As any litigator will tell you, putting your client in a strong negotiating position to settle a dispute is every bit as important as preparing the case for trial. However, the recent case of Ferster v Ferster is a reminder that there are certain boundaries beyond which solicitors and their client may not go.
This litigation began in suitably robust fashion, with Warren and Stuart Ferster obtaining a freezing injunction against their brother Jonathan, in connection with a dispute about the family business.
Later, in the context of settlement discussions, the solicitors acting for Warren and Stuart wrote to their opponent, via a mediator, claiming that Jonathan had breached the freezing order by failing to disclose certain offshore bank accounts. Warren and Stuart used that to apply pressure on their brother to settle the litigation, and increased the amount of money they were demanding as the price of settlement.
Jonathan wanted to use that letter in the litigation as evidence of improper conduct by Warren and Stuart. The normal rule in litigation is that communications to do with settlement may not be put before the court, but Jonathan contended that he should be allowed to do so here because the offer was in fact an “unambiguously improper threat”.
At first glance, that might seem like a bit of stretch. Could it be said that Warren and Stuart had caught their brother in a lie and were simply trying to use that to extract more favourable terms of settlement? The Court of Appeal concluded that there were several factors that made the letter unambiguously improper:
- The threats went beyond what was reasonable in civil proceedings, in particular the threat of criminal proceedings.
- The threats extended to members of Jonathan’s family, who were not a party to the proceedings.
- Warren and Stuart did not provide any evidence of the existence of the alleged bank account when asked to do so by Jonathan’s solicitor.
- The judge took the view that the increase in the offer was not linked to an increase in the value of the claim, or its prospects of success, but had occurred because Stuart and Warren believed they had found a way to frighten Jonathan into paying more.
In conclusion, the judge decided the offer was in fact a threat, that it was unambiguously improper and that Jonathan was entitled to rely on it.
In this case, Warren and Stuart went to the High Court and then the Court of Appeal to try to keep their “offer” private. If they and their solicitors had simply asked themselves at the outset “would I mind this letter being read to a judge” then perhaps the problem could have been avoided altogether.
Clearly all cases turn on their facts, but this case is a reminder that there are limits to the pressure that one party may apply to the other in litigation.
PLEASE NOTE: this briefing note contains information about current legal issues and is only intended as a general statement of the law – it does not give legal advice. No action should be taken in reliance on this note without specific legal advice.
If you would like advice on the issues raised in this article or on other dispute-resolution issues, please contact:
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Ben Horack Partner, Litigation |