Often in Court proceedings, the parties will agree terms of settlement of the claim and any counterclaim in a Consent Order, commonly referred to as a “Tomlin Order”
The terms of a Tomlin Order will typically stay the court proceedings (halt proceedings) on the terms of the settlement reached between the parties, which are often set out in a schedule to the order or in a separate Settlement Agreement.
In a recent case, the Commercial Court has held that an application to enforce the terms of a Tomlin Order and to enter judgement was an application to enforce contractual rights, and therefore subject to the six year limitation period for an action founded on a contract.
There does not appear to have been any previous decisive authority on whether the enforcement of a Tomlin order is subject to the Limitation Act 1980. The Court’s decision provides helpful clarification on this point and litigants should take note that, although fresh proceedings may not be required to enforce a Tomlin order, the right to do so is not indefinite.
In this case, the Claimants applied to enter judgment against the Defendants in accordance with the terms of a Tomlin Order, which provided that if the Defendants had failed to make payments due under the Order, then the Claimants were entitled to enter judgement.
The Order gave the parties the right to apply to Court to enforce its terms without the need for a new claim. The Defendants argued that the Limitation Act 1980 applied to the Claimant’s action in that it was out of time and that they could not therefore pursue judgement for the outstanding sums due.
Jacobs J acknowledged that proceedings to enforce a Tomlin order were something different to “an action founded on simple contract” under section 5 of the Limitation Act 1980. However, as such proceedings were to enforce contractual rights, it would be surprising if the use of a Tomlin Order insulated this type of claim from the normal limitation time limits, otherwise, there would never be a limitation time bar to the enforcement of a Tomlin order.
This also applied to the Claimants entitlement to enter judgment, which was simply a consequence of a breach of the order. There was no reason why the limitation period should not apply to the exercise of that right, arising in consequence of breach.
Accordingly a six year time limit applied to enforcement action. However, in concluding that the application was not time-barred, the Judge found that time period started running when the right to enforce the order arose and stopped when the application to enforce the order was made (not when it was determined).
Litigants with the benefit of a Tomlin order in their favour should ensure that all necessary enforcement action is taken in the relevant six year time period. Failure to do so will result in the loss of all rights under the terms of any settlement.
If you require legal advice on Tomlin Orders, please get in touch with our experts at Farleys Solicitors on 0845 287 0939 or email the team today.