The Recoverability Of Settlements

The High Court has recently analysed the authorities on the circumstances in which amounts paid by way of settlement to a claimant can form the basis of a claim for recovery from third parties and should be taken as the measure of damages. In a decision handed down on 27 June 2007, the Court held that:

• provided that a settlement is reasonable on the facts, it can be recovered from a third party even in the absence of liability in law; however,

• in the event of an unreasonable settlement on the facts, recovery will be limited to the true measure of loss.

The case (John F Hunt Demolition Limited v ASME Engineering Limited) clarifies the proper application of the principles set down in Biggin & Co Limited v Permanite Limited, and provides useful guidance both to professionals seeking to recover, from their sub-agents or other third parties, sums paid to a principal, and to liability insurers acquiring rights of subrogation from their professional insureds, on the vexed