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Interim Payments

Detailed assessment proceedings can sometimes take a long time to reach a conclusion and delays can have an impact on the cashflow of the receiving party or their solicitor, particularly in cases where considerable sums have already been paid to discharge disbursements or pay interim bills.

Receiving a payment on account of costs from the paying party at an early stage can help reduce the effect of such delays.  Here we consider the steps that can be taken to assist in securing an interim payment.

CPR 44.2(8) provides:

“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.”

 Receiving parties should therefore request a payment on account of costs when an order for costs is made whether that be following a successful trial or when settlement has been agreed and a claim concludes by way of a consent order.  In the case of the latter an attempt should be made to reach an agreement with the paying party as an early interim payment can be of benefit to the paying party too as it will reduce the amount of interest ultimately payable on costs subsequently assessed or agreed.  If the paying party is unwilling to agree to a payment on account of costs voluntarily, they should be put on notice of the intention to issue an application and that the costs of the application will be sought from them.

If damages are agreed without the need to issue proceedings and costs cannot be agreed it will be necessary to issue Part 8 – costs only proceedings in accordance with CPR 46.14.  In these circumstances the Claim Form can include a request that the Court make an order requiring the paying party make a payment on account of costs in accordance with CPR 44.2(8).

When an order for costs has already been made, or there is a deemed order for costs under CPR 44.9 such as when settlement of the claim is agreed by acceptance of a Part 36 offer there is the opportunity to request an interim costs certificate under CPR 47.16(1) which provides:

“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.”

 The use of the word “may” should be noted and contrasted with the wording of CPR 44.2(8) which confirms the court “will” order a payment on account to be made “unless there is good reason not to do so”.  As a receiving party will have had to serve a bill of costs, attempt settlement and likely consider points of dispute and prepare replies before requesting a detailed assessment hearing a significant amount of time will have likely elapsed since the order for costs was made and in cases where costs do not exceed £75,000 (and are to be provisionally assessed) it is not certain that the Court would deal with the request for an interim costs certificate before the provisional assessment takes place.

The best course of action is therefore to request the Court order the paying party to make an interim payment at the time the order for costs is made in accordance with CPR 44.2(8).

When that opportunity to secure an interim payment has been missed, or a deemed order for costs is obtained it may be difficult to secure an interim payment until the claim has been set down for assessment. 

There are conflicting first instance decisions on this issue.  In Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) the Court made an order for the paying party to make an interim payment on account of costs after HHJ Matthews confirmed he forgot to make such an order when he initially made the order for costs. 

However, in J P Finnegan v Spiers (t/a Frank Spiers Licensed Conveyancers) [2018] EWHC 3064 (Ch) the Court ruled that they had no power to order the paying party to make an interim payment on account of costs when a Part 36 offer had been accepted.  Mr Justice Birss considered that he had no jurisdiction to make such an order as CPR 36 is a self-contained code and included no provision for payments on account in those circumstances.

More recently, in the case of Bates & Ors v Post Office Ltd (No.5 : Common Issues Costs) [2019] EWHC 1373 (QB) the Claimants were successful on a number of issues at a preliminary trial and the Court made an order for costs in their favour.  The Defendant submitted that costs should be reserved until later in proceedings when the degree of the Claimants’ success would be clearer however the Court recognised the issue of cashflow, and noted that it might be less of a concern to public bodies such as the Defendant, and made an order for a payment to be paid to the Claimants.

Whatever stage you  are at in proceedings we can advise you on the best course of action to secure a payment on account of costs, and also as to the amount that should be sought or that the paying party is  likely to be ordered to pay by the Court.

About the author

Gavin Elliott

Gavin Elliott

Gavin is a specialist Costs Lawyer and member of the Association of Costs Lawyers.

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