27 April 2020
Disputes Quick Read – 66 of 87 Insights
Disputes Quick Read: Tomlin Orders – ensuring the confidentiality of settlement terms
Tomlin Orders are commonly used as a method of staying legal proceedings indefinitely following a settlement, save only for allowing the parties to apply to court to enforce settlement terms without having to commence new proceedings.
The question arises, however, whether the terms of the settlement – often confidential in nature – need to be included as a schedule to the Order and, if they are, whether there is a risk that they will become public if non-parties request access to the file under CPR 5.4C.
In our experience, parties try to avoid this issue in different ways. Some ask that the schedule be placed on the court file in a sealed envelope marked "confidential" and that it is not disclosed under CPR 5.4C without the parties' or court's consent, while others (where the court permits it) do not file the settlement terms at all, but simply refer to the existence of a settlement agreement.
Unfortunately, there is no consistent approach by the courts. The Commercial Court, for example, typically hands back terms following the granting of an Order, even where they are set out in a schedule or an annex. The Queen's Bench Division (QBD) did not adopt that practice.
The recently reported case of Zenith Logistics Services (UK) Ltd and others v Coury [2020] EWHC 774 (QB) highlighted this problem. It was an appeal from a QBD Master's decision not to grant Tomlin Orders with confidential schedules unless the parties could justify why confidentiality was required in accordance with the usual rules. He also declined to grant an Order that did not annex the terms, but simply referred to a settlement agreement that was not placed on the Court file.
Thankfully, the judge on appeal found it to be "entirely unobjectionable" for parties to file an Order referring to, but not setting out, the precise settlement terms. He confirmed – rightly in our view – that the open justice principle does not require parties to make their settlement agreements public. In his view, the QBD should not demand to see a settlement agreement which the parties have designated as confidential (save in certain circumstances, such as where litigants in person were involved) – which would have the effect of bringing its practice closer to that of the Commercial Court.
It must be right that, as a general rule, commercial parties should be permitted to resolve disputes on confidential terms and be confident that non-parties will not subsequently be able to obtain them from court files. Best practice remains to refrain from filing the settlement terms at court where possible.
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