Timing of orders for interim costs payments
I have previously commented on the issue of the timing of orders for interim costs payments.
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.”
I had always read this to mean there were two stages at which such an order could be made:
- At the same time an order for costs is being made (usually following a trial).
- 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 is the view shared by the authors of Cook on Costs.
This issue came up for determination in the recent case of Ashman v Thomas  EWHC 1810 (Ch) (19 July 2016).
Chancery Master Matthews had given judgment and awarded costs to the defendant. 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 claimant argued that a payment on account should be sought at the time that the costs order is made. The alternative was that an interim costs certificate may be issued at any time after the commencement of the detailed assessment process, under CPR 44.16(1). (This is a typo in the judgment and should clearly be CPR 47.16(1)). As there had been no request for a payment on account at the time the order was made and as no detailed assessment proceedings have yet been commenced, no order should be made (ie the Cook on Costs view). (Actually, if this is what the claimant argued it was not 100% correct. An interim costs certificate can only be issued once a request for a detailed assessment has been filed; it is not sufficient that detailed assessment proceedings have been issued.)
The Master resolved the issue in the defendant’s favour on the basis:
“The substantial point, as it seems to me, is whether a request for a payment on account can only be made at the hearing itself. If so, then, once the parties come to draw up the order for the court’s approval, it is too late to argue for its inclusion.
The general rule is that an order takes effect from the moment it is made by the court, not when it is entered and sealed by the court office: see Holtby v Hodgson (1890) 24 QBD 103; CPR 40.7. But the court retains power to alter its judgment or order at any time until it is entered and perfected by sealing: Re Barrell Enterprises  1 WLR 19, CA. This power is not restricted to exceptional circumstances: Re L (Children)  1 WLR 634, Sup Ct.
There is nothing in the rules, nor any case of which I am aware, to alter the general rule in the context of payments on account of costs. Indeed, the mandatory terms of CPR rule 44.2(8) (subject to the existence of a ‘good reason’) mean that there is even more reason to exercise the power when the matter is drawn to the court’s attention than there might otherwise be. Accordingly I conclude that there is no objection in principle to considering the Defendant’s request for a payment on account of costs, and indeed good reason to do so, when this is sought after the hearing but before the order is sealed. I shall therefore do so.”
Of course, this 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. Usually, if no request is made when judgment is being handed down, any subsequent request is made long after the final order has been entered and sealed.