A principle of law which provides that costs as between parties are given as an indemnity to the person entitled to them.

1. Indemnity Principle
#ACLTRev14

2. The Indemnity principle
Harold v. Smith [1860]: costs between
the parties are not a punishment
Gundry v Sainsbury [1910]: Because
the costs are awarded as an indemnity
so cannot recover sums in excess of his
liability to his own solicitor
The General of Berne Insurance Co v
Jardine Reinsurance Management
[1998]: Applied on item by item basis
and not globally
Nederlandse Reassurantie Groep
Holding NV v Bacon & Woodrow
[1998]: It doesn’t matter what form the
retainer takes the principle should be
applied in the same way
Bailey v IBC Vehicles Ltd [1998]: When
the bill is signed this is a declaration
that the bill complies with the principle
Hollins v. Russell [2003]: It applies to
CFAs
Ghadami v Lyon Cole Insurance Group
Ltd [2010]: Disbursements will be
recoverable even where the solicitor for
the receiving party has failed to comply
with the Solicitors Code of Conduct and
therefore cannot recover part or all of
his profit costs
Eastwood (deceased); Lloyds Bank Ltd
v Eastwood [1975]: The principle
applies in the same way to work
undertaken in-house
COLE V. BT – Court of Appeal 4 July
2000: Confirmed Eastwood

3. Harold v. Smith [1860] 5 H&N 381
“Costs as between party and party are given by the
law as an indemnity to the person entitled to them:
they are not imposed as a punishment on the party
who pays them, nor given as a bonus to the party who
receives them. Therefore, if the extent of the
indemnification can be found out, the extent to which
costs ought to be allowed is also ascertained”.

4. Gundry v Sainsbury [1910] 1 K.B. 645
Costs between parties are awarded as an indemnity to the party
incurring them and a successful party cannot therefore recover a sum
in excess of his liability to his own solicitor.

5. The General of Berne Insurance Co v Jardine
Reinsurance Management [1998] 2 All E.R. 301, CA.
The indemnity principle is to be applied on an item by item basis rather
than on a global basis "where applicable the figures in a contentious
business agreement provide both a measure and a ceiling for each
recoverable item of costs", per Sir Brian Neill

6. Eastwood (deceased); Lloyds Bank Ltd v
Eastwood [1975] Ch 112
Established that the conventional method, appropriate to
assessing the bill of a solicitor in private practice, was also
appropriate for a bill of an in-house solicitor in all but special cases
where it was reasonably plain that that method would infringe the
indemnity principle.

7. COLE v BT – Court of Appeal 4 July 2000
(Unreported)
The judgment of this court in In Re Eastwood establishes that the
conventional method appropriate to taxing the bill of a solicitor in
private practice is also appropriate for the bill of an in-house solicitor
in all but special cases where it is reasonably plain that that method
will infringe the indemnity principle.

8. Bailey v IBC Vehicles Ltd [1998] 3 All
ER 570 CA
"In so signing he certifies that the contents of the bill are correct.
That signature is no empty formality. The bill specifies the hourly
rates applied ... If an agreement between the receiving solicitor and
his client ... restricted (say) the hourly rate payable by the client that
hourly rate is the most that can be claimed or recovered on
[assessment] ... The signature of the bill of costs ... is effectively the
certificate of an officer of the court that the receiving party's
solicitors are not seeking to recover in relation to any item more than
they have agreed to charge their client ...” L J HENRY

9. Hollins v Russell [2003] EWCA Civ
718
“…it was the policy of section 58 of the 1990 Act that the paying
party should be protected by the indemnity principle in relation to a
CFA entered into by the receiving party, and should therefore be
entitled to object to paying costs if they arose under a CFA which could
not be enforced by the receiving party's solicitor against his own
client…”

10. Nederlandse Reassurantie Groep Holding NV v
Bacon & Woodrow [1998] 2 Costs L.R. 32
"In my judgment there should be no distinction between those
cases where a formal contentious business agreement is in place and
which are governed by s.60(3) of the Solicitors Act 1974 and other
cases where there is an agreement partly evidenced in writing, an
unwritten agreement or no agreement at all, but merely an
understanding arising perhaps from a long established relationship
...”

11. Ghadami v Lyon Cole Insurance
Group Ltd [2010] EWCA Civ 767
Where a defendant had professional indemnity insurance, the judge
had been wrong to limit the costs to the amount of the insurance
excess. On appeal the Court of Appeal held that on the material
before the court there was an implicit agreement that the solicitors
would act for the defendant in relation to the claim, but without any
express terms as to charging rates. The solicitors’ failure to comply
with the client care code did not prevent them from recovering fees
or disbursements.

12. Resources
Pictures (on 1.10.2014)
Slide 3: http://www.virginmedia.com/tvradio/soaps/soaptrivia/harold-bishop.php,
http://www.biography.com/people/will-smith-9542165
Slide 4: http://www.telegraph.co.uk/earth/agriculture/batteryfarming/4276716/Sainsburys-to-ban-battery-eggs.html ,
http://thenicelicelady.blogspot.co.uk/2010/05/dont-believe-nix-package-hair-dryer-is.html ,
http://www.b3takit.co.uk/site/tag/gun/
Slide 5: http://www.jfcbs.nato.int/jfcbrunssum/page130613051.aspx, http://niftynotcool.com/2014/09/19/the-diamonds-
and-the-jar/, http://www.huffingtonpost.co.uk/2013/02/01/eastenders-dean-gaffney-surgery-car-crash-derby_
n_2596937.html
Slide 6: http://foodswol.com/cook-bacon-wallpaper-gallery.html , http://www.orkin.com/ants/leafcutter-ants/
Slide 8: http://www.hotelmanagement-network.com/news/newswork-begins-on-new-premium-inn-hotel-in-birmingham-
uk, http://www.tripadvisor.co.uk, http://simpsons.wikia.com/wiki/Russell_Brand
Slide 9: http://www.clipartlord.com/wp-content/uploads/2013/06/lion5.png ,
http://raquelgfernandez.blogspot.co.uk/2012/02/army-men.html , http://indiabeyondcoal.org/
Slide 10: http://en.wikipedia.org/wiki/Clint_Eastwood, http://en.wikipedia.org/wiki/Lloyds_Bank
Slide 11: http://indiabeyondcoal.org/ ,
http://www.scotlandis.com/news/stories/21_communities_from_oban_to_stranraer_included_in_latest_phase_of_bts
_2.5_billion_fibre_broadband