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August 2008

Indemnity costs Awarded Against Unsuccessful Plaintiff

A solicitor who unsuccessfully sued a former client for damages arising out the termination of the solicitor’s retainer by the client has been ordered to pay the client indemnity costs. The effect of the order for indemnity costs was that the solicitor was required to pay all of the client’s costs incurred, not just the usual contribution towards costs.

Awards of indemnity costs are relatively unusual in themselves but an equally notable feature was the amount of the costs involved, which, together with disbursements and witnesses expenses, amounted to in excess of $1 million. During the course of the 6 day trial, the solicitor had progressively abandoned a number of his claims against the client, which lead the Court to form the view that the solicitor recognised that his case was hopeless. Furthermore, the Court was of the view that the solicitor had brought the proceedings for an ulterior purpose of attempting to force a financial settlement from the client.

The case should serve as a warning to those who bring unmeritorious claims for an ulterior motive that they may well be exposed to the Court’s sanction of indemnity costs.