Culkin v The Wirral Independent Appeals Panel

The indemnity principle permits a costs order only to indemnify a party against legal costs paid or legally payable. A third-party funder or statutory indemnity does not, without more, remove the receiving party’s liability to its solicitors. Acquiescence in solicitors acting on a party’s behalf may establish that liability, even without a client care letter. A statutory indemnity is limited to costs reasonably incurred in good faith and in pursuance of the indemnified party’s functions. Costs may therefore be recovered where the indemnified party remains potentially liable in circumstances falling outside the indemnity.

The appellant challenged a costs order made after the dismissal of his judicial review claim concerning his exclusion from school. The order required him to pay the respondent panel’s assessed costs of £15,376.70. The appeal was limited to whether recovery of those costs infringed the indemnity principle because the panel’s solicitors were instructed and paid by the local authority under a statutory indemnity.

The appellant also alleged defects in the retainer and sought a reduction of the appeal costs by reference to his financial position and proportionality.

1. The appeal against the costs order was dismissed. The indemnity principle, as explained in Thornley v Lang [2003] EWCA Civ 1484, permits an award only to indemnify a party against legal costs paid or incurred as a liability to pay.

2. The solicitors were on the record for the panel. The ordinary inference was that they had a relationship under which they could look to the panel for payment. The court applied Adams v London Improved Motor Coach Builders Ltd [1921] 1 KB 495: a party’s acquiescence in solicitors acting on its behalf can create liability to pay, notwithstanding a third party’s undertaking to fund the costs. The absence of a client care letter did not alter that conclusion. Davies v Taylor (No 2) [1974] AC 225 supported the same analysis.

3. Paragraph 5 of the Schedule to the Education (Pupils Exclusion and Appeals) (Maintained Schools) (England) Regulations 2002 did not relieve the panel of every obligation to pay its solicitors. The local authority’s indemnity was confined to reasonable costs and expenses incurred in connection with decisions or actions taken in good faith and in pursuance of the panel’s functions. Costs outside those limits could remain payable by the panel.

4. The alleged failures to provide costs information to panel members did not make the retainer unlawful or unenforceable. There was no sufficient basis for disturbing the general rule that the unsuccessful party pays the successful party’s costs. The appellant was ordered to pay the respondent’s appeal costs, assessed at £3,018.

• High Court (Queen’s Bench Division): The judicial review claim had been dismissed by Nicol J on 24 April 2009, with costs payable subject to detailed assessment.
• High Court, costs assessment: Deputy Master Keenes ordered payment of £15,376.70 on 27 May 2010 and refused permission to appeal.
• High Court (Queen’s Bench Division): Permission to appeal out of time was granted by Foskett J. Mrs Justice Slade dismissed the appeal and ordered appeal costs of £3,018.