Law firm avoids claim due to release clause in earlier settlement


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.




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


AI’s legal leap: transforming law practice with intelligent tech

Just like in numerous other industries, the integration of artificial intelligence (AI) in the legal sector is proving to be a game-changer.


Shocking figures suggest divorce lawyers need to do more for clients

There are so many areas where professional legal advice requires complementary financial planning and one that is too frequently overlooked is on separation or divorce.


Is it time to tune back into radio marketing?

How many people still listen to the radio? More than you might think, it seems. Official figures show that 88% of UK adults tuned in during the last quarter of 2023 for an average of 20.5 hours each week.


Loading animation