Qualified One-way Costs Shifting: 2 recent Court of Appeal decisions
1. Multi Defendant actions – when a Tomlin Order is not enough
The Court of Appeal found in the case of Cartwright v Venduct Engineering Ltd  EWCA Civ 1654 that a successful Defendant in a multi defendant claim would normally have the benefit of QOCS - a Claimant who has an order for damages and interest payable by defendant A is liable to pay out of that amount any adverse costs orders in favour of defendant B, but only up to the limit of the order for damages and interest payable by defendant A.
However, the key point is that the Defendant must have an order – a Tomlin Order is not an Order for the purposes of CPR 44.14 and therefore a successful Defendant cannot recoup costs made as a result of a Tomlin Order.
At paragraph 45 of the judgment, LJ Coulson summarised previous decisions on the point by stating:
“These authorities make it clear that a Tomlin order cannot be described as “an order for damages and interest made in favour of the claimant”. It is no such thing. It is a record of a settlement reached between the parties which is designed to have binding effect. In that sense, as the parties agreed in the present case, it is no different to the settlement that arises when there is an acceptance of a Part 36 offer. Such acceptance does not require any order from the court, so a settlement in consequence of an acceptance of a Part 36 offer would also be outside the words of r.44.14(1).”
2. Mixed claims and QOCS – When a judge can exercise discretion
The case of The Commissioner of Police of the Metropolis v Brown  EWHC 2046 (Admin) deals with claims that include an element of personal injury but have other claims in addition (in this case, the misuse of data, misfeasance in public office and misuse of private information). For such cases, Mrs Justice Whipple found, on appeal, that:
“Mixed claims are within the scope of QOCS, by virtue of CPR 44.13(1). But CPR 44.16(2)(b) provides a mechanism to deal with mixed claims. The mechanism is quite simply to leave it to the Court at the end of the case to decide whether, and if so to what extent, it is just to permit enforcement of a defendant’s costs order.”
She stressed “The question to be asked in any given case seems to me to be this: in the proceedings, is the claimant claiming anything other than damages for personal injuries?
i. If the answer is no, then QOCS protection applies automatically (subject of course to one of the other exceptions applying, where the case is struck out or dishonesty is found).
ii. If the answer is yes, then the case is subject to the court’s discretion under CPR 44.16(2)(b)”.
Therefore, when a claim is not limited to damages for personal injury, a judge is able to exercise discretion and allow the enforcement of a defendant costs order, to the extent that it is considered to be just.
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Indemnity basis costs, late acceptance of Part 36 offer and fixed costs – Hislop v Perde  EWCA Civ 1726
This case dealt with the scenario where a Defendant accepts a Claimant’s Part 36 out of time and the costs consequences of this when it is a matter subject to fixed fees. The Claimant argued that because the Part 36 offer had been accepted out of time that costs on the indemnity basis should follow from the date of the expiry of the Part 36 offer. Such an award would mean that the Claimant would be entitled to fixed costs up to the date of the expiry of the Part 36 offer and then indemnity basis costs outside of the fixed costs regime.
The Court held that an award of indemnity basis costs is not an entitlement and that there is a need for ‘exceptional circumstances’ to justify such an award. In this case there was no ‘exceptional circumstances’ even though there was a delay of 18 months.
The outcome of such a decision greatly reduces the benefits for Claimants to make a good early Part 36 offer, especially in fixed costs cases. It is no longer right to rely on a good part 36 offer accepted out of time to obtain an indemnity basis costs award bonus on top of fixed costs. Instead the Claimant will need to show ‘exceptional circumstances’ to obtain such an award and potentially escape the fixed costs regime.
Furthermore, Claimants should be cautious of Defendants accepting Part 36 offers out of time (when there are no ‘exceptional circumstances’ for the Defendant’s delay) as they are likely to remain within the fixed costs regime. It should be noted that if a Claimant proceeds to trial and successfully beats their own Part 36 offer then they will be entitled to indemnity basis costs outside of the fixed costs regime pursuant to the decision in Broadhurst v Tan  EWCA Civ 94.
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Hourly rates - Justification on assessment
In the recent decision of JXA -v- Kettering General Hospital NHS Foundation Trust  EWHC 1747 (QB) the Court reduced the hourly rates claimed. On appeal from that decision, the Court reaffirmed the test in Wraith -v- Sheffield Foremesters Ltd, Truscott -v- Truscott  EWCA Civ 2285 and found that the Court must first consider whether the decision to instruct the solicitor was reasonable.
However, importantly the court found that the failure to do so would not necessarily affect the determination of the second limb of the test which is “what is a reasonable amount to allow” for that solicitor. Practical tips for disputing or defending the hourly rates are contained within our full blog post on this topic here.
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