Lee v Cha

The High Court of Australia heard an appeal in *Lee v Cha*. The dispute concerned the interpretation of a settlement agreement and whether it extinguished a claim for deceit. The appellant, Mr Lee, sought to recover damages for deceit against the respondent, Mr Cha, arising from representations made during the sale of a business. Mr Cha contended that the settlement agreement, entered into prior to the commencement of proceedings, operated as a release of all claims, including the claim for deceit.

The central legal issue before the High Court was whether the terms of the settlement agreement, which provided for the release of "all and every claim and demand whatsoever" in relation to the sale of the business, extended to and extinguished the appellant's claim for deceit. This required the Court to consider the scope and effect of general release clauses in settlement agreements, particularly in the context of claims sounding in fraud or deceit.

The High Court, in allowing the appeal, held that the settlement agreement did not extinguish the claim for deceit. The Court reasoned that a release clause, even if broadly worded, would not ordinarily be construed to release a claim for deceit unless there was clear and unequivocal evidence that the parties intended to release such a claim. Gleeson CJ and Heydon J emphasised that the presumption against releasing unknown or unpleaded claims, particularly those involving fraud, required a high degree of certainty in the language of the release. The Court found that the wording of the settlement agreement, while general, did not demonstrate a specific intention to release a claim for deceit, which was not known or contemplated by the parties at the time of settlement.

The High Court ordered that the appeal be allowed, the judgment of the Full Court of the Supreme Court of New South Wales be set aside, and that the matter be remitted to the Supreme Court for determination of the deceit claim.