Jeffrey Cartwright v Venduct Engineering Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lady Justice Arden,Lord Justice Henderson |
| Judgment Date | 17 July 2018 |
| Neutral Citation | [2018] EWCA Civ 1654 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2018/0185 |
| Date | 17 July 2018 |
[2018] EWCA Civ 1654
Lady Justice Arden
Lord Justice Henderson
and
Lord Justice Coulson
Case No: A2/2018/0185
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Leicester County Court
Regional Costs Judge Hale
B37YP015
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Benjamin Williams QC (instructed by BC Legal) for the Defendant/Appellant
Mr Andrew Hogan (instructed by MRH Solicitors) for the Claimant/Respondent
Hearing date: Thursday 28th June 2018
Introduction
This ‘leap-frog’ appeal raises two issues arising out of the rules concerned with Qualified One Way Costs Shifting (“QOWCS”). They are:
i) Issue 1: Whether defendant B can enforce an order for costs out of sums payable to the claimant by way of damages and interest by defendant A;
ii) Issue 2: If the answer to Issue 1 is Yes, whether enforcement is possible if those sums are payable to the claimant by way of a Tomlin order, rather than a direct order of the court for damages and interest.
Although counsel identified a third issue, to the effect that, even if the answer to both Issues 1 and 2 is Yes, defendant B would not have been entitled to enforce the order against the claimant on the facts of this case (because the sum to be paid was a global figure for damages, interest and costs), I am firmly of the view that this is not a separate dispute, but arises as part of any consideration of Issue 2.
The CPR and the Authorities
The QOWCS regime is set out in four short rules ( r.44.13 – r.44.16) in Section II of Part 44 of the CPR. Rule 44.13 makes plain that the regime applies to, amongst others, “proceedings which include a claim for damages for personal injuries”. It is common ground that it applied in this case.
Rules 44.14–44.15 provide as follows:
“ Effect of qualified one-way costs shifting
44.14
(1) 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.
(2) Orders for costs made against a claimant may only be enforced after the proceedings have been concluded and the costs have been assessed or agreed.
(3) An order for costs which is enforced only to the extent permitted by paragraph (1) shall not be treated as an unsatisfied or outstanding judgment for the purposes of any court record.
Exceptions to qualified one-way costs shifting where permission not required
44.15
(1) Orders for costs made against the claimant may be enforced to the full extent of such orders without the permission of the court where the proceedings have been struck out on the grounds that –
(a) the claimant has disclosed no reasonable grounds for bringing the proceedings;
(b) the proceedings are an abuse of the court's process; or
(c) the conduct of –
(i) the claimant; or
(ii) a person acting on the claimant's behalf and with the claimant's knowledge of such conduct,
is likely to obstruct the just disposal of the proceedings.”
Rule 44.16 goes on to address other exceptions to QOWCS. It is common ground that these do not apply here. This case is solely concerned with the proper interpretation of r.44.14.
The significance of the QOWCS regime was addressed by this court in Wagenaar v Weekend Travel Limited [2014] EWCA Civ 1105; [2015] 1 WLR 1968, in which Vos LJ said:
“26. It is worth mentioning also that, as was pointed out in argument, the introduction of the QOCS regime is part of a wholesale reform of the funding of personal injury litigation. It is just one of a raft of interconnected changes. If QOCS were to be struck down, there would need to be a complete rethink of the entire Jackson reform programme as it affects personal injury litigation. It will be noted also that the changes in respect of the recoverability of success fees under conditional fee agreements and of ATE premiums were effected by primary legislation as they needed to be: see sections 44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which amended the CLSA 1990.
…
36. I should start by referring briefly to the Jackson Report, pursuant to which QOCS was introduced. I shall not repeat here the careful discussion in Chapters 9 and 19 of the Jackson Report. Suffice it to say that the rationale for QOCS that Sir Rupert Jackson expressed in those sections came through loud and clear. It was that QOCS was a way of protecting those who had suffered injuries from the risk of facing adverse costs orders obtained by insured or self-insured parties or well-funded defendants. It was, Sir Rupert thought, far preferable to the previous regime of recoverable success fees under CFAs and recoverable ATE premiums. There is nothing in the Jackson Report that supports the idea that QOCS might apply to the costs of disputes between those liable to the injured parties as to how those personal injury damages should be funded amongst themselves.”
Although in some ways the QOWCS regime reflects the pre-1999 Legal Aid scheme, it represents a major departure from the traditional principle that costs follow the event and that, save in unusual circumstances, the losing party pays the winning party's costs. The QOWCS regime provides that, subject to limited exceptions, a claimant in a personal injury claim can commence proceedings knowing that, if he or she is unsuccessful, he or she will not be obliged to pay the successful defendant's costs.
The only general exception to that is r.44.14(1), which permits a defendant with a costs order in its favour to recover the amount of that order, but only to the extent that the claimant will recover damages and interest for that amount or more. Thus, 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.
It should be emphasised that one of the principal purposes of QOWCS is to provide some assistance to claimants with personal injury claims. It is not to penalise their prospective defendants. So I disagree with paragraph 22 of Mr Hogan's skeleton argument, that a central feature of the regime is that defendants “would have to stand their own costs in unsuccessful claims”. That might be a common outcome of the QOWCS regime, but it is not its principal purpose or intent. If a defendant can bring itself within r.44.14(1), then it can recover its costs.
The Factual Background
On 19 November 2015, the claimant issued proceedings against six named defendants for noise induced hearing loss (“NIHL”). The third defendant, Venduct Engineering Limited (“Venduct”) accepted that it was responsible for any liability that was established on the part of D1 and D2. The claims against those defendants were therefore discontinued by consent.
The claim was transferred to Leicester County Court. It was allocated to the fast track and directions were given for the early hearing of a trial of the limitation issue. That was fixed for 18 January 2017.
On 12 December 2016, the claimant compromised its claim against D4 – D6. That compromise was in the form of a Tomlin order. It ordered that all further proceedings in respect of the claims against D4—D6 were stayed, except for the purposes of carrying out the agreed terms of settlement, which were set out in a separate schedule. The schedule provided that:
“The claimant do accept the sum of £20,000 in full and final settlement of his cause of action against the fourth, fifth and sixth defendant, inclusive of general damages, special damages, costs of the action, interest, and CRU.”
At about the same time, on 7 December 2016, the claimant served a notice of discontinuance in respect of the claim against Venduct. CPR 38.6(1) provides that, unless the court orders otherwise, “a claimant who discontinues is liable for the costs which the defendants against whom the claimant discontinues incurred on or before the date on which notice of discontinuance was served on the defendant”. Accordingly, Venduct's solicitors asserted that they had the right to recover the costs (approximately £8,000) which they had incurred as a result of the claimant's claim. They maintained that this could be paid out of the £20,000 paid by D4 — D6 pursuant to the terms of the Tomlin order.
In response, the claimant said that it 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 D4 – D6 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 could not rely on r.44.14 in any event.
The Judgment
These were therefore the two issues that came before Regional Costs Judge Hale in the Nottingham County Court. In an impressive reserved judgment dated 6 December 2017, the Costs Judge dealt with the Tomlin order issue first. He decided that issue against Venduct, concluding that the claimant's entitlement to damages arose, not by reason of an order of the court for damages, but by reason of an agreement with D4 – D6. This analysis was based on the decisions of Ramsey J in Community Care North East v Durham County Council [2012] 1 WLR 338 and the Court of Appeal in Watson v Sadiq [2013] EWCA Civ 822. As the Costs Judge noted, those cases were authority for the general proposition that,...
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