Court of Appeal overturns decision to decline undertakings given following the acceptance of a Part 36 offer (Smith v Backhouse)

30 Aug 2023

Dispute Resolution analysis: The Court of Appeal has reversed a decision by Mr Justice Nicklin not to accept various undertakings offered to the Court as part of the settlement reached following a Part 36 offer. The fact that such undertakings were broad in scope was not sufficient reason for the Court not to accept them.

Smith v Backhouse [2023] EWCA Civ 874

What are the practical implications of this case?

This is an interesting judgment in relation to two matters. First, it offers some useful analysis of what undertakings given in lieu of an injunction are and the extent to which a Court is bound to accept them. Whilst the Court is under no obligation to accept undertakings offered, it cannot decline to accept the, simply because their scope is broad and that there may be future disputes (requiring Court time to be allocated) in relation to whether ostensibly lawful conduct has breached them. The Court should instead consider whether the undertakings are illegal, immoral or equivocal. If they are not, the Court should be slow to conclude that those undertakings should not be accepted. Second, it confirms that Courts should be very reluctant to prevent the operation of a binding settlement which disposes of litigation. Whilst the Court may entertain some concerns about the feasibility or fairness of the settlement, in circumstances where both parties are legally represented, the Court should be slow to interfere with or prevent the completion of the terms of settlement.

What was the background?

Dr Smith, a physicist who worked at a facility called Fermilab, issued proceedings against Dr Backhouse, a colleague. The claim alleged that Dr Backhouse had conducted a prolonged campaign against her, including the making of various threats and the transmission of malicious images online. Dr Smith sent a Part 36 offer shortly after the claim was issued in which she indicated that she would accept a monetary sum in compensation plus the provision of signed undertakings to the Court within 14 days. That offer came to be accepted by Dr Backhouse and by way of a proposed consent order, Dr Backhouse gave the undertakings which formed the agreement contained in the Part 36 offer. The consent order accurately reflected the terms of the Part 36 offer. The undertakings were eight in number and the parties were both legally represented at the time of both the Part 36 offer being accepted and the consent order being drafted. The Court accepted the fourth to eighth undertakings included but declined to accept the first, second and third undertakings. The Court reasoned that the first three undertakings were too broadly drafted and gave rise to a potential for hard-fought litigation as part of future contempt proceedings. Dr Smith appealed.

What did the court decide?

Subject to one caveat, the appeal was allowed. It was correct that a Court is not bound to accept undertakings, even where those undertakings are offered as a result of the terms of a binding settlement agreement. The Court of Appeal set out some general principles to apply in such circumstances. (1) there can be no dispute that an injunction is a discretionary remedy which will be granted where it is just to do so and that the court should be slow to make an order which it would not be willing to enforce. (2) the circumstances in which an injunction might be refused are not closed and will turn on the particular facts of the case. (3) as a matter of general principle, an injunction must be expressed in unambiguous language so that the defendant knows exactly what is forbidden or required by the order and so that the injunction will be enforceable, if necessary, by means of contempt proceedings. (4) an undertaking is a very serious matter with serious consequences the breach of which can lead to a fine or imprisonment. It should be recorded in writing in full and clear terms and although there may be room for argument as to its interpretation, the circumstances in which such arguments can be raised should be kept to a minimum. (5) A Court should be way about accepting undertakings in lieu of an injunction in terms which it would have been hesitant about ordering by way of injunctive relief itself. On the facts of this case, the Judge had erred in focusing too much on the breadth of the undertakings and the issues which might arise on enforcing them. The proper approach should have been to ask whether the undertakings were illegal, immoral or equivocal. He should have concluded that they were not and it should have followed from that conclusion that the Court should have been very slow indeed to refuse to accept them, forming as they did part of a binding settlement. The only caveat expressed by the Court of Appeal was that one of the undertakings had the potential to prevent Dr Backhouse from citing any academic paper produced by Dr Smith in any publication of his own. That was restrictive and disproportionate in the circumstances and so a proviso was added to the undertakings to make plain that such citation would not constitute a breach.

Case details

  • Court: Court of Appeal, Civil Division
  • Judges: Lady Justice Asplin, Lord Justice Arnold and Lord Justice Warby
  • Date of judgment: 21 July 2023

Article by Phillip Patterson – first published by LexisNexis


Phillip Patterson

Call: 2008


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