British Sky Broadcasting Group Plc & Ors v Digital Satellite Warranty Cover Ltd & Ors

An agreement to settle litigation is not concluded where the parties remain only broadly or roughly agreed, essential financial terms require further negotiation, or the parties contemplate a later written contract. The court assesses objectively whether agreement was reached, having regard to the words used and the surrounding circumstances. Subsequent events may be admissible and relevant to whether an agreement was concluded, although the contemporaneous record of the negotiations remains primary evidence. An agreement in principle does not become binding merely because the parties have made progress or performed steps contemplated during negotiations. Essential terms must also be sufficiently certain.

Sky brought proceedings concerning the alleged misuse of customer data, trade mark infringement and passing off. The Personal Defendants applied for a stay, contending that the proceedings had been compromised by an oral agreement reached during a telephone conversation between Mr Freeman and Sky’s solicitor, Mr MacLennan, on 13 September 2010.

Sky denied that any agreement had been concluded. Alternatively, Sky contended that any arrangement was an agreement in principle subject to contract. The court considered the telephone transcripts, subsequent correspondence and conduct, and the evidence of the participants. The central issue was whether the parties had entered into a binding settlement agreement.

1. Application dismissed. No concluded agreement to settle the proceedings was reached during the telephone conversation of 13 September 2010.
2. The conversation showed that the parties remained engaged in negotiations. Costs were described as only roughly agreed, while damages required further financial information and negotiation. Sky’s position on the financial terms also depended on the quality and accuracy of the information supplied about the sources of the data.
3. Subsequent events were relevant to whether an agreement had been concluded. Applying ED&F Man Commodity Advisers Ltd v Fluxo-Cane Overseas Ltd [2009] EWCA Civ 406, the later correspondence, continuing requests for information, further settlement discussions and proposed meetings confirmed that the parties did not regard themselves as bound.
4. Even if some agreement had been reached, its terms were insufficiently certain. The alleged agreement did not identify the date by which half of Sky’s costs was payable, or which entity’s profits and which year were relevant to the alleged damages cap. Other alleged terms were not supported by the transcript.
5. The parties’ intention was that a written settlement contract would be executed. The negotiations were therefore an agreement in principle only, and no written contract was executed.

Not stated in the judgment.