Costs News

11 October 2018
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Sealed order is no bar to later application for interim payment, says High Court

A receiving party can still apply for an interim payment on account of costs even if the order for costs has been made, drawn up and sealed, the High Court has ruled.

Culliford and Anor v Thorpe [2018] EWHC 2532 (Ch) was a claim for possession of a property brought by the claimants in the capacity of personal representatives of the estate of their deceased brother, but also as persons beneficially entitled on his intestacy. The defendant defended the claim, and successfully counterclaimed on the basis of a proprietary estoppel equity.

His Honour Judge Matthews, sitting as a High Court judge in Bristol, made an order that the claimant pay the defendant’s costs on the standard basis but forgot – and was not prompted – to make any provision for an interim payment on account of costs.

After the order had been sealed and sent out by the court, the defendant's solicitors raised the issue of an interim payment, which the claimants rejected, and it ended up before the judge, who considered it on the papers.

HHJ Matthews ruled that he had the jurisdiction to make the order: “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…

“Although rule 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.”

HHJ Matthews said it was then simply a question of whether the court was minded to exercise that jurisdiction. “Given the terms of rule 44.2(8), I should say that I do not accept that the mere fact that the defendant did not ask for a payment on account by itself amounts to a ‘good reason’ for not making an order for one.

“No doubt one factor to take into account (not on its own necessarily determinative) will be whether the receiving party made a deliberate decision not to seek such an order at the time and then simply changed his or her mind later.”

In the circumstances of this case, the judge said there was “no suggestion” that the defendant deliberately decided not to ask for a payment on account: “I might have raised the point myself at the hearing, and yet overlooked it.”

He continued: “There is no good reason why the court should not make an order even at this stage for a payment on account of costs. It would still be of value to the defendant, who has an order for costs in his favour and is being kept out of his money only because of the need for the detailed assessment to ascertain the exact sum. Accordingly, taking account of rule 44.2(8), I consider that the court should make such an order.”

As to the amount, the defendant’s approved costs budget was £45,580 but asked for a payment of £30,000. Noting the 2014 Thomas Pink ruling of Mr Justice Birss (as he then was), where payment on account was ordered at 90% of the budget, HHJ Matthews said £30,000 “seems wholly reasonable to me”.

He added: “Given that this has arisen at a later stage than usual, when the claimants may not have been expecting to have to provide for it, I will however order that it be paid within 28 days rather than the usual 14.”

On the costs of the application, the judge accepted that, had the defendant asked for a payment on account at the hearing, there would have been no need for this application. But he said this objection would have been “more soundly based” had the claimants not objected when the defendant's solicitors raised the question; in written submissions, they said the application was "doomed to fail".

His provisional view was to make a costs order in favour of the defendant but gave the claimants 48 hours to challenge this.

Porter Dodson for the claimants and Burnetts for the defendant. Application dealt with on paper.

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