The Privy Coun­cil has up­held a land­mark case over the abil­i­ty of lit­i­gants to claim Val­ued Added Tax (VAT) on their le­gal costs when they are suc­cess­ful in pur­su­ing or de­fend­ing a law­suit. 

De­liv­er­ing a judg­ment Thurs­day, five Law Lords of the Unit­ed King­dom-based ap­pel­late court up­held an ap­peal over the tech­ni­cal le­gal is­sue, which arose in a case in which a woman suc­cess­ful­ly sued the South West Re­gion­al Health Au­thor­i­ty (SWRHA) for med­ical neg­li­gence over her son’s death. 

The ap­peal was not over her suc­cess in the case in­clu­sive of the over $1,750,000 in com­pen­sa­tion that was or­dered for her, but the lack of ap­pli­ca­tion of the 12.5 per cent tax for goods and ser­vices to the le­gal costs she was al­so award­ed. 

In de­cid­ing the ap­peal, UK Supreme Court Deputy Pres­i­dent Lord Patrick Hodge not­ed that he and his col­leagues were on­ly asked to con­sid­er the ap­pli­ca­tion of VAT to pre­scribed le­gal costs, which are cal­cu­lat­ed on a set scale based on the po­ten­tial com­pen­sa­tion sought in the law­suit. 

With pre­scribed costs, a suc­cess­ful lit­i­gant can po­ten­tial­ly re­ceive more or less than the ac­tu­al le­gal fees they paid to their lawyers based on the val­ue of the claim and the at­tor­ney they chose to re­tain to de­fend or pur­sue it. 

How­ev­er, le­gal sources said that the le­gal prin­ci­ples up­held by the Privy Coun­cil would al­so ap­ply to bud­get­ed le­gal costs, which are based on the bud­get set at the start of the case, and as­sessed costs, which are cal­cu­lat­ed based on a de­tailed ex­am­i­na­tion by a ju­di­cial of­fi­cer of what was rea­son­able in the cir­cum­stances. 

Lord Hodge not­ed that the Ap­peal Court in­cor­rect­ly in­ter­pret­ed the Civ­il Pro­ceed­ings Rules when it ruled that VAT could not be ap­plied to the judge’s costs or­der af­ter she pro­nounced it. 

He al­so stat­ed that the lo­cal judges wrong­ly re­fused to in­ter­vene be­cause it (VAT) ap­plied dif­fer­ent­ly to at­tor­neys based on whether they were VAT-reg­is­tered or not. 

He al­so point­ed out that in cir­cum­stances where the pre­scribed VAT is set to ex­ceed the VAT ac­tu­al­ly paid by the lit­i­gant for their le­gal rep­re­sen­ta­tion, the in­dem­ni­ty prin­ci­ple would ap­ply and on­ly the val­ue ac­tu­al­ly paid would be re­cov­er­able. 

“The words of the rule, ‘the ap­pro­pri­ate amount of val­ue added tax’ di­rect the court to ap­ply the in­dem­ni­ty prin­ci­ple and there­by make sure that the re­cip­i­ent par­ty is not over-com­pen­sat­ed for the VAT charge which he or she has in­curred,” Lord Hodge said. 

As part of his judg­ment, Lord Hodge gave guid­ance to at­tor­neys and ju­di­cial of­fi­cers on how VAT pay­ments on le­gal costs could be cal­cu­lat­ed and or­dered. 

He sug­gest­ed that at­tor­neys should di­rect­ly raise their is­sues when sup­ply­ing sub­mis­sions on the quan­tum of com­pen­sa­tion and le­gal costs. 

He al­so ad­vised the pro­ce­dure to be fol­lowed when a lit­i­gant is rep­re­sent­ed by dif­fer­ent lawyers, who are VAT reg­is­tered and not. 

On Oc­to­ber 25, 2014, Bhawan­tee Singh-Weekes’ 30-year-old son Navin Singh went to the Princes Town Dis­trict Health Fa­cil­i­ty com­plain­ing of se­vere pain in his right leg. 

Singh was di­ag­nosed with sci­at­i­ca—se­vere pain ra­di­at­ing from the back in­to the hip and out­er side of the leg caused by com­pres­sion of the sci­at­ic nerve. 

De­spite re­ceiv­ing treat­ment at the fa­cil­i­ty, Singh was forced to re­turn two days lat­er as the pain he was ex­pe­ri­enc­ing wors­ened. 

Al­though his low­er limb was swollen and be­gan to dark­en, Singh was di­ag­nosed with the same con­di­tion and dis­charged. 

Two days lat­er, he was rushed to the San Fer­nan­do Gen­er­al Hos­pi­tal as he had a high fever and was vom­it­ing. 

Doc­tors at the hos­pi­tal even­tu­al­ly di­ag­nosed him with necro­tiz­ing fasci­itis—a bac­te­r­i­al in­fec­tion that re­sults in the death of soft tis­sue. 

De­spite re­ceiv­ing treat­ment and un­der­go­ing emer­gency surgery, Singh died the fol­low­ing day. 

In No­vem­ber 2020, the law­suit brought by Singh-Weekes was up­held. 

The judge or­dered $35,000 in dam­ages for the pain and suf­fer­ing Singh en­dured be­fore he even­tu­al­ly died as well as $25,000 for loss of ex­pectan­cy of life. 

The SWRHA was al­so or­dered to pay al­most $55,000 in dam­ages to cov­er Singh’s fu­ner­al ex­pens­es. 

The most sig­nif­i­cant com­pen­sa­tion or­dered by the judge was $1,550,068.79 for Singh’s loss of earn­ings as a welder. She al­so or­dered the SWRHA to pay Singh-Weekes $142,216.73 in le­gal costs. 

In Au­gust 2023, the Court of Ap­peal agreed to in­crease the com­pen­sa­tion by a lit­tle over $100,000. 

How­ev­er, the judges re­fused the as­pect of the ap­peal over the SWRHA not be­ing or­dered to pay VAT on the le­gal costs it was or­dered to pay. 

The ap­peal was pur­sued by Singh-Weekes’ lawyer Anand Ram­lo­gan, SC, of Free­dom Law Cham­bers as the le­gal prece­dent de­cid­ed in the case was sub­se­quent­ly ap­plied in oth­er cas­es. 

Singh-Weekes was al­so rep­re­sent­ed by Mo­ham­mud Hafeez-Baig, and Aasha Ram­lal. The SWRHA was rep­re­sent­ed by Kather­ine Deal, KC, and Vi­jai De­onar­ine.