Frank Schrijver UK Ltd & Anor v Smart Dry Intl Ltd & Ors

A party alleging breach of a confidential settlement agreement must prove the particular breach on the evidence. Contractual obligations are construed according to their terms, including any express exceptions, rebranding periods and remedial provisions. A breach is not established by conduct that falls within an agreed carve-out, by a failure caused by the claimant’s own omission, or by materials that the defendant did not distribute or control.

Damages for breach of contract require proof of loss caused by the breach. Unsupported assertions that a fall in turnover resulted from the alleged breach are insufficient, particularly where competing explanations are established. The claim was dismissed because none of the alleged breaches or resulting loss was proved.

The claimants sought to enforce a Confidential Settlement Agreement concluded after earlier trade mark and passing-off proceedings had been compromised. They alleged seven remaining breaches concerning keyword advertising, website redirection, marketing brochures, branded bricks, responsibility for pre-settlement installations and online customer reviews.

The defendants denied liability, relied on the agreement’s express terms and exceptions, and contended that any breach had caused no recoverable loss. The court determined the allegations after a remote trial involving factual and witness evidence. The central issues were whether the defendants had breached the agreement and, if so, whether the claimants had established causative financial loss.

1. Claim dismissed. The claimants established none of the alleged breaches of the Confidential Settlement Agreement and no resulting damage or loss.
2. The court construed the agreement according to its wording. The obligation to remove or destroy branded material did not require destruction of every pre-settlement brick, provided the prohibited wording and logo were obliterated. The defendants were also entitled to communicate the material terms of the agreement to employees and contractors without disclosing written copies, because of the strict confidentiality provisions.
3. The alleged keyword breach was not made out. The defendants had instructed their marketing agency not to bid on the relevant keywords, had not withdrawn that instruction, and the later advertising resulted from an accidental process which was promptly stopped.
4. The website allegation failed because the claimants had not notified the defendants of the replacement domain until October 2018. The defendants then promptly updated the redirection link.
5. The brochure, branded-brick and installation allegations failed principally on the evidence. The court preferred the defendants’ witnesses and found that the non-compliant brochure had been withdrawn and destroyed, the displayed and installed bricks were not proved to bear visible prohibited marks, and the alleged evidence had been contrived or was unreliable.
6. The pre-settlement installation allegation also failed. The defendants had sent a rebranding letter and had responded to the customer’s later telephone call. The customer’s continuing confusion resulted from failure to receive or follow up the letter and was compounded by the claimants’ own conduct.
7. The customer-review allegation failed. The defendants were not themselves using the prohibited name in third-party reviews and were not required to cancel their membership of the review scheme when the website operator had said that removal or alteration was unavailable.
8. Even if breaches had been established, causation and loss were not proved. The accountant’s assertion linking reduced turnover to the defendants’ conduct lacked supporting analysis. Other explanations included the claimant’s own competing business and stress-related difficulties. The defendants were awarded indemnity costs, with £90,000 paid on account, and permission to appeal was refused.

First-instance decision. The court refused permission to appeal, recording that any appeal would require permission from the Court of Appeal.