#10318 - Recording Settlements - BPC Alternative Dispute Resolution

RECORDING THE SETTLEMENT

During the ADR process

• make sure clear on instructions as to bottom line and objectives

• take detailed notes

• make sure clear where agreement conditional on client approval

• remember: client ownership - whether and at what level to settle up to client best to have client present

Who needs to be informed of settlement?

• client

  • clearly explain in writing to allow to understand details of agreement and regulate behaviour

  • obtain client consent (if agreement subject to consent)

• only if proceedings have started the court (see below)

How to record

• contractual principles apply to settlement agreement

1. when reach settlement = oral contract

2. write up agreed terms in fresh document, get parties to endorse

3. record the settlement (may be one or more):

   1. contract / deed signed by both parties

   2. exchange of letters

   3. if proceedings issued + interim app interim order if relates to terms of interim app, so can take to judge for approval

   4. if proceedings issued consent order - terms recorded in court order by judge

   5. endorsement on briefs by both clients and both counsel - if agreement is simple; NOT suitable if terms subject to client approval (N.B. endorsement is evidence of an oral agreement, NOT a contract in itself - only between client and counsel don't rely on)

Where proceedings have been issued

• MUST discontinue proceedings + inform court - several actions result in discontinuance:

1. judge makes order in terms agreed through consent / Tomlin order

2. C files notice of discontinuance (only C can do so)

   1. costs consequences: C pays D's costs (unless CPR says otherwise)

   2. with court's permission, C can commence fresh proceedings re: same claim

3. C requests that judge make order dismissing claim (= formal court decision that case should not proceed)

4. judge stays proceedings

• consent order

  • order made by court on terms agreed between parties

  • must be expressed as being 'by consent'

  • must be signed by legal representatives for both parties

  • should cover costs; if no term as to costs, each party bears own

  • enforceable within existing proceedings without need to start new claim to enforce separate contract

• Tomlin order (type of consent order which keeps terms confidential)

1. order (public + subject to CPR)

   • must state

   1. further proceedings in claim to be stayed, except for purpose of carrying out terms of the compromise (in schedule)

   2. each party has liberty to apply to court to compel compliance with terms

   3. direction for payment + assessment of costs if amount not agreed / payment of money out of court (require involvement of the court)

2. schedule (confidential + subject to rules of contract)

   • contains terms of settlement agreement

   • parties can include provisions beyond limits of what court has jurisdiction to order e.g. ongoing relationships

   • suited to long + complex terms, as can be worded flexibly

   • effect of breach / enforcement:

     • wronged party can ask court to:

     1. lift stay

     2. restore proceedings

     3. make further order to compel party in breach to comply with terms of agreement (non-compliance = contempt of court specific performance by back door)

• informing the court of settlement

  • must do so, even if no consent order

  • solicitor usually does, unless at court door, in which case counsel tells judge

  • file order giving effect to settlement with listing offer

  • refund of fees based on when court informed

    • 7 - 14 days before trial - 50%

    • 15 - 28 days before trial - 75%

    • 28+ days before trial - 100%

Enforcement where there is NO court order

• usually where proceedings (litigation OR arbitration) NOT issued

• settlement agreement (contract) merges old dispute with compromise

• parties can sue on agreement for breach of contract

Drafting the settlement

• "Full and final settlement"

  • if used, whole dispute replaced by terms of compromise can no longer be litigated; difficult to obtain court order rectifying agreement

  • if NOT used, may be unclear if dispute fully settled party may commence proceedings

  • if wish to preserve right to sue on other causes of action, expressly state in settlement agreement

• terms comprehensive, accurate, clear, unambiguous - very hard to argue additional oral term incorporated

• practical details e.g. dates

• terms enforceable e.g. if bind third party, make sure agree to...