Omanovic v Shamaazi Ltd & Anor [2025] EWHC 110 (KB): Settlement Terms Ruled Inadmissible
Judgment Summary
In Omanovic v Shamaazi Ltd & Anor [2025] EWHC 110 (KB), Mr. Justice Martin Spencer granted the defendants’ application to exclude the terms of settlement reached with two claimants from being admitted as evidence in the trial of the remaining claimant, Mr. Omanovic. The court held that the evidence was not relevant and that allowing cross-examination on the settlement terms would undermine the important policy of encouraging settlement in litigation.
The court stated:
“…even if I am wrong about the question of the relevance of the settlement and its quantum in relation to the second and third claimants, I would exercise my discretion to exclude the evidence, not just because of its prejudicial effect…but more importantly because of the difficult or impossible position it would put Mr Dainehine in if the court were to admit the evidence, and because of the need to promote the policy to encourage settlement in all cases.”
The Case
Three claimants brought an action against the defendants, claiming damages relating to their entitlement to equity in a successful company formed to facilitate charitable donations during the final ten days of Ramadan. While the claims of all three individuals were similar, they were not identical.
The Claimants
1. The First Claimant (Mr. Omanovic): Asserted his claim for equity and continued as the sole claimant after the others settled.
2. The Second and Third Claimants: Mr. Jacob Lester and Mr. Matteo Gilardoni had separate claims with distinct factual bases, particularly regarding the quantum of equity they were promised and the specific roles they played in the company.
The Settlement and Application
The defendants settled the claims of Mr. Lester and Mr. Gilardoni, leaving only Mr. Omanovic’s claim to proceed to trial. Subsequently, the defendants applied for an order declaring that the terms of these settlements be deemed inadmissible at trial.
Court’s Reasoning
1. Irrelevance of Settlement Terms:
• The court found the settlement terms irrelevant to the issues in the remaining claim. While Mr. Omanovic argued that the quantum of the settlement reflected an implicit acknowledgment of liability by the defendants, the judge rejected this, emphasizing that settlements often result from pragmatic considerations rather than an admission of wrongdoing.
• The court cited Gnitrow Limited v Cape Plc [2000] 1 WLR 2327, which held that settlement terms generally bear no relevance unless directly linked to the legal issues in question.
2. Encouraging Settlement:
• Allowing settlement terms to be scrutinized in subsequent trials would deter parties from resolving disputes out of court.
• The court stressed the importance of promoting settlement as a matter of policy.
3. Fairness to the Defendant:
• The judge highlighted the impossibility of the defendant, Mr. Dainehine, justifying the reasons for settlement without breaching legal privilege.
• Cross-examining Mr. Dainehine on the terms of the settlement would place him in an unfair and prejudicial position.
Decision
The court ruled that the terms of settlement with the second and third claimants were inadmissible at trial. The judgment reinforces the principle that settlements are not admissions of liability and must not undermine the policy of encouraging parties to resolve disputes amicably.
This case serves as a significant reminder of the limits on using settlement agreements as evidence in ongoing litigation.