Abdullah Nasser Bin Obaid & Ors v RLS Solicitors Limited t/a RLS Law

A settlement release is construed objectively, having regard to its purpose and the factual matrix. Prior negotiations and subjective intentions are inadmissible to establish contractual meaning, although they may be relevant to matters such as rectification or estoppel. Where a settlement deed releases claims against parties and their respective affiliates, the release operates party by party unless the wording indicates otherwise. An affiliate who is connected with more than one party is not released only in a particular capacity. A claim is within a release covering claims arising out of or in connection with earlier proceedings where it is based on the same underlying facts and seeks losses, including costs, connected with those proceedings. A clear issue of contractual construction may be resolved summarily where the parties have had a proper opportunity to address it.

The claimants brought professional negligence and equitable compensation claims against their former solicitors. The defendant applied under CPR rule 3.4(2)(a) and CPR rule 24.2 to strike out or obtain summary judgment, relying on a release in a Settlement Deed that had compromised earlier proceedings between the claimants and the KAH Parties.

The Settlement Deed released claims against the other parties and their affiliates. The central issues were whether the defendant was an affiliate, whether the release operated only between the two groups involved in the earlier litigation, and whether the present claims arose out of or in connection with those proceedings.

The court also considered the relevance of earlier decisions concerning the Settlement Deed, including [2022] EWHC 2460 (Ch) and [2020] EWHC 1564 (Ch).

1. Construction. The Settlement Deed had to be construed objectively, by attributing to its words the meaning reasonably arising from the purpose of the contract and the circumstances in which it was made. Evidence of the parties’ negotiations and subjective intentions was inadmissible on construction because the factual matrix was not disputed and the evidence was speculative and subjective.
2. The grouping of parties into the ANBO Parties and KAH Parties applied only where the deed used those defined expressions. Clause 4 did not use that grouping. It therefore operated party by party and released claims against each other party and that party’s affiliates.
3. The word “respective” was given operative effect by aligning each party with its own affiliates. It did not confine the release of an affiliate to claims concerning that affiliate’s activities for another party. The defendant was an affiliate of OFY, Latifah and Oh-Na, and the release was not limited by the capacity in which it had acted.
4. The present claims fell within the definition of “Claim”. They arose out of or in connection with the earlier proceedings because they concerned the same underlying transactions and alleged fraud, and included the costs of investigating and prosecuting those proceedings. Allowing the claim to proceed would create a risk of contribution claims against the KAH Parties for liabilities released by the Settlement Deed.
5. The Particulars of Claim disclosed no reasonable grounds for bringing the claim. The claim was struck out under CPR rule 3.4(2)(a). Alternatively, summary judgment was entered for the defendant under CPR rule 24.2, since the issue was a short point of construction, the necessary evidence was before the court, and the claimants had no real prospect of success.