Disposing of claims: final orders, please

There is a popular misconception that the most appropriate way to dispose of claims, in which terms for settlement have been agreed after the issue of proceedings, is by way of a Tomlin order. This article aims to explode that myth and to explore why it may have arisen.

The 'Tomlin order' owes its name to Tomlin J following his decision in Dashwood v Dashwood (1927) 71 SJ 911. Paragraph 9.15 of the Chancery Guide states that 'the draft order should be drawn so as to read, with any appropriate provision in respect of costs, as follows':

And the parties having agreed to the terms set out in the attached schedule

IT IS BY CONSENT ORDERED

That all further proceedings in this claim be stayed except for the purpose of carrying such terms into effect

AND for that purpose the parties have permission to apply'

A Tomlin order simply places a stay on proceedings in terms agreed between the parties. As such, it does not necessarily bring finality to the proceedings but only an opportunity for the parties to implement terms for settlement without further court involvement.

If the agreed terms are not honoured the aggrieved party is not in a position to take enforcement action without first applying to lift the stay in proceedings and seeking an enforceable order in the terms originally agreed.

The additional work entailed in obtaining an enforceable order not only delays the recovery process but also has the potential to substantially increase the costs of proceedings.

Rarely justified

When the terms agreed for settlement require only the payment of an agreed sum in damages within a limited period, there is rarely any justification in staying the proceedings and the sensible course is usually to seek a final order in the terms agreed. Any failure then to pay in accordance with the order is immediately enforceable as a judgment debt.

In some cases it may be seen as negligent to file a Tomlin order as opposed to a final order. If the terms for settlement require only payment of money by a date and payment is not made, the time taken to apply to lift the stay and to obtain an order may allow other creditors to steal the march in taking enforcement action and thereby achieve priority.

If the terms for settlement are not straightforward, or if there is a justifiable reason for not seeking a final order, then the Tomlin form of order should be employed. For example, if the terms for settlement are beyond the court jurisdiction or for confidentiality.

Confidentiality

If it is by reason of confidentiality, do not assume that the schedule cannot be disclosed if made the subject of a request for disclosure to a non-party CPR Part 5.4C. The only sure way of preventing such disclosure is by recording in the schedule that the terms are set out in letters of a certain date exchanged by the parties.

An alternative is to file a document setting out the confidential terms in a sealed envelope not open to inspection without permission of a judge of the court. However, that does not prevent an application being made for disclosure under CPR Part 5.

It should be noted there is no reason why a final order should not recite agreement that the order is being made without admission of liability.

Registration

A judgment is not automatically registered in the Register of County Court Judgments. Many judgments or orders are exempt from registration under regulation 9 of the Register of Judgments, Orders and Fines Regulations 2005 (SI 2005/3595). There is also an absolute right under regulation 11(2) to cancel the registration if paid within one month of the judgment. In practice, the County Court does not refer judgments for registration in contested cases unless an application to enforce the judgment is received.

When agreeing terms for settlement the default position should be to obtain a final order and only if circumstances dictate by a Tomlin order.

The court can refuse to approve the form of order but it cannot interfere with the terms set out in the schedule. Dealing with such a refusal can be a time-consuming and costly business for the parties. You have been warned!

Copyright & permissions