In what scenario does the onus of proof switch to the paying party regarding indemnity costs?

The scenario in which the onus of proof shifts to the paying party regarding indemnity costs arises when the paying party challenges the incurred costs as being unreasonably incurred. In such instances, the burden of proof falls on the paying party to provide evidence supporting their assertion that the costs claimed by the other party do not meet the standard of reasonableness.

This principle is rooted in the rationale that when a party is seeking indemnity costs — which often signifies that the costs claimed are higher than what would usually be acceptable in ordinary circumstances — it is reasonable for the party incurring the costs to expect that any objections or allegations against the reasonableness of those costs are substantiated by the payor who disputes them. Thus, the paying party must demonstrate that the costs claimed are excessive or unreasonable. This shift in the onus serves to protect parties from unjustified challenges to their claims.

Other options do not accurately capture the circumstances under which the onus of proof switches. For instance, exceeding a predefined limit, proving all costs were incurred, or having a straightforward case do not initiate a change in the burden of proof regarding indemnity costs. Therefore, the correct understanding revolves around the challenge made by the paying party about the reasonableness of the costs