Chamonix Private Equity LLP v Caledonia Investments Plc

A settlement agreement is construed objectively in its commercial context. Where commercially experienced parties agree terms orally, the court may determine the scope of the agreement from the accepted offer and surrounding communications. Terms not agreed cannot be inserted into the order recording the compromise. A reasonable time for performance may be implied, and administrative consequences of the settlement may be included for clarity. Confidentiality may form part of the agreement where the parties acknowledged that the settlement would be recorded confidentially. The court may also consider whether proposed later proceedings would constitute an abuse of process because the issue should have been raised in the existing litigation.

The parties, both private equity houses, reached an oral compromise immediately before the trial was due to begin. They agreed the settlement terms but later disagreed about the form of order, including payment timing, release of security, confidentiality, the scope of the claims compromised and whether the claimant should release possible claims against the defendant’s employees and others.

The court was asked to resolve those disagreements and determine the appropriate order recording the settlement.

1. The defendant’s counter-offer, accepted orally by the claimant immediately before the hearing, remained open for acceptance and constituted the parties’ agreement. It was to be read as providing for payment in full and final settlement of all the claimant’s claims in the proceedings, including claims for damages, restitution and interest.
2. A reasonable time for payment was implicit in the agreement. Fourteen days was reasonable and could properly be included in the order.
3. Release of the security held in court followed administratively from the settlement and should be stated in the order for clarity.
4. Although confidentiality had not been expressly included in the accepted counter-offer, the short hearing confirmed that both parties acknowledged that the settlement would have the degree of confidentiality regularly found in a Tomlin order. If necessary, that acknowledgement amounted to a further agreement on confidentiality, with the settlement placed in a confidential annex.
5. The claimant had not agreed to release claims against the defendant’s employees or others. The defendant’s position was reasonable, but the proposed release was not part of the agreement and could not be recorded in the court’s order.
6. The defendant had indicated that any later proceedings might be challenged as an abuse of process. The court noted, by reference to Aldi Stores Ltd v WSP Group plc [2007] EWCA Civ 1260 and Otkritie Capital International Ltd v Threadneedle Asset Management Ltd [2015] EWHC 2329 (Comm), the possible relevance of whether claims against employees arising from the same facts should have been raised as a case-management issue in the existing proceedings. This was not necessary to determine the agreed settlement terms.
7. The order was to be made in the form provided to the parties with the judgment.