The defendant costs specialists

Interim costs payment

By on May 15, 2017 | 6 comments

This blog has previously looked at the interrelationship between interim payments on account of costs and interim costs certificates.

Gordon Exall’s Civil Litigation Brief blog recently had a post on this issue that I struggle to describe as being anything other than bizarre (although the post itself is an entirely accurate summary of the decision being reported).

HH Judge Robinson gave permission to appeal in relation to an unsuccessful application for an interim payment on account of costs.  The order granting permission does, to be fair, highlight:

“I appreciate that I have not had the benefit of hearing submissions to the contrary, and the observations set out below must be taken to be subject to receipt of such submissions.”

Nevertheless, the robustness of what follows makes it clear that the judge did not have much of an open mind as to the issue:

“I have read the transcript of the telephone hearing.  It seems to me that the District Judge was completely misled by the Advocate for the Defendant.

The Defence advocate directed the attention of the Judge to chapter 5 of the 2015 edition of Cook on Costs.

That chapter deals with interim payments on account of costs by the client to his own solicitor [Judge’s emphasis]. It has no relevance to a claim for an interim payment on account of costs by the paying party to the receiving party.  That issue is dealt with at chapter 25 of Cook.

The Judge was directed to a passage from Cook (2015) at page 85, paragraph 5.24 in these terms:

‘there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). …’ and

If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate.’

Those passages persuaded the Judge to conclude that the court had no jurisdiction ‘to entertain an application for payment on account of costs until [CPR] 47.16 kicks in, once you’ve lodged your request for detailed assessment’.

Those observations apply only to payment by the client to his own solicitor [Judge’s emphasis].

Chapter 25 of Cook (2015) is entitled ‘payment on account of costs’.  It is to this chapter that the Judge should have been directed.  The commentary is unchanged in the 2016 and 2017 editions.  I leave it to the parties to the parties to read it themselves.

Thus, unless I have fundamentally misunderstood something, this appeal is bound to succeed.  If it proceeds to a hearing, and this analysis prevails, I shall be asking why the Judge’s attention was drawn to an irrelevant chapter of Cook and why it was not drawn to Chapter 25.”

For the purposes of this post, I am not overly concerned with whether Cook on Costs 2015 was correct, but rather whether the advocate for the Defendant misled (deliberately or not) the Judge as to what Cook on Costs said.

Paragraph 5.24 of the 2015 edition reads in full:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no scope to seek an interim payment of costs until a detailed assessment hearing is requested (via an interim costs certificate). Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under £75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

The following issues arise:

  • Chapter 5 is headed “Running cases with conditional fee agreements”. Some sections of this chapter are clearly aimed at the solicitor/client relationship but other parts are clearly concerned with the position between opposing parties (eg paragraph 5.3 concerns notification to the other side of recoverable additional liabilities.  Paragraph 5.32 concerns interest on costs between the parties.)  There is nothing to suggest that chapter 5 is intended to deal simply with solicitor/own client matters.
  • There is clearly nothing in the wording of CPR 47.16 to support the idea that this is a provision that only applies to solicitor/own client detailed assessment.
  • Paragraph 5.24, which HH Judge Robinson selectively quotes from, expressly states: “these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side [emphasis added] as soon as possible”. Why would it be necessary to submit details of costs to the other side if these “observations apply only to payment by the client to his own solicitor”?
  • Again, paragraph 5.24 discusses it being “difficult for your opponent [emphasis added] to justify any outright opposition to an interim payment”. How is this consistent with this short section of Cook being confined to interim payments by the client to his own solicitor?

The decision becomes even stranger when one turns to chapter 25 of Cook.  Having invited the parties to read this for themselves, one wonders what HH Judge Robinson made of this section:

“The amended CPR maintains the distinction between a payment on account (CPR 44.2(8)) and an interim costs certificate (CPR 47.16).  The former, as we have seen, obliges a court that has made a costs award to order a payment on account.  The latter may only be made requested after the receiving party has requested a detailed assessment.”

One is left with the suspicion that any fault did not rest with the Defendant’s Advocate at the original hearing, but rather with a misleading Appellant’s Notice and skeleton argument (although I have seen neither).

For completeness, paragraph 5.26 (corresponding to 5.24 in the 2015 edition) of the 2017 edition of Cook on Costs (excellent as always), now reads:

“Where agreement has been reached by acceptance of a Part 36 offer, there is no opportunity to seek an interim payment of costs until a detailed assessment hearing is requested and an interim costs certificate under CPR 47.16 can be sought. This is simply because there is no court making an order for costs subject to detailed assessment under CPR 44.2. Instead a deemed order has been made by virtue of Part 36. Some courts have considered that this line of reasoning is an attempt to oust the court’s jurisdiction. But, as we discuss in Chapter 25, we consider the rationale for this position to be set out clearly in Dyson Ltd v Hoover Ltd. There are good policy reasons for requiring parties to get on with the detailed assessment proceedings in accordance with Part 47 rather than making interim applications to the court. Once a request for a detailed assessment hearing has been made there can be no argument regarding jurisdiction. Consequently, these circumstances should prove a powerful incentive for you to get your breakdown or bill drafted and submitted to the other side as soon as possible.

Where there has been a mediation or other form of negotiation which requires a consent order to be prepared for the court’s approval, there is scope for you to include an order for an interim payment. Given the wording of CPR 44.2(8) it will be difficult for your opponent to justify any outright opposition to an interim payment.

Don’t forget, cash (flow) is king. If you do not get an order as discussed here, you will have to wait until you have requested a detailed assessment hearing before being able to apply for an interim costs certificate. The laudable aim of provisional assessments is that they will be completed within six weeks of the request for detailed assessment. It is unlikely that courts will entertain interim costs certificate applications if the delay in getting a provisionally assessed bill is well under two months. If the courts do not manage to hold the six week target, they are likely to be sufficiently overwhelmed with work that they are not necessarily going to be dealing with interim costs applications speedily in any event. So if your costs are under 75,000 in total you definitely need to make sure that you seek an interim payment when the case concludes and do not leave it until later.”

Chapter 25 reinforces this view, although recognises there have been conflicting decisions:

“If anything, this position has been strengthened by the April 2013 amendments. Under the previous provision, where the court had ordered a party to pay costs it had the power to order an amount on account before the costs were assessed. CPR 44.2(8) seems less flexible, suggesting that the time for an order for payment on account is when the costs order between the parties is made, although we are aware of conflicting first instance decisions on this point. This interpretation creates problems when there are deemed costs orders under CPR 44.9(1) as, inevitably, an application for payment on account will be after the date of the deemed order.”

    6 Comments

  1. Glad someone has put this unjustified slur right Simon. Notwithstanding the appellant judge misled himself (sometime these things do happen and does caveat his summary with “unless I have fundamentally misunderstood something…..”), the article was then bizarrely presented by the Claimant’s Solicitor advocate and then again by Gordon as a short piece attempting to professionally embarrass a fellow advocate, all the while failing to appreciate the utter irony of the nonsense being posted.

    Barry Riley

    15th May 2017

  2. I am glad that you have pointed out the unfair terms in which Judge Robinson expressed himself. However, the authors of Cook on Costs are being doctrinaire in suggesting that it follows from the terms of CPR 44.2(8) that an interim payment can only be directed at the point a costs order is made. The language doesn’t dictate this outcome, and it would be very inconvenient, e.g. in cases where a deemed order for costs is made with no prior opportunity to request a payment on account. Even if an interim payment of costs was outside the CPR 44.2(8) jurisdiction in these circumstances, why should an order not be made under CPR 3.1(2)(m) (court’s power to make any order which furthers the overriding objective – the rule under which the court found that it had the power to costs cap before the rules were amended to provide for this expressly)? It could be said with considerable force that CPR 44.2(8) itself shows that an interim payment of costs usually furthers the overriding objective, thereby justifying such an order under CPR 3.1(2)(m) where (for example) a deemed costs order is made on acceptance of a Part 36 offer, even if (which I doubt) this scenario is in fact outside CPR 44.2(8).

    Ben

    15th May 2017

  3. Barnsley v Noble [2012] EWHC 3822 (Ch) (Proudman J): ‘CPR 44.12 [now CPR 44.9] is clear in its terms and the mischief which a costs order on account seeks to redress (namely that the person entitled to costs should not be kept out of the portion of costs to which he is plainly entitled pending detailed assessment) is the same whether there is a deemed order following discontinuance or an actual order following trial.’

    Peter Burdge

    16th May 2017

  4. It strikes me that at least part of the problem here, apart from a judge who doesn’t seem to have understood the point is a possibly inexperienced advocate who also failed to put his point in a way that could be understood. It just goes to show the risks of trying to rely on books in hearings rather than simply taking the judge through the rules, which is the proper way to do it.

    Liz

    17th May 2017

  5. As the Solicitors acting for the Claimant in this matter we think it is right to point out the skeleton argument made no complaint about the Defendant’s advocate at the hearing. That argument just made the point (which is picked up in some earlier posts) that Cook on Costs would not appear to accurately reflect law or practice on this topic.

    Given that this is an important point it did seem appropriate to make the decision, even though only the grant of permission to apply, more widely known.

    There was certainly no intention to cause any professional embarrassment and, for the avoidance of doubt, our view is that both parties made submissions in good faith. The Defendant’s contentions, based on Cook, did not, however, appear to reflect the way the courts should approach requests for payments on account of costs where, for example, terms have already been agreed or, as other posts have pointed out, if there is a deemed costs order because a Part 36 offer has been accepted.

    Atherton Godfrey

    30th May 2017

  6. @Atherton Godfrey, I am grateful for your clarification. However, if your skeleton argument was simply based on Cook on Costs being an incorrect summary of the law and practice on this issue, I am all the more surprised that the judge took the view that Cook on Costs was accurate but that the Defendant’s advocate had wrongly referred the court below to the wrong part of Cook on Costs.

    Simon Gibbs

    30th May 2017

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