When are 'costs' typically awarded on an indemnity basis?

Costs are typically awarded on an indemnity basis in circumstances where a party has behaved unreasonably or in bad faith during litigation. This means that the party who has incurred the costs can recover not just the standard costs that they would have been entitled to under a standard basis award but also additional amounts that cover the full extent of their losses.

Indemnity costs are intended to penalize the party whose conduct has been considered unreasonable or has abused the court's process. The rationale is that if a party engages in conduct that makes the litigation more complex, protracted, or contentious than necessary—whether through unreasonable refusal to settle, baseless claims, or other forms of misconduct—they should bear the additional financial burden resulting from that conduct. This approach is meant to encourage fair play and discourage parties from engaging in dilatory or adversarial tactics that are not in the spirit of resolving the dispute efficiently and justly.

In handling civil matters, courts evaluate behaviors and may grant indemnity costs to deter future misconduct and to provide a remedy to the aggrieved party for the excess costs incurred due to the other party's unreasonable behavior.