HHJ Paul Matthews confirms that there is nothing in the rules to say 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 under CPR 44.2(8)
In ordering the claimant (paying party) to pay the defendant’s costs of the application, HHJ Paul Matthews said:
“The Claimants may say that if the Defendant has [sic] asked for a payment on account at the time there would have been no need for this application. I think that may well be right. But when the Defendant’s solicitors raised the question in correspondence the Claimants did not immediately concede, or (so far as I know) even suggest a compromise. If they had, their objection would have been more soundly based. Instead, they resisted the application, their solicitors in written submissions calling it “doomed to fail”. [24]
Judgment in favour of the defendant was handed down by HHJ Paul Matthews on 8 March 2018. The parties were unable to agree the Order to carry the judgment into effect, and following a further hearing on 16 April 2018 an Order was made to provide, inter alia:
“Claimants should pay the Defendant’s costs of the claim, including the costs of this hearing, on the standard basis, to be assessed if not agreed”.
The Order did not make any provision for an interim payment on account of costs.
Thereafter, the defendant’s solicitors raised the matter of a payment on account of costs with the claimants’ solicitors in correspondence.
The claimants’ solicitors pointed out that the Order made no provision for such a payment.
The defendant’s solicitors referred to r 44.2(8), which states:
“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”.
The parties could not agree and an application under r 44.2(8) was made by the defendant.
In essence, the defendant argued that he should not be precluded from obtaining an interim payment on account whilst he waited for the final costs amount to be determined, whether by detailed assessment or otherwise. He referred to commentary in the White Book at paragraph 44.2.12, and to Mars UK Ltd v Teknowledge Ltd [2000] FSR 138, where Jacob J held that:
“where a party is successful the court should on a rough and ready basis also normally order an amount to be paid on account, the amount being a lesser sum than the likely full amount.”
The defendant said that a realistic starting point for assessing what a reasonable sum should be would be the defendant’s approved costs budget.
The claimants argued that there was a good reason within r 44.2(8) for not ordering them to pay a reasonable sum on account, namely that the defendant did not request any such payment at the time that the Order was made; and that it is not required that the court make an Order of its own volition.
Moreover, they said, if a request had been made at that time, they would have opposed it, on the basis that they acted in a fiduciary capacity as personal representatives of the estate of the deceased, and that the estate had no funds until the property in dispute was sold. For that reason, had the court been minded to order such a payment, the Claimants would have sought a different Order for sale, so that the property be sold earlier, so as to put the estate in funds.
Thirdly, the claimants said that, since the defendant made no application for a payment on account before the order was sealed, the next opportunity for doing so arises only after a request for a detailed assessment hearing has been filed, pursuant to r47.16(1). In this respect they relied on a decision of HHJ Paul Matthews himself, sitting as a chancery master, in Ashman v Thomas [2016] EWHC 1810 (Ch).
In Ashman, costs were awarded to a party but no Order for a payment on account was made at the time the Order was pronounced. However, before the Order was sealed, the receiving party wrote to the court and asked that such an Order for payment on account be made. The paying party said it was too late.
It was held that, since the Order had not yet been sealed, the court had power under the so-called Barrell jurisdiction (Re Barrell Enterprises [1973] 1 WLR 19, CA) to make a different Order from that pronounced, if appropriate.
The defendant in reply relied on the decision of the Court of Appeal in Blackmore v Cummings [2009] EWCA Civ 1276, where Elias LJ said that:
“There is a wide discretion afforded by both CPR rule 44.3 (8) and CPR rule 47.15 to be exercised in the circumstances of the particular case, and all material factors have to be weighed in the balance. These will include those identified by Jacob J in the Mars case.”
The defendant also cited the White Book at paragraph 44.2.12 to the effect that the delay by the receiving party in making an application for detailed assessment was a relevant factor in deciding whether to order a further payment on account.
The defendant said that the fiduciary capacity of the claimants did not help them, since they failed to remain neutral and had instead engaged in adversarial litigation from which as beneficiaries on the intestacy of the deceased they might have benefited personally.
As to the decision in Ashman, the defendant said it was irrelevant since he was not seeking to change the terms of an Order that had been pronounced, but was instead asking the court to make a further Order for a payment on account of costs.
Finally, the defendant referred to a number of factors which he said were relevant to determination of the application for an interim payment. Amongst other things, he said:
14. I begin with the question of jurisdiction. 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.
15. Once it is accepted that the court has jurisdiction in principle to make an order for the payment sum on account of costs in an appropriate case, it is then simply a question of whether the court is minded to exercise that jurisdiction on the facts of the case, at the time when the court is asked to do so.
Given the terms of r 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. At all events, I turn to consider the circumstances of this case.
The Claimants’ capacity
….
19. In my judgment the Claimants acted in their own interest rather than in that of the estate…. Accordingly, in considering whether to make an order for a payment on account of costs, there is no good reason for me to treat the Claimants as different from any other ordinary litigants who have lost and been ordered to pay the costs.
…
Order at the time?
21. Nor am I impressed by the argument that, if an application had been made at the time for an order for a payment on account, the Claimants would have sought the sale of the property at an earlier stage. I am not concerned with what order might have been made at an earlier stage. I am considering the application before me, and whether to make such an order at this stage. In accordance with the terms of the order which I made, the property ought now to be on the market. But even if it is not,
I do not see the fact that the Claimants in their capacity as personal representatives do not have liquid funds as something which should inhibit the court in making an order that the Claimants as litigants having lost the litigation and having been ordered to pay the Defendant’s costs should make a payment on account of those costs, in accordance with what Jacob J said in Mars UK Ltd v Teknowledge Ltd [2000] FSR 138, and now CPR r 44.2(8).
22. There is no suggestion here 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. In my judgment,
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 r 44.2(8), I consider that the court should make such an order.
23. I turn to the question of the amount. The obvious starting point for the assessment of the amount of the payment is the approved costs budget of the Defendant. This is in the sum of £45,580. The Defendant however asks for a payment in the sum of only £30,000. He refers to the decision of Birss J in Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 3258 (Ch), as showing that (in accordance with CPR r 3.18(b)) the court on a detailed assessment of costs will not depart from an agreed or approved budget unless satisfied that there is good reason to do so. In that case, payment on account was ordered in a sum amounting to 90% of the claimant’s approved budget. The Claimants in their written submissions however do not put forward any arguments as to the amount. In these circumstances, the sum of £30,000 seems wholly reasonable to me, and I will so order. 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.
24. Finally, in their draft order, the Defendant’s solicitors ask that the Claimants pay their costs of the application. Costs are in the discretion of the court, but if the court decides to make an order the general rule is that they follow the event, although the court may make a different order. Here the Defendant has won, and if costs follow the event he should have his costs from the Claimants.
The Claimants may say that if the Defendant has [sic] asked for a payment on account at the time there would have been no need for this application. I think that may well be right. But when the Defendant’s solicitors raised the question in correspondence the Claimants did not immediately concede, or (so far as I know) even suggest a compromise. If they had, their objection would have been more soundly based. Instead, they resisted the application, their solicitors in written submissions calling it “doomed to fail”.
25. Accordingly my provisional view is that I should make a costs order on this application and that the Claimants should pay the Defendant’s costs of the application, to be subject to detailed assessment if not agreed. There is no request that I should order the payment of a sum on account (and nothing to that effect in the draft order), and I have no figures to enable me to reach a view on what would be a reasonable sum for this purpose. If the Claimants wish to challenge my provisional view, they must do so in writing within 48 hours of their solicitors receiving this judgment, with the Defendant having 48 hours thereafter to respond to any such written submissions.
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Toby Moreton
File ownership and the powers of the court for delivery up under s68 and/or...