A Cautionary Tale

June 27, 2017

Dispute Resolution

A Cautionary Tale

Vanden Recycling Ltd v Bevin Tumulty and others [2017] EWCA Civ 354 (17 May 2017)

The claimants, a plastics recycling company, found out that one of their employees was involved in skulduggery.  In essence, she secretly conspired with two rival companies to divert business from her employers. The beneficiaries were to be two other companies, one based in Ipswich and one in Holland.  The employee fed them confidential information with a view to setting her up in a rival business to that of the claimants.

The claimants brought proceedings.  Against all three defendants they brought a claim of conspiracy. The conspiracy was, in simple terms, to cause breach of the employee’s implied and express terms of confidence which she owed to her employer.

Whilst the proceedings were on foot, the claimants were able to settle their claims against the employee and one of the complicit rival companies.  Having settled with two of the defendants, the claimants turned to the third.

 

 

But that third company then applied to have all claims against it struck out.  The argument was that, where there are two or more persons who have committed the same act complained of (conspiracy to cause a breach of employment contract) a settlement with, in this case, two parties, acts as a release of the third,

Agreed said the High Court.  We concur said the Court of Appeal. 

The result is that the claimant company, thinking no doubt that it could double its damages against this third company (the Dutch one), found that its hopes were dashed.

The legal expression for defining the defendants in this case is that they were “joint tortfeasors”.  And the legal rule is as stated above; satisfy a claim against one joint tortfeasor and you have satisfied your claims against all.

There was an exception to one of the claims brought by the claimants but that could not have been of much solace to them.

The moral is that, whilst it is sometimes highly desirable to pick off defendants one by one, there is a real risk that settlement, unless carefully structured, will lead to a completely unintentional and disastrous result both for the aggrieved party and, no doubt, for their red faced solicitors.

There but for the Grace…

posted by Julian Freeland | June 27 2017