Q&As

Has there been any recent case law on whether indemnities generally cover the right to recover legal fees in defending a claim?

read titleRead full title
Published on LexisPSL on 18/09/2017

The following Dispute Resolution Q&A provides comprehensive and up to date legal information covering:

  • Has there been any recent case law on whether indemnities generally cover the right to recover legal fees in defending a claim?
  • Approach of courts to indemnities providing for recovery of costs
  • Examples
  • Interpreting indemnity clauses to identify costs liabilities

Has there been any recent case law on whether indemnities generally cover the right to recover legal fees in defending a claim?

In this Q&A we have limited our research to cover contractual indemnities giving rise to costs liabilities.

Approach of courts to indemnities providing for recovery of costs

The Court of Appeal in Gomba Holdings v Minories Finance held that the court's discretion as to costs (CPR 44.2(2)(b)) will normally be exercised to correspond with the contractual entitlement agreed by the parties. This will include, where provided, contractual indemnities. In other words, courts can and will give effect to indemnities when making orders as to costs including ordering costs to be assessed on an indemnity basis (see Practice Note: Indemnity costs orders—principles).

Note that in Gomba Holdings the Court of Appeal held that a receiving party who benefits from an contractual indemnity cannot recover costs that have not been reasonably incurred or are unreasonable in amount.

Examples

The Practice Note: Costs—recovery of costs under contractual clauses in the section Interpreting iIndemnity costs clauses provides a list of various clauses and how the court has interpreted them. Some of the more recent examples include:

Euro-Asian Oil v Credit Suisse at [5] and [7]. This case involved an indemnity letter containing a clause indemnifying the claimant (Euro-Asian) against:

'...any and all damages, costs and expenses (including reasonable attorney fees)'

This clause was

Popular documents