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Local authority costs and the indemnity principle - Re Eastwood applied.

The judgment of Mostyn J. in R (on the application of Kuznetzov) v. Camden LBC [2019] EHWC 3910 (Admin) escaped my notice when it came out, but it was picked up today in the excellent Civil Litigation Brief blog run by the indefatigable Gordon Exall.

The case has one short, sweet point: it is a further application of the Re Eastwood principle, which featured in my blog last year on costs in licensing appeals. Re Eastwood (Deceased) [1974] 3 W.L.R. 454 (CA) established that the proper method of assessment where government legal services are provided “in house” by employed solicitors is to treat the bill as if it was that of an independent, external solicitor, and so, essentially those are the rates that are recoverable.

As I wrote then, Re Eastwood has survived repeated attack, a recent example being R (Bakhtiyar) v Secretary of State for the Home Department (Costs) [2015] UKUT 519 (IAC), which described the “presumed indemnity” that the external rates give.

In Kuznetzov, instead of attacking the principle, the paying party sought to persuaded the High Court that this was a "special case" where external rates were so much greater than the cost of the in-house solicitor that the indemnity principle was being offended. That there might be such exceptional cases was recognised in Re Eastwood itself, as well as in the post-CPR case of Cole v British Telecoms PLC [2002] Costs LR, 310

Mr Kuznetov had been ordered to pay Camden's costs of defending his unsuccessful judicial review of a housing decision. Camden sought and was awarded an hourly rate of £317 on the basis that this was the rate suggested by the Supreme Court costs office for solicitors of that grade in central London (a rate, incidentally, unchanged since 2010).

In seeking to set aside that order, the intrepid Mr Kuznetov had made a Freedom of Information request of the Council to discover its annual payroll budget, and the pay grades and annual and hourly cost to the taxpayer of the employees of each pay grade. He discovered that the maximum hourly rate paid to an in-house lawyer of the London Borough of Camden is £41.75, which he pointed out was a very much lesser amount than the £317, and therefore (he asserted) that the indemnity principle was being breached,

Mostyn J. was unpersuaded, and applied the general rule as found in Re Eastwood. He said at [34]:

The £317 encompasses a great deal more than just the costs, the payroll costs, of the people sitting in the offices of the London Borough of Camden. It extends to a contribution to the infrastructural costs of the borough itself. Certainly, it extends to the costs of maintaining not only all the equipment, utilities and all other office costs, but the capital costs of the building in which the legal department is itself housed. So, one would be reasonably expected to apply figures for notional rent for example. I cannot see that this case is, by virtue of the evidence that is before me, a special case allowing an exception to the general rule. investigate this matter would be unworkable in practice and to push abstract principle to the point where it ceases to give results consistent with justice.

The short judgment also contains an interesting fruit of judicial research - a 489 year old example of costs following the event:

My brief researches prior to giving this judgment have revealed to me that that rule first appeared during the reign of Henry VIII in 1531 when Parliament passed a statute entitled: "An Act that the Defendant shall recover costs against the Plaintiff if the Plaintiff be nonsuited or if the verdict passed against him."

Charles Holland -

Licensing law, chancery/commercial litigation and property.

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