NB: this Case Alert is a commentary piece on a non-Plexus case.
This appeal considered whether a Defendant can enforce an adverse costs order against damages recovered by a Claimant from a Co-Defendant under the QOWCS regime.
The Claimant issued a claim for noise induced hearing loss “NIHL” against six named Defendants. The third Defendant to the initial action, Venduct Engineering Limited (“Venduct”) accepted that it was responsible for any liability that was established on the part of D1 and D2. The Claimant discontinued against D1 and D2 by consent.
The Claimant subsequently compromised its claim against D4 – D6 by way of a Tomlin order.
At about the same time, the claimant served a notice of discontinuance in respect of the claim against Venduct. Venduct’s solicitors asserted that they had the right to recover the costs which they had incurred as a result of the Claimant’s claim. They maintained that this could be paid out of the Claimant’s damages, which were paid by D4-D6.
In response, the claimant said that it had the protection of the QOWCS regime. In addition, the Claimant alleged that, since the sums from D4 – D6 were paid by way of a Tomlin order, Venduct could not rely on r.44.14 in any event.
There were 2 main issues in this case.
Issue 1: Can one Defendant take advantage of damages paid to the claimant by another Defendant?
In summary, yes.
This issue was concerned with the proper interpretation of r.44.14.
The Court of Appeal upheld Cost Judge Hale’s decision on the applicability of the QOWCS regime to multi-defendant cases. It was found that where the Claimant had sued more than one party freely there was no reason why one defendant should not recover costs against the Claimant, where the Claimant was successful against a second Defendant. The rule intended to permit enforcement.
The overriding theme within the Judgment was that the Claimant should be discouraged from bringing proceedings which were unlikely to succeed.
This is a positive for Defendants and ensures they are not faced with having to defend hopeless claims only to have them shortly discontinue prior to trial.
Issue 2: Does It make a difference if sums are due by way of a Tomlin Order?
In summary, again, yes.
Enforcement is not possible when the sums payable arise from a Tomlin order.
CPR 44.14(1) requires “an order of the court”. A Tomlin order is not a “court order” and thus is outside the scope of the section. Whilst the Tomlin order itself is enforceable, the schedule is not an order of the court at all. The schedule instead reflects the agreement reached between the parties and CPR 44.14 did not apply.
There are also practical difficulties if a lump sum figure for damages and costs was agreed in a Tomlin order. How can a court go about identifying the relevant figure for the purposes of establishing the damages cap against which costs can be recovered when the damages figure agreed upon is a global figure to include costs?
Implications for Defendants
The Court of Appeal’s decision has important ramifications for the approach to multiple defendant litigation in personal injury proceedings.
Whilst a Defendant can recover costs from a Claimant against damages awarded to that Claimant from a Co-Defendant, this is only if that award was made by way of court order.
The amount that is payable to the Claimant by way of damages and interest is a cap on the amount which a Defendant can seek by way of enforcement of any costs order(s) in its favour. If the Claimant is unsuccessful, then the Defendant will recover nothing, despite those costs orders.
Practically what should we do:
- It is more important than ever at the outset of cases to assess our early prospects of success in defending the file. We need to advise our client about the potential for a costs recovery, but ensure advice is given regarding the implications if the Claimant is unsuccessful, or the claim is settled by way of Tomlin Order.
- It will be imperative to have good relationships with the other parties and engage in early discussions any other Defendants to any actions. A good working relationship should allow us to be able to ask for any settlement to be done by way of a Consent Order rather than a Tomlin Order, which will ensure any potential costs recovery is not stymied.
- As always, keep proportionality in mind. Even if we are successful in recovery of costs, the amount recoverably is limited to the amount of the Claimant’s damages and interest.
If you would like know more about this Case Alert, please speak to your contacts at Plexus Law:
Andrew Steel, Partner
T: 0161 2457 965 | M: 07557 232 419 | E: email@example.com
Rebekah Tomlinson, Associate Partner
T: 0161 244 6928 | E: firstname.lastname@example.org
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