Compromise - Frank Schrijver UK Ltd v Smart Dry Intl Ltd

By Pawel Wozniak - http://freestocktextures.com/texture/id/690,
CC BY-SA 3.0,
https://commons.wikimedia.org/w/index.php?curid=18603544

Jane Lambert

Chancery Division (HH Judge Hodge QC) Frank Schrijver UK Ltd and another v Smart Dry Intl Ltd and others [2020] EWHC 2092 (Ch) (30 July 2020)

Judge Hodge was disarmingly blunt when he said at paragraph [1] of his judgment in Frank Schrijver UK Ltd and another v Smart Dry Intl Ltd and others [2020] EWHC 2092 (Ch) (30 July 2020):

"This judgment is naturally of considerable interest and concern to the parties to this litigation but it raises no issue of law and will be of no interest to anyone not involved in this case."

I don't agree with him.  Cases on the enforcement of Tomlin orders are rare and practitioners can always learn something from them.

A Tomlin order is a consent order in which the parties invite the court to stay proceedings on terms set out in a confidential schedule. The schedule does not form part of the court file and is never consulted unless one or more of the parties believes that one or more of the other parties has failed to perform his or her obligations under the schedule.   The order is named after Mr Justice Tomlin who approved the first such order in Dashwood v Dashwood  (1927) 71 SJ 911, [1927] WN 276, (1927) 64 LJNC 431 (see David Swarbrick's note on the case, last updated 29 Aug 2016). The judge set out the practice in Practice Note 2 Jan 1927 [1927] WN 290 (see Mr Swarbrick's note, last updated 24 Jun 2020). They are now governed by CPR 40.6,

A typical Tomlin order will recite that the parties have agreed to settle the proceedings on the terms set out in the schedule to the order.  The body of the order will contain the words "by consent" and be followed by a provision that the action or action and counterclaim is stayed on the terms set out in the order except for carrying out those terms for which purpose each of the parties has permission to apply.   The effect of the "permission to apply" is to entitle each side to return to court upon serving an application notice and possibly one or more witness statements on the other to request the enforcement of the order.   if a party agrees to pay costs, a costs order will also be inserted.

The schedule can contain anything that the parties want subject to the usual rules on enforceability and legality of contracts.  There will often be a provision that the scheduled terms are in full and final settlement of all disputes and differences between the parties on a given date.  The effect of that provision is to substitute a contract for whatever rights each party enjoyed against the others before the compromise.  Usually, there is a confidentiality or non-disclosure clause.

The dispute that was settled by the Tomlin order had been over trade mark infringement and passing off.  The first claimant, Frank Schrijver UK Limited, was run by the second claimant  Frank Schrijver.  The first and second defendants were run by Frank's brother, Iwan, who was the third defendant.   Their father Henk had invented a system of damp proofing in the Netherlands which had proved to be very successful.  He encouraged his boys to market the technology in other countries,  Frank set up Frank Schrijver UK Limited to supply customers in the UK.

The scheduled terms required the defendant companies to re-brand which they did.  Unfortunately, a number of incidents occurred that caused Frank to suspect that the defendants were preparing to re-enter the British market under the Schrijver name.  The first and potentially most serious of those incidents was an attempt by Iwan's company Smart Dry Intl Ltd. to bid for the brand "Frank Schrijver UK Ltd" on Adwords.  That turned out to be an initiative by Smart Dry's digital marketing company which had been been unaware of the terms of the schedule.  The bidding was quickly brought to an end. 

The prompt handling of the first complaint did not allay Frank's suspicions.   His points of claim contained 9 complaints although two were struck out in pre-trial proceedings.  Nevertheless, they led to a 3 day trial before Judge Hodge as well as a number of interlocutory proceedings which would not have been cheap. Frank represented himself and the judge recorded an acknowledgement at [44] that he might not have done himself any favours:

"'Of course I shout and I am angry and I find it difficult to contain my anger because the Frank Schrijver entity has been affected so much. … I am not a machine. I am a person; a businessman.' At the very end of the hearing, Frank acknowledged that the court might not like him; but he went on to make the fair observation that this was not a case about likeability but rather about the evidence. He acknowledged that he is a difficult person, who does not communicate calmly and who shouts a lot; but he had not won his awards, or built up a successful business, by being a likeable person."

The judge examined all the allegations but found no substance in any of them.   Where there had been breaches, such as the Adwords bidding, the complaint was quickly rectified.  His Honour could find no evidence of loss or damage.  He, therefore, dismissed the claim.

Litigants in person are nearly always at a disadvantage in litigation and arbitration whereas in mediation they are often more effective than lawyers.  Perhaps mediation clauses should be considered by the parties' legal representatives whenever a Tomlin agreement is drawn up. Mediation does not resolve every dispute but it usually clarifies the issues which can save time and money.

Anyone wishing to discuss this case or settlements and compromises generally may call me on 020 7404 5252 during office hours or send me a message through my contact form.