Case Alert - [2016] EWHC 1759 (Ch)

Drafting a consent order after a settlement agreement

CW Harwood for claimants, Clarion for defendants

The parties entered into a settlement agreement which provided that the defendants would pay a certain sum within 28 days of service of the consent order (to be prepared), in return for the claimants dismissing the proceedings which they had brought against the defendant. The parties were then unable to agree the terms of the draft consent order: the defendants were not prepared to agree to an order requiring payment within the 28 day deadline. They argued that dismissal of the claims was not conditional on payment of that money, and indeed the money was to paid only after service of the order dismissing the claims. Accordingly, their position was that, while the court order can contain a recital which records that matters have been compromised pursuant to the agreement and that the agreement be attached to the order, they were not prepared to agree to an order requiring payment since that was not what was agreed.

The judge rejected that argument. He refused the defendants' application for a strike out on the basis that the issue should be decided at a hearing between the parties. He referred to textbook commentary that, where proceedings are ongoing and the claimant wishes to allege that a settlement has been reached, he can seek a determination of the point as a preliminary issue (see Foskett on Compromise, para 11-03). The judge concluded that a reasonable person, with the background knowledge of the parties, would have concluded that the settlement agreement provided that the consent order should contain a paragraph obliging the defendants to make the payment.

The agreement had referred to the drafting of a consent order, and the judge commented that "I emphasise the word "order". It does not say that the parties will present to the court an order that gives effect to only part of the Agreement, nor does it say that the reference to £275,000 will be contained in a recital to the order. It says in effect that the terms of the Agreement shall be contained in a consent court order. It follows that since the Defendants agreed to pay £275,000 that should be in the order".