Aehmed & Ors v The Legal Services Commission

Regulation 5(8) of the Community Legal Service (Costs Protection) Regulations 2000 applies only where a non-funded party acts in a representative, fiduciary or official capacity on behalf of another and is entitled to be indemnified from particular property, an estate or a fund. A person acting personally does not acquire an official capacity merely because proceedings require joinder by virtue of an office held. A contractual or insurance indemnity is not an indemnity from particular property, an estate or a fund. Without regulation 5(8), the indemnifying organisation’s resources cannot establish severe financial hardship under regulation 5(3)(c).

The appeal arose from an election petition concerning the election of Mr Afzal as a Birmingham city councillor. The unsuccessful petitioner, Mr Aehmed, had public funding. The election court ordered him to pay costs to Mr Afzal, subject to determination by a costs judge.

Master Rogers determined two preliminary issues against the Legal Services Commission. The issues were whether Mr Afzal acted in a representative, fiduciary or official capacity and was entitled to indemnification from property, an estate or a fund within regulation 5(8), and, if so, whether the Labour Party could suffer hardship for the purposes of regulation 5(3)(c).

1. Appeal allowed. The Legal Services Commission was permitted to withdraw its concessions below because they concerned statutory construction.
2. Regulation 5(8) was construed as a whole, with official capacity read eiusdem generis with representative and fiduciary capacity. Those capacities involve acting on behalf of another person or body and an entitlement to indemnification from property, an estate or a fund. The approach in R v Chester and North Wales Legal Aid Area Office (No 12), ex parte Floods of Queensferry Ltd was applied.
3. Mr Afzal was not acting in an official capacity merely because section 128(2) of the Representation of a People Act 1983 required the successful candidate to be joined to the election petition. He was sued personally as the successful candidate. The statutory joinder requirement reflected natural justice and did not make him a nominee or representative of the Labour Party.
4. The description of Mr Afzal as the official Labour Party candidate did not alter the analysis. Paragraph 5 of Schedule 2 to the Local Elections (Principal Areas) (England and Wales) Rules 2006 regulated descriptions in nomination papers. It did not establish that an official party candidate acted in an official capacity when joined to litigation.
5. Regulation 5(8) did not cover an indemnity from a contractual counterparty or an insurance policy. Its reference to indemnification from property, an estate or a fund contemplated, for example, a trustee’s indemnity from trust property or an executor’s recovery from an estate.
6. Regulation 5(8) was therefore irrelevant. Regulation 5(3)(c) was unsatisfied because Mr Afzal was fully indemnified and could not establish severe financial hardship without a costs order against the Commission. The second preliminary issue did not arise.

Lord Justice Sedley and Lord Justice Maurice Kay agreed with Lord Justice Dyson’s judgment. The order was: appeal allowed.

• Court of Appeal (Civil Division) [2009] EWCA Civ 572: appeal allowed from the decision of Master Rogers in the Supreme Court Costs Office. Regulation 5(8) did not apply and no costs order could be made against the Legal Services Commission.
• Supreme Court Costs Office: Master Rogers determined the two preliminary issues in favour of Mr Afzal and against the Legal Services Commission, and gave permission for a direct appeal.