£70 million Ferrari fraud claim rejected due to earlier settlement agreement

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A £70 million fraud claim involving a world-class collection of Ferrari cars has been thrown out by the High Court as the owner of the vehicles had signed an agreement releasing the defendants from all future claims.

Maranello Rosso Ltd had bought the collection of 33 Ferraris and 38 Abarths from the owners of an Italian museum. It financed the deal with a loan from Dutch company Lohomij. Maranello Rosso also entered into an agreement with Bohnams to sell the cars at auction in the USA and UK.

During the subsequent sales, one of the cars, a Ferrari 250 GTO, was sold for a world record price of US$34 million. However Maranello Rosso was unhappy with the results and failed to make repayments to Lohomij.

To resolve their dispute, Maranello Rosso, Lohmoji and Bonhams signed a settlement agreement, which released all the parties from any future claims. Later Maranello Rosso alleged dishonest behaviour by Bonhams and Lohmoji and tried to reopen its claim. It argued that the settlement agreement did not cover fraud.

In court, the judge considered previous rulings on settlement agreements, including Lord Bingham’s ruling in BCCI v Ali in 2002 that the courts would be slow to infer that parties intended to surrender rights and claims of which they were unaware.

However in this case the judge decided that the parties had all been professionally advised and had clearly wanted to draw a line under their past dealings. He agreed with Lohmoji and Bonhams that the agreement covered all future claims, even those involving fraud. He threw out Maranello Rosso’s claim and ordered it to pay the defendants costs.

James Burgoyne of Brunel Professions said: “The idea of signing a settlement agreement to draw a line under a dispute can be attractive, but it can backfire if a party regrets the release on the basis of subsequent events. Professional firms involved in disputes should think carefully about whether they may wish to make future claims, particularly if they suspect dishonesty, before they sign a release. If they wish to retain a particular type of claim, they should make sure clear wording identifying the retained claims is included in the settlement agreement.”

Reports about the case have been published by Herbert Smith Freehills and Business Leader.

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