Posted by Gemma Ospedale, Partner
On 1 September 2016 Withy King LLP merged with Royds LLP. The trading name for the merged firm is Royds Withy King. All content produced prior to this date will remain in the name of the firms pre-merger.
£70 million negligence claim caught by Settlement Agreement
In Khanty-Mansiysk Recoveries Limited v Forsters LLP the Commercial Court, in the trial of a preliminary issue, has held that a negligence claim worth more than £70 million against the Defendant firm of solicitors was captured by the terms of a Settlement Agreement in relation to a dispute connected to unpaid invoices. On its proper construction, the Court held that the Settlement Agreement had much wider scope than the particular dispute which existed between the parties when it was executed.
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”.
It pays to employ the right employment solicitor