Kazeminy v Siddiqi & Ors

The scope of a broadly drafted settlement release depends on its contractual context. General words settling all present, future, known and unknown claims do not extend beyond the rights and liabilities which the parties, viewed as reasonable persons with the shared factual background, intended to settle.

A settlement between original parties will not ordinarily compromise claims which one party may later acquire by assignment from a third party. Clear language would be expected if that unusual result were intended. Words referring to dealings involving “any person whatsoever” may instead address uncertainty as to the proper claimant for claims arising from the parties’ own dealings.

Mr Kazeminy and Mr Siddiqi settled proceedings concerning finance provided for the exploitation of technologies developed by Mr Siddiqi. The settlement purported to be in full and final settlement of claims connected with the proceedings and with dealings concerning loans or investments.

After the settlement, Mr Kazeminy acquired by assignment the rights of another investor, Mr Grano and his company, and brought substantially similar claims against Mr Siddiqi. Mr Siddiqi sought to strike out the claim or obtain judgment on the basis that it had been compromised.

Flaux J dismissed the application. The central issue on appeal was whether the settlement released claims which Mr Kazeminy acquired only later from a third party.

1. Appeal dismissed. Lord Justice Moore-Bick, with whom Lady Justice Black and Lord Justice Mummery agreed, held that the settlement did not compromise rights acquired by Mr Kazeminy under the later assignment from Mr Grano and Centurion.
2. Settlement agreements are construed by the ordinary principles of contractual interpretation. Applying Bank of Credit and Commerce International SA v Ali [2001] UKHL 8, the court held that the reach of general words of release is determined by the context known to the parties. The exceptionally broad wording covered all rights and obligations between Mr Kazeminy and Mr Siddiqi arising from their own dealings, including rights that were unknown, contingent, or enforceable only in the future.
3. That wording did not, however, extend to rights which Mr Kazeminy might subsequently obtain from a third party. Mr Grano was known to have separate rights and was not joined in either the proceedings or the settlement. The agreement contained no express provision addressing a future assignment of those rights. Such an arrangement would be unusual, and the proposed construction would give Mr Siddiqi an unbusinesslike windfall because the settlement payment did not reflect the value of Mr Grano’s claims.
4. The words referring to loans or investments by “any person whatsoever” did not alter that conclusion. In context, they addressed the possibility that persons other than Mr Kazeminy might be the proper claimants for the “friends and family” claims. They were not an oblique agreement to discharge the independent rights of third parties if later assigned to Mr Kazeminy.

• Court of Appeal (Civil Division) — dismissed Mr Siddiqi’s appeal in [2012] EWCA Civ 416.
• High Court of Justice, Queen’s Bench Division, Commercial Court — Flaux J dismissed Mr Siddiqi’s application to strike out the assignee’s claim or enter judgment, holding that the settlement did not extend to rights later acquired from third parties.