OLN

Dispute Resolution

How to Settle Civil Disputes: Importance of Tomlin Order

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Something must have gone wrong before parties commence civil litigation, whether the problem arises from breach of contract, unpaid invoices, or differing interpretations of terms of the contract. As civil litigation is costly, time-consuming, unpredictable, and at times excruciating for the parties’ peace of mind, it is not uncommon for parties to compromise and settle the civil dispute midway in the litigation proceedings. 

After years of advising and settling civil disputes, this series hope to shed light on the dos and don’ts for parties when they enter into settlement negotiations, and when they eventually sign and execute the settlement agreement. 

An important piece of consideration is to consider settling the civil action in Hong Kong by way of Tomlin Order. 

The nature of Tomlin Order 

In Hong Kong, Tomlin Orders are governed by the Rules of the High Court (Cap. 4A) and the Rules of the District Court (Cap. 336H). 

Provided under O.42 r.5A(2)(b)(iii) of the Rules of the High Court (Cap. 4A) and O.42 r.5A(2)(b)(iii) of the Rules of the District Court (Cap. 336H), Tomlin Order is a form of consent order which allows the parties to stay the proceedings upon the mutually agreed settlement terms which are scheduled to the Order but the terms of which do not otherwise form of the Order itself. 

Accordingly, Tomlin Order enables the parties to stay the proceedings, preserving the option to return to Court to enforce the settlement terms if one party fails to comply. This avoids the need for new legal action, making it an attractive option for settling a civil dispute. 

Further, the schedule, being a separate contractual agreement, can include terms that go beyond the ordinary terms typically ordered by the Court, and even go beyond the scope of the original dispute in the proceedings. 

In the Hong Kong case Shum Ho Seung v. Shum Foo Hang (As the Administrator of the Estate of Shum Kwok Hang, Deceased (18/12/2017, HCMP 3134/2016) [2018] 1 HKLRD 434, the Court clarified that it lacks general power to vary the terms in the schedule unless specific provisions for variation are included in the Order itself, or contractual law justifies it. In practice, the standard wording of a Tomlin Order in Hong Kong may include phrases like “all further proceedings be stayed except for the purpose of carrying into effect the terms of settlement,” with liberty to apply for enforcement. 

Here are the key benefits of settling a case via a Tomlin Order in Hong Kong: 

1. Enforceability without separate legal action 

If one party breaches the settlement terms in the schedule, the other can apply to the court to enforce the terms scheduled to the Tomlin Order directly, without starting a new legal action. 
 
For example, if a Defendant fails to pay an agreed sum as provided under the schedule to the Tomlin Order, the Plaintiff can seek enforcement by applying to a Judge/Master as appropriate. 
 
This is a way a more efficient and costs-saving route than settling the civil dispute by way of a separate settlement agreement, whereby generally, if a party breaches the terms of the settlement agreement, the other party will have to bring a fresh claim.

2. Flexibility in Settlement Terms 

The schedule can include terms which go beyond what the Court would typically impose in a judgment, e.g. ceasing certain actions not directly related to the original proceedings. In contrast, the terms which parties could enter by way of Consent Judgment (without Court’s leave) would be more limited under the straight statutory rules.
 
3. Preservation of Finality with Flexibility 

The stay of proceedings means the case is “paused”, but not dismissed. If the terms are fulfilled, the dispute ends without a full trial. On the other hand, if the settlement terms are breached, the innocent party can either enforce the scheduled terms or, in some cases, lift the stay to resume litigation (depending on how the Order is drafted). This balances closure with a safety net as opposed to a full withdrawal/dismissal, which may leave a party vulnerable if the other reneges. 

Conclusion 

The Tomlin Order must be carefully drafted to ensure enforceability and to prevent any pitfall compromising a party’s rights and interest. In summary, a Tomlin Order in civil litigation offers enforceability without separate legal action, flexibility, and preservation of finality with flexibility, making it ideal for parties seeking a practical binding settlement. For specific advice, as each case depends on its own facts, please consult a solicitor. 

Should you have any enquiries regarding civil litigation and commercial agreements, please contact our firm. 

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

How to Settle Civil Dispute: Importance of Payment by Instalment Clause

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Something must have gone wrong before parties commence civil litigation, whether the problem arises from breach of contract, unpaid invoices, or differing interpretations of terms of the contract. As civil litigation is costly, time-consuming, unpredictable, and at times excruciating for the parties’ peace of mind, it is not uncommon for parties to compromise and settle the civil dispute midway in the litigation proceedings.

After years of advising and settling civil disputes, this series hope to shed light on the dos and don’ts for parties when they enter into settlement negotiations, and when they eventually sign and execute the settlement agreement.

An important consideration is to consider having payment of settlement sum by instalments. In our experiences, this option has proven to be a game-changer, enabling parties to reach amicable resolutions more effectively. The practical benefits of having payment by instalment clauses in your settlement agreement are listed below:-

1. Alleviating Financial Flexibility for the Paying Party

When a party is required to pay a large settlement amount upfront, it can strain its cash flow, potentially forcing them to reject the settlement entirely.

By having payment by installment clauses in the agreement, the paying party gains room to better manage its finances. This flexibility can make the difference between a stalled negotiation and a signed deal, as it allows the debtor to commit to a resolution without jeopardizing their operational stability.

For instance, a small business facing a HK$1,200,000 settlement sum might struggle to pay it all at once. Spreading that amount over 12 monthly installments of HK$100,000, however, transforms an overwhelming burden into a manageable expense. This practicality often encourages parties to agree rather than prolong the dispute through litigation.

2. Ensuring enforceability of the Settlement Agreement

In cases involving a one-off payment, the settlement agreement carries a heightened risk of being contested down the line, as the paying party may later claim they were misled, poorly advised, or coerced into accepting the terms under economic duress—arguments that could potentially unravel the deal in court. A lump-sum payment, often made under pressure to resolve a dispute quickly, can leave the payor feeling cornered, especially if their financial situation deteriorates shortly after, prompting them to challenge the agreement’s validity by asserting they had no real choice but to comply at the time.

In contrast, a payment-by-instalment clause significantly mitigates this risk by spreading the financial obligation across multiple, manageable payments over an extended period, creating a built-in mechanism that strengthens the agreement’s practicality.

As long as the paying party adheres to some of the instalment schedule (i.e. making certain payment instalments), it is arguable that it effectively elects to affirm to the terms. This repeated compliance undermines any later attempt to overturn the agreement, as it creates a hurdle for the payor to convincingly argue misrepresentation or economic duress when their actions over months or years have indicated voluntary commitment.

By reducing the immediacy of the financial burden and providing a track record of commitment, such clause discourages post hoc legal challenges, offering both parties greater certainty in the resolution process.

3. Building Trust between Parties

Incorporating instalment payments into a settlement agreement can help build trust between parties. The paying party’s commitment to making regular payments reflects reliability and good faith, while the receiving party can appreciate the structured approach to fulfilling the agreement. The continued fulfillment of payment instalments can serve as a positive spiral for both parties to develop trust and positive interactions moving forward.

4. Preserving Business Relationships

Many business disputes occur between parties with ongoing or potential future dealings—suppliers and clients, partners, or vendors. A lump-sum demand can sour these relationships irreparably, whereas an installment plan demonstrates mutual accommodation. By agreeing to terms that work for both sides, the parties signal a willingness to maintain civility and cooperation, which can pave the way for future collaboration once the dispute is resolved.

Conclusion

Incorporating payment by installment into settlement agreements is more than a financial workaround—it’s a strategic tool that bridges gaps, builds trust, and expedites resolutions. For the paying party, it offers a lifeline to meet obligations without crippling their operations. For the receiving party, it ensures compensation with manageable risk. This approach transforms disputes from adversarial standoffs into opportunities for mutually agreeable solution.

Should you have any enquiries regarding civil litigation and commercial agreements, please contact our firm.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

OLN is Featured as Highly Recommended Law Firm in the Asialaw 2024 Profiles

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We are pleased to announce that Oldham, Li & Nie has been again ‘Highly recommended’ by asialaw.

asialaw have ranked Oldham, Li & Nie for the following practice areas:

  • Dispute Resolution – Highly recommended
  • Intellectual Property – Highly Recommended
  • Corporate and M&A – Recommended
  • Labour & Employment – Recommended
  • Private Client – Notable
  • Restructuring and Insolvency – Notable

Additionally, Oldham, Li & Nie has been recommended in the following industry sectors:

  • Insurance – Recommended
  • Technology and Telecommunications – Recommended

Oldham, Li & Nie’s partners have also received 5 recognitions in their respective practice areas:

  • Gordon Oldham is recognised as a Senior Statesman in Dispute Resolution
  • Richard Healy is recognised as a Notable Practitioner in Dispute Resolution
  • Tracy Yip is recognised as a Distinguished Practitioner in Corporate and M&A
  • Vera Sung is recognised as a Distinguished Practitioner in Intellectual Property
  • Anna Chan is recognised as a Rising Star in Tax and Private Client

For more information and detailed analysis, please visit Oldham, Li & Nie’s profile on asialaw: https://www.asialaw.com/Firm/oldham-li-nie-hong-kong-sar/Profile/1112#profile

OLN has also been shortlisted in two categories for asialaw awards 2024:

  • Oldham, Li & Nie – Hong Kong Law Firm of the Year
  • Anna Chan – Hong Kong Female Lawyer of the Year

About asialaw

asialaw is the only legal directory featuring comprehensive analysis on Asia’s regional and domestic firms, and leading lawyers from the region.

In addition to the asialaw rankings guide, the directory publishes awards shortlists and winners recognising the best firms in Asia.

More information about asialaw, please visit https://www.asialaw.com/

Oldham, Li & Nie is Ranked in Chambers Greater China Region 2024 Guide

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The newly released 2024 edition of Chambers Greater China Region Guide acknowledged Oldham, Li & Nie in Corporate/M&A and Family/Matrimonial practice areas. Additionally, the Guide has spotlighted four of our lawyers as leading figures in the region’s legal landscape.

Chambers Greater China Region 2024 ranked firm Oldham, Li & Nie

Comments from clients include:

  • “Oldham, Li & Nie are extremely professional and reliable. Their lawyers are worldly, knowledgeable and respectful.”
  • “They are able to give practical advice by considering the circumstances of our company and our company’s primary commercial objectives.”
  • “They are highly professional and well organised. They are very efficient and speedy with their work.”

The four Odham, Li & Nie lawyers recognized among the premier lawyers in the Greater China region are:

To view the OLN’s full rankings, visit our profile on 2024 Chambers Greater China Region.

About Chambers Greater China Region Guide

Chambers and Partners interview every year thousands of lawyers, clients and third-party experts to evaluate law firms’ and lawyers’ reputation and expertise in all four jurisdictions of the Greater China Region: PRC, Hong Kong, Macau, and Taiwan. The Chambers Greater China Region rankings assess various factors, including technical legal skills, professionalism, customer service, and business acumen of the leading lawyers across the region.

Compulsory Sale Litigation in Hong Kong: Process and Practical Tips

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In the fast-evolving landscape of Hong Kong’s real estate market, compulsory sale litigation stands as a crucial legal recourse, striking a balance between private property rights and the broader public interest. This legal process is governed by the Land (Compulsory Sale for Redevelopment) Ordinance and plays a pivotal role in facilitating urban redevelopment and addressing housing needs. In this article, we delve into the stages of compulsory sale litigation process in Hong Kong, shedding light on the procedures and implications, as well as practical tips for applicant and respondent teams.

What is the compulsory sale litigation process?

In general, the compulsory sale litigation process is akin to ordinary civil litigation, but with a strong focus on surveying expert evidence. In addition, respondents collaborate as a team with a coordinator, and their factual witnesses are usually not heavily challenged at trial. Site inspections of the subject lot occur during the first two days of trial. A significant portion of legal fees is allocated to expert fees (and counsel’s fees), and respondents generally receive costs if they successfully defend against the compulsory sale.

What are the main stages of compulsory sale litigation process?
1. Applicant Makes Offer

The Applicant is required to issue a pre-action offer letter to all remaining minority owners for acquiring their property.  The offered sum is normally based on the Applicant’s valuation expert report, and the valuation assessment will typically be provided together with the offer letter (but not the entire report).

2. Filing LDCS Application (Form 32)

If the minority owners refuse to accept the Applicant’s pre-action offer, Applicant would file a Notice of Application (Form 32) with the Lands Tribunal to commence the compulsory sales procedure and, inter alia, the full valuation report will be disclosed.  Mediation Certificate and Mediation Notice are normally served at the same time.

3. Filing Opposition (Form 33)

If minority owners choose not to accept the Applicant’s offer, they have to file a Notice of Opposition (Form 33) within 21 days.

The contents of the notice would set out the issues in dispute, including: –

  • Valuation;
  • Age and state of repair;
  • Reasonable step to acquire; and/or
  • No fair and reasonable offers made to minority owners.
4. Case Management Hearings

After filing of notice of opposition, Applicant may file an Application to List for Call-over Hearing. Applicant would: –

  • confirm with the Lands Tribunal as to service of roles
  • report the mediation progress with each Respondent
  • propose a set of case management directions

Proposed directions would include: –

  • Mediation
  • Respondents to agree to a single joint valuation expert
  • If state of repair is challenged, agreeing appointment of Building Condition Expert and Structural Engineering Expert
  • Exchange of witness statements and expert reports
  • Filing of rebuttal reports
  • Filing of updated Valuation Report

For Respondents, Lands Tribunal would appoint one party as the Coordinator. The Coordinator’s work will include: –

  • Liaising with experts;
  • Arranging inspection of respective Respondents’ flats;
  • Reporting case progress; and
  • Collection and payment of expert fees.
5. Pre-Trial Review Hearing

A Pre-Trial Review Hearing may be ordered to deal with: –

  • To confirm whether there are legal issues to be argued;
  • Usual trial preparation direction; and
  • Filing of updated valuation expert report on Redevelopment Value (RDV).

At this step, the Respondents may consider engaging joint Counsel.

6. Trial

If only valuation expert’s evidence is challenged, the case will be heard only by a Member (a qualified surveyor).  However, if legal issues are to be argued, the case will be heard by a Presiding Officer and a Member.  During the initial stages of the trial, typically the first or second day, the court may arrange a site inspection of the subject development, although not all individual flats may be inspected.  In most cases, witnesses as to facts (Respondents) will not be called for examination.  Instead, the examination predominantly centers around expert evidence and is highly technical.

7. Post-Trial

When a judgment is handed down, the Court would order: –

  • Whether there is an order for sale, and if so, what is the reserve price;
  • Appointment of trustees to conduct the sale; and
  • Costs.

The questions that minority owners would certainly ask: –

  • How much they will get after auction?

Put it very simply, the applied formula can be understood as follows: –

EUV of own unitXReserve Price=Owner’s entitlement
EUV of all units
  • When will be the auction?
  • When will they get the money?

Practical Tips for Managing Compulsory Sale Litigation Cases
For Applicant Teams:

  1. Prepare for Respondents’ Emotions – anticipate that Respondents might be upset and frustrated about the compulsory sale.
  2. Efficiently Acquire Minority Flats – strategize for the acquisition of minority flats to reach the required threshold for compulsory sale.
  3. Stay Updated on Market Trends – continuously monitor market trends and property values. Stay informed about current offers and potential counter-offers to anticipate Respondents’ negotiation positions.

For Respondent Teams:

  1. Expect Emotional Clients – be prepared to deal with clients who may be upset or distressed due to the compulsory sale.
  2. Property Maintenance – maintain your property in good repair and condition throughout the litigation process. A well-maintained property can positively impact valuation and negotiations.
  3. Rented Property – include a clause that addresses early termination or termination after judgment.
  4. Review Offers Continuously – act reasonably by consistently reviewing and assessing offers from the Applicant.
  5. Base your decisions on expert evidence to support your position.
  6. Collaborate with Surveying Experts – work closely with surveying experts to understand the variables and comparables used in property valuation.
  7. Explore the option of engaging legal counsel jointly
  8. Financial Preparedness – ensure you have sufficient funds available to cover legal expenses, expert fees, and any potential compensation.
  9. Document All Actions – keep meticulous records of all work done, correspondence, and negotiations.

Additionally, consider potential conflicts of interests, such as distinctions between commercial and residential use or the valuation of unauthorized building works. To address these conflicts effectively, consider obtaining separate legal representation and subjecting valuation experts to examination during the trial.

Disclaimer: This article is for reference only.  Nothing herein shall be construed as legal advice, whether generally or for any specific person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.