In Omanovic v Shamaazi Ltd & Anor [2025] EWHC 110 (KB), the High Court held that evidence of settlement terms agreed with two claimants was inadmissible in evidence at the trial of the remaining claimant's claims, or alternatively should be excluded pursuant to the court's power to control the evidence under CPR 32.1.
In deciding to exclude the settlement details from the evidence, the Court emphasised the importance of confidentiality of settlement terms and its policy of promoting settlements.
Background
The case involved a concept conceived by the second defendant, Mr Ismael Dainehine, to facilitate the making of charitable donations in the final ten days of Ramadan. The claimant, Mr Adnan Omanovic, was involved in the project from an early stage. Mr Omanovic claimed that, pursuant to a meeting with Mr Dainehine in April 2018, he was promised a 25% interest in the equity of the first defendant, Shamaazi Ltd, the corporate vehicle through which MyTenNights was operated, in return for his services and in recognition of his position as a founding member of the project.
After a falling out in 2021, Mr Omanovic, along with two other claimants, initiated legal proceedings against Shamaazi Ltd and Mr Dainehine, alleging breach of contract and tortious conspiracy. The other two claimants settled their claims shortly before the trial was due to commence.
Legal issue
Mr Omanovic sought permission to adduce evidence as to the quantum of the settlements with the other claimants at the trial of his claims. He argued that the settlement details were relevant to the defendants' alleged dishonestly, suggesting that the settlements contradicted the defendants' denial of any contractual agreements with any of the claimants. He further argued that no defendant who honestly and truly believed the pleaded defence which denied any contract at all with all three claimants would have settled with the other claimants for the settlement amounts.
Mr Omanovic also argued that the settlements with the other claimants suggested that Mr Dainehine's credibility was impaired, as settlements at a certain level would imply that he never had any true or honest belief in his defence, despite the terms of the statement of truth.
The defendants argued that such evidence was inadmissible due to the impact of privilege on their ability to provide evidence fully as to the reasons for the settlements and that allowing the evidence to be heard would be contrary to the court's policy of promoting settlement of claims outside of court.
Judgment
Mr Justice Martin Spencer found in favour of the defendants, deciding to exclude the evidence pursuant to the provisions of CPR rule 32.1. Justice Spencer further indicated that, even if CPR rule 32.1 did not apply, he would exercise his discretion to exclude the terms of the settlement because of the difficult position Mr Dainehine would find himself in if the Court were to admit the evidence as a result of the application of privilege and because of the need to promote the policy of encouraging settlements.
The Court recognised that Mr Dainehine's decision to settle with the other claimants could have been based on a multitude of reasons, none of which necessarily recognised the validity of Mr Omanovic's claim nor formed an acknowledgement of Mr Dainehine's dishonesty in defending the claims of the other claimants until shortly before trial.
The Court recognised that courts are often faced with denials of liability supported by a statement of truth in claims which go on to settle, and that it would be extraordinary to suggest that the decision to defend the case in first instance implied dishonesty because the case was ultimately settled.
Justice Spencer referred to the Court of Appeal's decision in Gnitrow Limited v Cape Plc [2000] 1 WLR 2327, considering that unless the settlement is directly relevant to the court's decision, it is preferable that the terms of the settlement should not be disclosed to the trial judge.
Practical Implications
This decision highlights the courts' commitment to preserving the confidentiality of settlement agreements, with a view to encouraging dispute resolution outside of court.
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