The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:
ARCHIVED: This Practice Note is based on provisions revoked on 1 April 2013. It is therefore for historical purposes only.
Where costs are assessed on the indemnity basis, the court will:
not allow costs which have been unreasonably incurred or are unreasonable in amount
not be concerned with whether or not costs are proportionate
resolve any doubt over whether costs have been reasonably incurred in favour of the receiving party
The CPR contains no guidelines as to when indemnity costs will be ordered, although it does prescribe two specific sets of circumstances in which they are likely to be ordered:
costs payable under a contract. While such costs are not expressed to be payable on the indemnity basis, the lack of a requirement to be proportionate amounts to the same thing (r 48.3)
where a Part 36 offer has been made by the claimant, is rejected by the defendant, and the claimant recovers more (r 36.14(3)(b))
A summary of the court's approach to whether or not to make an indemnity costs order can be found in IBM:
indemnity costs are intended to be compensatory not penal and so regard must be had to what is fair and reasonable (Reid Minty)
a party does not need to have shown a lack of moral probity to be ordered to pay
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