STEPHEN KINDRED & ORS. v CHRISTOPHER WARHURST & ORS.

A settlement agreement containing a full and final release and covenant not to sue may justify striking out claims within its scope as an abuse of process. A claimant who pleads the agreement but does not identify any recognised ground for challenging its validity cannot defer that challenge until a defence to a counterclaim. The court may strike out the existing pleading while allowing claims arising after the settlement, or outside its scope, to continue if they can be properly particularised. A diffuse pleading should not be struck out where it contains the central allegations supporting an arguable claim.

The defendants applied to strike out claims concerning the ownership and management of a yacht. The second to fourth defendants relied on a Release and Settlement Agreement dated 13 April 2021, while the first defendant relied on having sold his share in the yacht and sought removal as a defendant under CPR 19.4.

The claimants disputed the effect of the settlement and advanced claims concerning legal and beneficial ownership, trusteeship, alleged wrongdoing, injunctive relief and defamation. The court had to determine which claims were released, whether the pleading was abusive or disclosed reasonable grounds, and whether the remaining allegations should proceed after re-pleading.

1. Applications and effect of the settlement. The existing Particulars of Claim were struck out, but the proceedings were not ended. The settlement agreement was immediately binding on signature and released claims arising from the dispute concerning the yacht, its underlying facts and related inconvenience. Only claims arising from the settlement itself, including the alleged unilateral notice concerning the claimants’ residential property, survived. The first defendant’s sale of his beneficial share also required the claim for declaratory relief to be amended.
2. Abuse of process. The first and second claimants were parties to the settlement and had not pleaded duress, undue influence, invalidity or any other recognised ground for setting it aside. They could not resist strike-out by saying that they would disclose their challenge only in a defence to a future counterclaim. The settlement could therefore be deployed on the application under CPR 3.4(2)(b). The claims advanced in unexplained repudiation of the agreement were vexatious or ill-founded within paragraph 1.5 of Practice Direction 3A.
3. Reasonable grounds. The court noted that failure to address the validity of an agreement which apparently precluded the pleaded claims might also engage CPR 3.4(2)(a). However, the admissibility of evidence of the settlement on that ground alone, absent an application for summary judgment under CPR 24.2, was not finally determined.
4. Remaining claims. Applying the approach in Ardila Investments v ENRC, a diffuse pleading should not be rejected if it contains the central allegations supporting an arguable claim. The third claimant’s trust and ownership claims, and the alleged post-settlement breaches, required substantial clarification but were not summarily determined. The defamation claim also required proper pleading and could not be dismissed on the limited submissions made.
5. The claimants were required to serve completely re-vamped Particulars of Claim identifying the surviving claims, the relevant dates, alleged culpability and the relief sought.