Consumer “Handcuffed” by Previous Consent Order

One of our clients had the most unusual of scenarios to contend with. A customer issued legal proceedings against our client, even though the car was sold to the customer by a finance company. Our client did not reply to the claim in time and ended up with a default judgment against them. We wrote to the customer explaining that our client would be applying to the court (with costs) to have the default judgment set aside on the basis that they were not a party to the contract the customer had. The customer’s contract was only with the finance company.

The customer took legal advice and his solicitor agreed. His solicitor drew up a consent order agreeing for the default judgment to be set aside, for the claim against our client to be withdrawn, and that each party would bear their own legal costs. This was endorsed by the court.

18 months later, it is established the customer brought the exact same claim against the finance company as he did against our client. The finance company defended the claim. At the hearing, the customer starts pointing the finger at our client. Unaware of the consent order, the judge adjourned proceedings and gave the customer permission to apply to the court to add our client as a second defendant to the claim, which he duly did.

Our client made a strong objection to this on the basis that it is wholly inappropriate for a party to a formal court consent order to be allowed to ask the court to vary it to such an extent that the whole purpose of the consent order would be essentially reversed. With a good dollop of common sense, the judge read the consent order and the email from the customer’s solicitor and declined the customer’s application. Parties to a consent order have the security of knowing that it remains in place except in exceptional circumstances.

The customer was thus handcuffed by his own consent order. Interestingly though, the judge did say that she may have been persuaded to allow the application to succeed had the customer not taken legal advice and/or had a solicitor draw it up. Her rationale was that he may have acted naively and not known what the implications of signing a consent order were. Of course, whether that was simply said to ease the disappointment of the deflated customer – or whether she ever would have allowed our client to be added to the claim – we shall (thankfully) never know.

The motto here is that it is very difficult for a person to “wriggle out” of a formal settlement agreement where they have largely proposed or drafted the terms of that agreement. And if they do so after having obtained legal advice, then they are quite likely to be both handcuffed and super-glued to it.