Basis of Assessment

Legal costs are either payable on the standard basis or the indemnity basis.

Standard costs have to be proportionate to the issues and reasonable to be recovered.  If there is any doubt it is exercised in favour of the person who will be paying.

If costs are recoverable on the indemnity basis they are payable unless they are shown to be unreasonable.  If there is any doubt it is exercised in favour of the person who is getting paid.  This usually leads to a considerably higher amount of costs to be recovered.

Where parties have been involved in litigation the normal Order would be for costs to be payable on the standard basis.  Where one party is found to have conducted themselves improperly, either abusing the Court process or by conduct generally, the Court may make an indemnity costs Order against them to reflect the conduct and the fact that the other side has incurred costs unecessarily.  If the Order is silent on the basis of costs then the legal charges are payable on the standard basis.

Costs payable under a contract, such as between a lawyer and their client or under a mortgage, are normally paid on the indemnity basis.  This can lead to the client having to pay the difference if the amount of costs recovered from the other side is less than the solicitors bill.