The defendant costs specialists

Timing of payments on account

By on Oct 17, 2018 | 0 comments

The Legal Costs Blog keeps being pulled back to the issue of the timing of orders for interim payments of costs between the parties.The current wording of the relevant rules is to be found at CPR 44.2(8):

“Where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so.”

and

CPR 47.16(1):

“The court may at any time after the receiving party has filed a request for a detailed assessment hearing –

(a) issue an interim costs certificate for such sum as it considers appropriate; or
(b) amend or cancel an interim certificate.”

This distinction between an order for a payment on account and an interim costs certificate has been around (with only minor variations) since the introduction of the Civil Procedure Rules.  It is therefore surprising that the extent of any tension between the two rules, if such exists, has remained unresolved for so long.

I had always read the two rules to mean there were two stages at which such an order could be made:

1. At the same time an order for costs is being made (usually following a trial).

2. After a request has been filed for a detailed assessment hearing.

If an order for a payment on account had not been made when the costs order was being made, the next opportunity to obtain an order for an interim payment would not arise until after a request for a detailed assessment hearing had been made.  This has been the view shared by the authors of Cook on Costs.

The last time we looked at this issue was in the case of Ashman v Thomas [2016] EWHC 1810 (Ch) (19 July 2016).

Chancery Master Matthews had given judgment and awarded costs to the defendant but not made an order for an interim payment.  Subsequently, when trying to agree the terms of the order, the parties fell out over an attempt by the defendant to include a term for a payment on account of costs, which the claimant objected to.  The matter was referred back to the Master for a decision to be made on written submissions.

The Master held he had the power make an order for an interim payment because the court retains power to alter its judgment or order at any time until it is entered and perfected by sealing, and so ordered an interim payment to be made.

At the time I commented that the “decision rather evades the issue.  The Master did not expressly decide that no general power existed to make an order under CPR 44.2(8) at any stage.  Rather, he decided that he had the power to ‘alter’ his order, prior to it being entered and sealed, to include provision for an interim payment.  Nevertheless, it is clearly implicit in his decision that this route was only open to him because the final order had not been entered and sealed.  Otherwise, the defendant would have had to wait until after filing a request for a detailed assessment hearing”.

It is therefore interesting that this very same issue returned to the same judge, sitting as a High Court judge, in Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) where he was forced to make a direct decision on whether the Court has the power to order an interim costs payment after the original costs order had been made. He concluded:

“In my judgment, it is not the law that, once an order for costs has been made, drawn up and sealed, no further application can be made to the court for an order for a payment of a sum on account of those costs. There is nothing in the rules which so requires, and there may be good reason why payment of the sum on account is not considered at the time the order was made. My decision in Ashman v Thomas [2016] EWHC 1810 (Ch) does not decide to the contrary. It was a case where the court was asked to revisit its order before it had been drawn up and entered. So it turned on the so-called Barrell jurisdiction. There was no need to decide what would have happened if the order had already been entered. Although r 44.2(8) contemplates that the court will decide this question at the time of making the order for costs, to my mind this does not exclude the possibility that the court should decide it later. I see no justification in the rules or authorities for the Claimants’ view that, if an application is not made at the time, the next opportunity arises only after detailed assessment proceedings have been commenced.”

We now have, over 19 years since these rules were introduced, a binding authority on the power these rules confer.  We will no doubt have to wait a similar period before any meaningful guidance is given on the issue of proportionality.It also means:

1. Cook on Costs‘s traditional interpretation of these provisions has been consistently wrong (although the 2018 edition recognises there have been “conflicting first instance decisions on this point”).

2. CPR 47.16(1) is a redundant provision.

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