Legal Costs Specialists – Gibbs Wyatt Stone

Interim costs payments

The pre-Jackson CPR contained two provisions concerning the making of orders requiring interim payments prior to detailed assessment. CPR 44.3(8) read:

“Where the court has ordered a party to pay costs, it may order an amount to be paid on account before the costs are assessed.”

The second provision was contained CPR 47.15(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;

(b) amend or cancel an interim certificate.”

I had always read this 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.

Therefore, 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. CPR 44.3(8) did not confer a general power on the court to order an interim payment at any stage. If it did, CPR 47.15(1) would have been redundant.

Interestingly, in the cases of Dyson Ltd v Hoover Ltd [2003] EWHC 624 (Pat) and Blackmore v Cummings & Ors [2009] EWCA Civ 1276 it appears this distinction in timing was not argued and the courts simply proceeded on the basis that CPR 44.3(8) could be used to obtain an interim payment at any stage after an order for costs had been made.

The current wording of the CPR is very similar to before, except there is now a presumption a payment on account will be ordered when costs are awarded. CPR 44.2(8) reads:

“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.”

 CPR 47.16(1) reads:

“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.”

There is therefore no reason to suppose the issue of timing has changed, assuming my interpretation is correct.

Cook on Costs appears to agree with my views as to timing:

“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.”

That has always been my reading of the rules (pre and post-Jackson). I am just not aware of any case law confirming this.

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Simon Gibbs

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25 responses to “Interim costs payments”

  1. Peter Burdge avatar
    Peter Burdge

    Cook’s argument appears to take no account of the decision of Proudman J in Barnsley v Noble [2012] EWHC 3822, where he ordered a payment on account of costs in a case where a deemed order had arisen on discontinuance. A deemed order arises under CPR 44.9(1) in exactly the same way upon acceptance of a Part 36 offer (unless, of course, it is accepted pre-proceedings – see CPR 44.9(2)).

    In Blackmore v Cummings & Ors [2009] EWCA Civ 1276 there had already been one order for a payment on account, and the receiving party later applied for another. The Court of Appeal had no difficulty in entertaining an order for a further payment on account made under CPR 44.3(8) (now, in its amended form, CPR 44.2(8)) even after detailed assessment proceedings had been commenced. Even though it declined to make the order sought, it did so not on grounds of lack of jurisdiction, but on the particular circumstances of the case.

    So, the case-law appears to suggest that (a) the fact that your order for costs arises by virtue of acceptance of a Part 36 offer does not prevent you from applying for a payment on account, (b) you can have more than one bite at the cherry and (c) you can apply for a payment on account even after commencing detailed assessment proceedings (which is, of course, sensible and proportionate, when the alternative is stumping up a huge court fee for a detailed assessment hearing that you almost certainly won’t need, merely to act as a peg on which to hang your application for an interim costs certificate).

    Reply
  2. anon avatar
    anon

    I agree with Peter. CPR 44.3(8) gave the court a discretion to order a payment on account. The gateway to that discretion was that the court had made a costs order. That aside, the discretion was unfettered, as Blackmore confirmed. The application could be made at any time, though as a matter of practice it was often better to do so at the time the costs order was being made and if this was not done then the court may be more reluctant to make the order, particularly once it was confirmed in Blackmore that there was no presumption in favour and particularly if it seemed likely that detailed assessment would be commenced shortly (and therefore a costs judge would be in a better position to decide). However, these were matters that went to discretion, not jurisdiction.

    There was no fetter in CPR 44.3(8) saying that the court could only make an order for payment on account when making the costs order, merely that a costs order had to have been made.

    I have acted in a number of cases where there were free standing payment on account applications between costs order and assessment (either because none was sought at the time of the order, or an additional payment was sought, or because the costs order was a deemed one) and whilst they succeed or fail on their merits, arguments (which have been raised) that the court had no jurisdiction have always failed.

    The change in CPR 44.2(8) was intended to introduce a presumption in favour of payment, and certainly was not intended to introduce any other restriction. It is probably correct to say that the wording of the new rule is slightly more suggestive that the order for payment on account is to be made at the time of the costs order, but I don’t believe such a change of emphasis was intended. Quite the opposite. The intention is to make such payments more, not less, frequent.

    Reply
  3. Simon Gibbs avatar
    Simon Gibbs

    If Peter’s and anon’s interpretations are correct, that renders interim costs certificates entirely redundant (despite them being carried over into the new rules) with an entirely pointless restriction on timing (which can be bypassed with an application under CPR 47.2(8)).

    Reply
  4. anon avatar
    anon

    Simon, I think that is to slightly miss the point re CPR 47.16.

    The point about CPR 47.16 is that it is a limited procedure intended for use within the detailed assessment proceedings, by a court which may sometimes (as with SCCO cases), be a different court to that which made the costs order.

    In that situation, that court, which may have had no prior involvement with the case, has the power to make an ICC, but in order to ensure it is in a proper position to do so no such application can be made until the request is filed. The effect of filing the request, of course, is that the court then has the Bill, PODS and any replies.

    44.2(8), as it now is, is a much broader based discretion which give the court that has made the costs order the power to order a payment on account (and indeed now effectively requires it to do so). Of course, that court may well say ‘ on the information presently available I cannot make such an order, or only an order of a limited amount’, or ‘you only get £x from me and if you want more you need better information and that will probably not happen until you commence assessment’, but the point is that whilst this might happen, there is no fetter which says that unless the receiving party pops up on the very day the costs order is made and makes an application, no payment can be ordered.

    So, 44.2(8) is directed at the court that made the order, will usually be exercised at the time the order is made, but could be exercised later;
    47.16 is directed at the court assessing the bill and cannot be exercised until that court has received the papers due at the time of request for DAH.

    Reply
  5. abcde avatar
    abcde

    Simon, we all know the discretion is there. Are you saying you have never been in court against a pre interim certificate application for an interim payment?

    Reply
  6. avatar
    Anonymous

    had this recently, the Court dismissed the App, as being premature. I think we all know certain firms are using the I/P App just as a route to build costs anyway, now PA costs restrict their DA excess

    Reply
  7. Peter Burdge avatar
    Peter Burdge

    I agree with anon. There is still a place for interim costs certificates, but it’s the huge non-refundable detailed assessment fee that has to be paid in order to be eligible to apply for one that makes it the less attractive choice in most circumstances.

    Reply
  8. xxx avatar
    xxx

    SCCO Guide to Civil Cost Assessments says such applicaitons should become otiose as Bill will be provisionally assessed before any applicaiton can be heard.

    Reply
  9. anonymooose avatar
    anonymooose

    Wow times must be hard for Claimants, still pulling this old trick to costs build.

    Under C.F.A’s clients are not billed so why the sudden urgency to make the application as soon as the case settles? Rid the CPR of this nonsense and the parasites that make money doing this.

    Reply
  10. avatar
    Anonymous

    @ anonymooose

    very true. As to parasites, and the urgency of the application, consider the position please, that said firms, are the ones advertising that they can facilitate a cash draw down against WIP if they do the bills, and the need for them to make said applications, become rather clearer…

    Reply
  11. abcde avatar
    abcde

    Or maybe said firm has a 500k bill and a certain state body declines an interim . Each case on own facts and merits

    Reply
  12. avatar
    Anonymous

    @abcde

    one off matters like you describe, are worthy of pursuit of interims; especially where the SCCO are now listing DA requests in the period August 2015 onwards.

    What we have been talking about however, is where certain costs firms fire off I/P Apps 15 days after serving the bill, on all cases; invariably misquoting case law in their standard statements, and claiming the same £600.00+ ish costs for their “righteous and unique” applications

    Reply
  13. annonymooose avatar
    annonymooose

    @abcde – I sense some desparation in your post, you attempt to justify current behaivours by giving a scenario that is far from an every day scenario for most costs people/firms. Any defendant resisting an interim payment on a £500k bills deserves the extra cost. The fact is that these applications (which are pro forma in most cases) are being generated by certain people/firms as a cost building excercise, do you agree with this? or do you stand on the side of the parasites?

    Reply
  14. abcde avatar
    abcde

    I don’t dispute anything above. I said each case on own facts . Too much one size fits all

    Reply
  15. abcde avatar
    abcde

    The article is whether there is any legal basis for such an application. Clearly there is. As to merits if such an application then that is a different issue and case specific

    Reply
  16. Robert Pettitt avatar
    Robert Pettitt

    or PP’s could just make payments on account of costs?

    As strawman as ABCDE’s scenario is, so is the ’15 day’ application or the application ‘on wrong law’.

    Are paying parties not doing the following to avoid applications/costs of the applications:

    – Send a stalling letter
    – Argue that 15 days is premature for an app
    – Argue that the law is not being stated correctly
    – Make a payment on account
    – Argue that £600 is a tad high for something that is apparantly entirely ‘pro forma’

    I can’t fathom why people would rather moan about the nasty RP making the applications to ‘costs build’ when the PP has the power to make the payment and avoid the application.

    Also if you think that the primary purpose of applications for payments on account of costs is to generate costs then that is a very cyncial view.

    Reply
  17. annonymooose avatar
    annonymooose

    Ahhh I see, perhaps its me living in the dark ages, perhaps im the one being cynical by saying lots of people are doing things like this to costs build, noooo there are no costs people/firms that behave like parasites, im making it up……….Oh Simon, I am having a moment of self reflection, perhaps I should get something off my chest whilst im in the zone…. The recent decision in Liverpool that gives practioners the highest fixed fee simply because they have a practice in that court of immediately listing cases for disosal makes a mockery of Lord Jacksons work….. oooops have i gone to far now…..

    Reply
  18. Northern Monkey avatar
    Northern Monkey

    annonymooose on December 11, 2014 at 10:29 am

    – Why should a claimant get the highest fixed fee just because the matter has been listed for a disposal? A disposal hearing is not a “trial”.

    It is defined under Part 26 12.4 as a 30 minute hearing where (a) the court can may decide the amount payable under or in consequence of the relevant order and give judgment for that amount; or, (crucially), (b) give directions as to the future conduct of the proceedings.

    Normally a DH will be listed before even allocation and the crux of the matter is found under the header of Part 26 itself- ie “prelimenary stage”.

    I just argue as it has not been even allocated, that post- issue, pre- allocation costs apply. I always win. What Judge was it that ruled otherwise?

    Reply
  19. avatar
    Anonymous

    @ Robert Pettit 11.12.14

    certain RP firms make applications regardless. Even seeking the “50% as supported by the 60% awarded in the leading authority of Mars UK v Technowledge….”, where time extensions are agreed for PODs as there are fundamental issues over service, issue etc.

    @ annonymooose 11.12.14

    you have read the case in question wrong. The DJ did not give them the final 6B band pursuant to CPR 45.29C through automatic Disposal listing. There are too many people getting that totally wrong. Northern Monkey has got it 1/2 right, but doesnt understand the particular Court in question’s specific scheme

    Reply
  20. annonymooose avatar
    annonymooose

    hey northern monkey, i would argue the same but unfortunately the brotherhood that exists on the northern circuit, particularly the fun bunch who sit close to water seem to have exploited a lacuna in the rules, sorry pal if the decision isnt well known yet, i hasten to give it anymore publicity, especially on here. Needless to say if you issue proceedings in liverpool or birkenhead, you are well looked after!

    Reply
  21. avatar
    Anonymous

    @ anonymooose

    Your comments have veered into the obvious dislike of the real world in the North, which is most unfortunate. The case referred to does not exploit anything, it examined a certain definition, was argued very badly from the wrong perspective, and is now recounted by muppets who read the headline and not the transcript. Don’t fall into the same trap

    Anyone who wants the transcript, only has to ask…

    Reply
  22. proudofthenorth avatar
    proudofthenorth

    hey, i love the north, but over the last few years, you dont get much spare change in certain courts so the anonymoose makes a valid point. if this is the case i think you are talking about, ive read the transcript and it is a load of rubbish and yes it does exploit the system. it maybe distuingshed but the approach is the bit that sends out a clear message, people will always try and use arguments to maximise their recovery, but when Judges are paving the way for loopholes by saying “well you should have done that but you didnt” thats when the problems start

    Reply
  23. avatar
    Anonymous

    @ proudofthenorth

    you may have read it, but you havent understood it, clearly. The “approach”, has nothing to do with anything, its a bad point made which has an easy solution

    As to not getting spare change in certain Courts – stop looking for the small stuff, the DJ’s will listen on the big arguments if you present them properly. All you are doing, is perpetrating the incorrect myth, that there is some clique about NW Courts and their users, the way there is in the SCCO

    Reply
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