Abdullah Nasser Bin Obaid & Ors v Khalid Abdullah Al-Hezaimi & Ors

A settlement deed ordinarily settles the disputes identified by the claims, counterclaims and defences in the litigation, together with genuinely connected claims. It does not ordinarily settle every matter mentioned as background, explored on credibility, or raised in cross-examination.

A claim removed from the pleadings is no longer in issue. Its removal does not itself amount to irrevocable abandonment. The scope of a release depends on the deed as a whole, including its recitals and operative provisions.

The claimants had brought English High Court proceedings alleging that funds transferred to the first defendant had been misapplied in acquiring English property. The proceedings were settled at trial by a deed allocating specified properties and cash and releasing Claims defined by reference to the English proceedings.

The claimants later brought eight Saudi proceedings seeking repayment of particular transfers as loans. Most had been pleaded in the original English claim but deleted from the amended pleading; one had never been pleaded. The High Court held that the loan claims were not released: [2022] EWHC 2460 (Ch). The appeal concerned the proper scope of the contractual release.

Appeal dismissed. Lord Justice Nugee delivered the leading judgment. Lady Justice Elisabeth Laing and Lord Justice Snowden agreed.

1. The Settlement Deed was to be construed according to ordinary contractual principles: the question was how a reasonable objective reader, equipped with the background knowledge reasonably available to the parties, would understand the language used. The recitals and operative provisions indicated a conventional settlement of identified disputes concerning specified English properties and related cash.
2. The definition of Claim settled claims arising out of or connected with the matters litigated in the 2017 proceedings. Those matters were identified by the claims, counterclaims and defences advanced, rather than by every matter mentioned during the proceedings or forming part of the parties’ wider relationship. The observation in Bank of Credit and Commercial International SA v Ali [2001] UKHL 8; [2002] 1 AC 251 concerning a general release did not assist because this was a release of particular claims.
3. The deleted payments had been removed from the amended pleadings. They were not the subject of any surviving claim, counterclaim or defence. Their original inclusion did not make them matters litigated at the time of settlement. The court applied the reasoning in Libyan Investment Authority v King [2020] EWCA Civ 1690; [2021] 1 WLR 2659. Deletion also did not amount to irrevocable abandonment, subject to the usual permission and abuse-of-process controls.
4. Matters relevant only to credibility, collateral matters and the wider relationship between the parties remained background matters. They did not become the subject-matter of the litigation merely because they were explored in cross-examination or assisted the court in assessing the pleaded claims. The pleading distinction between material facts and background material was supported by Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405 (Comm).
5. The discharge application required consideration of the claimants’ conduct in making the without-notice application and their duty of full and frank disclosure, not determination of the true purpose of the deleted payments. The principles summarised in Tugushev v Orlov [2019] EWHC 2031 (Comm) were applied. Settlement of costs and any claim under the cross-undertaking did not release every claim relating to those payments.
6. Claims in the Saudi proceedings that the deleted payments were loans therefore did not arise out of or connect with the 2017 proceedings and were not released. The appeal was dismissed. The High Court’s order was upheld subject to removing the reference to the January 2015 missing payment, since the respondents accepted that claims concerning it had been released.

1. Court of Appeal (Civil Division) dismissed the appeal and made a minor amendment to the High Court’s order.
2. High Court of Justice, Chancery Division, Deputy High Court Judge Wicks KC, granted declarations concerning the scope of the Settlement Deed in [2022] EWHC 2460 (Ch).