Recovery Of Costs Pursuant To A Contractual Entitlement


In this short judgment Mr Christopher Hancock QC (sitting as a Judge of the High Court) confirmed the position where a party has a contractual entitlement to costs. 

“Whilst the fact of the contractual right does not take the issue of costs outside the Court’s normal discretionary regime, the Court will normally exercise that discretion in line with the contractual right, unless it has a particular reason not to do so”

CPR 44.5

(1) Subject to paragraphs (2) and (3), where the court assesses (whether by summary or detailed assessment) costs which are payable by the paying party to the receiving party under the terms of a contract, the costs payable under those terms are, unless the contract expressly provides otherwise, to be presumed to be costs which –

(a) have been reasonably incurred; and

(b) are reasonable in amount,

and the court will assess them accordingly.

(2) The presumptions in paragraph (1) are rebuttable. Practice Direction 44 – General rules about costs sets out circumstances where the court may order otherwise.

(3) Paragraph (1) does not apply where the contract is between a solicitor and client.”

“in Bank of Baroda v Panessar [1987] 1 Ch 335 at 355E-F, to which I was referred, the Court regarded a contractual entitlement to “all costs” as the same as saying that such costs should be assessed on an indemnity basis…. The Claimants invited me to award them all of the costs of the Application (£200,691.33) and of the Action (£166,983.97.).   For the reasons set out above, I so order.  For reasons of simplicity, I order that all the costs awarded be payable to the Second Claimant (KfW IPEX).”