Christopher Andrew Corfield v Christine Marie Howard

A court may enforce a Tomlin order by declaring the meaning and effect of the settlement agreement scheduled to it. Commercial settlement agreements are construed objectively, by considering the language used, the agreement as a whole, its purpose, the relevant background and commercial common sense, while excluding subjective intentions and inadmissible subsequent conduct.

Where a settlement agreement gives one party a quantified entitlement from property sale proceeds and makes the parties’ beneficial interests subject to that arrangement, the quantified entitlement may be exhaustive. The court must construe the agreement as a whole and should avoid an interpretation that makes a material clause meaningless.

The defendant applied for declarations concerning the meaning and enforcement of a settlement agreement scheduled to a Tomlin order made in earlier partnership proceedings. The parties had operated a property business and were joint legal owners of properties acquired for that business.

The central dispute concerned whether the claimant’s entitlement was limited to £400,000 from the net sale proceeds, or whether he retained a 50% beneficial interest in unsold properties after receiving that sum. The court also considered statutory formalities and an admitted overpayment.

1. Application granted in substance. The court had jurisdiction to grant declaratory relief concerning the construction of the settlement agreement in a Tomlin order, applying Ali Gurgur v Amanda Rees [2021] EWHC 2181 (Ch).
2. The settlement agreement had to be construed objectively and as a whole. The court adopted the summary in Network Rail Infrastructure Ltd v ABC Electrification Ltd [2020] EWCA Civ 1645, including the importance of the contractual language, the wider context, the purpose of the agreement and prospective commercial common sense. Subjective intentions and inadmissible pre-contractual negotiations were excluded. The principles concerning pre-contractual negotiations in Merthyr (South Wales) Limited v Merthyr Tydfil County Borough Council [2019] EWCA Civ 526 and Schofield v Smith [2022] EWCA Civ 824 were applied.
3. Clauses 3, 4 and 6, read with the agreement as a whole, established a clean-break arrangement. Clause 4 entitled the claimant to receive £400,000 from the net sale proceeds, subject to the arrangements for mortgage and partnership liabilities. It did not entitle him to more than £400,000 overall from those proceeds.
4. Clause 6 was subject to clause 4. The claimant’s beneficial interest in unsold properties, or their sale proceeds, automatically determined once his clause 4 entitlements had been met and the relevant liabilities discharged. Clause 3’s reference to income did not confer on the defendant an independent entitlement to sale proceeds; those proceeds were governed by clause 4.
5. The settlement agreement itself satisfied any applicable formalities under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and section 53(1)(b) and (c) of the Law of Property Act 1925. No further instrument was required.
6. The claimant was ordered to repay the mistaken overpayment of £1,781.04. Further directions concerning the sale of remaining properties and the precise form of order were reserved.

The application concerned the construction and enforcement of a settlement agreement scheduled to a Tomlin order made on 19 June 2020 in the parties’ earlier proceedings. No appellate decision was stated.