This blog has recently considered the issue of indemnity costs arising out the enforcement of an adjudicator’s decision. Another recent case has provided some judicial commentary on the issue of indemnity costs.
The facts of Kellie and Anor v Wheatley & Lloyd Architects Ltd  EWHC 2886 (TCC) are not relevant to this blog, but as an aside, in the outcome the Claimants conceded that they had to pay “at least” 90% of the Defendant’s assessed costs. The parties, presumably perplexed by exactly what “at least” 90% meant, sought costs orders. The judge found that costs should be assessed on the standard basis. However it is the further commentary on costs made by the judge that are of interest.
The judge led dicta that disagreed with that of Coulson J in the earlier Elvanite v AMEC case. Costs management orders set out probable limits of costs proportionately incurred (note r.3.18) and it is the proportionality that forms the basis of the assessment and not reasonableness. This contrasts an indemnity costs basis whereby costs are required to be shown to have been reasonably incurred (note r.44.3). Of course all this remains subject to the discretion of the court, which must always be borne in mind.
You may think that the distinction between proportionality and reasonableness is marginal, if anything, or perhaps that it those law talking folk splitting hairs. This would, however, belie the reality that the courts are taking robust approaches on issues of costs and costs management, particularly following the recent Jackson reforms, and are increasingly intolerant to, what one may call, gamesmanship in litigation.