"Indemnity Costs" - Why isn't this the normal situation?

Question

OK so the court orders indemnity costs when there has been a Calderbank offer - an offer of compromise, as long as the party that made the offer is better of after the judgement. There is logic there, but why isnt Indemnity costs always awarded? Should Lawyers refund the difference between the costs awarded and the costs paid? Isn't that a real indemnity giving true meaning to the words?

Answer 1

The only costs awarded are the costs paid/incurred. Courts do not award extra "costs".

The indemnity is the difference between the costs incurred prior to the settlement offer, and the total costs -- in other words, the extra costs that would have been avoided if the settlement offer was taken.

That's because, from the perspective of the settlement offer, if the other party gets less then they effectively "lost" -- relative to the settlement offer. And the losing party pays costs.

If there is no settlement offer, there is no mid-point to compare costs against. Just the start of the proceedings. So, the total costs are paid by the loser -- not just the "costs after offer" by the "loser relative to offer".