The Unnamed Defendant

Can a claimant recover costs against a defendant not named in the CFA?

In Engeham v London & Quadrant Housing Ltd & Academy of Plumbing Ltd (1 December 2015), the Court of Appeal upheld a finding that a consent order stating that damages and costs were to be paid by a defendant not named in the Conditional Fee Agreement was a “win,” which entitled the claimant to recover costs from that defendant.

The claimant entered into a CFA to pursue a claim against the first defendant only, but went on to pursue the claim against the first and second defendants.

The consent order provided: “upon payment by the second defendant of the agreed sum and costs, the first defendant and second defendant be discharged from all further liability to the claimant in respect of the claims made by the claimant in this action.”

At first instance, the court held that the CFA did not cover a claim against the second defendant. Accordingly, the costs claim was a breach of the indemnity principle and no costs were recoverable.

The decision was upheld on review but subsequently overturned on appeal at the Central London County Court, where it was held that, as the claimant had derived benefit from the claim irrespective of who had to pay, she was therefore liable for her solicitor’s costs under the CFA and entitled to recover them from the second defendant.

The second defendant appealed. The Court of Appeal dismissed the appeal saying that: “The parties could not have contemplated that only the first defendant could pay. The Tomlin order was an agreement to pay damages for the purposes of the CFA. It was not relevant that it was the second rather than the first defendant paying. The county court had been correct to allow the claimant to recover her solicitors' costs from the second defendant.”

Keoghs comment

Defendants have had significant success in arguing that a claimant’s liability to pay costs was not triggered if a claimant succeeded against a defendant that was not named in the CFA.

The Court of Appeal decision means that the “win” clause is now satisfied even if the claimant obtains an agreement to pay damages from a different defendant.