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Consent orders: is reaching settlement only half the battle?

So, the other side has finally agreed terms of settlement, and all you have to do now is draw up a consent order. That should be easy enough, shouldn’t it? Well, perhaps not.

We receive a large number of practitioner queries on consent orders, which leads me to wonder whether drafting the order and getting it approved might be almost as stressful as negotiating the settlement. The reappearance of a consent order, with a cryptic message from the court saying that it cannot be approved, is not only unwelcome, but may also lead to a guessing game in the office as to precisely what is wrong.

The level of interest in this topic among our subscribers got me thinking about practical pitfalls to watch out for when drafting consent orders. There are many points that could be made, but in no particular order, these are my suggested “Top 3”.

1. Take care with discontinuance, the court may not be prepared to order it

The White Book (at paragraph 40.6.2) states that “the court cannot order a party to discontinue a claim”. Speaking personally, I have some difficulty in understanding why, where the parties have agreed on discontinuance, the court cannot order it by consent. After all, in this scenario, there is no real element of compulsion: all the court is being asked to do is give effect to the consensual termination of the proceedings.

However, the position on the ground, as confirmed by practitioners regularly dealing with the issue, is that a consent order with a provision for discontinuance in the body of the order may soon wing its way back to you, unapproved. Using a recital such as “Upon the claimant discontinuing the claim” should be an effective way of avoiding rejection of the order.

Sometimes, seeing that proceedings are “discontinued” is psychologically important to a defendant, and they will insist on it. Likewise, as a subscriber recently pointed out, a claimant might dislike the idea of their claim being dismissed. However, if there are no sensitivities of this nature, the parties could opt for a dismissal of the proceedings by consent, which avoids procedural issues arising from discontinuance.

Under CPR 40.6(2), if none of the parties is a litigant in person and there is no other provision to the contrary, a consent order for dismissal does not require court approval. In those circumstances, a court officer may enter and seal it.

Somewhat surprisingly, we have received a few reports from practitioners that (even) orders providing for dismissal of proceedings by consent have been rejected. Referring to CPR 40.6(2) in a covering letter may help to prevent this (though practitioners should be aware that CPR 40.6 does not apply in the Commercial Court or Mercantile Court).

2. Use Tomlin orders wisely, and keep them short and sweet

Tomlin orders can be extremely useful where terms of settlement are complex, go beyond the strict confines of the dispute before the court, or the parties want privacy. However, they have no place when resolving something like a simple money claim. In that case, all you usually need is a consent order for X to pay Y a specified sum in full and final settlement of Y’s claim by a specified date, plus an appropriate provision for costs.

If you do need a Tomlin order, it is important to respect the boundary between what goes in the order itself, and what goes in the schedule (or settlement agreement). The court’s role is usually confined to implementing the stay of proceedings and dealing with costs (plus payment out of any monies sitting in court).

It is crucial to make sure that any order for costs to be assessed goes into the order (rather than the schedule or settlement agreement), so that the assessment can actually take place. By contrast, the detailed terms of settlement are not the court’s concern, so if they appear in the body of the order, I would expect it to be rejected.

A correctly drafted Tomlin order is usually very short. A long and detailed draft would suggest that something has gone wrong – most probably that matters which ought to be in the schedule or settlement agreement have crept into the order.

3. Be careful what you say, or at least how you say it

A consent order is, by definition, consensual – but it is also an order of the court. That might seem blindingly obvious, but judges are sometimes invited to approve consent orders which (although they reflect the gist of the parties’ agreement) seek to confer on the court a jurisdiction which it does not have.

For example, in a simple money claim, a draft consent order which requires one party to “accept” a sum of money from the other (rather than requiring one party to pay the other) will most probably be sent back for redrafting. Practically speaking, of course, you might justifiably ask “What’s the difference?”, but from a technical point of view, the court can only order payment.

As an aside, when formulating a Tomlin order, careful thought needs to go into drafting the detailed terms of the schedule or settlement agreement, as they must be capable of enforcement by the court if necessary. Since these terms will not form part of the court’s order, the judge is unlikely to critique your drafting. However, any imprecision at this stage could leave your client high and dry in the unfortunate event that you have to seek enforcement of the agreed terms – which is a topic for another day.

Practical Law Dispute Resolution Natalie Stopps

2 thoughts on “Consent orders: is reaching settlement only half the battle?

  1. Reference your comments about discontinuing, there do indeed seem to be some misunderstandings about it, but isn’t the position this in a nutshell – 1. it’s something a party does, rather than something the court orders; 2. whether a party can just do it or not depends on the stage the action has reached; particularly 3. once it’s gone beyond a certain stage a party needs the court’s permission to discontinue, so your consent order may need to provide for this; and of course 4. it has cost consequences, as you would expect of a tacit admission that the case shouldn’t’ve been started, and if you want to avoid those which would otherwise follow, you need to provide for this too in your order – if you-re using the Tomlin format, as you say it must go in the order, it’s no good putting it in the schedule.

    Regards

  2. A propos discontinuance – whilst the court will tend to approve “claim dismissed” (though I note what Natalie says about reports of refusal), I’ve found that claimant litigants in person sometimes object, thinking there’s some imputation that their claim was ill-founded if it is now to be “dismissed”, or that it makes them in some way the loser.
    I’ve sometimes needed to put “the claimant shall… discontinue the claim” in the schedule of a Tomlin order to get both sides to agree.

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