SHUM HO SEUNG v. SHUM FOO HANG (as the administrator of the estate of SHUM KWOK HANG, deceased

HCMP 3134/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 3134 of 2016

_____________

_____________

_____________

______________

DECISION

______________

The Application

1.  This is an application by the defendant by summons dated 16 November 2017 (“Variation Summons”) to vary the Schedule to a Tomlin order dated 16 August 2017 as follows:

“… in that the following paragraphs shall substitute paragraphs (2), (3) and (4) under the ‘Schedule’ of the said Order:-

1. After the payment of the aforesaid sum to the Plaintiff, the Defendant shall vest the Plaintiff’s rights in the property known as Flat No 2, 32^nd Floor, Block N, Amoy Gardens, No 77 Ngau Tau Kok Road, Kowloon, Hong Kong (the Amoy Garden property) onto the Defendant.

2. The Defendant do sell the 東莞巿常平豪苑廣場第15座6樓A室 and he shall use his best endeavours to obtain the best price he could practically obtain in the open market.

3. The Defendant shall pay the Plaintiff her share of the sale proceeds of東莞巿常平豪苑廣場第15座6樓A室 agreed at RMB200,000.00 less reasonable costs and disbursements incurred within 3 months hereof irrespective of whether the said property has been sold and upon receipt of RMB200,000.00 less the share of the reasonable costs and expenses incurred in the sale, the Plaintiff’s interest in the property will wholly extinguish.

4. There be no order as to costs of this application.

Dated the 16 November 2017.”

The claim in the Originating Summons

2.  On 10 November 2016, the plaintiff issued the Originating Summons against the defendant seeking:

“1 a declaration that:-

(a) only the surviving siblings of the Deceased are entitled to share in the estate of SHUM KWOK HANG (岑國亨), deceased (‘the Estate’);

(b) the Defendant has been in wrongful occupation of Flat No. 2, 32^nd Floor, Block N, Amoy Gardens, No 77 Ngau Tau Kok Road, Kowloon, Hong Kong (‘the Premises’) without the consent of the surviving siblings of the Deceased (other than himself) since January 2015;

(c) the Defendant is not entitled to recover from the Estate any renovation cost in relation to the Premises;

(d) the Defendant (and/or his agent) is not entitled to recover any amount as remuneration for personal trouble and loss of time in the execution of his duty as the administrator of the Estate;

2. An order that:-

(a) the Defendant be required to pay all rents arising from or in connection with the wrongful occupation of the Premises;

(b) the Defendant be removed as the administrator of the Estate;

(c) the Plaintiff be appointed to succeed as the administrator of the Estate in place of the Defendant;

3. Costs;

4. Interest; and

5. Further or other relief.”

3.  On 16 August 2017, ie the 2^nd day of trial of the Originating Summons, the parties reached a settlement of their disputes.  They chose to adopt the Tomlin Order format to record their compromise. 

The Court Order

4.  The Order (“Court Order”) that I made read as follows:

“ORDER

UPON the joint application of the Solicitors for the Plaintiff and the Defendant by way of Consent Summons filed herein on 16^th August 2017 (‘the Consent Summons’)

AND Upon hearing counsel for the Plaintiff and counsel for the Defendant

BY CONSENT, IT IS ORDERED that:-

1. All further proceedings in the action herein between the Plaintiff and the Defendant be stayed upon the terms set out in the Schedule annexed hereto except for the purpose of carrying out the terms and conditions under the Schedule into effect and that each of the parties shall be at liberty to apply to a Judge or Master as appropriate for enforcement of the said terms;

2. Notwithstanding any previous orders for costs to the contrary, the Defendant do pay the Plaintiff’s costs in the agreed sum of HK$680,000.00 within 7 days from the date of the signing hereof; and

3. There be no order as to costs of his Consent Summons.

Dated the 16^th day of August 2017”

Schedule to the Tomlin order

5.  The Schedule to the Court Order (“Tomlin Schedule”) read as follows:

“SCHEDULE

1. For the purpose of full and final settlement of the action herein between the Plaintiff and the Defendant, the parties herein agree to enter into agreement according to the terms and conditions as hereinafter more particularly described:

(1) The Defendant do pay to the Plaintiff the sum of HK$2,500,000.00 inclusive of interests (sic) within 7 days from the date of the signing of his consent summons, the same sum being the Plaintiff’s 1/3^rd share of the right benefit and entitlement of the deceased estate both real and personal after taking into account of the reasonable expenses incurred by the Defendant in obtaining of (sic) the Letters of Administration and in the course of the administration of the estate of the deceased; such sum shall not include the Plaintiff’s entitlement of net proceed of sale and (3) and (4) below;

(2) After the payment of the aforesaid sum to the Plaintiff, the Defendant shall vest the Plaintiff’s right in the Amoy Garden property onto the Defendant himself;

(3) The Defendant do sell the東莞巿常平豪苑廣場第15座6樓A室within 3 months from the day of signing hereof at market value at a reserved price of RMB600,000.00;

(4) The Defendant do pay to the Plaintiff her share of the proceeds of 東莞巿常平豪苑廣場第15座6樓A室less reasonable costs and expenses incurred within 5 days after completing the sale thereof;

(5) Subject to the carrying out and full performance of the agreed terms and conditions herein by the Plaintiff and the Defendant, all further pending hearing dates fixed under the above action including all summons in relation thereto be vacated with no order as to costs;

(6) As soon as the carrying out and upon the full performance of the agreed terms herein by the Plaintiff and the Defendant, a consent order be signed by the parties for whole withdrawal of all proceedings against each other in this action with no order as to costs;

(7) There be liberty for either party to apply before a Judge or Master as may be appropriate.

Dated this 16^th day of August 2017”

“Authorities” relied on by the defendant

6.  The only mention of authority in “The Defendant’s Skeleton Submission” submitted by TC Lau & Co is in §§2 and 3 which read as follows (written exactly as in the original):

“2. The Defendant’s application is made pursuant to Order 44 Rule 3 of the Rules of the High Court.

3. Order 44 Rules 1 and 3 states, inter alia that:-

R(1) Where a Judgment given in a cause or matter contains directions which make it necessary to proceed in Chambers under the Judgment, the Court may, when giving the Judgment, or any time during proceedings under the Judgment, give further directions for the conduct of those proceedings ……

R(3) The Court may revoke or vary any directions given under the Rule.”

7.  Mr Billy NP Ma of TC Lau & Co had not supplied a copy of Order 44 rule 1 or rule 3.  He was wrong both about the rule numbers and contents.

8.  Contrary to the bare assertions of Mr Billy NP Ma, Order 44 rules 1 and 3 of The Rules of the High Court, Cap 4A read as follows:

“1. Application to orders (O. 44, r. 1)

In this Order references to a judgment include references to an order.”

“3. Directions by the Court (O. 44, r. 3)

(1) Where a judgment given in a cause or matter contains directions which make it necessary to proceed in chambers under the judgment the Court may, when giving the judgment or at any time during proceedings under the judgment, give further directions for the conduct of those proceedings, including, in particular, directions with respect to—

(a) the manner in which any account or inquiry is to be prosecuted,

(b) the evidence to be adduced in support thereof,

(c) the preparation and service on the parties to be bound thereby of the draft of any deed or other instrument which is directed by the judgment to be settled by the Court and the service of any objections to the draft,

(d) without prejudice to Order 15, rule 17, the parties required to attend all or any part of the proceedings,

(e) the representation by the same solicitors of parties who constitute a class and by different solicitors of parties who ought to be separately represented, and

(f) the time within which each proceeding is to be taken,

and may fix a day or days for the further attendance of the parties.

(2) The Court may revoke or vary any directions given under the rule.”

9.  Order 44 rule 3(1) is applicable to directions “which make it necessary to proceed in chambers under the judgment”, emphasis supplied.  TC Lau & Co have not shown how it is alleged to be “necessary to proceed under the judgment (referred to as “Court Order" in this case).

10.  The defendant has not identified any authority to satisfy me that I have jurisdiction to vary the Tomlin Schedule.

Plaintiff’s position

11.  The plaintiff said she had no objection except on the question of costs.  However, her counsel, Mr Wallace Cheung wrote in §6 of Plaintiff’s Skeleton Arguments that:

“6. For the information of the Court, the Plaintiff’s application to vary the Order might affect the interest of other beneficiaries. In Halsbury’s Laws of England, 4^th Ed, Vol.31 1982¹, paara.390, p.286, text to nn.6-8, it was stated that ‘Once a consent order has been entered, it cannot be set aside by Court in the original action, even if it were by mistake, but it may be altered with the consent of all the parties, provided that to do so will not prejudice a third person”.

See: Halsbury’s Laws of England, 4^th Ed, Vol. 31, 1982¹, para.390, p.286, text to nn.6-8, citing:-

Australasian Automatic Weighing Machine Company v Walter [1891] WN 170² (An order made by consent could not be altered without consent)”

12.  What Mr Cheung wrote was difficult to understand. Was he objecting (contrary to his lay client’s instructions) or was he not?  Why cite an old edition published 25 years ago and a short note of a case decided in 1891.

Court’s power to vary the Tomlin Schedule

13.  There is a world of difference between the Court Order and the Tomlin Schedule.  The former is an order of the court.  The latter is not an order of the court – it is a settlement agreement between the parties. 

14.  I can do no better than quoting the elucidating judgment of Ramsey J in Community Care North East (a partnership) v Durham County Counil [2012] 1 WLR 338:

“24 … the schedule to a Tomlin order sets out an agreement which has been made between the parties as to the terms on which the proceedings have been settled. In general once the parties have entered into an agreement the ability to set aside or vary that agreement depends on there being a remedy in relation to that contract. Otherwise the court is only concerned with the meaning of the agreement in the schedule and this depends on normal principles. As Lord Steyn said in Sirius International Insurance Co (Publ) v FAI General Insurance Ltd [2004] 1 WLR 3251 , para 18: ‘The settlement contained in the Tomlin order must be construed as a commercial instrument.’

25. In my judgment where the terms are contained in a schedule to the Tomlin order the position is different from the terms being incorporated as part of a consent order. As set out in the commentary in Civil Procedure 2010 a party can settle a case and seek a court order in one of two ways. First it can seek to incorporate the terms of the settlement within the body of the order so that those terms are part of the court order. The alternative way is by way of a Tomlin order under which the parties seek a stay of the proceedings on terms that the parties will comply with the agreement in the schedule, with liberty to apply to enforce those terms. The court approves and orders the consent order in the first case but only approves and orders the terms of the order but not the terms of the schedule in the second case.

26 In the case of a Tomlin order a stay is given on the basis that the agreement is complied with. The terms of the schedule are not ordered by the court. Frequently the terms of the agreement in the schedule to a Tomlin order are detailed and contain matters which go beyond the scope of the original dispute in the proceedings.

27 As a general rule, I cannot see that the provisions of the CPR either in the overriding objective in CPR r 1.1 or in the requirement for active case management under CPR r 1.4 , as referred to in the Ropac case [2001] L & TR 93 , have any application to the terms of the agreement in the schedule to a Tomlin order which have been freely entered into by the parties as a binding contract. As set out in Weston v Dayman [2006] EWCA Civ 1165 , CP r 3.1(7) gives the court power to vary or revoke an order and Arden LJ proceeded on the basis that it applied to the consent order in that case, without deciding that it did. In principle, it would seem that the provisions of the CPR might permit the court to vary or revoke a consent order but, even in that case, a major and often determinative factor in the exercise of that power would be the fact that there was an agreement: see the Ropac case [2001] L & TR 93 and Weston v Dayman [2006] EWCA Civ 1165 . Equally, I see no reason why that same principle would not apply to the order part of the Tomlin order.

28 In relation to the terms of the agreement incorporated in the schedule to the Tomlin order, other considerations apply. The terms of the schedule are not an order made by the court. The court obviously has the ability to interpret that agreement on well known principles of interpretation, as set out in the Sirius case [2004] 1 WLR 3251 and would have to do so when it was asked to take any enforcement action under the standard liberty to apply for that purpose in the Tomlin order. Likewise the court has the ability to deal with the terms of that agreement in the same way as any other contract. That would include, for instance, a claim for rectification or a claim that the agreement was unenforceable for some reason. If the court decided that the agreement should be rectified or that it was unenforceable then the court may well take the view that they would vary or revoke the terms of the order part of the Tomlin order, to take account of that determination. To what extent, though, would the court otherwise vary the terms of the agreement incorporated as the schedule to the Tomlin order?

29 First, if the terms of the consent order part of the Tomlin order included an express liberty to apply to vary the terms of the schedule either generally or in particular circumstances, the court would have the power to do so. However the scope of the liberty to apply would have to be clearly defined. I was referred to Cristel v Cristel [1951] 2 KB 725 in which there was a dispute between the husband and wife and an agreement was made for possession of the matrimonial home, suspended until the husband provided suitable alternative accommodation. The order gave liberty to apply. The husband wished to vary the order as to the type of accommodation which had to be provided. The Court of Appeal held that the liberty to apply did not allow for the variation of the order in the manner applied for.

30 In dealing with the scope of the express liberty to apply, Sommervell LJ said, at p 728:

‘‘Liberty to apply’ is expressed, and if not expressed will be implied, where the order drawn up is one which requires working out, and the working out involves matters on which it may be necessary to obtain the decision of the court. Prima facie, certainly, it does not entitle people to come and ask that the order itself shall be varied.’

31 Denning LJ said, at p 731:

‘If there were an unforeseen change of circumstances, for instance, if the wife were left by will another house, or if she took an adulterer to live with her in this house, I should have thought that the ‘Liberty to apply’ would enable the court to remedy the position.’

32 Also in S v S (Ancillary Relief: Consent Order) [2003] Fam 1 the court had to consider the basis on which the terms of an ancillary relief order on divorce could be varied. There was a consent order and Bracewell J said as follows at paras 4 and 5:

‘4. The authorities cited before me demonstrate that the grounds for setting aside a consent order fall into two categories. (1) Cases in which it is alleged there was at the date of the order an erroneous basis of fact eg misrepresentations or misunderstanding as to position or assets. (2) Cases in which there has been a material or unforeseen change in circumstances after the order so as to undermine or invalidate the basis of the consent order, as in Barder v Barder [1988] AC 20 , and known as a supervening event.

‘5. In many of the decided authorities, contractual terms such as ‘fraud’ and ‘misrepresentation’ are used, but it is important to remember that court orders for financial provision in matrimonial proceedings derive their authority not from the agreement of the parties but from the approval of the court and the resulting consent order: see Jenkins v Livesey (formerly Jenkins) [1985] AC 424 and Xydhias v Xydhias [1999] 2 All ER 386 .’

33 The council seek to rely on the court's power to amend the terms of the schedule to the March 2009 order because they say that there has been a change in circumstances which could not have been foreseen. They submit that the variation to the March 2009 order is no more than a clarification to take account of circumstances which the parties cannot have had in mind when entering into the March 2009 order, namely that the tender process would not lead to an award after the re-run interview but the council would decide that it should re-run the whole tender process. For reasons set out below, I do not accept that this would come within the relevant changed circumstances.

34 However, in any event, I do not consider that the court has a power to vary the agreement in the schedule to the Tomlin order on the basis sought. The decisions in Cristel v Cristel [1951] 2 KB 725 and S v S (Ancillary Relief: Consent Order) [2003] Fam 1 , in my judgment, are directed at the circumstances in which the terms of a consent order can be varied. Whilst those cases relate to matrimonial proceedings where there may be other applicable principles, I accept that the principle may be extended to the power of the court to vary consent orders generally. However, when it comes to a Tomlin order, I can see no justification for a general power for the court to vary the terms of the agreement set out in the schedule on the basis that there has been a material or unforeseen change in circumstances after the order was made which might undermine or invalidate the basis of the agreement, unless that would give rise to a power to do so as a matter of the law of contract. Such a procedural power would provide an additional remedy in cases where the agreement is incorporated into a Tomlin order, which is not available in a case where the parties merely enter into a separate settlement agreement and leave any question of enforcement to a further set of proceedings. I do not see that this is the effect of a Tomlin order where the agreement in the schedule does not form part of the terms ordered by the court.

35 In the current case it is also argued by the council that the phrase ‘these proceedings be stayed save for the purposes of giving effect to the terms, for which there be liberty to apply’ is sufficient to give rise to a liberty to apply to vary the terms of the agreement in the schedule. I do not accept that this is correct. This is not a case where there is a general liberty to apply which gives a right to vary the agreement. Rather it is a liberty to apply to give effect to those terms. In my judgment that requires the court to give effect to the terms of the settlement agreement as set out in the schedule. It is therefore a liberty to apply to enforce the terms not to vary them.

36 Accordingly, I do not consider that the court has power to vary the terms of the settlement agreement in the schedule to the Tomlin order, certainly in the circumstances relied on in this case. There is no general power to do so in respect of settlement agreements and I do not consider that incorporating the agreement into a Tomlin order changes that position.”

Stay of proceedings under Court Order

15.  Neither party addressed me on the stay of proceedings under the Court Order which provided that:

“All further proceedings in the action herein between the Plaintiff and the Defendant be stayed upon the terms set out in the Schedule annexed hereto except for the purpose of carrying out the terms and conditions under the Schedule into effect and that each of the parties shall be at liberty to apply to a Judge or Master as appropriate for enforcement of the said terms.”

16.  The only exception to the stay is “except for the purpose of carrying out the terms and conditions under the Schedule into effect”.  The defendant’s application does not seek to “carry out” the scheduled terms and conditions, but to vary some of the scheduled terms and conditions.  The application does not come within the exception.  The defendant cannot proceed under the proceedings which have been and remain stayed.

17.  The “liberty to apply” under the Court Order does not assist the defendant for the simple reason that it must be “for enforcement of the said terms”.  The defendant’s application does not seek to “enforce” the scheduled terms and conditions, but to vary some of the scheduled terms and conditions.

Conclusion

18.  I have no power to accede to the Variation Summons.

Disposition

19.  I dismiss the Variation Summons.

20.  The plaintiff did not object to the Variation Summons.  It should not be entitled to costs on dismissal of the Variation Summons.

21.  I make an order nisi under Order 42, rule 5B(6) of the Rules of the High Court, Cap 4A that there be no order as to costs of the Variation Summons.