England and Wales High Court (Chancery Division) Decisions

Heaton; Cheetham and Taylor v. AXA Equity & Law Life Assurance Society Plc and AXA Equity & Law Unit Trust Managers Ltd [1999] EWHC Ch 229 (27th May, 1999)

Before: THE HON. MR. JUSTICE LADDIE

B E T W E E N

Mr. Jonathan Hirst Q.C. and Mr. Dominic Chambers instructed by Pinsent Curtis for the Defendants
Mr. Leslie Kosmin Q.C. and Mr. Andrew Tabachnik instructed by M&S Solicitors Limited for the Claimants

Hearing dates: 26 - 27 May, 1999

DATED: 8 July, 1999

Mr. Justice Laddie:

1. David Edgar Heaton, Robert Cheetham and Jack Taylor ("the Claimants") were directors of and shareholders in a company called Glyne Investments Limited ("Glyne"). It traded under the name "Inter City" as agents and representatives in the sale of investment products. Until 29 April 1988, Glyne was an agent of Target Life Assurance Limited ("Target"). Between that date and 4 July 1991, Glyne was an agent of National Financial Management Corporation Plc ("NFMC"), a member of the same group as Target. At the end of June 1991, Target and NFMC closed for new business and a joint marketing group was established between Target and the defendants in this action ("Equity & Law").
2. By a written agreement dated 4 July 1991 ("the Target Agreement"), Glyne was made an Appointed Representative of Target with a view to enabling its representatives to continue to service Target/NFMC clients. On the same date by another written agreement ("the Equity & Law Agreement"), Glyne was made an Appointed Representative of Equity & Law, selling Equity & Law's financial products to members of the public. Target summarily terminated the Target Agreement on 29 January 1993, on the grounds, inter alia, that Glyne had been engaged in conduct prejudicial to the business of Target. The justification for this action was an allegation by Target that Glyne had been engaged in "churning" business. Equity & Law summarily terminated the Equity & Law Agreement on 8 February 1993. These actions caused great damage to both Glyne and the Claimants personally.
3. By Writ issued on 1 March 1993, Glyne sued Target ("the Target Action") claiming damages for breach of contract in respect of the alleged unlawful termination of the Target Agreement by Target on 29 January 1993. The scope of the allegations made and the heads of damage sought in those proceedings will be considered in some detail below. It is sufficient at this stage to note that Glyne alleged that it was that termination and the accusations of churning by Target which in turn had caused Equity and Law to terminate the Equity & Law Agreement and that the damages sought by it in the Target Action included damages flowing from Equity & Law's termination of its agreement. Glyne also claimed unpaid commissions owed by Target.
4. On 18 July 1996 Glyne went into liquidation and, by assignment dated 18 July 1996, Glyne, acting by its liquidator, assigned absolutely to the Claimants all of Glyne's rights of action against Target in connection with the termination of the Target Agreement and against Equity & Law in connection with the termination of the Equity & Law Agreement. It should be noted that although at that date proceedings had been brought against Target, none had been commenced against Equity & Law. In November 1993, Equity & Law had commenced proceedings against Glyne and the Claimants for the repayment of £25,000 advance commissions. In correspondence in 1993, solicitors acting for the defendants in that action asserted that their clients were entitled to a set off and had a substantial counterclaim arising out of the termination of the Equity & Law Agreement. In fact no defence and counterclaim were served. Equity & Law obtained judgment in default of defence in December 1993 but this appears to have been obtained in error and in breach of an agreement between the parties allowing further time for the service of a defence. Save in this respect, the case has remained effectively dormant. On 29 July 1996, Maurice Kay J ordered that Glyne cease to be a plaintiff in the Target Action and that the Target Action thereafter be carried on by the Claimants as assignees against Target.
5. In June 1997, a number of preliminary issues were tried by Moses J. in the Target Action. It is not in dispute that those proceedings went badly for Target. On the tenth day of the hearing, Target withdrew its allegations of systematic churning and serious misconduct. Target effectively conceded liability and was ordered to pay costs on an indemnity basis.
6. On 3 February 1998 the Claimants' solicitors sent a draft Statement of Claim to Target's solicitors pleading further claims against Target in connection with the termination of the Target Agreement ("the Draft Second Target Statement of Claim"). These claims were advanced by the Claimants both as assignees of Glyne and in their own right. The Draft Second Target Statement of Claim concerned claims by the Claimants, acting both in their own right and as assignees of Glyne's rights, for damages in tort and for breach of contract in connection with the preparation and publication by Target of reports and references concerning Glyne and the individual Claimants after the termination of the Target Agreement.
7. The Target Action and the proceedings threatened on the back of the Draft Second Target Statement of Claim were settled on the terms set out in a written agreement ("the Settlement Agreement") for the sum of £10 million which has been duly paid by or on behalf of Target. The Settlement Agreement was contained within an order of the court dated 23 April 1998 which brought the Target Action to an end. The parties to the Settlement Agreement were each of the Claimants in the present proceedings, together with their companies, Glyne and Abbey Life Assurance Company Limited ("Abbey Life") which by then had assumed the relevant assets and liabilities of Target. Equity & Law was neither a party to the Settlement Agreement nor was it made a party for the purpose of the court order of 23 April.

The current proceedings

8. On 23 November 1998, the Claimants issued the writ in these proceedings, which are brought in their personal capacities and as assignees of Glyne. In it they claim that on 8 February 1993 Equity & Law wrongly and in breach of contract terminated the Equity & Law Agreement. In addition, the Claimants assert that after the termination of the Equity & Law Agreement, Equity & Law (in breach of contractual and tortious duties allegedly owed to them personally and to Glyne) gave false and untrue reports and references in respect of each of Glyne and the Claimants. On 27 January 1999, Equity & Law issued Third Party proceedings claiming a contribution against Abbey Life because it had by then assumed the relevant assets and liabilities of Target.
9. On 26 April 1999 pursuant to CPR Rule 3.1(2)(i) and on the application of Equity & Law, Master Bragge ordered the following preliminary issue to be tried by a judge of the High Court:

"What is the consequence for the Plaintiffs' claims in these proceedings of the settlement agreement contained within the Order dated 23 April 1998 in the High Court Queen's Bench Division action number 1993 G. No. 610 and made between the Plaintiffs and Abbey Life Assurance Limited and satisfied by payment of £10 million paid thereunder."

10. The Defendants, represented by Mr. Jonathan Hirst Q.C., argue that the effect of the Settlement Agreement is to extinguish the Claimants' claims against Equity & Law and to prevent them from pursuing this action. They invite me to dismiss these proceedings. This outcome is said to flow from a recent decision of the House of Lords; Jameson v. Central Electricity Generating Board [1999] 2 WLR 141.
11. The Claimants, represented by Mr. Leslie Kosmin Q.C., say that the defendants' argument is misconceived. In substance they argue that, when properly construed, the Settlement Agreement was not intended to and did not give Equity & Law immunity from suit and that Jameson has no application to the facts of this case. Further, they argue that if the defendants' argument prevails it will have presented them with a windfall. They will get away without having to pay a penny of compensation for the harm they have inflicted on the Claimants. This unexpected bonus to Equity & Law is matched by injustice to the Claimants because, unlike Target, Equity & Law has neither retracted or apologised for the allegations of churning and has not undertaken to desist from making such allegations in the future. Furthermore the Claimants will be deprived of the opportunity to raise the set off and counterclaim to Equity & Law's dormant advance commission claim.
12. Abbey Life were not represented before me and no submissions were advanced on their behalf.
13. I will consider the parties' respective arguments in greater detail below, but both sides accept that their arguments are dependent on or affected by what actual or potential litigation was compromised by the Settlement Agreement. Therefore each relies upon or accepts that its arguments have to be set against the background of what was in issue in the Target proceedings and would have been in issue if the Draft Second Target Statement of Claim had progressed to proceedings.

The Target Proceedings (1993 G. No. 610).

14. The introductory paragraphs in the Re-Re-Amended Statement of Claim set out the engagement of Glyne by Target, NFMC and then by Equity & Law. It is alleged that Equity & Law agreed to buy all the relevant Target and NFMC business and that was given effect to in early 1991. Equity & Law was to take over Target's and NFMC's agents and representatives. Paragraph 11 of the pleading states that by the Equity & Law Agreement, Equity & Law appointed Glyne as its appointed representative. That agreement contained certain provisions, including Clause 8.1.2, allowing Equity & Law to terminate forthwith in certain defined circumstances. Paragraph 12 of the pleading states that on the same day the Target Agreement was entered into between Target, NFMC and Glyne to replace the previous agreements between those parties. It was in short form, incorporating essentially all the terms of the Equity & Law Agreement as if they had been set out in full, the only differences of note being the identities of the contracting parties. Paragraph 22 asserts that on 29 January 1993, Target wrongfully purported to terminate the Target Agreement alleging that Glyne had engaged in prejudicial conduct and that it, Target, was of the view that Glyne;

"... was in breach of the terms of Schedule 2 of the Equity & Law Agreement in that inter alia it had failed to comply with LAUTRO regulations and had used sales techniques which in the opinion of [Target] brought into disrepute the name and goodwill of [Target]"

15. Paragraphs 23 to 26 allege that Target wrongfully withheld certain payments due to Glyne. Target's actions are pleaded to have inflicted severe damage on Glyne (and, of course, the Claimants). In particular, under the heading "Destruction of the Plaintiff's Business" the following is pleaded in paragraph 28:

"[Target's] unlawful termination of the Target Agreement on the basis of wholly unsubstantiated and misconceived allegations of serious misconduct on the part of the Plaintiff was the effective and dominant cause of the following events, each of which was a natural and reasonably foreseeable consequence of the said unlawful termination:

(1) by a letter dated 8 February 1993 and signed by Mr. G A Markham (Equity & Law's Head of Associates), Equity & Law purported to terminate the Equity & Law Agreement pursuant to clause 8.1.2. thereof but without otherwise specifying the grounds of such termination;

(2) [Target] refused to pay any further commissions to the Plaintiff;

(3) Equity & Law refused to pay any further commissions to the Plaintiff

(4) ...

(5) The Plaintiff was forced to cease trading, and to dispose of its staff, equipment and premises.

(6) The Plaintiff was (or would have been) unable to obtain appointment as a appointed representative of any other Member of LAUTRO or of the PIA, or certification as an independent financial adviser by FIMBRA or the PIA; and

(7) on 18 July 1996, consequent upon being deprived of its commission income, the Plaintiff went into creditors' voluntary liquidation on the ground that by reason of its liabilities it was insolvent and unable to pay its debts."

16. Paragraph 29 of the pleading then sets out particulars to support the allegation that Target's actions were the "effective and dominant cause" of those events. Those particulars include;

(i) a reference to an internal memorandum within Target that "Equity & Law will find it very difficult to refuse termination as our evidence as to current churning is strong",

(ii) a further internal memorandum in which Target is said to have recognised that its termination of the agreement on the basis of serious allegations made against the Plaintiff would put the Plaintiff out of business and that "it is unlikely that any other Life Company could take them on",

(iii) an alleged representation made by Target to Equity & Law that the Plaintiff had committed serious regulatory breaches,

(iv) two conversations between Target's Managing Director and Equity & Law's General Manager in which the former informed the latter that the Target Agreement had been terminated on the grounds of serious misconduct,

(v) communications with LAUTRO in which Target asserted that the Plaintiff was guilty of serious misconduct,

(vi) letters sent by Target to "substantially the whole of the Plaintiff's client base" informing those clients that the Plaintiff was no longer authorised to provide investment advice in relation to their policies,

(vii) an expression by Mr. Markham to a third party that, notwithstanding Equity & Law's sympathy for the position of the Plaintiff in the light of Target's termination of the Target Agreement on the basis of allegations of serious misconduct by the Plaintiff, "Equity & Law had itself been forced to terminate the Equity & Law Agreement",

(viii) letters sent by Target to clients warning them that they may have suffered a reduction in the value of their investments which entitled them to substantial compensation,

(ix) As the result of the operation of LAUTRO rules Target's "summary termination of the Target Agreement on the basis of wholly misconceived and erroneous allegations of serious misconduct substantially impugned the good character, competence and suitability of the Plaintiff to manage the marketing of investment contracts on behalf of Equity & Law or any other member of LAUTRO."

17. The Re-Re-Amended Statement of Claim ends with a section particularising Glyne's loss and damage. This includes the loss of the value of its business, including its goodwill as a going concern and the costs and expenses of the creditors' voluntary liquidation including legal expenses.
18. It is not necessary to analyse the defence in any detail. It is sufficient to record that Target denied that it was responsible for Equity & Law's decision to terminate the Equity & Law Agreement. It pleaded that Equity & Law had made its own inquiries. This denial was not accepted and the assertion that Target was the effective and dominant cause of Equity & Law's termination and that such termination was foreseeable was maintained by Glyne and, after assignment, by the Claimants throughout. Similarly the Claimants maintained throughout that Target was responsible for the total loss of the Glyne business as a going concern.

The Draft Second Target Statement of Claim

19. Whereas the Target proceedings were framed in contract, the draft second Target Statement of Claim was framed in terms of a contractual and common law duty of care. Essentially it alleged that Target was under a duty to ensure that any references or reports it prepared and issued concerning any of the Claimants were prepared with reasonable care and skill and would be accurate and properly researched. It alleges that in making assertions of churning, Target breached that duty. Paragraph 36 of the draft statement of claim alleged that it was foreseeable as a result of the provision and publication by Target of untrue statements in its reports and references concerning the Claimants;

"(i) that [the Claimants] would be unable to obtain employment or engagement elsewhere in the financial services industry or other responsible management position elsewhere either commensurate with their positions in relation to Inter City or at all;

(ii) that [the Claimants] would be forced to borrow monies and realise assets in order to meet their living expenses and the costs of any legal proceedings to clear their names and enforce the legal rights of Inter City;

(iii) that the Equity & Law Agreement would be terminated by Equity & Law;

(iv) that Inter City would be unable to obtain appointment as an appointed representative of any other Member of LAUTRO or of the PIA or certification as an independent financial adviser by FIMBRA or the PIA, and

(v) that Inter City, consequent of (sic) being deprived on (sic) its commission income, would be put out of business and forced into insolvent liquidation."

20. The draft went on to allege that as a result of the publication of the various Target reports and references concerning the Claimants;

"(i) [the Claimants] were unable to retain their appointments as Company Representatives of Equity & Law or to obtain appointment as Company Representatives of any other Member of LAUTRO or of the PIA or unrestricted certification as independent financial advisers by FIMBRA or the PIA. Each of the [Claimants] suffered a period of unemployment and was forced to realise personal assets and incur substantial borrowings;

(ii) by letter dated 8 February 1993 signed by Mr. G. A. Markham (Equity & Law's Head of Associates) Equity & Law purported to terminate the Equity & Law Agreement pursuant to clause 8.1.2 thereof but without otherwise specifying the grounds of termination;

(iii) Inter City was unable to obtain appointment as the Appointed Representative of any other Member of LAUTRO or of the PIA or certification as an independent financial adviser by FIMBRA or the PIA unable to resume trading. ...

(iv) Inter City was deprived of its commission income from Target and Equity & Law and was forced to dispose of its staff, equipment and premises; and

(v) ... Inter City went into creditors' voluntary liquidation."

21. The damages alleged to have flowed from these actions covered a wide field including the loss of personal income as a result of being unable to continue in employment, loss of future earnings, losses incurred by being forced into the firesale of various assets and losses incurred as a result of having to borrow money.
22. One other point should be made about the draft Statement of Claim. As with the Target proceedings themselves, the whole thrust of the pleading was that Target bore primary or dominant responsibility for all losses suffered by the Claimants, including the losses incurred as a result of Equity & Law terminating the Equity & Law Agreement. In the draft Statement of Claim this responsibility was emphasised by paragraphs which referred to the fact that Equity & Law's expressed view, before Target disseminated its assertions of impropriety against the Claimants, was that the Claimants were not guilty of churning (paragraph 33(6)(iv)) and that their selling methods and practices were proper (paragraph 33(8)(ii)).

The Settlement Agreement

23. The Settlement Agreement is scheduled to a Tomlin Order made on 23 April, 1998. The parties to it include the Claimants and various Target companies. It records the payment of £10m to the Claimants and then provides at Clause 2.1:

"This Agreement is in full and final settlement of all claims and potential claims of whatsoever nature and kind (including interest and costs) which the Parties have or may have against each other under or in respect of or arising out of or in connection with, whether directly or indirectly:

(1) the termination on 29 January 1993 of the Target Agreement (as defined in paragraph 12 of the Re-Re-Amended Statement of Claim in action number 1993 - G- No. 610);

(2) the termination on 8 February 1993 of the Equity & Law Agreement (as defined in paragraph 11 of the Re-Re-Amended Statement of Claim in action number 1993 - G- No. 610);

(3) the personal references, reports and statements made to third parties that were provided in respect of any of the Claimants following the termination of any of the Target Agreement and the Equity & Law Agreement (or either of them);

(4) the matters at issue in action number 1993 - G- No. 610

(5) any claims or matters identified in the draft Statement of Claim provided by the Plaintiffs' solicitors to the Defendant's solicitors under cover of a letter sent on or about 3 February 1998;

and without prejudice to the generality of the foregoing, the Parties hereto agree not to commence or prosecute any proceedings against one another arising out of or in connection with such matters."

The allegations against Equity & Law in the current proceedings

24. Some months after the Settlement Agreement, the Claimants commenced the current proceedings. The issues and assertions raised are very similar to those raised or asserted against Target. The proceedings are brought in the name of the Claimants suing both in their personal capacities and as assignees of Glyne. The causes of action are for breach of contract, i.e. breach of the Equity & Law Agreement, and breach of contractual and common law duty of care. As with the Target pleadings, the Claimants assert that, prior to Target's allegations of churning, Equity & Law had expressed satisfaction with the Claimants' and Glyne's method of conducting business. They plead that it was Equity & Law's view that termination by Target of the Target Agreement "put Equity & Law in a very difficult position" (paragraph 35). It was only after Target's assertions of churning and termination of its agreement that Equity & Law terminated the Equity & Law Agreement. In paragraph 46, the Claimants rely upon an assertion by a senior employee of Equity & Law that the latter's decision to terminate the Equity & Law Agreement "had been made on the basis of information supplied to Equity & Law by Target". The statement of claim also contains allegations of contractual and common law duties of care and breach of them by Equity & Law which mirror the equivalent allegations against Target.
25. The pleading of loss and damage also mirrors that in the Target proceedings and the Draft Second Target Statement of Claim. It includes Glyne's inability to obtain an appointment as an appointed representative or certification as an independent financial adviser and the fact that Glyne was forced to cease trading and into creditors' voluntary liquidation (paragraph 76). It also includes loss of the value of the business, including goodwill as a going concern (paragraph 77). The claims for losses suffered by the Claimants in their personal capacities appear to be indistinguishable from those raised against Target even down to the minutiae of the losses incurred as a result of the firesale of assets. In relation to this, in paragraph 52(C) of its Amended Defence and Counterclaim, Equity & Law asserts that the Claimants have claimed that the same loss was caused by Equity & Law and Target. The Claimant's denial of this in the Amended Reply is illuminating;

"Further it is denied that each of Equity & Law and Target caused the same loss to the Plaintiffs as alleged in paragraph 52C. The following losses were caused to the Plaintiffs (either in their personal capacities or as assignees of [Glyne]) by Target which were not caused by Equity & Law - ..."

In other words some losses were caused by Target alone. Nowhere is it suggested that any loss caused by Equity & Law was not also covered by the claims against Target. The losses claimed against Equity & Law are entirely encompassed within what was sought against Target.

The application of Jameson to the facts in this case

26. In Jameson an asbestos worker, formerly employed by company A, developed malignant mesothelioma. He said that this had been caused by his exposure to asbestos dust while working at various premises on behalf of A. They included the premises of company B. The ex-employee sued A for negligence and breach of statutory duty. Shortly before his death, he accepted a sum of money in full and final settlement and satisfaction of all the causes of action in respect of which he had claimed in his statement of claim. After his death, his executors sued B on behalf of his widow. Similar allegations of negligence and breach of statutory duty were advanced in relation to the same acts of exposure to asbestos. B denied liability, pleaded that it was released as a result of the settlement of the proceedings against A and also issued third party proceedings for a contribution against A. The House of Lords held, Lord Lloyd dissenting, that B succeeded on the release argument.
27. Lord Hope, with whose speech the majority of their Lordship agreed, explained that a claim of damages in tort (which was all that was in issue in Jameson) is a claim for unliquidated damages. It remains unliquidated until the amount has been fixed either by the judgment of the court or by an agreement as to the amount which must be paid to satisfy the claim. A plaintiff is barred from going on with a separate action against another tortfeasor if the judgment which he has obtained in the first action has been satisfied.

"The critical question ... is whether the claim has in fact been satisfied. I think that the answer to it will be found by examining the terms of the agreement and comparing it with what has been claimed. The significance of the agreement is to be found in the effect which the parties intended to give to it. The fact that it has been entered into by way of a compromise in order to conclude a settlement forms part of the background. ... The essential point is that the meaning which is to be given to the agreement will determine its effect." ([1999] 2 WLR 151)

He also pointed out that the judge could only embark on a limited inquiry if a subsequent action is raised against another concurrent tortfeasor;

"He may examine the statement of claim in the first action and the terms of the settlement in order to identify the subject matter of the claim and the extent to which the causes of action which were comprised in it have been included within the settlement. The purpose of doing so will be to see that all the plaintiff's claims were included in the settlement and that nothing was excluded from it which could properly form the basis for a further claim for damages against the other tortfeasors. The intention of the parties is to be found in the words of the settlement. The question is one as to the objective meaning of the words used by them in the context of what has been claimed.

"... The question therefore is ... not whether the plaintiff has received the full value of his claim but whether the sum which he has received in settlement of it was intended to be in full satisfaction of the tort." (p. 154)

Mr. Hirst argues that the Settlement Agreement could not be more clear. All the claims, including those arising out of Equity & Law's actions, are settled. That covers all the claims made in the current proceedings.

28. Mr. Kosmin advances three arguments. First he says that on its true construction the Settlement Agreement was intended to settle the Claimants' claim against Target only and was not intended to, and did not, extinguish the claim against Equity & Law. He says that this is clear from the wording of the Settlement Agreement. Secondly, he says that if there is any doubt on this issue, it is an implied term of the Settlement Agreement that rights against Equity & Law were preserved. Finally he argues that Jameson was concerned only with liability of concurrent tortfeasors for the same harm. It has no application to a case such as this concerned with breaches of different contracts. It is convenient to consider the first two of these arguments together.
29. Mr. Kosmin invites me to construe the Settlement Agreement just like any other contract. He says it was designed to settle claims only against Target. This can be seen from a number of its provisions. In particular he relies on the fact that clause 2.1, which is set out at paragraph 23 above, only refers to the settlement of claims which the parties have or may have "against each other" and that they agreed not to commence or prosecute proceedings "against each other". He also relies on Clause 5 which provides:

"Each of the Parties hereto hereby unconditionally and irrevocably releases and discharges each other, and their respective directors, officers and employees from all or any liabilities, actions, causes of action, suits, demands of whatever nature or kind and howsoever and whenever arising which any of them may be entitled to make, assert or pursue in any jurisdiction whatsoever in relation to or in any way connected with the matters specified in clause 2.1 above" (Mr. Kosmin's emphasis)

30. He says that this shows that the Claimants turned their minds to who, besides Target, were to be released. The category of non-parties who were to benefit from the Settlement Agreement was limited to the various officers and employees of Target referred to in this Clause. He says that the point is reinforced by Clause 3 which imposes a blanket of confidentiality over the Settlement Agreement. He asks rhetorically, how could Equity & Law be released from the claims against it by a settlement with another party of which it has no knowledge. He also relies on Clause 6:

"The Defendant and Lloyds TSB hereby agree to withdraw or to procure the withdrawal of the proof of debt lodged in the liquidation of Glyne and hereby agree not to prove or seek to make any claim whatsoever in the liquidation of Glyne."

31. Mr. Kosmin points out that no similar undertaking has been sought from or given by Equity & Law. Further the default judgment obtained in error and referred to at paragraph 4 above, was used as the basis of a claim submitted by Equity & Law in the liquidation of Glyne. With interest, that claim is in the region of £32,000. It has not been withdrawn. As a result it remains a contingent liability in the liquidation. As the liquidator has pointed out, the liquidation cannot be finalised until that claim has been resolved. Mr. Kosmin says that if the Settlement Agreement has the effect for which Equity & Law contend, then his clients will be debarred from putting forward their set off and counterclaim. He says that it is not credible that his clients would have intended to settle all their claims, including the claims against Equity & Law, without requiring the withdrawal of Equity & Law's proof of debt in the liquidation.
32. Finally Mr. Kosmin says that if his submissions on construction are not right, a term must be implied in the Settlement Agreement to the effect that the Claimants' rights as against Equity & Law are reserved. He says that the implication of such a term is consistent with the Court of Appeal's approach in Watts v. Aldington The Times, 16 December, 1990.
33. It appears to me that the arguments on construction advanced by Mr. Kosmin came close to asking whether Equity & Law were intended to be parties to the Settlement Agreement. His approach appears to me to concentrate too much on the identity of the parties to the settlement and insufficiently on what it was that was intended to be settled. Although the extent of party A's release from litigation may be determined or shaped by a contract of settlement entered into between his opponent and party B, it is not a contractual entitlement not to be sued. There is no privity of contract between A and his opponent in relation to the settlement. As in Jameson, the settlement may not expressly purport to confer any rights on A. On the contrary, the interests or liabilities of that party may not have been considered by any of the signatories to the settlement. A will have given no consideration. If that is so, then how can A rely on the settlement to avoid the litigation? It appears to me that the proper analysis is that this is one of those areas where the courts prevent a litigant from doing something which is inconsistent with the fair conduct of litigation. The effect of a settlement agreement between two parties to litigation may create benefits for third parties who are not in contractual relationship with the plaintiff. The contract acts as a statement, effective against the parties to it, which determines not only the extent of the settlement between them but also acts as a concession of general application which restricts the parties' right to litigate the same or similar issues again against others. So the court looks at the contract of settlement to see whether and to what extent it would be improper to allow the plaintiff to assert rights against a non-party to it. Having settled claims with one defendant it would be contrary to public policy to allow the plaintiff to continue to litigate or to raise the same issues against another. This is part of the public policy against multiplicity of proceedings.
34. When a party settles a claim, the courts look to the terms of the settlement to see whether the intention was to settle the claim in its entirety or only to settle a part of the claim. Although it is possible for a plaintiff to choose the latter course, thereby reserving part of the claim against a number of defendants, he must make it clear that that is what he is doing. This appears to me to have been the view of the majority of the House of Lords in Jameson;

"In the typical case the plaintiff agrees to accept the sum which the defendant is willing to pay in full and final settlement of his claim. Such a settlement normally involves an element of compromise on both sides. ... The effect of the compromise is to fix the amount of his claim in just the same way as if the case had gone to trial and he had obtained judgment. Once the agreed sum has been paid, his claim against the defendant will have been satisfied. Satisfaction discharges the tort and is a bar to any further action in respect of it ... I think that it follows that, if the claim was for the whole amount of the loss for which the defendant as one of the concurrent tortfeasors is liable to him in damages, satisfaction of the claim against him will have the effect of extinguishing the claim against the other concurrent tortfeasors.

There may be cases where the terms of the settlement, or the extent of the claim made against the tortfeasor with whom the plaintiff has entered into the settlement, will show that the parties have not treated the settlement as satisfaction for the full amount of the claim of damages. In the same way a judge, in awarding damages to the plaintiff in his action against one concurrent tortfeasor, may make it clear that he has restricted his award to a part only of the full value of the claim." (p. 152)

The same point was made, perhaps more forcefully, by Lord Clyde; see page 160 C to G and page 162 B to E.

35. The obvious way to make such an intention clear is to use express words to that effect. But the intention may be apparent from a consideration of the surrounding circumstances. Although Lord Hope referred to looking at the extent of the claim made against the tortfeasor, this does not mean that the court is free to assess whether the settlement of the whole claim on the agreed terms was a good deal from the plaintiff's point of view. This is can be seen from another passage in Lord Hope's speech;

"What the judge may not do is allow the plaintiff to open up the question whether the amount which he has agreed to accept from the first concurrent tortfeasor under the settlement represents full value for what has been claimed. That kind of inquiry, if it were to be permitted, could lead to endless litigation as one concurrent tortfeasor after another was sued on the basis that the sums received by the plaintiff in his settlements with those previously sued were open to review by a judge in order to see whether or not the plaintiff had yet received full satisfaction for his loss. Different judges might arrive at different assessments of the amount of the damages. The court would then have to decide which of them was to be preferred as the basis for the apportionment between the various tortfeasors. I do not think that this can be regarded as acceptable. The principle of finality requires that there must be an end to litigation."

36. So, in determining whether the settlement was intended to release or has the effect of releasing other defendants, the court must not consider whether the plaintiff would have received more had he pursued the case to judgment or could have held out for more. There are all sorts of reasons, including the nature of the advice he gets from his lawyers and their assessment of the likelihood of various witnesses acquitting themselves well at the trial, all matters of which the judge will be ignorant, which may have led him to conclude that settlement on one package of terms now is preferable to the hope of more later. He could simply have negotiated poorly. This does not mean that the size of the settlement is always irrelevant. A settlement of an apparently good claim against one of multiple defendants for an apparently nominal sum may lead the court to the conclusion that the settlement was not intended to assess the value of the claim or give the plaintiff full compensation. It may, for example, simply be a way of excluding from the dispute a defendant who has no money or who played a peripheral role. This is illustrated by Watts v. Aldington. This was yet a further stage in the dispute between Lord Aldington on the one hand and Count Tolstoy and Mr. Watts on the other. Lord Aldington had obtained a judgment for £1.5M in his favour arising out of libels published by the defendants. Both Count Tolstoy and Mr. Watts petitioned for their own bankruptcies. There were numerous further applications to court but eventually Lord Aldington entered into a settlement with Mr. Watts in the sum of £10,000 which was to be paid by Mr. Watts' family. Lord Aldington always made it clear that he intended to get more than this from Count Tolstoy's Trustee in Bankruptcy. He had already rejected an offer on behalf of the Count of £20,000. Once the settlement had been entered into, Mr. Watts brought proceedings against Lord Aldington seeking a declaration that the settlement agreement constituted a release by Lord Aldington of all rights which he might have against either Mr. Watts or Count Tolstoy arising out of the judgment for £1.5M. The settlement agreement did not expressly refer to Count Tolstoy being released.
37. All three members of the Court of Appeal rejected Mr. Watts' arguments. They accepted that a release of one tortfeasor could and frequently would release another. They also appear to have approached the case on the basis that if Lord Aldington was to be permitted to continue with his proceedings against Count Tolstoy, it was necessary for him to show that he had reserved a right to do so when entering into the release with Mr. Watts. As Simon Brown LJ said, parties who intend to reserve a right to sue or continue with proceedings against another wrongdoer are well advised to include an express reservation to that effect (Transcript p. 41). But the absence of such an express reservation was not an end to the matter. A reservation could be implied. In holding that such an implied term existed, Neill LJ said that any other result would offend commonsense in the light of the surrounding circumstances in that case. Steyn LJ, having commented that the touchstone of implication is strict necessity, said:

"I therefore turn to the question whether the test of strict necessity is satisfied, or, putting it another way, whether it is so obvious that it goes without saying that Lord Aldington was reserving his right to proceed against Count Tolstoy. Here one must credit the reasonable man with knowledge of the surrounding circumstances. The contextual scene included the following matters. First, Lord Aldington's willingness to settle with Mr. Watts was the result of Lord Aldington's belief that Mr. Watts was impecunious. Secondly, Lord Aldington rejected an offer of £20,000 from Count Tolstoy, on the basis that he thought that he would be able to recover substantially more than £20,000 from Count Tolstoy. Thirdly, Lord Aldington was energetically pursuing his remedies against Count Tolstoy at all material times before the agreement made on 20 March 1991. Fourthly, Lord Aldington entered into the negotiations with Mr. Watts alone. There circumstances were known to both contracting parties.

It is important to formulate the right question to be posed by the notional bystander. In my judgment the right question is the following: is Lord Aldington reserving the right under his agreement to sue Count Tolstoy? In my judgment the objective setting of the contract convincingly shows that the answer of both parties to that question would have been 'Yes, of course'." (Transcript p. 35-6)

38. This appears to me to be consistent with the approach adopted by the House of Lords in Jameson namely that it is possible for a plaintiff to reserve his claim against some of a number of defendants but it must be clear that that is what he is doing. If he does not make the reservation by express words, it must be a reservation which is made by necessary implication. How, then, do the facts of the present case fit in with those principles?
39. First, the fact that the Settlement Agreement was only entered into by the Claimants and Target is one factor but, as Jameson illustrates, is not determinative of whether the Claimants intended to reserve their rights of action against Equity & Law. Secondly, the overall structure of the Settlement Agreement and the claims made against Target point strongly against any such intention. Target was purchasing peace at a high price. One of the core allegations made against it was that Equity & Law originally did not challenge the Claimants' commercial practices but it was persuaded to do so by Target's wrongful acts and statements. All the damage flowing from Equity & Law's breach of contract and wrongful assertions of churning flowed directly and foreseeably from Target's actions. It follows that any reasonable observer at the time of the Settlement Agreement would have recognised that if the Claimants were to bring or reactivate proceedings against Equity & Law, it was inevitable that Equity & Law immediately would seek a contribution for the majority if not the whole of its liability from Target and would rely on just those allegations of responsibility which permeate the Claimants' Statement of Claim. So, if the Claimants reserved their rights against Equity & Law, Target would have paid the price for peace but without achieving it. This appears to me to be the antithesis of the full and final settlement which Clause 2.1 of the Agreement promised. This point is reinforced by the provisions of Clause 2.1(2), (3), (4) and (5) each of which clearly are intended to give Target peace in respect of the activities of Equity & Law.
40. I am also not persuaded by Mr. Kosmin's argument based on the confidentiality clause in the Settlement Agreement. The issue, as formulated by Steyn LJ, is whether the notional bystander would believe that the Claimants were reserving the right under the agreement to sue Equity & Law. In my view the confidentiality clause does not help to answer that question. The fact that the parties to the Settlement Agreement agreed to keep the terms of their compromise secret says nothing about the Claimants' right to continue claims against Equity & Law. On the contrary, if they were to pursue such claims it was inevitable that the terms of the Settlement Agreement would become known to Equity & Law even if they did not know them earlier. The Agreement itself would have had to be disclosed on discovery and the terms would also have become known as soon as Target put in its defence to the contribution notice. In fact in this case the terms of the Agreement were pleaded by Equity & Law and responded to by the Claimants. It was not suggested that Equity & Law were not allowed to know them.
41. I am also not persuaded by the argument relating to the continued contingent liability arising from Equity & Law's claim for £32,000 in the liquidation. I am by far from convinced that the Settlement Agreement, even if it precludes the Claimants from making further claims against Equity & Law, has the effect of preventing them from defending Equity & Law's claim for reimbursement of commissions paid. But even if it does, I do not think this would lead anyone to believe that the Claimants had impliedly reserved their general rights of action against Equity & Law. At the most it means that the Claimants would need to pay £32,000, a sum which is trivial compared to the £10M settlement, to resolve that issue in the liquidation.
42. Finally I should deal with two other points which Mr. Kosmin advances as showing that it would be unfair to deprive his clients of the right to make their claims against Equity & Law and that a reservation therefore should be implied. He places particular emphasis on the fact that Equity & Law has not retracted its accusations of churning. This appears to me to be more theoretical than real. Mr. Kosmin does not suggest that they have repeated them since the date of the Settlement Agreement. In view of what happened to Target before Moses J, it stretches the imagination to think that Equity & Law will make any further allegations. It is hardly likely that in the future they will repeat the allegations made to them by Target and in respect of which Target has now so publicly had to eat humble pie. The remote possibility that Equity & Law would do such a thing has no appreciable impact on the answer to Steyn LJ's question. Furthermore I do not accept that the Claimants would be deprived of a cause of action if Equity & Law were to make defamatory statements in the future. Those would give rise to new causes of action not covered by the settlement.
43. Finally Mr. Kosmin argues that if the Settlement Agreement has the effect of releasing Equity & Law, they will have got away free and that would be unfair. In my view it is neither unfair nor is it true. If, as the Claimants have consistently asserted, it is Target which is primarily responsible for the losses they have suffered, including the losses suffered because of Equity & Law's imitative behaviour, it is neither unfair nor surprising that they sought compensation from that prime wrongdoer. Furthermore Equity & Law is not free of liability. Insofar as the Claimants' losses can be attributed to their actions, no doubt Target will have a claim for a contribution. I say nothing of the strength of that claim.
44. The other argument advanced by Mr. Kosmin is that Jameson was a case concerned with the liability of concurrent tortfeasors for the same harm. The House of Lords' reasoning was not intended to apply, and cannot stretch, to a case such as the present which is concerned with independent breaches by two different financial institutions of two different contracts, terminated unlawfully on different dates, that have caused not the same, but only partly overlapping, loss and damage. In support of this he relies upon Townsend v Stone Tonn & Partners [1981] 1 WLR 1153, a case in which the plaintiffs had sued a firm of architects and a firm of builders under their respective contracts in respect of work done on their house. The builders had paid money into court "in satisfaction of all the causes of action in respect of which the plaintiffs claim". The sum was taken out by the plaintiffs and judgment was entered against them. The architects argued that the action against them should be stayed in so far as it encompassed mutual or overlapping claims. This argument failed in the Court of Appeal where Eveleigh LJ expressed the law as follows:

"... where there are two separate causes of action, satisfaction of the one should not be a bar to proceedings on the other." (p. 1161).

45. It is apparent that the law so stated is inconsistent with Jameson which involved two separate causes of action, albeit in tort. Mr. Kosmin accepts that to be so. He says that nevertheless the two authorities can be reconciled. Townsend expresses the generality of the rule on settlements against one defendant and from it Jameson has carved out a different rule which applies when the two causes of action are in tort. He points out that the speech of Lord Hope is in relation to tort only. On the other hand Mr. Hirst points out that Townsend was relied upon by Lord Lloyd in his dissenting speech in Jameson as it had been by the Court of Appeal in their judgment which was reversed on appeal.
46. As Mr. Kosmin accepts, the unqualified statement in Eveleigh LJ's judgment quoted above cannot stand in the face of Jameson. However there is nothing in Jameson which indicates that the House of Lords was intending to create an exception which applied to torts alone. Furthermore there does not appear to me to be any reason in principle why Jameson should apply only to torts. If a party has consented to all his claims being settled, there is no compelling reason to assume, absent clear indications to the contrary, that he draws a distinction between claims arising under different causes of action. As Lord Hope said, there must be an end to litigation. If a litigant wishes to settle with one opponent but to continue against another, the reservation of that entitlement must be clear. That should apply whether or not the claims against the different opponents arise under the same or different categories of causes of action. It may well be that if the causes of action arise under contracts which are between different parties, entered into at different times, cover different activities, give rise to different obligations and are alleged to have been breached at different times by different actions, those are factors which can be taken into account in deciding whether it is necessary to imply a reservation by the plaintiff of a continued right to sue a non-settling defendant. However in this case, the contractual claims in large part mirror the claims in tort and they do not drive one to imply any such reservation.
47. In addition, even if Mr. Kosmin is right in this submission, it would not get his clients home. He emphasises the fact that in Jameson Lord Hope's reasoning was founded on the principle that damage is an essential element in tort. Therefore if the claim for damages is satisfied by settlement with one tortfeasor, that ingredient of the cause of action is no longer satisfied and the second cause of action in tort withers. He says that an action for breach of contract is not dependent on damage. It follows that even if no further damages are recoverable, the cause of action survives. I find this argument unattractive. It would result in the action being allowed to proceed for no purpose other than to obtain a declaration that a breach has been committed. No other relief could be obtained. It appears to me that to allow an action to proceed in those circumstances would be futile, a waste of the parties' time and money and would delay the court in disposing of more meaningful disputes. In those circumstances the court should stay or strike out the proceedings.
48. For these reasons I have come to the conclusion that the Claimants did not expressly or impliedly reserve rights of action against Equity & Law and that they are therefore precluded from continuing with these proceedings. I should emphasise that the arguments before me have proceeded on the basis of Jameson. No argument has been advanced that the commencement of the current proceedings some months after the termination of the Target proceedings offends against the principles set out in cases such as Henderson v. Henderson (1843) 3 Hare 100, Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] AC 581 and in the recent unreported decision of the Court of Appeal: Johnson v. Gore Wood & Co. (12 November, 1998). However similar principles of public policy appear to me to be involved.