COSTS

Indemnity costs - successful party legally aided - no objection to costs award

Brawley v Marczynski: CA (Lords Justice Aldous, Tuckey and Longmore): 21 October 2002

At the conclusion of an appeal hearing as to whether the trial judge had erred in deciding that the defendants should pay the costs of the action, the Court of Appeal confirmed the order for costs, but left over the question whether the order should be for costs on an indemnity basis.

On the subsequent hearing by the Court of Appeal the defendants contended that the fact that the claimant was legally aided precluded an award of costs on an indemnity basis.

Graham Shipley (instructed by Gorna & Co, Manchester) for the defendants.

James Mellor (instructed by DLA, Liverpool) for the claimants.

Jeremy Morgan (instructed by the Legal Services Commission) for the Legal Services Commission.

Held, making an order for indemnity costs, that since the introduction of the CPR, indemnity costs had been described as both compensatory and penal, but the concepts were not antitheses; that all costs awards were intended to be compensatory in the sense that the litigant was compensated for the liability he had incurred to his own lawyers; that the indemnity principle ensured that an award of costs (whether on a standard or indemnity basis) did not enable the litigant to profit from any costs order; but that an order for indemnity costs was often intended to operate penally on the losing party in the sense that the court disapproved of that party's conduct in relation to the litigation; that that was what the judge had intended; and that it was not a principled objection to an award of indemnity costs for the losing party to say that a legally aided litigant would not himself recover the difference between a standard costs and an indemnity costs order.