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Indemnity principle: Case Authority 2014

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A principle of law which provides that costs as between parties are given as an indemnity to the person entitled to them.

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Indemnity principle: Case Authority 2014

  1. 1. Indemnity Principle #ACLTRev14
  2. 2. The Indemnity principle Harold v. Smith [1860]: costs between the parties are not a punishment Gundry v Sainsbury [1910]: Because the costs are awarded as an indemnity so cannot recover sums in excess of his liability to his own solicitor The General of Berne Insurance Co v Jardine Reinsurance Management [1998]: Applied on item by item basis and not globally Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1998]: It doesn’t matter what form the retainer takes the principle should be applied in the same way Bailey v IBC Vehicles Ltd [1998]: When the bill is signed this is a declaration that the bill complies with the principle Hollins v. Russell [2003]: It applies to CFAs Ghadami v Lyon Cole Insurance Group Ltd [2010]: Disbursements will be recoverable even where the solicitor for the receiving party has failed to comply with the Solicitors Code of Conduct and therefore cannot recover part or all of his profit costs Eastwood (deceased); Lloyds Bank Ltd v Eastwood [1975]: The principle applies in the same way to work undertaken in-house COLE V. BT – Court of Appeal 4 July 2000: Confirmed Eastwood
  3. 3. Harold v. Smith [1860] 5 H&N 381 “Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the indemnification can be found out, the extent to which costs ought to be allowed is also ascertained”.
  4. 4. Gundry v Sainsbury [1910] 1 K.B. 645 Costs between parties are awarded as an indemnity to the party incurring them and a successful party cannot therefore recover a sum in excess of his liability to his own solicitor.
  5. 5. The General of Berne Insurance Co v Jardine Reinsurance Management [1998] 2 All E.R. 301, CA. The indemnity principle is to be applied on an item by item basis rather than on a global basis "where applicable the figures in a contentious business agreement provide both a measure and a ceiling for each recoverable item of costs", per Sir Brian Neill
  6. 6. Eastwood (deceased); Lloyds Bank Ltd v Eastwood [1975] Ch 112 Established that the conventional method, appropriate to assessing the bill of a solicitor in private practice, was also appropriate for a bill of an in-house solicitor in all but special cases where it was reasonably plain that that method would infringe the indemnity principle.
  7. 7. COLE v BT – Court of Appeal 4 July 2000 (Unreported) The judgment of this court in In Re Eastwood establishes that the conventional method appropriate to taxing the bill of a solicitor in private practice is also appropriate for the bill of an in-house solicitor in all but special cases where it is reasonably plain that that method will infringe the indemnity principle.
  8. 8. Bailey v IBC Vehicles Ltd [1998] 3 All ER 570 CA "In so signing he certifies that the contents of the bill are correct. That signature is no empty formality. The bill specifies the hourly rates applied ... If an agreement between the receiving solicitor and his client ... restricted (say) the hourly rate payable by the client that hourly rate is the most that can be claimed or recovered on [assessment] ... The signature of the bill of costs ... is effectively the certificate of an officer of the court that the receiving party's solicitors are not seeking to recover in relation to any item more than they have agreed to charge their client ...” L J HENRY
  9. 9. Hollins v Russell [2003] EWCA Civ 718 “…it was the policy of section 58 of the 1990 Act that the paying party should be protected by the indemnity principle in relation to a CFA entered into by the receiving party, and should therefore be entitled to object to paying costs if they arose under a CFA which could not be enforced by the receiving party's solicitor against his own client…”
  10. 10. Nederlandse Reassurantie Groep Holding NV v Bacon & Woodrow [1998] 2 Costs L.R. 32 "In my judgment there should be no distinction between those cases where a formal contentious business agreement is in place and which are governed by s.60(3) of the Solicitors Act 1974 and other cases where there is an agreement partly evidenced in writing, an unwritten agreement or no agreement at all, but merely an understanding arising perhaps from a long established relationship ...”
  11. 11. Ghadami v Lyon Cole Insurance Group Ltd [2010] EWCA Civ 767 Where a defendant had professional indemnity insurance, the judge had been wrong to limit the costs to the amount of the insurance excess. On appeal the Court of Appeal held that on the material before the court there was an implicit agreement that the solicitors would act for the defendant in relation to the claim, but without any express terms as to charging rates. The solicitors’ failure to comply with the client care code did not prevent them from recovering fees or disbursements.
  12. 12. Resources Pictures (on 1.10.2014) Slide 3: http://www.virginmedia.com/tvradio/soaps/soaptrivia/harold-bishop.php, http://www.biography.com/people/will-smith-9542165 Slide 4: http://www.telegraph.co.uk/earth/agriculture/batteryfarming/4276716/Sainsburys-to-ban-battery-eggs.html , http://thenicelicelady.blogspot.co.uk/2010/05/dont-believe-nix-package-hair-dryer-is.html , http://www.b3takit.co.uk/site/tag/gun/ Slide 5: http://www.jfcbs.nato.int/jfcbrunssum/page130613051.aspx, http://niftynotcool.com/2014/09/19/the-diamonds- and-the-jar/, http://www.huffingtonpost.co.uk/2013/02/01/eastenders-dean-gaffney-surgery-car-crash-derby_ n_2596937.html Slide 6: http://foodswol.com/cook-bacon-wallpaper-gallery.html , http://www.orkin.com/ants/leafcutter-ants/ Slide 8: http://www.hotelmanagement-network.com/news/newswork-begins-on-new-premium-inn-hotel-in-birmingham- uk, http://www.tripadvisor.co.uk, http://simpsons.wikia.com/wiki/Russell_Brand Slide 9: http://www.clipartlord.com/wp-content/uploads/2013/06/lion5.png , http://raquelgfernandez.blogspot.co.uk/2012/02/army-men.html , http://indiabeyondcoal.org/ Slide 10: http://en.wikipedia.org/wiki/Clint_Eastwood, http://en.wikipedia.org/wiki/Lloyds_Bank Slide 11: http://indiabeyondcoal.org/ , http://www.scotlandis.com/news/stories/21_communities_from_oban_to_stranraer_included_in_latest_phase_of_bts _2.5_billion_fibre_broadband

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