Wednesday, 20 February 2013

Law report - claiming indemnity costs from other side

Femi Bada v Capcar Enterprises Ltd [2013] SC Bda 13 Civ

Comment - this case will be particularly interesting for landlords and tenants, as leases in Bermuda often contain an indemnity clause such as this.

The parties had had a contract dispute, and it was a term of the contract that the Appellant agreed to fully indemnify the Respondent for all legal costs incurred in enforcing the terms and conditions.

The outcome of the legal action was that the Respondent discontinued its claim against the Appellant and agreed to pay its legal costs to be taxed on a full indemnity basis.

Kawaley CJ held that this type of indemnity clause is designed to create a legal entitlement to compensate a party for all of its costs falling within the scope of the clause [17]. This differs from usual costs taxations, where all costs are considered on the basis of whether it is reasonable for the other party to pay them.

To deprive a party of their full costs would require exceptional circumstances, for example if the bill included time that was not spent, or did not reflect the terms on which the attorney was hired, or was clearly grossly inflated [22].

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