Tunstall v Harrison & Anor

A Tomlin order staying proceedings, except for implementing its agreed terms, creates a contractual stay. Applications falling outside that exception cannot be pursued within the original action. A party seeking to set aside the compromise must commence separate proceedings on an appropriate ground, such as misrepresentation, fraud or mistake. If the compromise is set aside, the original proceedings may resume and consequential remedies may then be pursued. A freezing order which has ceased to exist cannot subsequently be set aside within the stayed action.

Chartered accountants brought proceedings for repayment of fees or damages for misrepresentation. After a freezing order affecting the defendants’ proposed sale of their home, the parties provided undertakings and later compromised the action by a Tomlin order. The order stayed all further proceedings except those needed to implement its terms.

The defendants subsequently sought, within the original proceedings, to set aside the Tomlin order, set aside the earlier freezing order and obtain an enquiry into damages. Judge Kershaw held that setting aside the compromise required separate proceedings. Judge Howarth dismissed the further application, holding that the contractual stay also prevented an enquiry into damages. The issue before the Court of Appeal was whether permission should be granted to challenge that decision.

1. Permission refused. The application could not succeed on the reasoning of Judge Howarth, which was correct.
2. A Tomlin order staying all further proceedings except those necessary to carry its terms into effect imposes a contractual stay. An application to set aside the compromise on grounds such as misrepresentation, fraud or mistake is outside the exception and must be brought by separate proceedings. It cannot be made by application within the original action.
3. The same procedural restriction applied to the proposed enquiry into damages. The defendants could not pursue that enquiry in the original action while the contractual stay remained in force.
4. The earlier freezing order had ceased to exist when the court made no order continuing it. The parties’ subsequent undertakings produced a similar practical effect but did not preserve the freezing order as an order capable of later being set aside.
5. If separate proceedings succeeded in setting aside the compromise, the original action could proceed from the position existing before the Tomlin order. If the claimants then failed at trial, the defendants could seek an enquiry into loss caused by the freezing injunction.

The application for permission to appeal was refused.

• Court of Appeal (Civil Division): Lord Justice Mantell refused permission to appeal.
• High Court of Justice, Mercantile Division: His Honour Judge Howarth dismissed the defendants’ application to set aside the freezing order and seek an enquiry into damages within the original proceedings.
• Mercantile Court: His Honour Judge Kershaw dismissed the defendants’ application to set aside the Tomlin order, indicating that any such challenge required separate proceedings.