Court Of Appeal Rules On Applicability Of QOCS Where Settlement Is Reached Via Tomlin Order

Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654

The Court of Appeal has upheld a first instance decision confirming that a successful defendant can recover costs from damages payable to a claimant by an unsuccessful co-defendant in the same proceedings.

However, such a recovery is limited to where an order of the court, awarding that sum of damages, has been made. It is not permissible for a defendant to enforce where the damages have been agreed by a Part 36 offer or in a Tomlin Order, which are not deemed orders of the Court within the ambit of CPR 44.14, standing in contrast to a consent order.

The ruling is good news for insurers and companies in occupational diseases, who are often brought into multi-defendant cases by claimants in hope, rather than expectation, of bringing a successful claim against one of a number of parties.

Nonetheless, it is apparent that the ruling may encourage claimants and their representative to seek to agree settlements in this way, so as to avoid having to pay a successful defendant's costs order, and this may require a change in the Civil Procedure Rules.

Background

The Claimant issued proceedings against six named defendants in response of a noise induced hearing loss claim. The Third Defendant, Venduct accepted any liability which may be established against the First and Second Defendant, however, the claims against them were discontinued by consent.

The Claimant compromised the claims against D4, D5 and D6 via a Tomlin Order. The claim against Venduct was discontinued following service of the appropriate notice. Under CPR 38.6(1) following service of such a notice, the claimant is ordinarily liable for the costs incurred by the defendant up to that date. Venduct sought recovery of their costs, namely from the damages payable to the Claimant under the terms of the Tomlin Order.

Judge Hale in the Nottingham County Court determined that whilst the Tomlin Order was enforceable, it was not an order of the Court for the purposes of CPR 44.14. Venduct therefore had no entitlement to recover their costs following discontinuance.

Appeal

On appeal, the decision of Regional Costs Judge Hale was upheld.

The appeal dealt with two issues:

Whether Venduct could enforce an order for costs out of sums payable to the Claimant by way of damages and interest by other defendant(s) in a multi-defendant case; If yes, whether this enforcement is possible where the sums payable were agreed by way of a Tomlin Order, as...