At all (reasonable) costs…
In the recent case of Alafco Irish Aircraft Leasing Sixteen Ltd v Hong Kong Airlines Ltd  EWHC 3668 (Comm), the Commercial Court held that a contract entitling a party to “all reasonable costs and expenses” of litigation. Meant that it was entitled to an assessment of costs on the indemnity basis.
The Claimant had sought costs on the indemnity basis after a summary judgment application had been successful.
In a previous case, Little Stone v MacLeish  ECWA Civ 127, the tenant’s covenant to “pay to the Lessor all costs and expenses (including legal costs)” could not be distinguished as the reference to “all reasonable costs” rather than “all costs” did not alter the position. This is because under the Civil Procedure Rules 44.3 when costs are being assessed on the standard or indemnity basis. Aparty is only entitled to recover costs that have been reasonably incurred in any event.
The Alafco Irish Aircraft case will be seen as a welcome precedent by those pursuing contractual rights as costs assessed on an indemnity basis. Rather than a standard basis are likely to be far more favourable given there is no requirement for costs to be proportionate and the onus is on the paying party to show that the costs claimed are unreasonable.
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