Land Law — Tomlin Orders – Parties’ Settlement Agreement Embodied in Schedule to Tomlin Order Enforced Despite the Plaintiff’s allegations of Undue Influence, Duress and Unconscionability
In Ng Tung v Grand Wayfair Investment Company Ltd [2024] 5 HKLRD 285, [2024] HKCFI 2630, the Court agreed to enforce the settlement agreement embodied in the Schedule to a Tomlin Order of an adverse possession case.
The facts
The Plaintiff (squatter) claims possessory title to the subject lots by way of adverse possession against the Defendants (land owners). During the trial, the parties reached an agreement by way of a Tomlin Order. In essence, the Defendants agreed to pay certain sums to the Plaintiff in return of vacant possession of the subject lots.
The Plaintiff refused to comply with the Tomlin Schedule. Thus, the Defendants applied to enforce the same. In resisting enforcement, the Plaintiff alleged he entered into the settlement agreement under duress and undue influence exerted upon him by his own lawyers. The Plaintiff also alleged that the settlement terms were unconscionable in that he was physically unwell at the time and the sum payable to him is grossly undervalued as compared to the case if the subject lots were resumed by the government.
The judgment
The court (per Mimmie Chan J) confirmed the principles in relation to the enforcement of Tomlin Orders. First, the Tomlin Schedule is a separate and binding contract of settlement between the parties. Secondly, the burden is on the party resisting enforcement to show an arguable objection, and the standard of proof is to show a triable issue or an arguable point. Thirdly, where the resisting party fails to raise any arguable objection, the relief to enforce the terms set out in the Schedule can be granted directly.
In relation to the Plaintiff’s claims of undue influence or duress, it was held that there was nothing to suggest the Defendants have actual, imputed, or constructive knowledge of any undue influence having been exerted against the Plaintiff by his own lawyers, or the Defendants knew or should have known of any facts which may put them on inquiry as to whether the Plaintiff had given his true consent to the settlement terms when he signed the Schedule. It was emphasised that parties to a settlement agreement are opponents in adversarial positions. Therefore, when parties in litigation are negotiating settlement, each party is entitled to leave it to the other side’s lawyers to advise and explain the terms to their own clients.
As to unconscionability, it was held that the fact that the Plaintiff may have made a bad bargain is not sufficient for the Court to exercise any discretion it may have to permit the rescission of the settlement agreement or to relieve him from the alleged hardship of a thoughtless decision on the grounds of commercial certainty.
Orders were granted in terms of the Defendants’ summonses.
The Plaintiff has applied for leave to appeal to the Court of Appeal and the hearing is pending.
Significance
The court confirmed the contractual nature of Tomlin Schedules and therefore, factors vitiating consent are available as defences to the resisting party. Most importantly, the court affirmed that in the context of settlement agreements, parties are opponents with competing interests, and are therefore fully entitled to leave it entirely to the other side’s lawyers to ensure the settlement terms have been fully explained and advised on, without having to worry about whether consent has been improperly obtained from the other party.
Mr Kenneth CL Chan and Mr Ross MY Yuen, instructed by Hastings & Co, acted for the defendant (in both actions).
Eunice Lui was involved in the drafting of written submissions as Ross’s pupil at the time of the enforcement application.
Ross Yuen
Called to the Bar in 2008, Ross has practice focused on land and commercial law. He has ample trial experience in adverse possession, compulsory sale and land resumption. He regularly advises on other land related matters such as conveyancing, building management and tenancy. He acted for the land owners who succeeded in recovering their lands either wholly or partly in:
• Fulland International Ltd v Liu Kin Lam [2024] HKCFI 1209
• Monat Investment Ltd v. All Person(s) in Occupation of Part of the Remaining Portion of Lot No 591 in Mui Wo D.D. 4 No.16 Ma Po Tsuen, Mui Wo, Lantau Island and Another[2023] 2 HKLRD 1311; [2020] 4 HKLRD 330
• Tsang Kiu v Fulland International Ltd[2019] HKDC 676
• Chan Mei Lin & Ors v Lee Hong[2018] HKCFI 2441
• Yu King Chau v Personal Representatives of the estate of Fong Fu Foon, HCA 1438/2011, 21 November 2017
• Incorporated Owners of Fuk Wing Building v Ma Hing Ching, DCCJ 2356/2015, 17 July 2017
• Woo Hoi Lun v Lai Yung, DCCJ 2312/2012, 20 October 2014
• Cheng Wing Hei v Chan Yat Kwan, DCCJ 168/2010, 18 November 2013
• 譚海强對林樹福遺產管理人, HCA2462/2009, 15 May 2013
Eunice Lui
Eunice was called to the Bar in 2024. Eunice joined Chambers in the same year upon completion of her pupillage with Mr. Hectar Pun SC, Ms. Priscilia Lam, Mr. Ross Yuen and Dr. Benny Lo.
Eunice is developing a broad mixed practice, spanning over land, commercial, arbitration and public law matters, and accepts instructions in all areas of Chambers’ work. She is fluent in English, Cantonese and Putonghua (Mandarin).
During her studies at the University of Hong Kong, Eunice served as part of the Law Association, representing law students of her cohort. Eunice was also an enthusiastic mooter, as she represented the University of Hong Kong at the Twenty Second Annual International Maritime Law Arbitration Moot as oralist, in which her team was a quarter finalist. Prior to commencing pupillage, Eunice served as a Marshal to the Honourable Madam Justice Carlye Chu, Vice-Preseident of the Court of Appeal.
This article was first published on 3 December 2024.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.