Legal Cost Specialists

Posts made in August, 2021

Assessing costs on the indemnity basis

By on Aug 2, 2021 | 0 comments

The recent decision of Louis Dreyfus Company Suisse S.A. v International Bank of St. Petersburg (Joint-Stock Company) [2021] EWHC 1039 (Comm) contains a short passage dealing with the approach on detailed assessment where costs are to be paid on the indemnity basis. The decision was reported in Costs Law Reports.  (Copies of their latest reported judgments are available free for a short period on their website, where you can also sign up to their monthly newsletter.) The headnote to this decision included: “On taxation the costs would be heavily taxed down, even after the application of the receiving party’s presumption that the costs had been reasonably incurred and any doubt was to be given in its favour under CPR 44.3(3).” However, there is nothing in the judgment itself that refers to there being a presumption that costs have been “reasonably incurred”. The relevant part of the judgment reads: “CPR 44.3 and 44.4 provide that where costs are to be assessed on an indemnity basis, the court (1) will not allow costs which have been unreasonably incurred or are unreasonable in amount; (2) will have regard to all the circumstances in deciding whether costs were unreasonably incurred or unreasonable in amount; and (3) will resolve any doubt which it may have as to whether costs were unreasonably incurred or were unreasonable in amount in favour of the receiving party (“the receiving party presumption”).” It is more than simple semantics to note that there is a crucial distinction between “any doubt” being resolved in favour of the receiving party and whether there is a “presumption” that any costs have been reasonably incurred.  This judgment supports the former (because that is what the rule says) but not the latter. Interestingly, comments closer to the summary in the headnote were made by Woolf CJ in Excelsior Commercial & Industrial Holdings Ltd v Salisbury Hammer Aspden & Johnson (a firm) [2002] EWCA Civ 879, dealing with the pre-Jackson rules, addressing the distinction between costs on the standard basis and the indemnity basis: “The differences are two-fold. First, the differences are as to the onus which is on a party to establish that the costs were reasonable. In the case of a standard order, the...

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