Minton v Kenburgh Investments (Northern) Ltd

A settlement extinguishes claims against other concurrent tortfeasors only where it provides full satisfaction for the same damage and the settlement, properly construed, was intended to have that effect. The principle is not automatically extended merely because claims arise from the same transaction. Statutory insolvency proceedings under section 212 of the Insolvency Act 1986 may involve different causes of action and remedial considerations. A compromise in such proceedings, particularly a claim concerning wrongful preference, may provide only partial satisfaction and may not bar a separate professional-negligence claim.

The liquidators of Kenburgh Investments (Northern) Ltd compromised insolvency proceedings under section 212 of the Insolvency Act 1986 against the company’s directors and associated parties. They later brought proceedings against solicitors who had acted on the transfer of the company’s property, alleging professional negligence and breach of duty.

The solicitors contended that the earlier compromise extinguished the later claim. His Honour Judge Behrens rejected that contention on a preliminary issue. The central question on appeal was whether the principle in Jameson v CEGB and its treatment in Heaton v AXA Equity and Law Life Assurance applied beyond concurrent tortfeasors liable for the same damage.

1. Appeal dismissed. The compromise did not, on the pleaded cases, extinguish the claim against the solicitors.
2. The relevant inquiry is directed to the claims in the first action, the terms of the settlement, and the claims in the second action. Under Jameson v CEGB, a settlement may extinguish a claim against another concurrent tortfeasor where the agreed sum was accepted in full satisfaction of the same loss. The intention is determined by construction of the settlement in context; the court does not reopen whether the amount represented full value.
3. The distinction identified in Heaton v AXA Equity and Law Life Assurance between full satisfaction and final settlement was material. The appeal concerned full satisfaction. The principle could not be extended here because the directors’ liability under section 212 of the Insolvency Act 1986 and the solicitors’ alleged professional liability were different causes of action. Liability arising from the same transaction does not establish liability for the same damage.
4. Although section 212 is procedural in character, it gives the court a wide judgment as to the sanction imposed for misfeasance or breach of duty. A section 239 wrongful-preference claim is a special statutory mechanism supporting the pari passu principle and does not necessarily increase the company’s net assets. The compromise could therefore represent less than full satisfaction for the wrong relied upon in the later claim.
5. The court did not exclude a possible extension of the full-satisfaction principle to closely analogous cases. Where defendants are not liable for precisely the same damage, abuse of process may provide a safer basis for restricting later proceedings. The court expressed no view on any eventual identity-of-damage issue under the Civil Liability (Contribution) Act 1978.

Appeal dismissed with costs. Payment on account of costs ordered in the sum of £10,000. Permission to appeal to the House of Lords refused.

• Court of Appeal (Civil Division): Appeal from the preliminary-issue order made by His Honour Judge Behrens in the Chancery Division on 11 May 2000. Appeal dismissed with costs.