Kerry Underwood

INDEMNITY PRINCIPLE

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In Commissioners for HM Revenue and Customs v Gardiner & Others [2018] EWHC 1716 (QB)

the Queen’s Bench Division of the High Court was considering the indemnity principle in relation to a non-conditional fee case.

Although the judgment contains no new legal principles, it does contain a thorough analysis of the relevant case law and sets out the principles relevant to the making of a costs order in favour of a successful party in circumstances in which another body or individual has undertaken to meet those costs.

Here the High Court said that the indemnity principle will not be infringed if:

  1. the putative receiving party establishes a contract with solicitors or representatives to act on their behalf;

 

  1. the contract derives from a retainer or agreement, which may be express or implied;

 

  1. the receiving party may have sole liability for costs or dual liability with a solicitor or other representative acting as their agent;

 

  1. absent an express term to that effect it is likely to be an implied term of such a contract that the client will be liable for costs incurred on his behalf;

 

  1. if the receiving party establishes a contractual liability to pay the costs, it does not matter that it is “highly or vanishingly unlikely” that the receiving party will in fact be called upon to pay those costs. It is the liability to pay, rather than who makes the payment, which is material;

 

  1. the presumption that a client instructing a solicitor or representative to represent them will be liable for costs incurred for such representation may be rebutted by the paying party proving that there was a bargain between the client and the representative that under no circumstances was the client to be liable for costs.

 

 

The High Court added:

 

Frequently, as in this case, litigation is funded by the third party to further their own interests as well as those of the funded party. However that does not negate the liability of the funded successful claimant to pay for legal fees incurred albeit met by a third party acting as his agent in giving instructions.” (Paragraph 39)

 

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Written by kerryunderwood

August 13, 2018 at 8:10 am

Posted in Uncategorized

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