The Reasonableness of a Settlement

Dealing with a settlement in a multi-party dispute can be complicated. The recent case, Siemens Buildings Technologies FE Ltd v Supershield provides a useful summary of the law relating to the recovery of monies from a third party when the defendant has settled with the original claimant(s). As a matter of causation and remoteness, the losing party may recover from the third party the money paid in the settlement if it can establish that: 1) the settlement was reasonable; and 2) the amount paid in settlement was reasonable. Typical considerations relevant to reasonableness include the strength of the claim, whether the settlement was a result of legal advice, the extent of the uncertainty / expenses of litigation, and other benefits of settling the case rather than continuing litigation.