A STRATEGY WHEN SETTLEMENT IS REACHED WITH SOME, BUT NOT ALL, DEFENDANTS
An earlier post dealt with the judgment in McDermott -v- Inhealth Limited (19/07/2018) in relation to costs liability when a claimant settled against some, but not all, defendants in a clinical negligence case. That judgment was sent to me by Thomas Riis-Bristow, Associate Solicitor at Irwin Mitchell. Thomas was also kind enough to send me his “anecdotal tips” for settling in cases where there are several defendants.
On settlement where we resolve against some, but not all multi-Defendants:
During the litigation:
- The reality in the majority of multi-party litigation is you are unlikely to succeed against all the Defendants pursued. This means there is an ongoing adverse costs risk (running alongside what is often already highly complex litigation) as against those Defendant(s) who are successful in obviating liability. As ever, Claimants are often in the impossible position of having to make (and continually re-evaluate) difficult decisions, finely balanced against practitioners facing their own pitfalls in not including all necessary Defendants.
As was the position in my case we initially proceeded against D1, we received more information (not available at the point of issue), added D2 and D3 and ultimately succeeded against D3 so not the initially pursued Defendant! In addition, D2 (who we discontinued against at the point of entering Judgment against D3) contributed to the costs and damages liability without our knowledge.
After nearly 8 years working on this case, I can safely say that the bottom line is, things change and my thoughts/tips below are a mixture of what I did and what I wished I had done more of in retrospect!
- Run through the entire factual scenario in significant detail, my case concerned a key missing professional boxing relicensing scan with a multitude of possible causes of that loss. We were in a position where none of the potential tortfesors of that loss were willing to concede that they were the weak link in the chain. From the very outset, think carefully about who you join, what is the factual basis?
- Run the claim with a clear understanding that the Claimant will possibly not succeed against all parties. If it is at the forefront of your mind, the case will be prepared in a proactive and costs conscious way, which will stand you in good stead in justifying your costs position ultimately;
- Invite them to an RTM pre CCMC to resolve issues of liability before costs significantly increase. They refused the invitation in my case, but, having been invited to do so, attended their own RTM before the first CCMC and were unable to resolve any issue. The key point is we invited them and b. they met and were unable to resolve any issues thus adding strength to the Claimant’s reasoning for pursuing them all;
- During the lifetime of a multi-party case, prepare key letters (open to all if possible) to all the Defendants reminding them about the factual basis the Claimant sees for including all of them and the ultimate costs consequences if the Claimant doesn’t win against all. Be very open with why they are all included and encourage them to liaise on issues between themselves which currently remain unresolved and b. are ultimately the very reason the Claimant has seen it a necessity to include multiple parties to the litigation;
- Letters such as these create date stamps in the lifetime of the case. When the issue of costs are ultimately (and inevitably) disputed, these letters can act as lines in the sand where the unsuccessful Defendant’s later acceptance of said issues place them in difficulty in disputing the costs that were incurred up to and thereafter regarding issues they potentially should have conceded much sooner. As such, these letters will help support your ultimate reasoning (when asked to justify) to the Court the necessity of continuing against all parties with the inevitable costs implications this caused for the Claimant. These letters are invaluable in the why you did what you did arguments you will later need to rely on in costs litigation;
- In addition, these Letters should pre-empt both you and the Defendant(s) to forensically asses where the case is going and the costs consequences of continuance of the multi-party litigation. It will also illustrate to the Defendant that if they maintain their position and lose, you will seek that they pay the successful Defendant(s) costs and your own non-generic costs as incurred by those successful Defendant(s).
- We all strive to be right or to win. No one likes losing. Those who know my practice or have had the unfortunate experience of having to digest a 4 page letter of mine will tell you! However, don’t lose grip of the key issues hoping that one of the Defendants will inevitably crumble. Keep an eye on the costs issues you face. If things have changed and it is time to drop hands with some (or even all) it should be done at the earliest possible juncture. Down tools and continue against the other Defendants; don’t continue a futile action against all if you don’t need to.
- With this in mind, sound out your reasoning with others. I have bored my close colleagues and peers to death with my reasoning in this (and many other)cases. However, it is good to share views instead of paddling downstream on your own. Always arrange regular reviews with your supervising partner, so you can use their experience as a guide and also illustrate to the Court that these supervisory reviews formed part of the Claimant’s ongoing assessment of the litigation process. These reviews and can be referred to in your witness statement supporting your application for an SvB type order;
On settlement/before settling your multi-party Tomlin:
- Be bold, ask the successful Defendant(s) upfront whether they are contributing to the settlement behind the scenes (this, as was the case in mine, happens quite often and is, from experience, rarely disclosed to the Claimant);
- Try and discuss the various costs issues with the paying Defendant(s) to see if a deal can be agreed (unlikely but good to show willing, which you can refer to in your SvB application bundle);
- Try and agree with the successful Defendant(s) that they bear their own costs (unlikely but good to show willing, which you can refer to in your application bundle);
- If they are willing to bear their own costs, take a view on your non-generic costs incurred against them, if they are limited, do we really want to have to make a court application for the losing/likely to resist paying party to pay these?
- Prepare a carefully drafted Tomlin, which ensures a. the successful D has no entitlement to costs from C and (if applicable) b. We recover our non-generic costs from the paying party;
On dealing with the successful Defendant(s):
- Seek written confirmation from the successful Defendant(s) that they will not pursue you for their costs of the action;
- Draw up a Tomlin order which sets this out and include that the losing Defendant(s) agree to pay your non-generic costs incurred against the successful Defendant;
- If you agree ‘no order as to costs’ against the successful Defendant then you will not be able to recover your non-generic costs incurred against them from the losing Defendant;
- If the successful Defendant is adamant (as was the position in my case) that they seek their costs of defending the claim, whilst unlikely, ask the losing party to consent to pay them.
In a multi-party claim where you succeed against one and not another Defendant, an example appropriate Tomlin wording (example based on two Defendants) could be:
- D1 pay the Claimant’s costs of the action, to include the non-generic costs incurred by the Claimant against D2;
- D2 bear their own costs of the action;
In summary, the appeal Judge held in McDermott:
“The Claimant was not responsible for the complexities of the situation which he faced. The Claimant had not been advised of his aneurysm, there were three potential defendants and no defendant was admitting liability, nor was there to be any admission of liability for over two years after the Amended Particulars of Claim were served…
The Claimant acted reasonably in suing these three defendants, who were blaming one another, and it would not be unjust to order the Second Defendant to bear costs which were reasonably incurred in consequence of the Second Defendant’s negligence.”
It should always be the Claimant’s aim to conduct multi-party litigation in a manner that is seen by the Court as having an entirely well-reasoned basis in proceeding against all parties.
Ideally, you want to be in a position to illustrate, when the issue comes before the Court, why you did what you did and the impact of Defendant(s) conduct on the costs issues in the case.