Costs on an Indemnity Basis – Greener Costs Advises

What are indemnity basis costs?

Under the Civil Procedure Rules (CPR 44.3), costs on an indemnity basis are an amount of costs that one party must pay to the other. The court will assess and decide on whether  the amount of costs have been reasonably incurred, typically towards that receiving party.

A court may initiate costs on an indemnity basis assessment if there is doubt or concern that a party has had unreasonable conduct during the process, which is typically the paying party making unreasonable and disproportionate claims. Other reasons could include fraud allegations and general misconduct in the proceedings. During a courts assessment of costs on an indemnity basis, any decisions made on reasonableness will automatically be in favour of the receiving party.

Whereas costs assessed on the standard basis typically favour the paying party in relation to reasonableness and proportionality. Therefore, it is beneficial to a receiving party to have costs assessed on an indemnity basis as it will allow a higher proportion of costs to be recovered compared to if they were assessed on a standard basis. Costs under orders for indemnity also do not have to be proportionate, and costs budgeting is dis-applied.

At Greener Costs, our team of costs experts have ample experience in dealing with cases that cover costs on an indemnity basis and can provide expert help and assistance to our clients. If you are looking for more information on the subject or require a costs expert to assist on your case, then please get in touch with us today to see how we can help you.

How are costs on an indemnity basis assessed?

The courts hold the power to award costs to either party following section 98 of The Civil Procedure Act 2005 and can use their discretion through assessment and investigation as to which parties get awarded costs and to what extent. The court will usually order indemnity costs when there is a provision in the contract specifying how costs should be assessed. This means that costs will be construed on a standard basis unless it is clear that the costs required are on an indemnity basis.

Fixed Costs

The rules surrounding fixed costs can be found in Part 45 of The Civil Procedure Rules and they were first introduced for low value personal injury claims and liability claims. The fixed costs rules were brought into place a cap on recoverable costs in these types of cases, and as such, the receiving party can probably expect to receive a much lower amount of costs than if the case were under a standard costs or indemnity costs basis.

It is worth noting that both the High Court and the Court of Appeal have previously stated and determined that late acceptance of a Part 36 offer is not a good enough reason to claim costs on an indemnity basis. Ultimately this means that a party would need to provide evidence of unreasonable conduct or beat their own offer at trial in order to switch from fixed costs to indemnity costs.

Part 36 Offers

A court can make an order for indemnity costs within a fixed costs case if the receiving party beats their own Part 36 offer, according to CPR 36.17. Costs are recoverable on an hourly basis following the date the Part 36 offer expired.

Receiving parties can sometimes forget or fail to consider previous Part 36 offers and simply forget to apply for indemnity basis of costs. This means they will receive less on their claimed costs as indemnity costs typically override fixed costs at a much higher rate.

How Greener Costs can assist

Our experienced Costs Draftsmen and Costs Lawyers are highly capable to assist with orders for costs on an indemnity basis in civil litigation cases, and our clients can be assured that we use all of the tools at our disposable to maximise the amount of costs recovered for your party.

With our extensive knowledge and highly skilled team of Costs Draftsmen, we can provide law costing services to clients throughout England and Wales. We are also proud to be represented on Your Legal Advisor’s panel of costs experts.

In addition to our drafting services at Greener Costs, we are actively doing everything we can to ensure our business benefits the environment. We are doing this though carbon offsetting of our staff, becoming completely paperless and carbon offsetting through each instruction.

If you wish to speak to a member of the team here at Greener Costs then please contact us at 01204 or use the online form on our website below.


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