Lucky Wealth Consultants Ltd v. Horizon Technologies International Ltd
Read the full judgment text of HCA 248/1989 on BabelCite. This High Court CFI judgment was delivered on 22 February 1990.
1. On the 9th May 1989, a compromise was reached between the plaintiff and the defendant. On the same day, a Deed of Settlement was executed and a Tomlin Order was procured. The Deed of Settlement was entered into not only as between the plaintiff and the defendant but also by three of their respective associates. Clause 1(a) of the Deed required an application to be made after its execution for a Tomlin Order in prescribed terms. I made the Tomlin Order as requested. It is patently clear, there
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HCA000248/1989
IN THE SUPREME COURT OF HONG KONG HIGH COURT --------------- BETWEEN
---------------- Coram: Hon. Liu J. in Chambers : 22nd February 1990 Date of Ruling: 22 February 1990 Date of Handing down: 28 February 1990 ------------- RULING ------------- 1. On the 9th May 1989, a compromise was reached between the plaintiff and the defendant. On the same day, a Deed of Settlement was executed and a Tomlin Order was procured. The Deed of Settlement was entered into not only as between the plaintiff and the defendant but also by three of their respective associates. Clause 1(a) of the Deed required an application to be made after its execution for a Tomlin Order in prescribed terms. I made the Tomlin Order as requested. It is patently clear, therefore, that the Deed of Settlement preceded the making of the Tomlin order on the same day. 2. Proceedings were stayed on certain payment terms scheduled to the Tomlin order with liberty to apply for carrying these terms into effect. Save for the first sum, the defendant made no further payments under the Schedule. On account of such non-payment, the plaintiff maintained that the rest of these scheduled payments had all become immediately due and payable. A court order was sought from this Court under liberty to apply to the same effect. The defendant's response was that he had been released from all further obligations under the Deed of Settlement by the plaintiff's and his associates' breaches of their corresponding undertakings given in that Deed 3. The Deed of Settlement had encapsulated the compromise of which the sums subsequently scheduled to be paid under the Tomlin Order formed part. As the pivot of the compromise, so argued counsel for the defendant, the payment terms scheduled to the Tomlin Order were intrinsically tied to the overall provisions of the Deed. Indeed, in more ways than one these sums were linked up with the other provisions of the Deed : under Clause 5 of the Deed of Settlement, the said Mr Cheng guaranteed payment by the defendant of these sums set out in the Deed, which found their way to the Schedule in the Tomlin Order. Even the continued validity of the Deed hinged upon the success in securing a Tomlin Order. in these set terms. See Clause 3 which made the Deed voidable by any failure to obtain such a Tomlin Order. 4. Each of the parties regarded paragraph (iv) in the Schedule to the Tomlin Order as either supportive of or consistent with their respective rival contentions. Paragraph (iv) reads
5. The plaintiff relied on this paragraph as a self-contained default clause to bring about instant liability by accelerating the due dates of the outstanding sums in case of non-compliance. Conversely, the defendant urged the Court not to look at paragraph (iv) in isolation but to interpret it in coordination with the provisions of the Deed of Settlement. 6. Clause 1(a) of the Deed of Settlement required the plaintiff and the defendant to apply jointly for a Tomlin Order in the terms as prescribed by Clause 1(b). The Tomlin Order thereupon obtained pursuant to the provisions of this Deed was in line with those prescribed terms. It is worthy of note that not only was the Tomlin order subsequently obtained a step taken in the implementation of the Deed, but its terms followed meticulously the formula set out in that Deed. 7. It is undeniable that liabilities for or under the payment terms in the Deed must be determined in the context of its provisions. Clause 7 of the Deed of Settlement expressly stipulated for their mutual dependence. These payment terms as formulated were complemented by or subject to the other provisions of the Deed and thus acquired an extended meaning beyond the confines of its Clause 1(b). Were the payment terms in the Schedule to the Tomlin Order governed by the same extended meaning? 8. I should now deal with two more pertinent clauses in the Deed of Settlement : by Clause 6(a) the plaintiff and his associates undertook to take all lawful steps as might be necessary or expedient for withdrawing certain proceedings or complaint. These undertakings were alleged by the defendant in this application as having been breached. Clause 7 of the Deed of Settlement reads :
9. By consent, a preliminary point was taken by the plaintiff. 10. Mr. Smith's submission was formidable and can be conveniently summed up : the parties had decidedly brought an end to litigation. The issues in this action were finally disposed of by the Tomlin Order. The test of finality "is not determined by inquiring whether for the purposes of rules of court. Relating to time or leave to appeal it attracts the label 'final' or 'interlocutory'. The test is : has the court that made the order, a continuing power to vary its terms, as distinct from making orders in aid of enforcing those terms under a liberty to apply?". See the advice delivered in their Lordships' House by Lord Diplock in de Lasala v. de Lasala [1980] A.C. 546 at p.561 Letter D. Understood in that sense, a Tomlin Order is final, and a fresh action must be brought, if need be, to reform a Tomlin Order unless the error can be corrected under the slip rule. It was submitted by Mr Smith that so long as the final Tomlin Order stood unimpugned, its terms bound the defendant and the plaintiff could enforce them strictly in the exercise of his procedural right under "liberty to apply". Mr Smith laboured the point that the two eventualities specified in paragraph (iv) of the Schedule to the Tomlin order, namely default in payment and breach of any provision of the settlement Deed, were treated disjunctively and that any one event would, on a properly served default notice, trigger off this paragraph so as to make all outstanding balance immediately payable. The defendant Was in default of payment. Counsel submitted that with a requisite notice now properly served, the plaintiff had a right to activate paragraph (iv) by his instant summons, and that the defendant must submit to the plaintiff's procedural right to apply for the remaining payment terms to be carried into effect in aid of enforcement. Counsel laid great stress on the sanctity of agreed, terms in a Tomlin order, even when they went "beyond the ambit of the original dispute". "could not have been enforced in the original action" and involved "an obligation which did not then exist". E.F. Phillips & Sons Ltd. & Others v. Clarke, [1970]1 Ch. 322 at p.325 Letter G, per Lord Goff as he now is. 11. Mr Smith argued with considerable force that since paragraph (iv) was unobscure, the plaintiff was entitled to, in the plain words of that paragraph, an instant order for payment of the outstanding balance so as to allow judgment to be entered and execution to issue. Counsel pressed upon this Court that as a code in itself, paragraph (iv) would admit or require no other material as an aid to construction. Mr Smith strongly resisted the defendant's attempt to introduce the provisions of the Deed to vary or modify what was said to be the clear language of a comprehensive code particularly when the Tomlin Order instrumental to its creation was not contested. 12. For the purpose of this preliminary point, it must be assumed that there were breaches in effect nullifying the Deed of Settlement as alleged. Mr. Swaine, counsel for the defendant submitted that the payment terms scheudled to the Tomlin Order were not strictly part of the court order and that the schedule merely embodied the agreement of the parties and, in this case, also of their associates for the final resolution of their disputes. Counsel's submission would appear to be well-founded by an observation of Slade J. as he then was in Green v. Rozen & others,[1955]2 All ER 797 at p.800 Letter B, where the effect of the Tomlin form of order was more closely examined : "it could be said that the schedule to the Tomlin form of order is not part of the order, and .... in any event, all that the court has ordered in the Tomlin form of an order, which does not contain any positive order of the court that the terms shall be carried into effect, is a stay of all further proceedings, with a qualification by implication that they shall not be stayed so far as is necessary for carrying the agreed terms into effect." (Emphasis added) 13. Mr Swaine also referred to paragraph 4616 at p.1272 of Vol. 2 of 1988 White Book :
14. As indeed it is highlighted in the same paragraph 4614 that "a judge is not concerned to approve or disapprove the terms of a consent order in the Tomlin form, still less has he any power to make such an order in different terms (Noel v. Becker (Practise Note) (1971)1 W.L.R. 355, C.A.)." 15. Naturally, the court may suggest refinements. See page 197 (Note 9), 23 Akin's Court Forms, the 1988 issue. The court would refuse to make any order in vain, for instance, ordering performance of an undertaking when performance has become impossible (Udall v. Capri Lighting Ltd., [1987]3 All ER 262), decreeing specific performance in a futile exercise to force unwilling cooperation where it would be "ineffectual or unnecessary" (Anstalt Nybro v. H.K. Resort Co. Ltd. [1980] H.K.L.R. 76 at p.80) or enforcing an agreed term too vague to put into execution (Wilson & Whitworth v. Express & Independent Newspapers, [1969]1 A.E.R. 294 at p.300 Letters B - C). 16. True enough that a Tomlin Order will not invariably be acted upon by the court, but it would seem that the court would not intervene without cause. The Tomlin Order here was not sought to be questioned. That the plaintiff was entitled to his order for carrying the unambiguous terms strictly into effect has much to commend itself. 17. Mr Swaine, counsel for the defendant, accepted the Tomlin order as accurately reflecting the agreed terms in final settlement, but it was argued that with the Deed and the Tomlin order both as integral parts of the overall compromise, the defendant had the inherent right to invoke one for the interpretation of the other. Except where special considerations exist, such as ambiguity, designated identity of a person, object or place, given meaning of words and phrases or the like, there does not seem to be any sound reason for associating any two instruments in a settlement. unless otherwise indicated, they are separate for different provisions of their own. 18. Mr Swaine relied heavily on Clause 7 of the Deed of Settlement, which made all its provisions inter dependent and clause 3 which would avoid the Deed unless the Tomlin order was granted. The obligations created by the payment terms specified in the Deed were clearly expected to interlock with its other provisions. It was submitted by counsel that the interlocking effect had, through the compromise as a catalyst, permeated these terms as reproduced in the Tomlin Order. One of the provisions of that Deed, Clause 6, imposed, in Mr Swaine's description, "a condition precedent on the plaintiff's right to payment of sums" provided for in its Clause 1(b). Counsel argued that the compromise had the, effect of engrafting this condition on the payment terms scheduled to the Tomlin Order. Counsel explained that the transplant was necessary to avoid the injustice of refusing to allow the defendant to raise in the plaintiff's instant application the same defence he enjoyed under the Deed. The Deed and the Tomlin Order cannot rightly be said to be intertwining documents in the settlement. The requirement in the compromise and the Deed for a Tomlin Order to be applied for would not per se ally the one with the other. I am not inclined to subscribe to this submission. 19. Further, Mr Swaine's contention would necessarily lead to the payment terms in the Tomlin Order being varied. An unqualified agreement to pay in the amounts and at the time's as specified in the Schedule to the Tomlin order (with a proviso in paragraph (iv) for acceleration in default) is different from an agreement so to make payments subject to a condition precedent. If payment terms scheduled to a Tomlin order are free from error or mistake, as that conceded by Mr Swaine in this case, it is difficult to understand how an unqualified agreement to pay at specified or accelerated times in such a schedule could be taken as or otherwise varied to an agreement so to pay, but defeasible by a condition precedent or perhaps more appropriately a condition subsequent. It would seem that once a Tomlin Order is accepted without reservation, it must be strictly interpreted and it would not be open to any party thereto to argue on the line of counsel's submission that it is susceptible of a different meaning from the meaning conveyed by the unobscure language of its Schedule which, on authority, is strictly binding on a11. 20. However, regard must be paid to the peculiar circumstances of this case, and on the decision I have come to, I need express no concluded view on these subtle arguments. 21. Evidently, the Deed of Settlement preceded the Tomlin Order. Clause 1(b) of the Deed formulated a set of terms for incorporation into the proposed Tomlin Order. When the Tomlin Order came to be made, the parties were left with no option except to adhere to the set formula given in Clause 1(b) of the Deed. The Deed embodied the compromise reached between the plaintiff and the defendant together with their respective associates. These set terms in the Deed must have been intended to interlock with and depend on its other provisions, including its Clause 6. Clause 6 imposed a condition precedent on the plaintiff's right to payments or introduced a condition subsequent for relieving the defendant of his obligations to pay. The said Mr Cheng also guaranteed payments in these formulated terms under Clause 4 of the Deed. His liability may likewise be said to interlock with or depend on Clause 6. I am not now called upon to construe the provisions of the Deed. The suggested or prima facie construction is assumed to be correct. It is outlined to set the scene against which some peculiar arrangment, as I see it, arose. Both the rights of the plaintiff and the obligations of the defendant and Mr Cheng under the Deed of Settlement were envisaged by Clause 6 to be linked to plaintiff's observance of and compliance with the provisions of the Deed. In the mind of these parties, the terms as formulated would bear this special meaning. The payment terms in Clause 1(b) of the Deed for incorporation into the schedule to the proposed Tomlin Order were intended to be read in the context of the other provisions of the, Deed. These terms were never meant to be read in isolation. These set terms were dutifully transposed to the Schedule of the Tomlin Order. The court cannot ignore the meaning so ascribed to these terms at the every inception when they were introduced. This special meaning so embraced by all must be given weight to in the peculiar circumstances of this case. These payment terms as finally scheduled to the Tomlin order must be read with this special meaning so assigned to them by the parties. I venture to think no one would be more surprised than the plaintiff himself if he had been told at the time of the making of the Tomlin order that the same formula or the identical set of terms could be susceptible of two different meanings. After all, the scheduled payment terms were merely the agreement of the parties and was not regarded as part of the Order of the Court. In my view, it could not be argued that the meaning of the identical payment terms so scheduled to the Tomlin order in this case is different from the meaning given to the self same words. Evidently, the same rights and obligations were envisaged to flow from these identical terms, be they found in the Deed or in the Tomlin Order as arranged, and their meaning cannot depart from the one the parties had chosen for these set terms. 22. It has been assumed that under the Deed of Settlement, the defendant had a prima facie case in resisting the plaintiff's demand for payment, immediate or otherwise, of these sums. In my judgment, the payment terms scheduled to the Tomlin Order carried an in-built extended meaning, identical with that assigned by the Deed in the peculiar circumstances of this case. The defendant should not, in my view, be precluded from invoking the provisions in the Deed of Settlement in his defence to the plaintiff's demand. On this preliminary issue, at the conclusion of counsel's submissions I ruled in favour of the defendant with costs, certified for two counsel. It was indicated that reasons were to follow, and these I now give.
Representation: Mr. C. Smith instructed by M/s. John M. Pickavant & Co. for the Plaintiff. Mr. J. Swaine Q.C. & Ronny Wong instructed by M/s. Richard Bryson & Co. for the Defendant. |