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Kellie & Anor v Wheatley & Lloyd Architects Limited [2014] EWHC 2886 (TCC) - 27/08/14


The claimants had lost in their professional negligence action against the defendant. One issue for consideration by the judge was whether the defendant's costs should be assessed on the standard basis or the indemnity basis. The defendant's previously approved costs budget was in the sum of £91,700, but its schedule at the conclusion of the litigation was for £166,649. A costs order on the indemnity basis would give the defendant the opportunity to recover costs in excess of its approved budget.

The judge observed that proportionality trumps reasonableness for costs assessed on the standard basis but not when assessed on the indemnity basis. It was important therefore to ensure that applications for costs on the indemnity basis were carefully scrutinised. In general terms, an award of costs on the indemnity basis is justified only if the paying party's conduct is morally reprehensible or unreasonable to a high degree, so that the case falls outside the norm.

The judge concluded that the appropriate costs order was for assessment on the standard basis. Whilst the evidence was not impressive on paper it provided a proper basis for bringing the claim to trial. The weakness of the evidence was starkly exposed at trial but that matter should not be viewed with hindsight. The conduct of the claimants could not be described as unreasonable to a high degree.