0370 270 6000

already registered?

Please sign in with your existing account details.

need to register?

Register to access exclusive content, sign up to receive our updates and personalise your experience on brownejacobson.com.

Privacy statement - Terms and conditions

Miskin v St John Vaughan, Court of Appeal

3 October 2002
The issues

VAT – whether Claimant should pay Defendant’s Solicitors VAT – indemnity principle.

The facts

This was a professional negligence claim brought by Miskin against the Defendant. Miskin became liable for Defendant’s costs in the sum of £55,000.00 including VAT, following their failure to beat a Part 36 Payment. The Claimants sought to avoid payment of the VAT on the basis that the Solicitors would look to the Insurer and not to the Insured for payment of costs and that therefore there was a breach of the indemnity principle. In reality, there was no doubt that the Insurer had taken over the conduct of the litigation, pursuant to its rights under the policy. The Defendant had in fact ceased business before 1989, the Solicitor and own client bills being rendered in April 1993. As the Defendants had ceased business before 1989, instructions could subsequently have come only from Insurers and not from the Partners of the former business. It was argued for the paying party, that was seeking to avoid paying the VAT, that this distinguished the case from Davies -v- Taylor and Adams -v- London Improved Motor Coach Builders, in that there was no residual liability on the part of the Insured for costs. The Solicitors could not look to the Defendants for any costs because the business was dissolved and the partners had disappeared.

The decision

1. The evidence supported the view that both Insured and Insurers were liable for the Solicitors costs. Until the bill of 1993, it was clear that the Solicitors looked to Insurers for profit costs and disbursements and to the Insured for the VAT. The Solicitors expected the costs to be met from those two sources.

2. There was nothing inconsistent in there being a co-existing obligation on the part of the Insured and its Insurers to pay the Solicitors.

3. The Master did not accept that where Insurers took over a claim and conducted it at their own expense, that this created a liability only between the Insurer and the Solicitors that was sufficient to exclude a liability on behalf of the Insured to the Solicitors.

4. Neither was there an implied liability that the Defendant was released from the liability in respect of the Solicitors costs. Until 1993, the Solicitors looked to the Insured exclusively for payment of VAT.

5. As after the point at which the Defendants ceased to be registered for VAT, the Insurers met the liability and as they were unable to re-claim this sum as input to Tax, it followed that this was a liability which the paying party must meet.

Compiled by Mark Fowles

focus on...

Legal updates

Insurance annual review 2019-2020

Welcome to our review of 2019 as we look ahead to what is on the horizon for the insurance sector in 2020.


Legal updates

Financial Services – ‘Duty of Care’ Bill: consumer protection or damp squib?

The Financial Services Duty of Care Bill (the “Bill”) was introduced into the House of Lords in October 2019 and had its second reading on 9 January 2020.


Legal updates

Noise-induced hearing loss claims – documentation and the expert engineer

Guest writer, Finch Consulting Senior Consultant Teli Chinelis applies his expertise in preparing engineering reports in relation to noise-induced hearing loss (NIHL) claims to explain information that is required from the claimant and information that is required and is advisable to be retained by employers, in order to ensure that claims can be fairly represented.


Legal updates

SRA Standards and Regulations November 2019

On Monday 25 November the 2011 SRA Handbook is replaced by the 2019 SRA Standards and Regulations (often referred to as STARS).This is the 26th version of the Code of Conduct for Solicitors.


The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

mailing list sign up

Select which mailings you would like to receive from us.

Sign up