Fluor Ltd (“Fluor”),the claimant, was engaged under an EPC Contract to build the foundations and infrastructure for a Suffolk Windfarm.  The Defendant (“SZH”)was engaged to provide steelwork for the farm. This dispute arose out faults with the turbines supplied by the Defendant.

As Fluor had settled the claim further up the chain with CGOWL, they pursued SZH for the settlement funds, resulting in this case involving both the quantum analysis of damages and an assessment of how the claimant restricted those damages in the settlement letters. 

Both Fluor and SZH had entered into a partial settlement. The letter of waiver allowed for a transfer of the claims for costs suffered by SZH in exchange for a waiver of the Claimant’s claim for further costs and delays caused by non-conformance. This settlement also allocated a warranty to Fluor, guaranteeing 25 years on all of the unrepaired transition pieces and steel piles. This was offered in exchange for release of the final payment under the original Contract. However, when Fluor attempted to regain further settlement sums, the Judge ruled that the settlement was intended to include all the claims relating to the project and they had therefore waived its claims in relation to weld defects. 

The Judge noted that the position was made more complicated by the fact that some of the heads of claim had been settled between Fluor and the Employer, but Fluor was alleging that some of the responsibility lay with SZH. Therefore, as part of the consideration, Sir Anthony Edwards-Stuart had to look at what claims had been settled by Fluor, which ones had received payment and how such payment was to be apportioned. 

The judge made it clear that the court was ‘bound’ to look at all of the material available to them simply to provide a fair understanding of the claim.  A third party should only be liable for direct contract breaches and not consequences that are the product of two other parties, into which it had no say. The Judge then identified which items could be claimed as arising from the defects of the welds which had not been covered by the waiver letter and therefore not been compromised. 

This case demonstrates the need to be clear in the meaning of a settlement, highlighting the necessity for a clearly worded settlement. Where it is left as anything less than full or final, there becomes a much greater need for precision.  As demonstrated by this case, if it is not clear, the court will have to decide and this could result in exposure for additional damages which you may have thought covered by settlement agreement.