High Court Highlights the Risk of a Settlement With One But Not All Defendants

19 January, 2016

The case of Vanden Recycling Limited v Tumulty and others [2015] EWHC 3616 acts as a reminder that in a claim against multiple defendants, care must be taken when a settlement can be reached with one (but not all) of the defendants so as to avoid the claim against the other defendants being compromised.

The Facts

Prior to the claim the first defendant, Ms Tumulty was an employee of Vanden Recycling Limited (Vanden).  Vanden claimed that during the course of Ms Tumulty’s employment she had supplied confidential information to Bolton Brothers Limited (Bolton) and Kras Recycling BV (Kras), who conspired to divert business away from Vanden. 

Vanden claimed that by providing this information Ms Tumulty was in breach of the terms of her employment and Bolton and Kras were jointly liable for inducing her to provide this information.

During the course of the proceedings Ms Tumulty admitted all the allegations of misconduct and Vanden was able to agree terms of settlement with Bolton and Ms Tumulty. The consent orders required Bolton to pay Kras damages of £176,000 in full and final settlement of the claims against Bolton and for the damages due from Ms Tumulty to be assessed.

Kras applied for the claim against it to be struck out as an abuse of the court’s process or alternatively for summary judgment to be entered in its favour on the basis that the claim against it had no real prospect of success.

Conclusion

The court granted Kras’ application for summary judgment. The claim was for the same tort and the parties were jointly liable for the loss suffered by Vanden.  As the court had entered judgment against Bolton (by way of a consent order) and this had been paid by Bolton, this had the effect of discharging the other defendants from their liability.

Practice Points

Care should be taken when settling a claim that involves more than one defendant. If a settlement can only be reached with one of the parties then the settlement agreement needs to be carefully worded so that the claimant may seek to continue the claim against the other defendants and avoid arguments of double recovery.