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Settlement: All for one and one for all
20 February 2013

The recent case of Gladman Commercial Properties (GCP) v Fisher Hargreaves Proctor and others (FHP) delivered in January 2013 serves as a useful reminder to both lawyers and surveyors of the difficulties they can encounter in their professional practices, and the need for a claimant to take particular care when considering a claim for damages against one or more of a number of potential defendants.

In this case GCP were property developers who exchanged contracts to buy a fire station and adjoining piece of land from Nottingham Fire Authority and Nottingham City Council. Subsequently they claimed to have been fraudulently mislead by the vendor authorities as to the planning potential of the property before they had committed to the contract and as a result refused to complete the transaction. The Fire Authority issued proceedings seeking specific performance of the sale contract whereupon GPC defended the claim and counterclaimed for damages for fraudulent misrepresentation against both authorities. In these proceedings they contended that the chartered surveyors who had jointly marketed the properties for sale as agents for the authorities had made false representations as to the planning potential of the properties in the sale particulars. Individuals from the surveyors’ firms were called to give evidence in the action which eventually settled half way through the trial. The settlement agreement provided that a payment made by Nottingham Council to GCP was to be in full and final settlement of all GCP’s claims of any nature that it had against the other parties in the action.

Shortly after settling the proceedings with the authorities GCP commenced a second action against the firms of surveyors who had acted as sale agents for the authorities and the individual surveyors who had worked for them and given evidence at the trial of the first action. Potentially, in the event of a trial judge accepting the allegations of fraudulent or negligent misrepresentation, substantial awards of damages could have been faced by the defendants. However, the surveyors applied for the claims to be struck out and summary judgment awarded in their favour on various grounds.

The judge hearing the application found in favour of the surveyors and dismissed the claims against them on two principal grounds. Firstly, he considered that the surveyors were joint tortfeasors together with the authorities who were parties in the first action and that under the normal common law rule, where there is a joint cause of action against two or more persons, a settlement of the claim against one of them will operate as a discharge of liability against all. This rule will not apply where either a settlement agreement is construed as a covenant not to sue a party or alternatively there is an express or implied reservation of the claimant’s right to sue another joint tortfeasor by separate action. The judge considered that neither of the qualifications were in the settlement agreement in this case and accordingly the surveyors had been released by the settlement agreement in the first action.

Secondly, he considered that the issue of proceedings against the surveyors in the second action, when they had been extensively involved as witnesses in the first action and had acted as the agents of the authorities, was an abuse of legal process pursuant to a principle originally laid down in a case called Henderson v Henderson. Under the principle deriving from this case the court has discretionary power to find that claims brought in a second set of proceedings should have been raised and dealt with in the original proceedings, and that the bringing of a second action amounts to an unjust harassment of the defendant. 

For more information about the issues in this article to find out more about how the Dispute Resolution team can help you please contact Mike Robinson on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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