Complying with the Overriding Objective and correctly recording the Terms of Settlement: Consent Orders-v-Tomlin Orders

The Civil Procedure Rules (‘CPR’) tell us, from the outset at rule 1.1, that “the overriding objective of the Civil Courts in England and Wales is to deal with cases justly and at proportionate cost”.

All parties must adhere to the overriding objective. Simply, parties should avoid judicial adjudication with the aim of settling their dispute at the earliest opportunity. Parties who stray away from this principle are at liberty of incurring the criticism of the courts and subjects of negative costs orders.

One of the key proponents of settlement is protecting the party’s respective positions. In practice, this is carried out by recording the terms of the agreement through either a Consent Order or a Tomlin Order.

A Consent Order may be used when recording either a simple agreement or judgment for payment of money. Equally a Consent Order may be appropriate for dismissal of proceedings, discontinuance or withdrawal of proceedings. Generally, the court will not interfere with the terms of a Consent Order, save on the grounds of fraud, mistake, frustration or ultra vires.

In comparison, Tomlin Orders are often used for complex terms of settlement. The origin of the Tomlin Order can be traced back to Mr Justice Tomlin his decision in the case of Dashwood v Dashwood [1927] WN 276, on 1 November 1927. Despite the fact that Mr Tomlin went on to become a Lord of Appeal, his name remains synonymous with this form of order, already widely used in 1927. On the day after his decision, he issued a practice note setting out the desired form of such an order. This practice note remains in circulation to this day and is considered the go-to template for example at paragraph 40.6.2 of the WhiteBook.

The Order stays the claim on agreed terms set out in a schedule to the Order. Similar to a Consent Order, certain terms must be included and these will be open to public inspection. Whilst the terms detailed in the Schedule remain confidential between the parties.

A Tomlin Order brings the proceedings to a conclusion save for the purposes of implementing the agreed terms. The form of order is prescribed by the Chancery Guide at paragraph 9.16.

The important characteristics of this type of order are as follows:

  • Unlike orders by consent, a Tomlin Order constitutes a binding contract between the parties;
  • The compromise, as recorded in the Schedule to the Order, may go beyond the subject matter of the litigation;
  • The Court’s jurisdiction is limited to ensuring the correct form of words has been used in the order – the Court is not concerned with the terms agreed in the Schedule. Once the Order has been made, the Court’s role thereafter is supervisory;  and
  • Post approval of the Order, the Court can only re-open the dispute between the parties that was detailed where it could intervene with any other contract.

As per the overriding objective, Tomlin Orders symbolise a useful means of settling a claim without the continuing need to involve the Court. A fundamental advantage of the Tomlin Order remains, where drafted correctly, that the Order may be enforced without the need for fresh proceedings. However a further application is required to enforce the terms of Order.

Pursuant to the agreed terms of the Schedule comprising a binding contract between the parties, any breach or enforcement action will be subject to the six-year limitation period for contractual claims under the Limitation Act 1980. As confirmed by the Commercial Court in Bostani and others v Pieper and another [2019] EWHC 547 (Comm).

In conclusion, a Tomlin Order remains a highly prized and useful instrument in settling a claim. With Court time becoming ever more precious, the ability to settle a dispute amongst the parties in clear and distinguished terms should not be underestimated.

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