Are there any sanctions for a late acceptance of Claimant Part 36 offer pre-trial ?

Are there any sanctions for a late acceptance of Claimant Part 36 offer pre-trial ?

Tomlin Order prevents a “successful” Defendant from recovering costs from the Claimant’s damages in a QOCS case

Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 (17 July 2018)

The Court of Appeal has ruled that in principle a successful Defendant in a multi-defendant personal injury claim can enforce a costs Order in its favour against the damages awarded against a different, unsuccessful Defendant, however this right could not be enforced where the damages are payable under a Tomlin Order, as this is not a direct order of the Court.

The background to this case was a noise induced hearing loss claim in which the Claimant issued proceedings against six named defendants. The Third Defendant, Venduct Engineering Limited, accepted that it was responsible for any liability that was established on the part of the First and the Second Defendants. The claims against those Defendants were therefore discontinued by consent.

The Claimant compromised his claim against the Fourth, the Fifth and the Sixth Defendants, who agreed to pay him £20,000.00, including costs. This was recorded in a Tomlin Order. At about the same time, the Claimant served a notice of discontinuance in respect of the claim against Venduct Engineering Ltd.

Venduct Engineering Ltd sought to recover their costs of £8,000.00 from the damages the paying Defendants had paid to the Claimant. They asserted that, as per CPR 38.6(1), they had the right to recover the costs they had incurred.

Under the QOCS rules in CPR 44.14, a defendant with an order for costs made against a claimant can enforce it only to the extent that the damages received by the claimant.

The Claimant argued that he had the protection of the QOWCS regime, such that one Defendant could not take advantage of sums payable by another Defendant to the Claimant. In addition, the Claimant alleged that, since the sums from the Fourth, the Fifth and the Sixth Defendants were paid by way of a Tomlin order, which reflected a contractual agreement between the parties, there had been no “order for damages and interest made in favour of the claimant”, so Venduct Engineering Ltd could not rely on r.44.14 in any event.

At first instance, Regional Costs Judge Hale in Nottingham held that the Claimant’s entitlement to damages arose out of the Tomlin order and not any order of the Court. He then held that had the Claimant recovered damages at Trial then the successful Defendant would be able to recover costs from those damages. However, as the damages are payable under a Tomlin order, rather than a direct order of the Court, Venduct Engineering Ltd cannot enforce their deemed costs order in this case.

The appeal was leapfrogged directly to the Court of Appeal.  Venduct Engineering Ltd, the Appellant, argued that the Costs Judge was wrong to say that they could not recover the costs on discontinuance, merely because the £20,000.00 was payable pursuant to a Tomlin order rather than an ordinary order of the Court.

The Claimant sought to uphold the Judge’s conclusion on that issue. The Claimant also argued (by way of his respondent’s notice) that the Costs Judge was wrong to find that one defendant could recover costs from sums payable by way of damages and interest to the claimant by another defendant.

Accordingly, there were two issues to consider:

  1. Can one defendant take advantage of sums paid to the claimant by another defendant?
  2. Does it make a difference if sums are due by way of a Tomlin Order?

Lord Justice Coulson analysed both parties’ arguments in respect of these issues and concluded that although in principle, a successful co-defendant may seek to enforce an award of costs when an order for damages and interest is made in favour of the claimant against an unsuccessful co-defendant, a settlement made with that defendant by a Tomlin Order, by way of part 36 or in correspondence will not trigger the ability to enforce a costs Order.

Lord Justice Coulson upheld the Cost Judge’s decision on the applicability of the QOWCS regime to multi-defendant cases, and his decision that sums payable under the Tomlin order were not covered by r.44.14(1). As a result he dismissed both Venduct Engineering Ltd’s appeal and the principal argument in the respondent’s notice.  

The Court of Appeal finding in this case provides some good news for claimants. However, this case also highlights the importance of claimants considering multi-defendant case strategy more carefully in future.

Tanya Bland,

Law Costing Ltd

3rd August 2018