This case concerns a dispute regarding the interpretation and application of a Tomlin Order between Dawnvale Cafe Components Ltd ("Dawnvale") and Hylgar Properties Ltd ("Hylgar"). The main issue was whether the Tomlin Order barred Hylgar from issuing further proceedings for additional losses to those claimed in an earlier adjudication, the enforcement of which was settled via a Tomlin Order.
In summary, the Court held the Tomlin Order did not apply to Hylgar's new claim, meaning it can claim for additional heads of loss even though the proceedings settled by the Tomlin Order related to the same breach.
Background
Hylgar is a developer. In February 2020, it engaged Dawnvale for the design, supply and installation of mechanical works ("Works") at The Beacon, Hoylake, Wirral ("Contract"). However, the parties' relationship broke down in October 2020 which ultimately led to the Contract being terminated in November 2020. Each party alleged the other repudiated the Contract.
Tomlin Order
Hylgar successfully referred a dispute to adjudication regarding the true valuation of Dawnvale's works under the Contract. The adjudicator determined (i) that Dawnvale had committed the repudiatory breach; and (ii) the true value of the works that had been carried out. This resulted in an order for Dawnvale to repay Hylgar for its overpayment for the Works and to pay the adjudicator's fees ("Award").
Hylgar issued proceedings in the TCC to enforce the Award, plus interest and costs ("Enforcement Proceedings"). On 24 August 2021, the Enforcement Proceedings were settled by way of a Tomlin Order on the following terms:
BY CONSENT IT IS ORDERED THAT:
…(2) All further proceedings in this action be stayed upon the terms set out in the Schedule hereto except for the purpose of enforcing those terms…
Schedule
…(4) This Settlement Agreement shall immediately and be fully and effectively binding on the parties. The payment of the Settlement Sum is in full and final settlement of any and all claims the Claimant may have against the Defendant arising from or in connection with these proceedings.
(emphasis added)
New Claim
By a letter of claim dated 31 August 2023, Hylgar sought to recover further losses arising from the same repudiatory breach of contract ("New Claim") and threatened to refer the New Claim to adjudication. The New Claim was for consequential losses arising from Dawnvale's repudiatory breach. In response, Dawnvale issued Part 8 proceedings to dispose of the New Claim on the basis that it is barred by the Tomlin Order.
Decision
The Court assessed the language of the Tomlin Order and concluded that the New Claim neither arises from, nor is it connected with, the proceedings for the following reasons:
- Both parties received legal advice. If they intended to settle all potentially related future claims, they would have said so by using wording such as all claims arising from "the contract", "the works" or "the dispute(s)", rather than "the proceedings".
- If the parties intended to settle all potentially related future claims, paragraph 4 of the Tomlin Order would have expressly bound both parties, rather than just barring claims against Dawnvale.
- The purpose of paragraph 4 is to prevent Hylgar from re-arguing the true valuation of Dawnvale's works.
- Although the New Claim could be said to "arise from" the Contract or the dispute between the parties, it did not arise from the Enforcement Proceedings because there was no causal relationship.
- The New Claim is not "connected with" the Enforcement Proceedings, except in the most indirect manner.
For these reasons, Hylgar remained entitled to refer the New Claim to adjudication.
Key takeaway
This case reinforces the importance of precise language in settlement agreements. If the parties wish to preclude any and all potential claims, they must do so in unequivocal terms.
