A settlement deed in which the parties agree the full and final settlement of all claims arising out of or in connection with proceedings precludes an action against affiliates on the same subject matter.
The court has struck out a claim in Obaid and others v RLS Solicitors Ltd t/a RLS Law [2023] EWHC 3136 (Ch).
The case concerned a settlement deed between the claimant ANBO parties and the defendant KAH parties concerning investments which the claimants alleged that the defendants had agreed to make in English properties to be held by the claimants. They alleged fraud against the defendants as a result of which 125 apartments in the Assembly Development, Manchester, worth more than £35m, acquired with funds paid by the claimants, came to be held by defendant companies. The defendants denied the claims, alleging that payments made by the claimants were made for other purposes, including salaries and expenses. RLS acted for various companies on both sides.
The claim was compromised by a settlement deed before conclusion of the trial on 19 June 2019. Clause 4 of the deed provided that each of the parties agreed on behalf of themselves and their respective affiliates that the deed constituted full and final settlement of all claims against each other and their respective affiliates. Claims were defined as all and any claim or cause of action in any jurisdiction arising out of or in connection with the proceedings.
These proceedings concerned a claim by some of the ANBO parties for damages against RLS for failing in its contractual and tortious obligations to Oh-Na, a party to the previous proceedings, in property transactions which were also part of the previous proceedings. RLS, which had yet to file a defence, applied to strike out the claim against it on the basis that it was caught by the contractual release contained in clause 4.
The court agreed. Clause 4 had the effect of releasing all claims that a party had against any of the other parties regardless of which camp – ANBO or KAH – a party was in. The use of the word “respective” denoted that each party and its affiliates released each other party and their affiliates.
The claim clearly arose out of or in connection with the previous proceedings. It was based on the same facts and included the costs of those proceedings: which costs formed part of the settlement reached. RLS was released, as affiliate of the companies for which it had acted in the previous proceedings, from claims brought by any of the ANBO parties.
Louise Clark is a property law consultant and mediator
