Court can refuse to accept party’s undertaking offered as part of settlement

Since this article was posted the Court of Appeal has overturned the decision, details of the judgment can be found in our briefing here.

In Smith v Backhouse [2022] EWHC 3011 (KB), the High Court held that it does have jurisdiction to refuse to accept undertakings which a party had agreed to give to the Court as part of a settlement of a civil claim. The Court accepted some of the undertakings from the Defendant but refused to accept certain contractual undertakings as undertakings given to the Court because they were too wide and uncertain.

Background

The Claimant brought a claim against the Defendant in connection with alleged online harassment. The claims were for misuse of private information and breaches of data protection regulation.

The Claimant applied to the High Court for approval of a Consent Order which reflected that the parties had reached an agreement to settle the dispute upon acceptance of a Part 36 offer. The proposed settlement included undertakings designed to prevent the Defendant from continuing to harass, impersonate and/ or monitor the Claimant and endorsed a penal notice outlining the Defendant’s potential liability for contempt should the undertakings be breached.

Decision

Upon reviewing the Consent Order and enclosed undertakings, Nicklin J immediately expressed concerns at the “breadth of the undertaking and whether it is one that is appropriately given to the Court”.

Nicklin J said that, whilst parties are generally free to settle litigation as they wish, it would be absurd if a court had to accept any undertakings that parties agree. He explained that there could be no objection to the terms of the contractual undertakings between the parties themselves but noted that undertakings given to a court are different because they can be enforced by the court when breached. Accordingly, terms of undertakings have to relate to something a court would be willing to enforce and must be precise; hopelessly vague undertakings might prove incapable of enforcement.

In particular, the High Court did not accept undertakings 1 to 3, by which the Defendant undertook not to: (1) publish by any means any express or implied reference to the Claimant; (2) impersonate the Claimant; and (3) monitor the Claimant’s activities. If the Defendant breached any of these undertakings the Claimant would only be entitled to contractual remedies.

The Court considered these restrictions too broad on the following basis:

1. Undertaking 1 would prohibit the Defendant from ever mentioning the Claimant ever again (even, for example, in the context of providing an apology);
2. Undertaking 2 extended to any form of impersonation, including mimicry; and
3. Undertaking 3 was so broad that it could prevent the Defendant from simply searching the Claimant on the internet.

Nicklin J highlighted that the effect of broad undertakings was to increase the likelihood that parties end up back before a court on a contempt application. The remaining undertakings were accepted by the Court including undertakings not to engage in any activity amounting to harassment.

At the time of posting, an appeal to this judgment is outstanding.

Key takeaways

1. Undertakings to the court are a powerful tool in dispute resolution but their acceptance and enforceability by the courts is limited where they are too wide-ranging.
2. When drafting undertakings specificity is key. The more imprecise the terms of an undertaking, the less likely it is to be effective.
3. In circumstances where a court refuses to accept a contractual undertaking as an undertaking to the court, contractual remedies will still be available to the parties in the event of breach.

With thanks to Mark Lightbown for his assistance in preparing this post.