In Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654 the Court of Appeal considered issues relating to the recoverability of costs in multi-defendant cases where the claimant would normally have the protection of qualified one-way costs shifting.   The case provides some good news for claimants but highlights  the importance of claimants choosing their targets carefully when issuing proceedings.

 “It is important that claimants are discouraged from bringing proceedings which are unlikely to succeed. Claimants with QOWCS protection should not think that this general principle does not apply to them, or that they can issue proceedings against any number of defendants with impunity.


The claimant issued proceedings against six defendants for noise induced hearing loss.

The claim was compromised against three of the defendants by way of a Tomlin order.

“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.”

The claimant then discontinued his claim against the defendant Venduct, that had accepted responsibility for any liability that attached to itself and two other defendants.

Venduct sought to recover its costs from the damages the paying defendants had paid to the claimant.


The District Judge held that the claimant’s entitlement to damages arose out of the Tomlin order and not any order of the court.

He then  held that had the claimant recovered damages at trial then the successful defendant would be able to recover costs from those damages.


The appeal was leapfrogged directly to the Court of Appeal.  The Court held that there were two issues.

(1) Can one defendant take advantage of sums paid to the claimant by another defendant.

(2) Does it make a difference if sums are due by way of a Tomlin Order.


The Court decided this issue in the defendant’s favour.
  1. In my view, a result which requires a claimant, in the appropriate case, to pay to a successful defendant the amount of a costs order made in favour of that defendant, out of sums payable by way of damages and interest to the claimant by an unsuccessful defendant, is precisely in accordance with what Sir Rupert calls “the necessary elements of a one-way costs shifting regime“. It is important that claimants are discouraged from bringing proceedings which are unlikely to succeed. Claimants with QOWCS protection should not think that this general principle does not apply to them, or that they can issue proceedings against any number of defendants with impunity.
    1. I understand of course that in NIHL claims, it is often necessary for a claimant to consider carefully which of his or her former employers may be liable and why. I understand too that, because it is a divisible injury, there may be times when a claimant may have to issue proceedings against a number of such employers, even if it is known that the claim against employer A is likely to be stronger than the claim against employer B. But none of that can override the need to ensure that defendants such as Venduct are not faced with a hopeless claim, in respect of which they have to incur costs, only for that claim to be discontinued shortly before trial.
  2. On a related topic (covered in the short post-hearing written submissions), I do not accept Mr Hogan’s argument that, if a claimant can be found liable to pay one defendant’s costs out of sums paid by another defendant, the claimant will be encouraged to bring one action against one defendant and then, subsequently a second action against another, and so on. Such a strategy would immediately run into limitation difficulties, and may also founder on the principles derived from Henderson v Henderson. So in a NIHL case, it is a much better course for a claimant to consider the position carefully at the outset, and issue one set of proceedings against those former employers against whom he or she is advised that they have an arguable claim. In addition, the claimant should also make appropriate Part 36 offers to all of the defendants as soon as reasonably practicable.
  3. Accordingly, for all these reasons, I consider that the Costs Judge was right to conclude that 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.


The Court of Appeal agreed with the District Judge.  A “successful” defendant could not recoup costs made as a result of a Tomlin Order.

    1. I have not found Issue 2 entirely easy to decide. I am acutely aware that any decision which upholds the Costs Judge on Issue 2 may encourage a claimant (who would otherwise be liable to meet a successful defendant’s costs order) to try to avoid that result by the use of the Tomlin order mechanism. However, I have concluded that, in respect of the rule in its current form, the Costs Judge was right. The wording of the rule cannot, on even the most liberal interpretation, be construed in the wide way urged by Mr Williams QC. What is more, for the reasons explained below, I do not consider that this is merely a technical point, which could be cured by adding a few words to r.44.14(1). It would in truth require a wholesale recasting of the rule because, amongst other things, it would require a mechanism to allow the court to consider the terms of a confidential schedule in order to try and identify the sum payable to the claimant by way of damages and interest (which may not be expressly identified in the schedule). As Mr Hogan submitted, these complexities may explain why settlements were not a part of the simple QOWCS rules.
    2. The starting point is this: a Tomlin order is not an “order for damages and interest made in favour of the claimant”. The order itself is curial; but the schedule is not a part of the order of the court. Instead it reflects the agreement reached between the parties.
    3. In Community Care North-East v Durham CC, Ramsey J said:
“28. In relation to the terms of the agreement incorporated in the schedule to the Tomlin Order, other considerations apply. The terms of the schedule are not an order made by the court. The court obviously has the ability to interpret that agreement on well known principles of interpretation, as set out in Sirius and would have to do so when it was asked to take any enforcement action under the standard liberty to apply for that purpose in the Tomlin Order. Likewise the court has the ability to deal with the terms of that agreement in the same way as any other contract. That would include, for instance, a claim for rectification or a claim that the agreement was unenforceable for some reason. If the court decided that the agreement should be rectified or that it was unenforceable then the court may well take the view that they would vary or revoke the terms of the order part of the Tomlin Order, to take account of that determination. To what extent, though, would the court otherwise vary the terms of the agreement incorporated as the schedule to the Tomlin Order?”
    1. This approach was approved by McCombe LJ in Watson v Sadiq & Sadiq at paragraph 50, where he said:
“For my part, I agree with the analysis of Ramsey J in Community Care North East v Durham CC [2010] EWHC 959 (QB) that the CPR have no application to the schedule to a Tomlin order, which indeed is not an order of the Court at all. A different principle applies to the curial part of the order. The curial part of a Tomlin order is a consent order. In Weston v Dayman, Arden LJ, with whom Brooke and Wall LJJ agreed, proceeded on the basis that, whether the source of the jurisdiction for varying or revoking a consent order was in CPR3.1(7) or the liberty to apply contained in the order, there is jurisdiction to vary or revoke the order where it was just to do so but that the court has to be very careful in exercising its discretion where the consent order represented a contract between the parties (paragraph 24). “One of the aspects of justice is that a bargain freely made should be upheld.” (paragraph 24). In cases where the variation is contrary to the agreement that the parties have made, and leaving aside the possible effect of a violation of article 6 in the proceedings in which the Tomlin order was made, I agree with Ramsey J that a major and often determinative factor in the exercise of the discretion will be the fact of that agreement. In the present case, Mr Watson seeks to set aside the whole of the Recorder’s order but it follows from this discussion of the authorities that, putting on one side any violation of article 6, before the curial part of the order can be set aside, he must establish in the usual way that he is entitled to have the contract in the schedule to the order set aside.”
    1. 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. Mr Williams QC pointed out that, although the schedule to a Tomlin order is not part of the original order, if one or other party does not comply with the terms in the schedule, the court can eventually enforce those terms pursuant to the words of the Tomlin order itself. Thus, he said, even if not at the outset, the schedule to a Tomlin order may eventually be enforced by order of the court.
    3. That is right as far as it goes, but it does not get around the fact that this is not what r.44.14(1) is referring to. In order to allow for this, Mr Williams QC had to rewrite the rule to refer to “a sum payable by way of damages which is compellable by court order”. That is not what the rule says. Indeed, no matter how he put his case, Mr Williams QC needed to add further words to r.44.14(1). At the very least, on his case, the rule would have to refer, not only to an order, but to an agreed settlement. In my view, the absence of the necessary words is fatal to his case on interpretation.
    4. But there is more to it than the straightforward construction of the rule. It seems to me that there are insurmountable practical difficulties which also militate against a conclusion that r.44.14(1) was designed to cover Tomlin orders, or out-of-court settlements, or that the absence of the necessary words was a simple oversight or omission. Take just two practical difficulties by way of example. First, a Tomlin order is often confidential. The normal practice is that a judge does not see or approve the terms of a confidential schedule before making the order. Although in certain cases, courts have ordered the disclosure to defendant B of a Tomlin order agreed between the claimant and defendant A, this has been in particular circumstances where justice has required it. So, for example, in L’Oreal SA & Others v eBay International AG & Others [2008] EWHC B13 (Ch), Master Bragge ordered the disclosure of a Tomlin order, because there was a possibility that the terms of the order released other defendants from liability altogether. But in a case like this, where each defendant’s liability is several, not joint, it may well be that a successful defendant with a costs order in its favour is not entitled even to see the Tomlin order. If the QOWCS rules had intended the contrary, they would have said so.
    5. Secondly, there is the issue of global settlements. Sometimes, the figure for damages in a lump sum settlement figure can be easy to determine. But on other occasions it may never have been articulated by anyone during the settlement process, because it was the overall lump sum for everything (including costs) which was commercially attractive to the claimant. How in those circumstances could the court embark on the task of identifying the relevant figure?
    6. Indeed, that point can be taken even further. It can sometimes happen that a claim will be settled by a process which does not identify any lump sum at all, such as where the defendant offers the claimant some form of benefit in kind (continued employment in a different location, for example). It would be quite impossible for that sort of benefit to be given a liquidated financial value, so impossible for r.44.14(1) to operate.
    7. It is these practical difficulties which have confirmed my view that Mr Williams QC’s liberal interpretation of r.44.14(1) is wrong. Essentially, he has to argue that the CPRC intended that the rule should cover any circumstances in which a claimant recovers something, by whatever means, from a defendant. But not only does the rule not say that, but if that is what was intended, the rule would have needed to contain much fuller guidance as to what should happen to settlements and Tomlin orders: whether they were to remain confidential; the circumstances in which the confidentiality would be removed; the way in which any global sum was to be apportioned, and so forth. In the absence of that sort of guidance, it cannot be said that this is a situation which the rules were intended to cover. So, it does not seem to me to have been an oversight or a lacuna in the CPR: if it had been the intention for r.44.14(1) to cover settlements of whatever kind, different words and greater guidance would have been required.
    8. It goes without saying that whether or not the CPR should be amended so as to make changes of this kind is a matter for the Ministry of Justice and the CPRC. It is not a matter for this Court.
    9. Mr Williams QC’s most powerful submissions arose out of his demonstration of the potentially odd and counter-intuitive results which might follow from a conclusion that r.44.14(1) covered court orders in the claimant’s favour but not settlements or Tomlin orders. I understand those points and the obvious risks when very different consequences flow from what may appear to be only marginally different types of court order. But it is not enough to show that there would be unfortunate consequences in some cases if the rules mean what they say, particularly in circumstances where, even on Venduct’s case, they provide none of the express guidance that would have been required if they related to all types of court orders and settlement agreements.
    10. For all these reasons, therefore, I consider that the Costs Judge was right to exclude from the QOWCS regime sums payable pursuant to a Tomlin order.
  1. For the reasons set out above, I would uphold the Cost Judge’s decision on the applicability of the QOWCS regime to multi-defendant cases, and his decision that sums payable under the Tomlin order were not covered by r.44.14(1). On that basis, if my Lady and my Lord agree, both Venduct’s appeal and the principal argument in the respondent’s notice will be dismissed.