action, counsel for Ms. Bailey’s automobile insurers filed a defence and issued a third-party notice to the City claiming the City was liable to the employee. The City took the position the release precluded such a claim. The trial judge granted the City’s application for summary trial. The C.A. allowed Ms. Bailey’s appeal, interpreting the release as releasing only the claims in the action the Baileys had commenced against the City and not applying to a claim to recover damages of a third party.