Court of Appeal confirms claims excluded from the scope of a release clause (Bin Obaid and other companies v Al-Hezaimi and others)

Articles
02 Jul 2024

Bin Obaid and other companies v Al-Hezaimi and others [2024] EWCA Civ 612

Dispute Resolution analysis: The Court of Appeal has dismissed an appeal against a decision in which various claims were held to fall outside the scope of a release clause, notwithstanding that they had been included in the initial statement of case in the proceedings which had been compromised by the settlement deed in which the release clause was contained.

What are the practical implications of this case?

This decision of the Court of Appeal upholds and confirms an earlier helpful decision of Joanne Wicks KC (sitting as a Deputy High Court Judge) on the proper interpretation of a release clause in a settlement deed. No special principles of interpretation are to be applied when construing such clauses. It was a proper construction of the release clause for it to preserve the right to bring proceedings in another jurisdiction provided the claims did not overlap with those which had been released by the settlement agreement. The Court of Appeal was similarly content to adopt a narrow construction of the release clause such that claims which had originally been pleaded in a set of English proceedings fell outside the claims determined in those proceedings because they had subsequently been removed from the statement of case by amendment.

What was the background?

In June 2017, Mr Bin Obaid, applied for and obtained a worldwide freezing injunction, a proprietary injunction and issued proceedings against Dr Al-Hezaimi. Mr Bin Obaid alleged that a number of payments had been made by him and on his behalf to Dr Al-Hezaimi for the purpose of investing in English real property. Mr Bin Obaid claimed that various properties acquired thereafter and any rental income and surplus monies belonged to the Claimants beneficially. They sought declarations to that effect, an order requiring transfer of title, damages and/or equitable compensation, an order for an account, interest and further or other relief. By the time the claims came to trial, various proceedings had already commenced in Saudi Arabia between the Claimants and Defendants. During the course of the trial, a settlement agreement was made in the form of a deed in June 2019 and the trial concluded without judgment being given. On various dates in 2019, the First and Third Claimants issued eight sets of further proceedings in Saudi Arabia. There is a dispute between the parties as to whether the 2019 Saudi Proceedings remain live or are capable of being revived. However, in September 2020, the Claimants issued proceedings for a declaration as to whether the settlement deed had the effect of releasing claims in relation to various payments originally referred to in the Claimants’ 2017 pleadings but subsequently removed by amendment and, in the alternative, for rectification of the settlement deed so as to provide that claims relating to those payments were not released. The Defendants counterclaimed for a declaration that the claims in the 2019 Saudi Proceedings were settled by the settlement deed and for indemnities, injunctions and damages for breach of the deed. On 4 October 2022, Joanne Wicks KC, sitting as a Deputy High Court Judge concluded that on a true construction the settlement deed did not settle, release or waive the claims that various payments made were loans to Dr Al-Hezaimi. Mr Al-Hezaimi appealed.

What did the court decide?

The appeal was dismissed. Lord Justice Nugee, in a judgment with which the other Judges agreed, rejected each of the three arguments advanced by counsel for Mr Al-Hezaimi on his behalf that the disputed payments were settled by the settlement deed. As the Judge below had found, the relevant clause in the settlement deed was not a general release. It was expressly intended to settle only certain of the claims which existed or might exist between the parties. It was confined to claims arising out of or in connection with the claims made in the 2017 proceedings, brought in England and Wales. This intentionally carved out a right to pursue other litigation in Saudi Arabia, provided those claims did not overlap. The so-called ‘deleted payments’ had originally been included within the statements of case in the 2017 proceedings. However, when the statements of case had been amended, those payments had effectively been taken out of the scope of the 2017 proceedings. Accordingly, the Judge below was right in finding that the settlement deed had not compromised claims based on those payments.

Case details

  • Court: Court of Appeal, Civil Division
  • Judges: Lord Justice Nugee, Lady Justice Elisabeth Laing and Lord Justice Snowden
  • Date of judgment: 7 June 2024

Article by Phillip Patterson, originally published by LexisNexis.

Author

Phillip Patterson

Call: 2008

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