The defendant costs specialists

Interim costs payment following acceptance of Part 36 offer

By on Nov 30, 2018 | 0 comments

I had anticipated that the case of Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) would be the last word we would hear on the subject of interim payments for costs.  In that case the court had to decide whether it had the power to order an interim costs payment after the original costs order had been made. The judge 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 CPR 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.”

However, barely had the ink dried on that judgment before another decision on this topic has been reported (although the case was actually heard several months before Culliford).

In Finnegan v Frank Spiers [2018] EWHC 3064 (Ch) the High Court ruled that the court has no power to order a payment of costs on account after a Part 36 offer has been accepted.  This is because Part 36 is a self-contained code and it makes no provision for payments on account following acceptance of a Part 36 offer.

We now have two different principles governing interim payments on account:

  1. Where the court makes an order for costs it may at the same time, or at any point subsequently, order a payment on account of those costs (pursuant to Culliford).
  2. Where the order for costs is a deemed costs order following acceptance of a Part 36 offer, the court has no power to order a payment on account (pursuant to Finnegan).

The judgment in Finnegan reveals a strange route by which the matter came to appeal, which is not commented upon (and I have seen no subsequent comment on this point elsewhere).

The case concerned a Part 36 offer accepted on 23 March 2017.

In early June 2017 the Claimant issued the application for an interim payment on account.

It was not until 8 August 2017 that the Claimant finally commenced detailed assessment proceedings (out of time).

The application came before a District Judge, on a date not given within the judgment, where the judge concluded there was no jurisdiction to order an interim payment on account.  The judge commented that by this stage: “the claimant has requested a provisional assessment”.

Permission to appeal that decision was given on 13 March 2018 and was heard on 27 June 2018.

All of this was unnecessary and misconceived.  By the time of the hearing before the District Judge, a request had been made for a provisional assessment.  There was therefore a clear right to request an interim costs certificate under CPR 47.16 (as opposed to an interim payment on account under CPR 44.2(8)).  Having said that, Cook on Costs 2018 notes: “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”.  But, by the same logic, one must wonder why the courts would have entertained an application for an interim payment on account for a provisional assessment matter.  Again, as per Cook on Costs 2018: “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”.

Then again, we are presumably taking about a Bill of Costs valued at under £75,000.  In this case, the Defendant had apparently already made a voluntary interim payment of £30,000.  The application that was issued sought a (presumably further) £19,000.  This was a lot of satellite litigation over not very much.

Post a Reply

Your email address will not be published. Required fields are marked *