The indemnity principle continues to apply to costs orders, meaning that if a successful party has no legal obligation to pay their own lawyers, the unsuccessful party cannot be required to pay costs. In contingency fee arrangements, the contingency operates as a condition subsequent, so there is an immediate obligation on the client when the retainer is created, satisfying the indemnity principle. The test for leave to appeal from a costs assessor under s 208M is a broad discretion requiring consideration of whether justice requires the grant of leave, not the restrictive test of 'obvious error on the face of the record' applied in Reynolds v Whittens. Where there is a genuine dispute about the terms of a costs agreement and the costs assessor lacks procedural mechanisms for a fair hearing, leave to appeal should generally be granted.
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