Line Trust Corporation Ltd & Ors v (1) Michael Fielding (2) David Garrard & Ors (1999)
The words "in respect of the subject matter of the action", when used in a compromise agreement, were to be given the widest possible meaning.
Appeal of Burrington Ltd from the order of Hart J made on 6 October 1992. The appeal concerned the construction of para.2 of the schedule to the Tomlin Order which provided that "All parties...release all claims which they or any of them have or may have against each other in respect of the subject matter of this action or arising out of these proceedings ...".
(1) The relevant question was whether the claim in the consolidated action came within the description in paragraph 2 as being one of the claims which the parties "have or may have against each other in respect of the subject matter of this action or arising out of these proceedings". To answer that it was necessary to identify the subject matter of the Frogmore action. (2) It was plain from para.2 that what was compromised was not just the claims actually made or what the court would have had to determine in the Frogmore proceedings. (3) The subject matter of the Frogmore proceedings had to include the facts pleaded by Frogmore. The subject matter in broad terms was the acquisition of Land Investors plc. It was an essential element of the claim against the first defendant that the second defendant had agreed to hold 25 per cent of the shares on trust. (4) In those circumstances there was no reason why the phrase "in respect of the subject matter" should not be given a wide meaning. (5) Objectively construed against the background of fact, para.2 of the schedule contemplated a compromise of the claim in respect of the secret profit and the judge had therefore reached the right conclusion on this issue.