Jirehouse Capital & Ors v Beller & Anor

A settlement negotiated under a subject-to-contract qualification becomes binding only if the parties expressly, or by necessary implication, remove that qualification. Necessary implication may arise from the parties’ negotiations, their intention to achieve finality, their conduct after agreement, and the proximity of trial. Once removed, one party cannot unilaterally reinstate the qualification by using the words in later correspondence.

An agreement to compromise related proceedings may be binding even though a consent order remains to be signed. Unless the agreement makes time essential, the order may be provided within a reasonable time.

The claimants and defendants were involved in related Chancery and Queen’s Bench Division litigation. During negotiations shortly before trial, their legal representatives agreed settlement terms, including a drop-hands compromise of the QBD action. Earlier correspondence had repeatedly been marked without prejudice and subject to contract.

The court had to determine whether the negotiations produced a binding settlement, whether the QBD action was included, and whether either party had breached the agreement by insisting on additional terms or money.

1. The court held that the parties had agreed all terms of settlement on the evening of 29 June 2009. Although earlier correspondence used a subject-to-contract qualification, the negotiations and surrounding circumstances necessarily implied that the qualification had been lifted. The court applied the principle stated in Cohen v Nessdale Ltd [1982] 2 All ER 97.

2. The relevant circumstances included counsel’s authority to negotiate a final compromise, the parties’ common desire for finality before trial, the fact that only the formal recording of the agreement remained, and the parties’ subsequent conduct in standing counsel down and making alternative arrangements. Later repetition of subject-to-contract wording could not unilaterally undo the binding agreement.

3. The QBD action was also compromised. The agreement was for a drop-hands settlement, subject to production of a signed consent order. That compromise was neither a condition precedent to settlement of the Chancery action nor a term of that settlement. The claimants’ lawyers lacked authority to bind the parties in the QBD action, but the agreement nevertheless established the terms on which that action was to be concluded.

4. Time was not of the essence for production of the consent order. The claimants provided it within a reasonable time. The defendants’ assertion that no QBD settlement existed, coupled with a demand for further money, was a breach but caused no loss and was not a repudiatory breach capable of acceptance. The court relied on Woodard v Wimpey Constructions [1980] 1 WLR 277 at 282A–283A.