Costs

It was well established that while, in principle, there might be two alternative bases for obtaining costs, namely under the terms of an express contractual indemnity or by the exercise of the court’s discretion pursuant to s 51 of the Senior Courts Act 1981 and the CPR, the fact that the court made an order pursuant to s 51 did not detract from any contractual right to claim indemnity costs. It was clear that in exercising its discretion under CPR 44.3, the court should ordinarily exercise that discretion so as to reflect the contractual right.

Equally, if the court was giving effect to a contractual right to costs, then the provisions of CPR 48.3 and para 50.1 of the Costs Practice Direction to CPR Pt 48 would provide, first, that the costs recoverable were those which had been reasonably incurred and reasonable in amount, and, second, that the costs payable should be disallowed if the court was satisfied by the paying party that costs had been unreasonably incurred or were