Bin Obaid & Ors v Al-Hezaimi

Factual and Procedural Background

This appeal concerns the construction of a settlement deed resolving earlier English High Court proceedings between two individuals, here referred to as the Plaintiff and the Defendant, along with companies associated with each. The Plaintiff initiated proceedings in England in 2017 against the Defendant, which were settled by a settlement deed dated 19 June 2019 ("the Settlement Deed"). Subsequently, the Plaintiff brought several claims against the Defendant in Saudi Arabia in 2019. The Defendant contended that these claims were released under the Settlement Deed, depending on whether they fell within the definition of "Claims" in the deed, which refers to claims "arising out of or in connection with" the earlier English proceedings.

The Plaintiff disputed this, seeking a declaration that the Saudi claims were not released. The issue was tried before a Deputy High Court Judge who agreed with the Plaintiff and declared that the Saudi claims were not released by the Settlement Deed. The Defendant appealed with permission, contesting the construction of the Settlement Deed.

The original English proceedings involved allegations by the Plaintiff that substantial payments made between 2013 and 2016 were intended to fund investments in English property through an offshore corporate vehicle, but the Defendant misappropriated these funds. The Defendant denied the existence of such an agreement and asserted that most payments related to a medical business venture and other unrelated transactions.

The Settlement Deed divided specified English properties and related cash ("Identified Assets") between the parties and contained a release clause settling all claims defined as those arising out of or connected with the English proceedings or claims related to rental or proceeds of the Identified Assets. The deed was governed by English law and included an exclusive jurisdiction clause.

After the Settlement Deed, the Plaintiff commenced new claims in Saudi Arabia based on payments either deleted or omitted from the amended particulars of claim in the English proceedings. The Defendant contended these Saudi claims were released by the Settlement Deed. The present proceedings were brought to determine whether the Settlement Deed released these claims.

Legal Issues Presented

1. What is the correct construction of the term "Claim" in the Settlement Deed, specifically whether it includes claims in respect of payments deleted or omitted from the English proceedings?
2. Whether the Settlement Deed fully and finally settles the claims asserted by the Plaintiff in the subsequent Saudi proceedings.

Arguments of the Parties

Appellant's Arguments

• The claims in respect of the deleted payments were originally pleaded in the English proceedings and formally abandoned, thus they arise out of or are connected with those proceedings.
• The discharge application, which was part of the English proceedings and adjourned to trial, involved the true nature and purpose of the deleted payments, making claims about them connected to the English proceedings.
• The central dispute at trial concerned the true purpose of the payments relied on in the amended particulars of claim (APOC payments), and the deleted payments were relevant to the parties' wider relationship and witness credibility, thus claims in respect of the deleted payments are connected to the English proceedings.

Respondent's Arguments

• The Settlement Deed settles only claims arising out of or connected with the claims (including counterclaims and defences) made in the English proceedings, not all matters raised in the course of those proceedings.
• The deleted payments were removed from the English proceedings and no claim or defence depended on them at trial; therefore, claims relating to these payments were not settled by the deed.
• The discharge application concerned whether the claimants had made full and frank disclosure, not the true purpose of the deleted payments, so claims related to those payments were not within the scope of the Settlement Deed.
• The recitals and operative provisions of the Settlement Deed indicate the parties intended to settle disputes about the ownership of specific English properties and related cash, not broader or unrelated claims.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Bank of Credit and Commercial International SA v Ali [2001] UKHL 8, [2002] 1 AC 251	General release intended to "wipe the slate clean" of claims between parties ending a relationship.	The court distinguished the present case from a general release scenario, holding the Settlement Deed was not a general release but a release of particular claims, thus the principle was not directly applicable.
Tchenguiz v Grant Thornton UK LLP [2015] EWHC 405 (Comm)	A statement of case should plead only material facts necessary for claims or defences, not mere background.	The court noted that although the Amended Defence contained references to deleted payments, these were background and not material to pleaded claims or defences.
Libyan Investment Authority v King [2020] EWCA Civ 1690, [2021] 1 WLR 2659	Once a claim is deleted from pleadings, facts formerly pleaded are no longer "in issue" for limitation purposes.	The court applied this reasoning analogously to conclude that deleted claims were no longer in issue in the English proceedings.
Tugushev v Orlov [2019] EWHC 2031 (Comm)	Principles governing full and frank disclosure on without notice applications and discharge applications.	The court accepted that the discharge application concerned compliance with disclosure obligations, not the substantive purpose of the deleted payments.

Court's Reasoning and Analysis

The court analyzed the Settlement Deed by considering the reasonable objective reader's understanding, focusing on the recitals, operative provisions, and the definition of "Claim". The recitals indicated the deed's purpose was to settle disputes concerning the beneficial ownership of certain English properties and related cash ("Identified Assets"). Clause 3.1 divided these assets between the parties, and clause 4.1 provided a full and final settlement of all "Claims" as defined.

The definition of "Claim" was interpreted to mean claims arising out of or connected with the English proceedings, including counterclaims and orders for costs, or claims related to rental or proceeds of the Identified Assets. The court rejected the appellant's broader interpretation that claims connected to any matter raised during the proceedings were settled, emphasizing that claims must be connected to the pleaded claims or defences actually litigated.

The court found that the deleted payments had been removed from the proceedings and no claim or defence in the amended pleadings depended on them. Although references to the deleted payments remained in background pleadings, these were not material facts in issue. The discharge application related to procedural matters concerning disclosure, not the substantive claims about the deleted payments.

The court further rejected the appellant's argument that matters relevant to witness credibility or the parties' wider relationship brought the deleted payments within the Settlement Deed's scope. It held that collateral matters affecting credibility do not become issues litigated or settled by the deed.

Ultimately, the court concluded that the Settlement Deed settled the claims that were actually pleaded and litigated in the English proceedings and related claims, but did not extend to claims about the deleted payments or the unpleaded payment, which were the subject of the Saudi proceedings.

Holding and Implications

The court DISMISSED the appeal, affirming the Deputy High Court Judge's declaration that the Settlement Deed did not settle or release claims in respect of the payments deleted or omitted from the English proceedings, including the claims made in the Saudi proceedings.

The court made a minor amendment to the order to remove reference to the "missing payment" from the declaration, as it was accepted that claims relating to that payment were settled.

The direct effect of this decision is that the Plaintiff remains free to pursue claims in respect of the deleted payments in jurisdictions other than England, such as Saudi Arabia. The decision does not establish any new legal precedent beyond the interpretation of the specific Settlement Deed in this case.