£70 million negligence claim caught by Settlement Agreement

This case highlights how crucial drafting release clauses in Settlement Agreements is to ensure that any future unsuspected claims such as this one are not inadvertently compromised. It was considered to be compromised even though the only dispute between the parties when the agreement was signed related to the amount of the unpaid invoice and there had been no allegation raised against the solicitors relating to how they had carried out their duties. The wide terms of the release clause meant that the cautionary principle enunciated in Bank of Credit and Commerce International SA v Ali (that, where there is no clear wording, the Court will be slow to infer that a party intended to surrender rights and claims of which it was unaware and could not have been aware). This was held to be of no assistance to the Claimant in this case. Although the claim was unsuspected at the time of the agreement it could not have been considered to be impossible by an objective bystander. This is in contrast to the BCCI claim where, although the relevant clause was wide, the claims could not have been regarded as a possibility and were “unknown unknowns”.

For further details on any of the issues covered in this update please contact Gemma Ospedale, Partner in Employment on 020 7583 2222.