Tchenguiz & Ors v Grant Thornton UK Llp & Ors

A settlement release may compromise unknown claims, including claims alleging misconduct or deliberate wrongdoing, where the contractual language, read objectively and in context, sufficiently identifies the relevant subject area. Express reference to unknown claims is significant. A release directed specifically to investigations by authorities and the provision of information to them may extend to claims concerning the conduct of that investigation, even without expressly mentioning fraud or illegality.

A qualification preserving claims arising after the agreement does not save later effects or later descriptions of earlier conduct where the essential alleged acts occurred before execution. The sharp-practice principle applicable to general releases does not necessarily apply to a release specifically directed to the relevant subject matter.

The claimants sought to pursue conspiracy, malicious procurement and execution of search warrants, and malicious prosecution claims against the fifth defendant. The claims arose from an investigation by the Serious Fraud Office and related events occurring before a settlement agreement was executed.

The fifth defendant was not a party to the settlement agreement but relied on it as a third party under the Contracts (Rights of Third Parties) Act 1999. The agreement released claims concerning specified disputes, including investigations by authorities and the provision of documents or information to authorities. The application required the court to determine whether the releases covered unknown claims, claims alleging wrongdoing, later events and alleged sharp practice, and whether the claims of the non-party claimant could proceed.

1. Summary judgment. The court could determine the application summarily because the issue turned on the construction and effect of the settlement agreement and did not ultimately depend on contested facts or documents held by the SFO.

2. Construction of the release. Applying the approach in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251; [2001] UKHL 8 and Satyam Computer Services Ltd v Upaid Systems Ltd [2008] 2 CLC 864; [2008] EWCA Civ 487, the agreement had to be construed objectively, as a whole and in context. Parties may release unknown claims if sufficiently clear language is used. The requirement for express words in relation to fraud-based claims was satisfied here by the specific subject-matter drafting, rather than by an express reference to fraud.

3. The references to investigations or actions by any authorities and to the provision of documents or information to any authority objectively included the SFO investigation. In context, claims alleging misconduct or deliberate wrongdoing in that investigation were within the released subject area. The reference to unknown claims reinforced that conclusion. The court also relied on the parties’ control over contractual language, as explained in Arnold v Britton [2015] AC 1619; [2015] UKSC 36.

4. The qualification concerning acts or facts arising after execution did not preserve the claims. The essential alleged conduct occurred before execution. Later effects, later descriptions of earlier matters and failures to correct earlier matters did not create claims outside the release.

5. The alleged sharp practice argument failed. The release was not equivalent to the general release considered in Bank of Credit and Commerce International SA v Ali. It specifically addressed investigations and the provision of information to authorities. The illegality argument also failed because reliance on the settlement as a compromise of claims alleging illegal conduct did not involve reliance on an illegal agreement, object or performance.

6. CBG was not a party to the settlement agreement. Nevertheless, the claimants failed to show an arguable basis for CBG’s alleged loss or conspiracy claim. Summary judgment was therefore entered for Mr Johannsson, including appropriate declarations concerning the indemnities in clause 9.