Adnan Omanovic v Shamaazi Ltd & Anor

The fact or amount of a settlement by other claimants does not ordinarily establish the merits of a remaining claimant’s different claim, or imply that a previously pleaded defence was dishonest. Settlement terms should generally remain undisclosed to the trial judge unless there is a close nexus with a decision the court must make, such as preventing double recovery or calibrating damages after an apportionment. Even where settlement evidence may be relevant, the court may exclude it under Civil Procedure Rules 1998, rule 32.1, particularly where disclosure would create unfair cross-examination difficulties, engage legal professional privilege, cause prejudice, and undermine the policy of encouraging settlements.

The claimant pursued contractual and tortious claims against the defendants concerning an alleged promise of equity in a company operating the MyTenNights charitable-donation project. Two other claimants had brought related but materially different claims against the defendants. Their claims were compromised shortly before trial, leaving the claimant as the sole remaining claimant.

The claimant sought to adduce evidence of both the fact and quantum of those settlements. He argued that the amounts were inconsistent with the defence, supported an inference that contracts existed, and impaired the second defendant’s credibility. The defendants applied to exclude the evidence as irrelevant or under rule 32.1 CPR. The central issue was whether the settlements could properly be used against the remaining claimant’s claim.

1. Application allowed. The evidence of the fact and quantum of the settlements was excluded.
2. The claims of the other claimants were materially different from the claimant’s claim. Settlement could have resulted from many reasons and did not amount to proof or admission of those claims. Nor did settlement, without more, imply that the defendants had dishonestly defended them or that the defence of the claimant’s claim was dishonest.
3. The relevant evidence was the evidence concerning the formation and operation of MyTenNights, what was agreed, and the legal consequences of those matters. The quantum of settlements was not relevant merely because a larger payment might appear inconsistent with a denial of liability.
4. The approach in Gnitrow Limited v Cape Plc [2000] 1 WLR 2327 was confined to circumstances where settlement information had a close nexus with a decision the court had to make. In that case, disclosure was relevant to prevent over-recovery after the court apportioned responsibility and assessed damages. Absent such a nexus, settlement terms should preferably not be disclosed to the trial judge.
5. Even if the settlement evidence had been relevant, it would have been excluded under rule 32.1 CPR. Admission would expose the second defendant to cross-examination about reasons for settlement, while those reasons might be protected by legal professional privilege. It would also create unfair prejudice and undermine the policy of encouraging settlement.