Criminal Legal Aid And The Indemnity Principle | No Escape From Legal Aid Rates In Contempt Proceedings

MCGIVERN V MBR ACRES LIMITED AND OTHERS [2025] EWHC 2070 (KB)

In MBR Acres Ltd & Ors v McGivern [2025] EWHC 2070 (KB), the High Court confirmed that parties defending civil contempt proceedings under criminal legal aid cannot recover inter partes costs beyond legal aid rates, as the indemnity principle applies without statutory disapplication. Ms McGivern successfully defended contempt proceedings (dismissed as “totally without merit” with indemnity costs) but her £120,292.21 bill was assessed at £20,673.34—below the Respondents’ Calderbank (£21,000) and Part 36 (£33,000) offers—resulting in her paying £53,044.65 for their assessment costs. Sweeting J (with Senior Costs Judge Rowley as assessor) distinguished criminal from civil legal aid, noting the absence of any provision equivalent to Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013. Following Liverpool Victoria v Khan [2022] EWHC B8 (Costs), the court held that neither paragraph 8.10 of the Criminal Contract Specification nor Regulation 9’s non-application to the High Court could override the indemnity principle. Arguments that Ms McGivern could retrospectively revoke legal aid or rely on the LAA’s £28,556.58 assessment were rejected. The decision confirms that without express legislative intervention, criminal legal aid rates cap inter partes recovery even where this transforms litigation success into financial loss.

As Costs Judge Leonard concluded in Khan, and as I agree, there is no equivalent disapplication of the indemnity principle in criminal legal aid. Mr Underwood KC for the Appellant argued that since Regulation 9 of the Criminal Legal Aid (Remuneration) Regulations 2013 does not apply to the High Court, there is no prohibition on recovery from other sources in High Court committal proceedings. However, I prefer the Respondents' submission on this point. Regulation 9 serves as an example of a situation where the statutory regime expressly allows for certain payments outside the standard LAA funding; the fact that it is limited to other courts (rather than including the High Court) reinforces the argument that such express legislative provision is required for any deviation from the general rule. Its limited scope does not create a general disapplication of the indemnity principle in the High Court.

Citations

R (on the application of E) v Governing Body of JFS [2009] UKSC 1, [2009] 1 WLR 2353 A successful publicly funded party may recover costs at conventional between the parties’ rates where the statutory framework disapplies the indemnity principle, to ensure access to justice is not undermined. King’s Lynn and West Norfolk Council v Bunning [2016] EWCA Civ 1037, [2016] 6 Costs L.O. 927 Where civil contempt proceedings are deemed criminal for legal aid purposes, courts may award costs at between the parties’ rates where the statutory scheme allows disapplication of the indemnity principle. Liverpool Victoria Insurance Co Ltd v Khan and others [2022] EWHC B8 (Costs) In criminal legal aid proceedings, the indemnity principle remains applicable unless expressly disapplied by statute, limiting recovery to legal aid rates even where a party is otherwise successful. Harold v Smith [1860] 5 H&N 381 A receiving party in costs proceedings may not claim more than they are liable to pay their own legal representatives, reflecting the indemnity principle’s application in all costs recovery cases. Radford v Frade [2018] EWCA Civ 119 A retrospective variation to a party’s liability to their legal representatives made after a costs order is granted cannot increase the recoverable amount from the paying party. Kellar v Williams [2004] UKPC 30 A party’s liability to pay costs crystallises at the point of the costs order, prohibiting retrospective changes designed to increase recovery from the other party.

Track allocation housing disrepair CPR 46.13 settlement sum costs restriction SCCO

MRO fee markup cap 25% detailed assessment personal injury Senior Courts Costs Office

Security for costs refused CPR 25.27 very high probability success excessive estimate King's Bench

IPEC scale costs transfer Patents Court PD 30 para 9.2 costs caps Court of Appeal

Costs budget variation CPR 3.15A promptness significant development unfair prejudice Chancery Division

Costs budgeting inter partes proportionality high hourly rates AI disclosure Patents Court CPR 3E

Beneficiary personal liability section 71(3) Solicitors Act 1974 indemnity costs VAT self-supply SCCO

Summary assessment indemnity costs unless order payment on account disclosure default Chancery Division

Provisional assessment set aside CPR 3.1(7) points of dispute filing duty PD 47 para 14.3 SCCO

Fixed recoverable costs police claims CPR 26.9(10)(e) intentional tort exemption

Key Points

The indemnity principle continues to apply in the context of criminal legal aid, limiting inter partes costs recovery to the rates payable under the legal aid scheme unless expressly disapplied by statute. [15], [37], [39]
In the absence of a statutory provision equivalent to Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013, the indemnity principle is not disapplied for criminal legal aid, including where such aid funds civil contempt proceedings. [39], [41]
Contractual provisions within the Criminal Legal Aid Standard Crime Contract, including authorisations to retain sums recovered from other parties, cannot override or disapply the indemnity principle unless supported by primary or secondary legislation. [41], [44]
A receiving party cannot retrospectively revoke legal aid and substitute a private retainer to defeat the indemnity principle or increase recoverable costs; such conduct is both contrary to public policy and ineffective to vary costs orders already made. [45]–[47]
Summary assessment and standard procedural cost controls remain the appropriate mechanisms for managing proportionality of appellate costs where a Costs Capping Order is not justified under CPR 3.20. [56]–[57]

"While Mr Underwood KC forcefully articulated the perceived 'absurdity' of a successful legally aided party being unable to recover full between the parties' costs, this is, fundamentally, a matter for the legislature, not for the courts. The courts' role is to interpret and apply the law as enacted."

Key Findings In The Case

The court found that the Appellant’s recoverable inter partes costs were limited to legal aid rates prescribed by the Criminal Legal Aid (Remuneration) Regulations 2013, as the indemnity principle was not disapplied in the context of criminal legal aid funding civil contempt proceedings [8]–[9], [37], [39].
The Appellant’s retainer with her solicitors, Scott Moncrieff & Associates Ltd, which purported to include higher privately agreed rates, was ruled ineffective for inter partes recovery, as such contractual arrangements could not override the indemnity principle without express statutory support, and any attempt to “top up” legal aid funding was prohibited by section 28 of LASPO [6]–[7], [41].
The court held that even though the Legal Aid Agency (LAA) assessed a higher cost figure than that awarded upon detailed assessment, the LAA’s assessment was not binding on the responding party or the court when determining inter partes costs under the indemnity principle [8], [43]–[44].
The Appellant’s argument that she could revoke criminal legal aid retrospectively and rely on a private retainer to justify recovery at higher rates was rejected as incompatible with public policy and legally ineffective to vary liability established by an existing costs order [45]–[47].
The Respondents’ Calderbank and Part 36 offers were not beaten by the final assessed figure (£20,673.34), leading to a costs order against the Appellant for the assessment proceedings, including indemnity costs post-27 September 2023, despite her overall success in the underlying contempt proceedings [10]–[12].

"An outcome by which the Appellant had to pay the Respondents was however the result of the reduction in her recoverable costs and the effect in costs of the Respondents' offers to settle. The Respondents had made a Calderbank offer to settle the costs claim for £21,000 on 12 August 2022. Subsequently, a Part 36 offer of £33,000 was made by the Respondent on 5 September 2023. The final assessed amount of £20,673.34 was less than either offer. The Judge ordered Ms McGivern to pay the Respondents' costs of the assessment proceedings. These costs were themselves substantial. The Respondents had claimed £80,048.74 for their participation in the assessment process and were awarded £53,044.65 on the standard basis until 26 September 2023, and on an indemnity basis from 27 September 2023, due to the Part 36 offer not having been beaten."

Background

The underlying proceedings concerned a contempt application brought by MBR Acres Limited and Others against Ms Gillian McGivern, a solicitor, for alleged breaches of an injunction order dated 10 November 2021. The application was heard before Mr Justice Nicklin on 21 and 22 July 2022, who dismissed it entirely, exonerating Ms McGivern. He awarded her costs on the indemnity basis and certified the application as “totally without merit”, additionally making a civil restraining order against the Respondents.

Ms McGivern had instructed Scott Moncrieff & Associates Ltd (SMA) on approximately 6 July 2022 and secured legal aid for her representation under the criminal legal aid regime, as contempt proceedings are classified as “criminal proceedings” for legal aid purposes under section 14(h) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Her application to instruct King’s Counsel (Mr Ashley Underwood KC) under legal aid was refused by Nicklin J, but she proceeded to instruct him privately.

The assessment of Ms McGivern’s costs between the parties came before Costs Judge Whalan in the Senior Courts Costs Office on 4 December 2023. Ms McGivern’s bill totalled £120,292.21. The Respondents had made a Calderbank offer of £21,000 on 12 August 2022 and a Part 36 offer of £33,000 on 5 September 2023.

Following his judgment of 18 July 2024, at a further hearing on 20 November 2024, Costs Judge Whalan assessed the bill at £20,673.34 – significantly below both the claimed amount and the £28,556.58 that the Legal Aid Agency (LAA) had assessed as payable. As this was less than both settlement offers, the Judge ordered Ms McGivern to pay the Respondents’ costs of the assessment proceedings. The Respondents had claimed £80,048.74 for their participation in the assessment and were awarded £53,044.65 (on the standard basis until 26 September 2023, and on an indemnity basis thereafter due to the Part 36 offer).

The net result was that Ms McGivern owed a balance to the Respondents. She appealed to the High Court, where the matter was heard by Mr Justice Sweeting sitting with Senior Costs Judge Rowley as an assessor on 3 July 2025.

Costs Issues Before the Court

The primary issue was whether a party with criminal legal aid defending civil contempt proceedings could recover costs from their opponent at private client rates, or whether recovery was limited to the rates prescribed under the Criminal Legal Aid (Remuneration) Regulations 2013. This raised fundamental questions about the application of the indemnity principle in criminal legal aid cases.

Specifically, the court needed to determine whether the indemnity principle – which prevents a party from recovering more in costs than they are liable to pay their own representatives – was disapplied in criminal legal aid cases. In civil legal aid, Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 expressly disapplies this principle, allowing costs to be determined “as if that party were not legally aided”. No equivalent provision exists in the criminal legal aid framework.

The court also had to consider whether Ms McGivern could rely on her retainer with SMA, which purportedly provided for a between the parties rate of £400 per hour, and whether she could retrospectively revoke her legal aid to claim at higher rates. Additionally, the court examined whether the LAA’s assessment of costs at a higher figure than ultimately allowed was binding on the costs judge.

A subsidiary issue concerned the recoverability of leading counsel’s fees, which had been privately incurred after the refusal of legal aid funding for King’s Counsel. The appeal also raised an application for a costs capping order in respect of the appeal proceedings.

The Parties’ Positions

Ms McGivern argued that she should recover costs at private client rates, contending that her retainer with SMA provided for £400 per hour. She submitted that preventing recovery at between the parties rates would lead to an absurd result and undermine access to justice. She relied on observations in R (on the application of E) v Governing Body of JFS [2009] UKSC 1 and King’s Lynn and West Norfolk Council v Bunning [2016] EWCA Civ 1037, which emphasised the importance of solicitors being able to recover remuneration at commercial rates when undertaking publicly funded work.

Ms McGivern further argued that paragraph 8.10 of the Criminal Contract Specification authorised providers to retain costs recovered from other parties exceeding LAA payments, and that Regulation 9 of the Criminal Legal Aid (Remuneration) Regulations 2013, which restricts payments from other sources, did not apply to High Court proceedings. She also contended that the LAA’s assessment at £28,556.58 should be treated as the minimum recoverable amount.

Regarding her retainer arrangements, Ms McGivern submitted that she could revoke her legal aid retrospectively and rely on the private retainer to claim higher rates. She argued that if counsel’s fees were refused under legal aid provisions, there was no prohibition against incurring them privately and recovering them at between the parties rates.

The Respondents maintained that the indemnity principle strictly limited recoverable costs to those payable under the legal aid scheme. They emphasised the absence of any provision equivalent to Regulation 21 of the Civil Legal Aid (Costs) Regulations 2013 within the criminal legal aid framework. They relied heavily on Liverpool Victoria Insurance Co Ltd v Khan and others [2022] EWHC B8 (Costs), where Costs Judge Leonard concluded that criminal legal aid does not disapply the indemnity principle.

The Respondents argued that any attempt to claim higher rates through the retainer with SMA constituted an unlawful attempt to “top up” legal aid payments, contrary to section 28 of LASPO. They submitted that paragraph 8.10 of the Criminal Contract Specification could not override statutory provisions, and that the LAA had no discretion to enhance the rates set in Schedule 4 of the Regulations. They characterised the suggestion of retrospectively revoking legal aid as “unprecedented and remarkable” and contrary to the principle in Radford v Frade [2018] EWCA Civ 119.

The Court’s Decision

Mr Justice Sweeting upheld Costs Judge Whalan’s decision, confirming that the indemnity principle applies to criminal legal aid cases without any statutory disapplication. The court found that whilst civil legal aid contains express provisions (Regulation 21) permitting recovery as if the party were not legally aided, no equivalent provision exists in the criminal legal aid framework.

The court rejected Ms McGivern’s argument that Regulation 9’s non-application to the High Court created a general disapplication of the indemnity principle. The judge reasoned that Regulation 9 merely provided specific examples where payments outside standard LAA funding were permitted; its limited scope reinforced rather than undermined the requirement for express legislative provision to disapply the indemnity principle.

Regarding paragraph 8.10 of the Criminal Contract Specification, the court agreed with the reasoning in Khan that whilst this provision authorises retention of costs recovered from other parties exceeding LAA payments, it cannot disapply the indemnity principle. The court emphasised that the indemnity principle is a rule of law requiring primary or secondary legislation for its disapplication, not merely contractual terms between the LAA and providers.

The court acknowledged the policy arguments raised, particularly the Supreme Court’s observations in JFS about the financial sustainability of publicly funded work. However, it distinguished these cases as concerning the court’s general discretion to award costs rather than directly analysing whether the statutory scheme disapplied the indemnity principle in criminal legal aid contexts. The judge stated that the function of courts is to apply the law as enacted by Parliament, not to rewrite it based on perceived policy shortcomings.

On the LAA assessment point, the court endorsed Costs Judge Leonard’s finding in Khan that the LAA “has no discretion to enhance the rates and fees set by paragraph 7(b) of Schedule 4” of the Regulations. Any purported agreement to pay enhanced rates was a matter between solicitors and the LAA with no bearing on amounts recoverable from the paying party.

The proposition that Ms McGivern could retrospectively revoke her legal aid was rejected as “untenable”. The court applied the principle from Radford v Frade that retrospective variation of a receiving party’s costs liability after a costs order cannot increase the paying party’s liability. Such an attempt would breach the statutory prohibition on topping up and be contrary to public policy.

The court refused the application for a costs capping order, finding that the criteria under CPR 3.20(2) were not met. Whilst acknowledging the wider implications for access to justice, the judge determined it would be unjust to require the Respondents to defend a costs order in their favour whilst potentially bearing their own reasonable costs. The court found that summary assessment provided adequate safeguards against disproportionate costs in the appeal.

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