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Nothing more to stay: Consent Orders and Tomlin Orders in the Court of Appeal

Robert Dunn examines the case of Vanden Recycling Limited v Kras Recycling Ltd [2017] EWCA Civ 354, in which the Court of Appeal held that, in substance and effect, a consent order was the same as an order made following judgment, and gave guidance on the differences between a consent order and a Tomlin order. David Reade QC, of Parklane Plowden Chambers, appeared on behalf of the Appellant.

  

THE FACTS AND THE ISSUE

 The Claimant, Vanden Recycling Ltd, a plastic waste management company, brought an action against Mrs Tumulty, a former employee of theirs, alleging that she had been providing sensitive information obtained during her employment to two other companies, Kras and Bolton. Kras and Bolton had had previous business relationships with Vanden. Seeking injunctive relief and damages, Vanden alleged that:

 

  1. Mrs Tumulty had therefore committed a breach of her employment contract;
  2. Kras and Bolton had induced this breach of contract;
  3. Mrs Tumulty, Kras and Bolton had all conspired to breach Mrs Tumulty’s employment contract;
  4. Mrs Tumulty, Kras and Bolton had all breached the duties of confidentiality that they individually owed to Vanden;

 Following disclosure, Bolton agreed by consent order to pay Vanden ‘the total sum of £275,000 in full and final settlement of the Claimant's claims against the Second Defendant in these proceedings, together with interest and costs’. Moreover, the order stated that further proceedings should be stayed, except for the purpose of enforcing the terms of the order. Mrs Tumulty subsequently entered into a consent order with Vanden, whereby she admitted every allegation, and agreed for ‘damages to be assessed in due course’.

 Upon Bolton satisfying the first consent order, Kras made their move. Kras applied for summary judgment, on the basis that the consent order was equivalent in substance and effect to a judgment order. Therefore, Kras said, as they were purported joint tortfeasors with Bolton, Bolton’s satisfaction of the claim extinguished Vanden’s causes of action against them. The learned Circuit Judge agreed.

 Vanden appealed on the basis that the order was not equivalent to a judgment, and that even if it was, it did not operate to bar all of their claims against Kras.

  

THE LAW

 Hamblen LJ began by confirming the proposition that a satisfied judgment barred further claims against joint tortfeasors liable for the same damage. This is trite law, as set out in Jameson v CEGB [1988] 1 AC 455. However, what about satisfied compromise agreements? Citing Vol 97 of Halsbury’s Laws (para 449), and Heaton v AXA Equity [2002] UKHL 15, the learned Judge held the position will not always be the same. As Lord Bingham held in Heaton, whilst a satisfied judgment is automatically taken to fix the Claimant’s loss, a satisfied compromise agreement will only have the same effect if the parties intended that the satisfied sum was ‘intended to fix the full measure of the Claimant’s loss’.

 With that in mind, what was the consent order in this matter? Was it a tantamount to a judgment, or was it a mere compromise agreement that required Kras to show the requisite intention for Vanden to be barred?

 THE DECISION

 Firstly, the Court of Appeal held that the consent order was capable of barring Vanden’s claims against Kras. The consent order clearly required Bolton pay a sum in satisfaction of Vanden’s claims, and it was therefore a ‘final order’. If the matter had gone to trial, the final order would have been similar. In its substance and effect, the consent order was the same as a judgment order, and should therefore be treated as such [49]. Therefore, as this consent order was for all purposes ‘a judgment’, it automatically barred claims against other defendants for the same damage. The question of the parties’ intention as to whether the full measure of Vanden’s loss was fixed, did not arise [51]; Bryanston Finance Ltd v de Vries [1975] 1 QB 703. No doubt this was a relief for Kras, considering the references in the order’s terms to ‘continuing claims against the First and Third Defendants’.

 Vanden had attempted to suggest that this agreement was effectively a Tomlin Order, and thereby a mere compromise agreement. Vanden relied upon the references in the order to the claim being ‘stayed’ and to a ‘full and final settlement’, hallmarks of a Tomlin Order [47]. However, in this case these terms were part of the order, not a schedule, and could be enforced without the need for further proceedings. The order ended the proceedings, and there was nothing left to stay [48].

 Secondly, Hamblen LJ held that it did not however follow that all of Vanden’s claims were barred [53-54]. The claim for conspiracy was barred, it being a claim for the same damage. However, the injunctive relief claim could not be barred by the satisfaction of the damages claim. Neither could the claims against Kras for breach of confidence and for inducing breach of contract. This was because of the individual nature of these claims, and because the pleadings did not particularise that the losses incurred were for the same damage. Moreover, it was not a problem that the Claim Form limited damages to £100,000 when Bolton had already paid £176,000: the Claim Form figure was only an estimate and Vanden’s witness statement suggested a loss of over £300,000. Therefore, the only barred claim was the conspiracy claim [63]

  

COMMENT

 This judgment is particularly useful for practitioners. Firstly, the case is a helpful reminder about the differences between a Consent Order and a Tomlin Order, and the pitfalls of using the wrong one. If a Claimant wishes to pursue other defendants for the same damage, they should not use a Consent Order. Instead, they should use a Tomlin Order, which will only stay the claim, and preserve the right to bring proceedings against other defendants. It may also be advisable for a Claimant to expressly reference this right to bring proceedings against other Defendants. Usefully, Hamblen LJ goes even further in clearly setting out the differences [45]:

           

“A breach of a consent order may be punishable as a contempt in appropriate circumstances, whilst the remedy for breach of the scheduled terms of a Tomlin order is a claim for breach of contract. In terms of enforcement, the remedies in CPR Part 83 are available for breach of a consent order but not for breach of a Tomlin order. Variation of a consent order is possible in the interests of justice, whilst rectification would be necessary to vary the contractual terms of a Tomlin order. Confidentiality for a consent order requires CPR 39.2 to be satisfied, whilst it can be contractually agreed for a Tomlin order. An appeal of a consent order is possible subject to the usual permission test, whilst there is no appeal from the agreed terms of a Tomlin order

 Secondly, if the parties do elect to use a compromise agreement, rather than a consent order, Hamblen LJ’s repetition of the guidance given by Lord Bingham in Heaton is a helpful reminder as to how parties can best protect their positions. In brief:

 

  1. Releasing one concurrent tortfeasor does not in itself release another;
  2. An agreement between A and B has no effect on C, unless A agrees with B to forgo his rights against C, which either B could enforce on behalf of C, or C could enforce if entitled under common law or by the Contracts (Rights of Third Parties) Act 1999;
  3. The key question is whether the agreement represents the full measure of A’s loss. The more inadequate the compensation, the greater the need for B to clearly protect himself against further claims by A;
  4. If the A-B agreement includes a reservation that A can bring a claim against C, that will indicate the A-B settlement does not represent the full measure of A’s loss. However, the absence of such a reservation is of no significance;
  5. If B wishes to protect himself from a contribution claim by C, he could seek an undertaking from A in the A-B agreement not to pursue C, or B could seek an indemnity from A in respect of any sums A may subsequently recover against C.

 

 

ROBERT DUNN

 

Pupil Barrister

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