Settlement Agreement – Case Law Update
In Kazeminy v Siddiqi & Others  EWCA Civ 416 (2 April 2012) the Court of Appeal was asked to consider the construction of a settlement agreement entered into between the appellant, Mr Siddiqi, and the respondent, Mr Kazeminy, and the various companies represented by them to settle proceedings between them.
There were in total 10 parties to the settlement agreement, however, there was a further party, Mr Grano (and a company controlled by Mr Grano), who had intimated various possible claims against Mr Siddiqi but neither he nor his company was either a party to the proceedings between Mr Siddiqi and Mr Kazeminy or the settlement agreement which ultimately settled those proceedings.
Subsequently Mr Kazeminy procured, by way of a deed of assignment, the rights held by Mr Grano and his company against Mr Siddiqi and his companies. Mr Kazeminy then started proceedings against Mr Siddiqi as assignee of Mr Grano and his company.
Mr Siddiqi sought to strike out the claim on the basis that all claims between Mr Siddiqi and Mr Kazeminy had been settled pursuant to the settlement agreement entered into by the parties.
Flaux J at first instance considered that whilst it was apparent that the settlement agreement had a clear intention to capture every possible claim that Mr Kazeminy might have against Mr Siddiqi then or at any time in the future, the wording used was not sufficiently wide to capture assigned rights procured by Mr Kazeminy from a third party.
The Court of Appeal agreed with the Judge’s finding at first instance. The settlement agreement was concerned with rights arising only as between Mr Kazeminy and Mr Siddiqi and was not intended to extent to rights which Mr Kazeminy might in the future acquire from third parties including Mr Grano.
Parties to settlement agreements will need to be careful to ensure that if circumstances such as those set out in this case are possible, they should be covered sufficiently by the terms of any settlement agreement.
If you have any questions on this topic, please contact Philip Vickers.