As part of Keoghs continuing strategy to drive down claims spend, bespoke training is delivered to increase awareness of trigger-points and tripwires where input from a costs specialist is necessary. Where there are multiple defendants to a claim in areas such as casualty or disease litigation, the costs position at conclusion can often become messy. Sometimes the unsuccessful defendant is required to meet the costs of all parties; at other times, multiple unsuccessful defendants argue amongst themselves over who is paying what proportion of the successful claimant’s costs. This area is ripe for misunderstanding and exploitation.
It is important when faced with multi-party claims to “Get the Right Order; and the Order Right”. Most litigators have heard of Sanderson[1] and Bullock[2] Orders. But when is one to be preferred over the other? Or when are neither appropriate? Should a Consent Order or Tomlin Order be utilised? What impact may a Notice of Discontinuance have on the parties? And how does Qualified One Way Costs Shifting[3] (QOCS) interact with these? Keoghs believes it is essential that costs specialists work seamlessly alongside substantive lawyers in these circumstances to provide effective representation for their clients.
In a recent case, Keoghs was able to bring to bear their considerable expertise in both substantive and costs law to bear in order drive down claims spend and achieve significant savings on behalf of their client.
The claimant was sitting in her conservatory when a permanent fixture on the roof of the house dislodged and fell through the glass ceiling, striking her and causing injury. A Letter of Claim was served on the first defendant (D1), the developer responsible for building the house. D1 wrote to the second defendant (D2), the contractors whom fitted the roofing fixture. D1 advised D2 that the claim for damages was to be investigated and a claim for contribution/indemnity may be pursued in the future. Although some exchanges between D1 and D2 occurred over the next few months, the matter went quiet and the insurer of D2 closed their file.
Some three years later, D1 wrote to D2 providing a copy of the Part 7 proceedings that commenced 12 months earlier together with lay witness and expert evidence seeking to blame D2 for the incident. Around the same time, the claimant wrote to D2 advising they were to be joined to proceedings for the purposes of a claim for damages in negligence. In addition, D1 commenced a Part 20 claim against D2 for an indemnity and/or contribution in respect of any damages and costs payable to, or as a result of, the claimant’s claim. At the same time, D1 commenced a Part 20 claim against D3 for an indemnity and/or contribution. This followed the claimant joining D3 to the proceedings after alleging that the remedial works carried out on the roof some years after D2’s involvement may have been negligent in disturbing the permanent roof fixture that had subsequently fallen and caused the claimant’s injury.
In view of the time elapsed (11 years) between the work D2 had performed at the claimant’s property and being served with proceedings, D2 found themselves in difficulty locating relevant documentation for disclosure purposes. Whilst adamant they were not at fault for the unfortunate events surrounding the claimant’s injuries, D2 could not locate sufficient contemporaneous documents to support their usual working practices at the time. Neither could a copy of the original subcontract order be located governing the position between D2 and D1.
Mindful of litigation risks and the already substantial costs incurred by all parties, the decision was made to settle the claimant’s claim without admission of liability rather than proceed to a long and costly trial on what would otherwise have been a fast track claim for damages.
Having benefited from receiving specialist in-house training, Keoghs’ substantive lawyers appreciated that when considering settlement of the main claim, D2 was potentially exposed to paying costs that: (i) D2 had no control over during the period they were incurred; (ii) had not been expended or required to be incurred in bringing the claim against D2. Consequently, rather than just offering to settle the claimant’s claim and pay reasonable costs, advice was sought from Keoghs costs team as to how to appropriately word an offer that restricted D2’s liabilities – and what impact this would have on other claims in the proceedings.
Following acceptance by the claimant of the offer to settle, further input was provided by Keoghs costs team regarding the appropriate instrument to record terms of settlement. In the circumstances, a Tomlin Order was utilised. This avoided any suggestion of liability on the part of D2. It also protected the claimant’s damages from the other defendants attempting to enforce any orders for costs under the QOCS rules[4]. Thereafter, the claimant discontinued her claims against D1 and D3.
The terms of settlement reached provided only for payment of the claimant’s individual costs of pursuing D2 and reasonable disbursements incurred prior to first notification of the claim against D2 together with 100% of any common costs thereafter.
The costs ‘avoided’ by D2 included: (i) the claimant’s individual costs of pursuing D1 and D3; (ii) the claimant’s common costs prior to first notification of the claim to D2; (iii) any costs relating to D1’s Part 20 claim against D2; (iv) any costs relating to D1’s Part 20 claim against D3. In monetary terms, a saving was achieved of 55.6% against the costs D2 may otherwise have paid to the claimant by virtue of compromising the main claim.
Alleging that D2 was the unsuccessful party in the litigation as a whole, D1 and D3 pursued payment of all their costs from D2. Further advice was requested from Keoghs costs team and a decision was made to resist these claims for costs on grounds that: (i) D1 was not entitled to any costs from D2 pursuant to a contract; (ii) D2 was not a party to the claim made by D1 against D3 and had no responsibility for the costs incurred in that distinct claim; (iii) D2 should not be required to pay any costs to D1 on grounds of conduct – but certainly no costs before D1’s notification of proceedings to D2 proceedings; and (iv) D1 and D3 already had a deemed order for costs in their favour against the claimant in respect of the main claim (albeit those orders could not be enforced against the claimant due to the operation of the QOCS rules).
Dissatisfied with D2’s position, D1 issued an Application Notice that, amongst other things, sought an order that D1’s Part 20 claims against D2 and D3 be dismissed, D2 pay all D1’s costs on an indemnity basis, and D2 indemnify D1 against any costs liability to D3.
Each party was represented by counsel at the contested application hearing. Witness statements were filed by those representing D1 and D2. At the hearing it was submitted on behalf of D1 and D3 that the first they knew of D2 making any payment of damages to the claimant was upon receiving Notice of Discontinuance. At the time of making the application, D1 did not know settlement was by way of Tomlin Order and had assumed D2 admitted liability. It was argued the costs incurred had been caused by D2 refusing to accept liability at the outset and by their sustained denial prior to what was described as “capitulation” shortly before hearing. In so far as the Part 20 claims were concerned, D1 submitted the subcontract order which incorporated relevant terms and conditions of business providing for an indemnity from D2.
On behalf of D2 it was submitted that negligence had not been proved or admitted. There was no findings against D2 to trigger any indemnity clause and a contractual liability had not been proved by D1. The documentation produced in support of the indemnity was said not to support D1’s pleaded case and there were no findings by the court concerning what terms applied to the subcontract order. Regarding D1’s Part 20 claim against D3, this had no relevance to D2 as it arose in circumstances different to those between D1 and D2 and, in any event, was avoidable by allowing the claimant to claim directly against D3. D2 further argued that the conduct of D1 had been unreasonable in not involving D2 much earlier and had consequently prejudiced their ability to defend the claim given the time elapsed between the works complained of and first notification of proceedings. For these reasons, D2 had pragmatically sought to compromise the claim but without admission of liability.
In a reserved judgment, the court found in favour of D2 and accepted that D1 was not entitled to costs on the basis they were payable under a contract. Furthermore, there was no basis on which D2 should pay D1’s costs of pursuing D3 as D2 was not responsible for D1’s decision to make a claim against D3, based on entirely distinct allegations. D1’s conduct was also criticised for not keeping D2 informed as to the proceedings thus denying D2 the opportunity to investigate the claim and prejudicing their ability to defend.
D1’s Part 20 claims against D2 and D3 were dismissed – as requested by D1 in their own Application Notice – and D1’s claim for costs against D2 was dismissed.
As a consequence of the joined-up approach adopted by Keoghs substantive lawyers and costs team, significant savings had been achieved for D2’s insurer. This includes a 55.6% saving against the claimant’s costs of bringing the claim; 100% in respect of D1’s costs of defending the claim and bringing the Part 20 claims against D2 and D3; and 100% of D3’s costs of defending the main claim and Part 20 claim of D1. In addition, D2 will be entitled to recover the costs of defending D1’s Application Notice.
The substantive proceedings were conducted by Margaret McQuaid – Associate Solicitor in Keoghs casualty team, with costs advice provided by Ben Petrecz – Costs Lawyer and Partner.
The interaction between Keogh’ members allows individual specialists to bring their expertise to bear collectively on behalf of clients at all critical points in the litigation process. Through Keoghs in-house training, lawyers and team members are upskilled to recognise and understand key events in a claim that trigger the need to involve others with specialist knowledge in different areas of law. The end result is a robust, but fair approach to litigation, with a keen eye on ensuring claims spend is controlled, contained and reduced to the benefit of insurers and compensators.
[1] Sanderson v Blyth Theatre Company [1903] 2 KB 533: where the unsuccessful defendant is ordered to pay the successful defendant’s costs directly
2 Bullock v The London General Omnibus Company [1907] 1 KB 264: where the claimant pays the successful defendant’s costs but the unsuccessful defendant is ordered to pay those costs over to the claimant
3As set out at Section II of CPR Part 44 (rules 44.13 to 44.17)
[1] Sanderson v Blyth Theatre Company [1903] 2 KB 533: where the unsuccessful defendant is ordered to pay the successful defendant’s costs directly
[2] Bullock v The London General Omnibus Company [1907] 1 KB 264: where the claimant pays the successful defendant’s costs but the unsuccessful defendant is ordered to pay those costs over to the claimant
[3] As set out at Section II of CPR Part 44 (rules 44.13 to 44.17)
[4] See paragraphs 45-48 of Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654
Ben Petrecz
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