Settlement Deed Fails To Release Claims Brought In Subsequent Foreign Proceedings (Abdullah Nasser Bin Obaid And Ors V Khalid Abdullah Al-Hezaimi And Ors)

• Published date: 27 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Gatehouse Chambers
• Author: Mr Phillip Patterson

Dispute Resolution analysis: The Court has ruled that various payments pleaded before being deleted on amendment fell outside the scope of a subsequent settlement deed and release. The release clause would not have been rectified had it been construed in the alternative.

Abdullah Nasser Bin Obaid and ors v Khalid Abdullah Al-Hezaimi and ors [2022] EWHC 2460 (Ch)

What are the practical implications of this case?

This is an interesting case in relation both to the proper interpretation of a release clause in a settlement deed and in relation to the circumstances in which rectification of such clauses are required on the grounds of common or unilateral mistake. It confirms existing authorities that no special principles of interpretation are to be applied when construing such clauses. Where common mistake is claimed, it is necessary to show an actual common intention (as opposed to an objective intention as would be perceived by a reasonable person observing the parties' communications) and this is a demanding test which affords appropriate respect to the primacy of the final, agreed written terms of a contract. Convincing proof is needed before rectification may be considered on this basis. Where unilateral mistake is claimed, the relevant mistake must be made by the true decision-maker and not simply a negotiator. The Court cited with approval the principles set out in FHSC Group Holdings Ltd v GLAS Trust Corporation Ltd [2020] Ch. 365 and Global Display Solutions Ltd v Financial Solutions Group Ltd [2021] EWHC 1119 (Ch) in relation to the state of mind required of the contractual party who opposes rectification and the broader principles applicable to a plea of unilateral mistake.

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...