Page 17 - PIC Magazine Issue 25 - Autumn-Winter 2025

Despite the decision in Re Eastwood
being binding, parties have attempted
to challenge the established principles,
and these challenges have been
unsuccessful. The cases following
this authority include:
In Cole v. British Telecommunications
Plc [2000] 2 Costs LR 310; (2000)
EWCA Civ 208 – we are back at the
Court of Appeal, with Mr Cole paying
the costs of the in-house solicitors at
BT. A mark up on the hourly rates was
claimed, and whilst Mr Cole did not
seek to challenge the principle from
Re Eastwood he did argue that there
should be an overriding principle
that the receiving party must not
recover more than the actual cost
to it of employing the solicitor, with
reference to the indemnity principle
and seeking to work out the annual
cost of the solicitor based on the
rates which had been allowed by the
Deputy Master - and it was reasonably
plain the indemnity principle would
be infringed. Disclosure of the
salary scales of the solicitors and
data about overheads was sought,
to seek to calculate the actual
cost of the employed solicitor, and
arguments made about a table that
BT produced. Mr Cole’s arguments
were unsuccessful before the Deputy
Master and in the fi rst appeal.
The Court of Appeal confi rmed the
approach in Re Eastwood applied
”in all but special cases where it is
reasonably plain that that method
will infringe the indemnity principle”
and that whilst a ‘special case’ could
arise “where a sum can be identifi ed,
diff erent from that produced by the
conventional approach, which is
adequate to cover the actual cost
incurred in doing all the work done.
Such a sum may be identifi ed by
concession or, presumably, by the
factual assessment of the taxing
tribunal itself: but that possibility does
not justify a detailed investigation in
every case” that the case at hand did
not meet these requirements. Whilst it
was accepted that the assumption the
indemnity principle was not breached
“may in some cases strain logic” it was
the case that the approach “has the
merit of simplicity, and of avoiding the
burden of detailed enquiry in any but a
special case”.
In R (On the application of Kuznetsov)
v London Borough of Camden
[2019] EWHC 3910 (Admin), a case
concerning a judicial review in a
housing dispute, the Claimant tried to
argued the costs of the Defendant’s
in-house solicitors, sought at £317ph,
breached the indemnity principle
on the basis the hourly rate paid to
the lawyers was £41.75. There was
regard given by Mr Justice Mostyn
to the other expenses that would
be within the allowance for the rate
and he concurred with Russell J in
Re Eastwood “that to 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.”
In R (On application of Mazanov
Bakhtiyar) v The Secretary of State
for the Home Department (Costs)
[2015] UKUT 519 (IAC) there was
consideration by the Upper Tribunal
(Immigration and Asylum Chamber)
as to whether the rates payable for
work done by the Government Legal
Department should be limited to those
charged between the Government
Legal Department and the other
government departments, and the
argument that there was a ‘presumed
indemnity principle’ was rejected with
regard to other costs/expenses and
work that would not be within the
charges between the departments.
The judgment confi rms that
“Eastwood is clear authority for
the proposition that the process of
calculation of the costs to which the
successful party has been put by the
litigation is the same whether that
party has engaged a solicitor in private
practice or employed a solicitor as
part of his or its organisation.” The
decision also looks at the fact that
the costs were those of ‘the Crown’,
rather than one particular department
or another under the same entity,
with regard to Town Investments
Ltd & others v Department of the
Environment [1978] AC 359, and
held that whilst the Secretary of
State for the Home Department
is the nominal defendant in an
immigration judicial review the
party to the litigation was, in truth,
the government.
Another example would be
the case of Ping Europe Ltd v
Competition and Markets Authority
[2019] Costs LR 571, which
concerned proceedings before
the Competition Appeal Tribunal
and in which it was held that the
costs of in-house solicitors should
be assessed on the same basis as
those of independent solicitors.
For an example of the application
of the principle in the Upper
Tribunal (Lands Chamber) see
Sidewalk Properties Ltd v Twinn
[2015] UKUT 0122 (LC).
This means, that if you are dealing
with the assessment of costs for
in-house solicitors under the Civil
Procedure Rules then the court will
be assessing the reasonableness
of the costs by reference to the
factors at CPR 44.4 (or whatever
the relevant costs provisions are
for the relevant jurisdiction), rather
than looking to consider the
indemnity principle and should
not be seeking to embark upon
an exercise concerning the ‘cost’
of the work done, unless the rare
special circumstances apply.
Whilst not the focus of this article,
I note that there can be the
situation arise when solicitors are
represented by their fi rm or act for
themselves, in which case there
would be consideration of the
Chorley Principles (as set out in
London Scottish Benefi t Society
v Chorley [1884] 13 QBD 872,
CA and subsequently expanded/
upheld in Malkinson v Trim [2002]
EWCA Civ 1273) – but I will save
these for another day!
Resolution Costs has considerable experience in dealing
with the recovery of costs for in-house representatives,
and if you are encountering any issues regarding the
assessment of such costs, please do contact us on:
e. info@resolutioncosts.co.uk t. 01302 244 415
This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility
for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted.
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