Lampert: Decision avoids ‘ricochet’ claims
The High Court has struck out a claim against a London law firm because of a release clause in a previous settlement involving its clients.
Deputy Master Lampert rejected evidence that protecting RLS Law was not contemplated when the settlement agreement.
The underlying litigation saw the ‘ABNO parties’ and ‘KAH parties’ in dispute in relation to the beneficial ownership of properties in Manchester and Brighton. RLS had acted on a joint retainer on the acquisition of the properties.
The case, brought by the ABNO parties, settled during the trial in 2019, with the settlement deed saying that it “shall constitute full and final settlement of all claims against each of the other parties and their respective affiliates”.
The claimants then sued RLS for professional negligence and/or equitable compensation, accusing it of preferring the KAH parties in its work.
Baker McKenzie partner Hugh Lyons, acting for the claimants, told the court that RLS’s position was not considered in the course of the settlement negotiations.
He said: “If it had been suggested at any time by the KAH parties that the claimants would need to release claims against RLS as part of the overall deal, that would have needed to be ‘priced in’ accordingly.”
But Deputy Master Lampert refused to consider this: “Mr Lyons’s evidence as to what might have happened had the position of the defendant been considered in the course of negotiations is both speculative and highly subjective and may well be disputed by the KAH parties.
“Therefore, in my judgment, evidence as to the negotiation of the settlement deed is inadmissible on the issue of construction and I therefore have no regard to it.”
She went on to hold that the settlement deed operated to release RLS – as an affiliate of parties to the case – from claims brought by any of the ANBO parties arising from the previous proceedings, which this one clearly did.
“This interpretation also has the effect of avoiding ‘ricochet’ claims which might be brought by the defendant against one or more of the KAH parties if the claim against the defendant is allowed to proceed.
“This would open up the KAH parties to further liability arising out of or in connection with the previous proceedings which would undermine the full and final settlement of all claims under the settlement deed.”
Deputy Master Lampert struck out the claim and, alternatively, granted summary judgment.
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