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Court of Appeal: Master of the Rolls Lord Dyson, Floyd LJ, Simon LJ
1 December 2015
The claimant’s claim was funded by a CFA which named the first defendant but not the second defendant. The second defendant ultimately settled the claimant’s claim by agreeing to pay her damages. The claimant had “won” her claim as she had derived a benefit from bringing the claim and so, even though the second defendant was not named on the CFA, she was entitled to recover the costs of the action from the second defendant.
The claimant brought a personal injury claim resulting from injuries sustained when her bathroom ceiling collapsed. She entered into a CFA which named her landlord as the defendant (the first defendant). It later transpired that a plumbing company were also a potential defendant (the second defendant). The second defendant ultimately settled the claim by Tomlin Order agreeing to pay the claimant compensation and her costs. However, at Detailed Assessment, the costs officer held that the CFA, which only named the first defendant, did not cover the claim against the second defendant and so was invalid. The claimant was not responsible for payment of any costs under the CFA and so she was not entitled to recover them from the second defendant.Article continues below...
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On rehearing, the Costs Judge upheld the costs officer’s decision. In the Judge’s opinion, the claimant did not secure a “win” within the meaning of the CFA as this “win” was not against the opponent named in the CFA. The first defendant had not agreed to pay damages and costs: the second defendant had.
The claimant appealed to the County Court Judge who overturned the previous decision on the basis that the Costs Judge had focused on who was paying, which was not the right approach. The County Court highlighted that the definition of “win” in the CFA was when the claim was decided in the claimant’s favour whether by payment of damages or in any other way that benefit was derived from pursuing the claim. The Judge concluded that, as the claimant had derived benefit from pursuing the claim (she had received compensation), she had secured a “win” within the meaning of the CFA. It was not a question of who paid, the definition of “win” was much more widely drafted than that. The claimant was liable for her costs under the CFA, and so was entitled to recover them.
The second defendant appealed but the Court of Appeal upheld the County Court decision. The appeal was dismissed.
The Court of Appeal considered that it was not realistic to say that claimant had not won her case. She had secured an agreement by way of a consent order for payment of damages, and the order was an agreement to pay damages for the purposes of the CFA. Whilst these were the costs of the claim against the first defendant (and so the costs relating exclusively to the pursuit of the second defendant were not recoverable), the Court highlighted that the definition of “win” did not read “an agreement by the first defendant to pay you damages” it read “an agreement to pay you damages.” It did not matter who paid. To focus on who the paying party was would cause problems in a variety of cases, including Part 20 claims, and claims where payment was made by a subsidiary or parent company and was not a realistic approach.
Katherine Browne, Anthony Gold Solicitors