Cartwright v Venduct Engineering Limited [2018] EWCA Civ 1654
When a claimant with the benefit of QOCS protection discontinues a claim there should be no enforceable costs order against them unless there has been fundamental dishonesty in bringing the claim.
But what is the position in a case of multiple defendants where the same claimant is eventually successful in obtaining damages from another defendant to the action?
CPR 44.14 is unclear on the issue, simply stating:
“Subject to rules 44.15 and 44.16, orders for costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.”
The answer given by HHJ Freedman in Bowman v Norfran (unreported) was that the action against each defendant should be seen as separate proceedings for the purposes of the interpretation of rule 44.14.
His view was that “if it were the intention of the Rules Committee that one defendant could recover costs from a claimant out of damages paid by another defendant, I think it very likely, if not inevitable, that such would have been spelt out.”
This decision has provided significant reassurance to claimants in multi-defendant cases.
The Court of Appeal has, however, come to the opposite conclusion in Cartwright v Venduct Engineering Limited. The reasoning is set out by Coulson LJ at paragraphs 23 to 26. In essence, the argument is that the QOCS regime is intended to ensure that a claimant is no worse off for bringing a claim than he or she was before (subject to the fundamental dishonesty exception). If a claimant recovers, for example £100,000, from defendant A but has to discontinue against defendant B by which time defendant B has incurred costs of £40,000, the claimant is still £60,000 better off. CPR 44.14 would ensure that defendant B would not be in a position to recover costs exceeding the sum which the claimant recovered from defendant A.
Any other result would give a claimant carte blanche to commence proceedings against as many defendants as he or she likes, requiring those defendants to run up large bills by way of costs, whilst remaining safe in the knowledge that, if the claim fails against all but one defendant, he or she will incur no costs liability of any kind to the successful defendants, despite the recovery of sums by way of damages from the unsuccessful defendant. That seems to me to be wrong in principle, because it would encourage the bringing of hopeless claims.
In fact this analysis did not assist the ‘defendant B’ in this case because the compromise between the claimant and the ‘defendant A’ was by way of Tomlin order which was not an “order for damages and interest made in favour of the claimant”. Coulson LJ took the view that interference with a Tomlin order would require a wholesale recasting of the rule to provide “a mechanism to allow the court to consider the terms of a confidential schedule in order to try and identify the sum payable to the claimant by way of damages and interest”.
There is therefore cause for concern on both sides of the equation here.
Claimants remain in a position whereby claims must sometimes be advanced against multiple defendants however care should be taken to ensure that prospects of success are good against each defendant individually. Claimants contemplating a discontinuance in such circumstances should ensure that it is negotiated on a costs-neutral basis and/or consider using a Tomlin order to capture the final terms of settlement.
This is no home run for defendants because a defendant against whom the claimant has discontinued will usually have no power to prevent the use of a Tomlin order.
Zenith PI: PERSONAL INJURY LITIGATION IN PRACTICE 