Settling Disputes: Settling "All Claims" Includes Unknown Claims Related To Fraud

• Published date: 27 January 2023
• Law Firm: Gowling WLG
• Author: Ms Catherine Naylor, Tom Cox, Christopher Richards and Alistair Connor

In a recent judgment, the Court of Appeal ruled that an agreement for the settlement of "all and any claims" extended to unknown claims based on dishonesty and fraud. This is despite the release failing to expressly refer to such claims. In dismissing the claimant's appeal, the Court emphasised that the usual principles of contractual construction apply to settlement agreements and reiterated that there is no rule of law that express words are required in order to release claims in fraud. In this update, we consider the implications of this ruling and the importance of carefully considering the drafting of such releases.

Background

In this case, the claimant company (MRL) purchased a collection of 71 classic cars valued at over '150 million. MRL purchased the cars with the intention of selling them on for a profit at auction. MRL financed the deal by borrowing '90 million from the first defendant. It was agreed that the cars would be sold via the third and second defendants, Bonhams auction house (Bonhams). In total, 25 cars remained unsold and '35 million remained outstanding under the facility agreement.

MRL claimed that the total amount raised was less than the assurances given by Bonhams and argued wrongdoing in the conduct of the auction. MRL wrote to Bonhams setting out its claim for in excess of '20 million for negligence and breach of contractual...