Parties bound by settlement agreed by lawyers over email (Bieber & Ors v Teathers (In Liquidation))

Parties bound by settlement agreed by lawyers over email (Bieber & Ors v Teathers (In Liquidation))

Dispute Resolution analysis:

On 11 December 2014, HHJ Pelling QC, sitting as a judge in the Chancery Division, held in the case of Beiber and others v Teathers Ltd (in liquidation) [2014] EWHC 4205 (Ch); [2014] All ER (D) 168 (Dec) that the parties had settled their litigation by an agreement contained in, or evidenced by, an exchange of emails between their solicitors. Although the settlement agreed by the parties contemplated that a Tomlin order would be filed at court, the judge found that settlement was not conditional upon the agreement of the terms of that order or the terms of a formal settlement agreement, ie. it was not 'subject to contract'.

Practical implications

As many of you will understand, negotiating the settlement of a dispute can be challenging and is rarely straightforward. In the heat of negotiations, it can be easy for both sides to focus attention on agreeing the settlement figure and to lose track of the important, and practical, matter of ensuring that the ancillary terms of the settlement are also agreed and, if appropriate, recorded accurately in a formal settlement agreement.

In many cases, such an approach won't result in any adverse consequences if the parties are able to agree any ancillary matters or formal documentation after agreement on the settlement figure has been reached. However, as this case clearly demonstrates, failure to be clear about the basis on which a settlement is 'agreed' may result in one party (at least) being bound by a settlement that they may not have intended.

To avoid uncertainty and the risk of being unintentionally bound by a settlement, it is crucial to expressly state if any agreement reached in respect of settlement is intended to be 'subject to contract'. In this case, the parties were found to have agreed to settle their dispute for £2m unconditionally, even though they were subsequently unable to agree to the terms of the settlement agreement

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.