Case Alert - [2018] EWCA Civ 89

Court of Appeal considers the scope of a settlement agreement

The settlement agreement entered into by the parties compromised "claims" which were defined as "any claim, potential claim…whether known or unknown, suspected or unsuspected…whether or not such claims are within the contemplation of the parties at the time of this agreement arising out of or in connection with the Action or the invoice…"

The appellant argued that there were two limitations on the apparent scope of the settlement agreement: (1) the agreement captured only claims that were "realistically supposed to exist" and (2) the agreement did not cover "inconceivable claims".

The leading case on the interpretation of settlement agreements is the House of Lords decision in BCCI v Ali [2001]. In that case, it was accepted that, depending on its wording, a settlement agreement can encompass "claims which could not on the facts known to the parties have been imagined", but that there is a "cautionary principle" that the courts "will be very slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware". In BCCI, the relevant claim did not exist in English law at the time of the settlement agreement and so was held not to fall within the scope of the agreement.

However, here the wording of the settlement was wide and "even if the parties did not in fact envisage that such a claim existed it would have been conceivable". Accordingly, the appellant's arguments failed.