Gladman Commercial Properties v Fisher Hargreaves Proctor & Ors

A settlement with one joint tortfeasor ordinarily releases all joint tortfeasors, unless the agreement is a covenant not to sue or expressly or impliedly reserves a right to sue the others. Whether a reservation is implied is a matter of construing the settlement agreement against its factual background. Where alleged tortfeasors are concurrent rather than joint tortfeasors, the settlement bars a further claim only if it represents full satisfaction for the loss. Separate proceedings against additional defendants may constitute Henderson v Henderson abuse of process where, applying a broad merits-based approach, they amount to unjust harassment. Parties who contemplate related claims should raise the issue with the court so that case management directions can be given.

Gladman Commercial Properties claimed substantial damages from surveyors and individual surveyors for fraudulent, alternatively negligent, misrepresentation concerning the proposed purchase of two properties. It had previously brought related proceedings against the Fire Authority and Nottingham City Council, alleging substantially the same misrepresentations.

Those proceedings were settled. The Council paid £2.7 million in full and final settlement, and the settlement agreement released the parties from the contracts. The defendants applied to strike out the new claim as disclosing no reasonable grounds and as an abuse of process, or alternatively for summary judgment. The principal issues were the effect of the settlement, whether it provided full satisfaction, whether the later proceedings were abusive, and whether causation and loss were adequately pleaded.

1. Joint tortfeasors and release. On the claimant’s pleaded case, the surveyors and individuals were agents of the Fire Authority and Council and were joint tortfeasors with them in respect of both fraudulent and negligent misrepresentation. A firm could act only through the individuals who made the representations. The common-law rule remained that discharge of one joint tortfeasor discharged the others.
2. The exceptions were where the settlement was a covenant not to sue or contained an express or implied reservation of the claimant’s right to sue another joint tortfeasor. The Settlement Agreement was not a covenant not to sue and contained no express reservation. Whether a reservation should be implied was an exercise in construction. The court had to ask what the agreement, read as a whole against the relevant background, would reasonably be understood to mean. The claimant had no real prospect of establishing an implied reservation. The defendants were therefore entitled to summary judgment.
3. Concurrent tortfeasors. If the defendants were concurrent rather than joint tortfeasors, the settlement would not necessarily bar the claim. The question would be whether the sum accepted represented the full measure of the claimant’s loss. On that alternative basis, the settlement did not establish full satisfaction.
4. Abuse of process. The rule in Henderson v Henderson is a broad, merits-based jurisdiction. The fact that a claim could have been brought earlier does not automatically make later proceedings abusive. The court must consider all the circumstances and ask whether the later claim misuses the court’s process or causes unjust harassment. A later claim against different defendants may nevertheless be abusive.
5. The present claim substantially repeated the allegations made in the First Action. The claimant knew enough by October 2010, and certainly by January 2011, to formulate its case against the defendants. It failed to join them or seek directions from the court, and merely notified them shortly before trial. Requiring the defendants and witnesses to undergo a second trial on the same allegations amounted to unjust harassment. The claim was struck out as an abuse of process.
6. The pleaded case on causation and loss was also inadequate. An expert report could not remedy failure to plead the basic facts said to connect the alleged misrepresentations with the claimed losses. The claimant subsequently served further particulars, but the principal claims were struck out on the release and abuse grounds.