Qualified One Way Costs Shifting in Multi-Defendant Personal Injury Claims: Cartwright v. Venduct Engineering Ltd ([2018] EWCA Civ 1654)

Introduction

The case of Cartwright v. Venduct Engineering Ltd ([2018] EWCA Civ 1654) presents significant developments in the application of Qualified One Way Costs Shifting (QOWCS) within multi-defendant personal injury litigation in England and Wales. This appeal revolves around two primary issues related to the enforcement of costs orders under QOWCS:

Issue 1: Whether Defendant B can enforce a costs order from sums payable to the claimant by Defendant A.
Issue 2: Whether such enforcement is feasible when the sums are payable through a Tomlin order rather than a direct court order for damages and interest.

The parties involved include the claimant, who suffered noise-induced hearing loss (NIHL), and multiple defendants, among whom Venduct Engineering Ltd is a significant party contesting the enforcement of costs orders.

Summary of the Judgment

The Court of Appeal upheld the decisions made by Regional Costs Judge Hale at the Nottingham County Court. The judge had determined that:

Under QOWCS, Defendant B is entitled to enforce a costs order from sums payable by Defendant A to the claimant, provided these sums are from a court-ordered award for damages and interest.
However, when the payments originate from a Tomlin order—a contractual settlement agreement—the enforcement of costs orders by Defendant B is not permissible under QOWCS.

Consequently, the Court of Appeal dismissed Venduct's appeal and the claimant's principal argument, reinforcing the limitations of QOWCS in the context of multi-defendant scenarios and settlement agreements.

Analysis

Precedents Cited

The judgment heavily referenced prior cases to underpin its reasoning:

Wagenaar v. Weekend Travel Limited [2014] EWCA Civ 1105: Emphasized the systemic importance of QOWCS in reforming personal injury litigation costs.
Community Care North East v Durham County Council [2012] 1 WLR 338: Clarified that Tomlin orders are not court orders for damages and interest.
Watson v. Sadiq [2013] EWCA Civ 822: Reinforced the non-curial nature of the schedule in Tomlin orders.
Plevin v Paragon Personal Finance Ltd and Another (No 2) [2017] UKSC 23: Addressed the interpretation of "proceedings" within the CPR.
Howe v Motor Insurers' Bureau (No 2) [2017] EWCA Civ 2523: Adopted a broad interpretation of "proceedings" in relation to QOWCS rules.

Legal Reasoning

The core of the court’s reasoning centered on interpreting Rule 44.14 of the Civil Procedure Rules (CPR), which governs QOWCS. The court examined whether costs orders could be enforced from payments made via a Tomlin order, concluding they could not. Key points in the reasoning include:

Rule 44.14(1) allows enforcement of costs orders only up to the amount awarded for damages and interest by a court order.
Tomlin orders, being contractual settlements with confidential schedules, do not qualify as court orders for damages and interest.
The court emphasized the importance of maintaining the integrity of QOWCS by preventing defrauding the system through multi-defendant litigation strategies.
Practical challenges, such as confidentiality and identified lump sums in Tomlin orders, further supported the exclusion of such settlements from QOWCS enforcement.

The judgment stressed that allowing enforcement from Tomlin orders would undermine the QOWCS regime's purpose of protecting claimants without imposing undue costs on defendants.

Impact

This judgment has profound implications for multi-defendant personal injury claims:

Clarification of QOWCS Applicability: Confirms that QOWCS enforcement is limited to court-ordered damages and interest, excluding contractual settlements like Tomlin orders.
Litigation Strategy: Defendants can enforce costs against defendants who obtain court-ordered damages, but not against those who settle via Tomlin orders, shaping how multi-defendant claims are approached.
Judicial Efficiency: Prevents the potential abuse of costs orders in complex multi-defendant scenarios, ensuring that QOWCS remains effective in safeguarding claimants.
Future Legislation: May prompt consideration for CPR amendments to address gaps related to settlement agreements and costs enforcement.

Complex Concepts Simplified

Qualified One Way Costs Shifting (QOWCS): A legal rule where, in personal injury claims, if the claimant loses, they do not have to pay the defendant's legal costs unless certain conditions are met.

Tomlin Order: A type of court order used to record settlement agreements between parties, often including a confidential schedule detailing the terms, such as monetary payments.

Costs Order: A court order that determines which party must pay the legal costs of the other party.

CPR Rule 44.14: Governs the enforcement of costs orders under QOWCS, setting limits based on the damages awarded to the claimant.

Conclusion

The Cartwright v. Venduct Engineering Ltd judgment solidifies the boundaries of Qualified One Way Costs Shifting in the landscape of multi-defendant personal injury litigation. By distinctly excluding contractual settlements like Tomlin orders from QOWCS enforcement, the court preserves the integrity of the regime designed to protect claimants from prohibitive legal costs. This decision ensures that while defendants can seek costs from court-ordered damages, they cannot exploit settlement mechanisms to recoup costs, thereby maintaining a fair balance in personal injury claims. Moving forward, legal practitioners must carefully consider the implications of this ruling when structuring multi-defendant claims and settlements, acknowledging the clear limitations imposed by QOWCS on costs enforcement.

The judgment also highlights potential areas for legislative refinement, suggesting that future amendments to the Civil Procedure Rules may be necessary to address the complexities introduced by multi-defendant litigation and settlement agreements. Until such reforms are enacted, the principles established in this case will guide the practical application of costs shifting in similar legal contexts.