An idiot’s guide to Tomlin orders and when is an order for costs

not an order for costs?

P.J. Kirby Q.C. 15 November 2018

hardwicke.co.uk + 44 (0)20 7242 2423

Who or what was Tomlin?

• Thomas Tomlin, Baron Tomlin PC

• Inventor of the Tomlin order – [1927] WN 290

• Patron saint of tax avoidance: “Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then, however unappreciative the Commissioners of Inland Revenue or his fellow tax-payers may be of his ingenuity, he cannot be compelled to pay an increased tax.”

Tomlin Orders

• District judge boxwork

• Really not that difficult but …

Why a Tomlin order?

• Court could not have ordered something

• Consensual stay of proceedings on agreed terms in the schedule

• Confidentiality

• Contractual effect

Tomlin orders – the downside

• Enforcement

• Interest

• QOCS

How to draft a Tomlin order

• “AND the parties having agreed to the terms set out in [the attached schedule]m[a [confidential schedule/agreement dated … copies of which are held by the parties’ solicitors/the solicitors for the (party)]

IT IS BY CONSENT ORDERED that

1. All further proceedings in this claim be stayed except for the purpose of carrying the terms of the agreement into effect and for that purpose the parties have permission to apply without the need to issue fresh proceedings

2. ANY PROVISION AS TO COSTS

Do not forget

• Any provision with regard to costs must be in the body of the order and not the schedule unless the schedule refers to an agreed sum to be paid by way of costs

Cartwright v Venduct Engineering Ltd [2018] EWCA Civ 1654

Cartwright v Venduct Engineering

• Leapfrog appeal from Regional Costs Judge Hale at Nottingham County Court – “impressive reserved judgment”

• CofA – Coulson LJ

Cartwright – the Issues

• Issue 1: Whether defendant B can enforce an order for costs out of sums payable to the claimant by way of damages and interest by defendant A;

• Issue 2: If the answer to Issue 1 is Yes, whether enforcement is possible if those sums are payable to the claimant by way of a Tomlin order, rather than a direct order of the court for damages and interest.

Cartwright – CPR 44.14

• CPR 44.14 Effect of qualified one-way costs shifting

• (1) Subject to rules 44.15 and 44.16 , orders for

costs made against a claimant may be enforced without the permission of the court but only to the extent that the aggregate amount in money terms of such orders does not exceed the aggregate amount in money terms of any orders for damages and interest made in favour of the claimant.

Cartwright – the facts

• 6 defendants – noise induced hearing loss

• D3 - Venduct accepted responsible for any liability established against D1 and D2

• C compromised claim against D4-D6 in a Tomlin order - £20k inc costs

• C discontinued against D3

• D3 sought to recover its costs of £8k out of £20k

Cartwright - the decision on issue 1

“Let us assume that the claimant issued proceedings against two defendants, A and B, which went all the way to trial. The claimant recovered £100,000 against defendant A, but the claim against defendant B failed, leading B to incur £40,000 by way of costs. In circumstances where the claimant had freely sued B (so that a Bullock or Sanderson order was inappropriate), I can see no reason in principle why B should not recover the £40,000 from the £100,000 payable by A to the claimant.”

Cartwright - the decision on issue 1

“The QOWCS regime is designed to ensure that a claimant does not incur a net liability as a result of his or her personal injury claim: that, at worst, he or she has broken even at the end of the action. In the example I have given, the QOWCS regime will have facilitated his recovery of £100,000 against A. But there is no reason why that regime should prevent B from recovering its costs out of the damages payable by A.”

Cartwright - the decision on issue 1 • “… r.44.14(1) deals simply with orders for

costs made against a claimant on the one hand, and orders for damages and interest made in favour of the claimant, on the other. The language is wide. It is clearly capable of embracing the situation in which defendant B has a claim for costs against the claimant which does not exceed the amount of the order for damages and interest made in favour of the claimant and payable by defendant A. “

Cartwright - the decision on issue 1

• “…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. … 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.”

Cartwright – the decision on issue 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.”

Curial - relating to the Curia, the papal court at the Vatican. Pertaining to a court.

Cartwright – the decision on issue 2

• Ramsey J in Community Care North East v Durham CC [2010] EWHC 959 (QB) – Ramsey J “The terms of the schedule are not an order made by the court.”

Cartwright – the decision on issue 2

“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) .”

Cartwright – the decision on issue 2

• Coulson LJ gave 2 examples of the practical difficulties that would arise if CPR 44.14(1) did cover Tomlin orders:

• (i) the schedule to the Tomlin order is often confidential

• (ii) The settlement figure may be a global sum including costs so discerning the damages element may be difficult/impossible

Cartwright– the practical consequences

• D can obtain costs from C’s damages where damages are paid by another D pursuant to a court order but not a Tomlin Order or the acceptance of a Part 36 offer (what about late acceptance of a part 36 offer where court’s permission is granted?)

Cartwright– the practical

consequences

• Tomlin orders and acceptance of part 36 offers will be far more appealing to Cs where multiple Ds.

• Consent orders not in Tomlin form will not benefit from the Cartwright Exception

• Where multiple Ds Ds may wish to consider settlement strategy

Thank you

PJ Kirby QC

+44 (0)20 7242 2523

pj.kirby@hardwicke.co.uk

www.hardwicke.co.uk/people/pj-kirby-qc

hardwicke.co.uk + 44 (0)20 7242 2423