Fisher Jones Greenwood v Allen

A settlement is binding where the parties’ communications, assessed objectively, show an intention to create legal relations and agreement on the terms essential to the compromise. A reference to a later Tomlin or consent order does not prevent contractual formation unless execution of that document was intended to be a condition of the bargain. Solicitors with actual or ostensible authority may bind their client to a settlement without the client’s personal signature or attendance. A settlement may be concluded orally or through electronic communications. Where a litigant’s conduct has substantially exacerbated the costs of simple proceedings, indemnity costs may be appropriate.

Fisher Jones Greenwood brought a Part 8 claim against Pamela Tracey Allen to enforce an alleged settlement of earlier professional negligence proceedings. Solicitors acting for the parties had agreed that Allen would pay £47,500 in full and final settlement, with payment within specified periods by her and her legal expenses insurers. The parties later contemplated recording the agreement in a Tomlin or consent order, but Allen disputed that a concluded agreement existed, that its terms were sufficiently certain, and that her solicitors had authority to settle without her personal signature. The court also considered the consequences of her conduct of the litigation.

1. Binding settlement. The court found that an oral agreement had been reached on 23 July 2010. The agreed terms were payment of £47,500 in full and final settlement, including the relevant costs claims, with payment within 28 days from the insurers and within 42 days for the balance. The agreement was sufficiently certain and complete.
2. Applying the objective approach in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH Company KG (UK Production) [2010] UKSC 14, the question was what the parties communicated by words or conduct and whether that objectively showed an intention to create legal relations and agreement on the essential terms. The correspondence, attendance notes and subsequent communications demonstrated a concluded contract.
3. Formal documentation. The proposed Tomlin or consent order was intended to record and implement the settlement. It was not a condition of contractual formation. Applying the distinction in Von Hatzfeldt-Wildenberg & Anor. v Alexander [1912] 1 Ch 284, the court held that the later formal document could be disregarded where the underlying bargain had already been concluded.
4. Authority. Allen’s personal signature and personal engagement were unnecessary. Her solicitors had actual or ostensible authority to negotiate and settle on her behalf. The settlement could therefore bind her even though she later disputed the instructions given to the solicitors. A settlement of proceedings may be made orally or reduced to writing by electronic means.
5. The Part 8 claim succeeded. In light of Allen’s conduct, which had grossly exacerbated the costs of relatively simple proceedings, indemnity costs were appropriate. On detailed assessment, the burden would be on Allen to show that the costs incurred were unreasonable, and proportionality would not be an issue on the indemnity basis.