Rescission of Settlement for Mistake and Non-Disclosure

Extract

Mr. Naeem and Mr. Mohammad (“the plaintiffs”) were employed by the Bank of Credit and Commerce International SA (“B.C.C.I.”). They were made compulsorily redundant in 1990. In 1998, the plaintiffs, seeking to take advantage of the decision of the House of Lords in Malik v. B.C.C.I. [1997] 3 All E.R. 1, sued B.C.C.I. for “stigma damages”—damages designed to compensate the plaintiffs for the difficulties they had experienced in obtaining work because they were associated, in prospective employers' minds, with the dishonest way in which B.C.C.I. was run. However, there was a problem. Shortly after being made redundant, each of the plaintiffs had agreed to accept a sum equivalent to one month's gross pay “. . . in full and final settlement of all or any claims whether under statute, Common law, or in Equity of whatsoever nature that exist or may exist . . .”. Having entered into this agreement (“the B.C.C.I. settlement”), were the plaintiffs precluded from pursuing their claims against B.C.C.I. for stigma damages? In B.C.C.I. v. Ali [1999] 2 All E.R. 1005, Lightman J. said the answer was “yes”.