Basis of Assessment of Legal Costs

The basis of assessment of legal costs is either on the standard basis or the indemnity basis.

Standard Basis For Costs

"Between the parties" costs are the costs the other side have to pay (also known as “Inter-partes” costs). These are usually costs that have been "reasonably incurred" and are proportionate to the issues the court has been asked to resolve and are assessed under the standard basis. If there is any doubt, it is exercised in favour of the person who will be paying.

Indemnity Basis For Costs

"Solicitor/own client" costs are what you have to pay your own lawyer. These are governed by contract law and are payable unless "unreasonably incurred" and are assessed under the indemnity basis. 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.

Standard vs Indemnity?

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 unnecessarily. If the Order is silent (i.e. does not mention) 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 solicitor’s bill.

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