Kiss and tell

There has been much coverage in Building of the litigation relating to the stadium at Wembley. As I’m sure we all know by now, the employer under the main contract was Wembley National Stadium Limited (WNSL) and the main contractor was Multiplex. Much of the construction has been delayed and some of the reasons for the delays may be found within the judgment between Multiplex and steel contractor Cleveland Bridge. Furthermore, there has been litigation between Multiplex and Honeywell Control Systems, which was instructed to perform the design and installation of the electronic systems. By the time Honeywell started work, the stadium was substantially delayed and this has given rise to more disputes.

In addition, there were issues between Multiplex and WNSL that went to the question of the delay and the financial consequences of that delay. Whereas some of the issues were the subject of litigation, the disputes between Multiplex and WNSL were resolved by a settlement negotiated in October 2006.

One of the issues that came before Mr Justice Jackson on 27 February of this year was whether or not Honeywell was entitled to sight of this. Multiplex maintained that it was confidential. Honeywell felt that it could disclose certain facts and matters that would assist the resolution of its own claims against Multiplex.

Honeywell was able to state that the settlement was an agreement that varied the terms of the main contract, and if the settlement varied the main contract, was not Honeywell entitled to view the settlement agreement in its entirety?

The court concluded that Honeywell was entitled to inspect those parts of the settlement agreement that varied the terms of the main contract; however it was not entitled to inspect the other provisions.

Honeywell obviously thought that what entitlements Multiplex had been able to negotiate. Multiplex resisted disclosure claiming confidentiality and privilege.

Honeywell’s legal team had sought to draw inferences from correspondence and press releases of the terms of the settlement agreement but its exact contents were (and are) a matter of speculation.

If the settlement varied the contract, was not Honeywell
entitled to view the settlement agreement in its entirety?

A subcontractor’s entitlement is usually governed and limited by the terms of the subcontract itself. There is, however a connection between the subcontract and the main contract and this may link to the flow of benefits.

However, it appears that the legal status of settlement agreements is clear, having been established by the House of Lords in Rush & Tompkins Limited vs Greater London Council (1988). The court in this instance appreciated the conflict between the public interest in promoting settlements and also the public interest in compelling full disclosure.

In deciding to maintain the confidentiality Lord Griffiths commented that if admissions were made by a person to settle a piece of litigation, and they could be held against them in subsequent litigation, it would actively discourage settlement.

Multiplex’s advisers would no doubt have ensured that the negotiations leading to the settlement, as well as the settlement itself, were identified as being “ without prejudice” . This privilege is not subsequently lost by the fact that a settlement is concluded.

The court stated that if such documents leading up to a settlement, as well as the settlement itself, could subsequently be revealed to a third party, then little or nothing would be put on paper that could indeed be a recipe for disaster in difficult negotiations.

The privilege and confidentiality applies equally to WNSL and thus had Multiplex wished to refer to any portion of the settlement agreement to justify any of its own claims against Honeywell, it would have had to have sought WNSL’s consent as well. Thus the exact terms of the settlement must retain their confidentiality.