Bieber & Ors v Teathers Ltd

A binding settlement may arise from negotiations even where the parties expect a consent order or formal agreement to follow. The question is whether, objectively and considering the whole course of negotiations, the parties agreed all terms necessary for an enforceable contract and intended to be bound immediately.

An express or implied subject-to-contract qualification prevents immediate contractual effect. The qualification may later be removed, but only where the parties objectively agree to do so. Uncommunicated reservations are irrelevant. Subsequent negotiations do not undo an earlier binding settlement unless they amount to rescission or variation.

The claimants, investors in the defendant’s film and television investment schemes, sought a declaration that their complex proceedings had been settled. They relied on emails exchanged by the parties’ solicitors on 29 June 2014, by which the claimants accepted an offer of Y +2 in full and final settlement.

The defendant contended that the emails agreed only a settlement figure, subject to negotiation and execution of a detailed settlement agreement. The central issue was whether the parties had objectively concluded a binding settlement, or whether their negotiations remained subject to contract.

1. Settlement concluded. The court declared that the parties had settled the proceedings by the exchange of emails on 29 June 2014. The agreed payment of Y +2 was in full and final settlement of the claims, counterclaims and costs claims.
2. The applicable approach was objective. The court considered the whole course of negotiations and whether the parties had agreed all terms necessary for an enforceable contract. The complexity of the underlying litigation did not make the settlement negotiations legally incapable of producing an immediate binding agreement.
3. The correspondence after 18 June 2014 was not expressed to be subject to contract. The offers were repeatedly described as being in full and final settlement, and the defendant’s offer was described as a take-it-or-leave-it offer and a final gesture to reach settlement. The reference to a consent order indicated that formal documentation was intended to implement the settlement, rather than constitute a condition of its existence.
4. Any uncommunicated reservation concerning contribution claims, indemnities or other future issues was irrelevant. The defendant had not raised those matters during the negotiations leading to 29 June. The parties had agreed the essential terms: the settlement sum, the payment period and the effect of payment on the litigation.
5. Subsequent negotiations concerning a formal settlement agreement did not show that no agreement had been reached. Properly understood, they could not undo the agreement absent rescission or variation, and neither had occurred. The application therefore succeeded.