INTERIM PAYMENTS ON ACCOUNT OF COSTS: A RECENT EXAMPLE AND USEFUL LINKS
“Cashflow is the lifeblood of business”, is a common maxim. This applies in the legal profession as much as anywhere else. Interim payments on account of costs is an important issue for litigators and their clients. This was considered in a the recent decision in Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd (Costs)  EWHC 2338 (Comm). That case is considered here, together with some useful links on this topic. See also the cases considered in Civil Procedure Back to Basics 60: Interim orders on account of costs:”Cash flow is the lifeblood of business”
Note that there is a presumption that a court will make an order for a reasonable sum on account. There has to be a good reason not to make an order.
“(8) 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.”
A RECENT EXAMPLE
In Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd (Costs)  EWHC 2338 (Comm) Christopher Hancock QC (sitting as a judge of the High Court) considered an interim payment in a case where an unless order had been made. The interim payment was to take effect if the defendant failed to comply with the order.
In the event that the Defendant fails to comply with the unless order and judgment is entered, the Claimant would clearly be entitled to the costs of the claim to be assessed if not agreed. Although the Claimant has asked for an order that costs be paid on an indemnity basis, I am not prepared to make such an order, since I do not take the view that the Defendant can be said to have behaved so unreasonably as to justify this form of order.
The Claimant’s Precedent H which was considered by Mr Andrew Burrows QC at the CMC was in the total sum of £1,073,535.81, including pre-action costs of £48,537.60 and costs of £266,731.50 in respect of issuing and statements of case (which had been incurred) at the time of the CMC. As set out in paragraph 25 of the Order of Andrew Burrows QC dated 9th November 2018, save that the costs of expert reports was reduced from £59,000 to £50,000, the costs set out in the Claimant’s Precedent H were approved.
In her Eighth Witness Statement, Ms Novikova of Druces, the Claimant’s solicitors, analyses and explains the costs incurred to date in prosecuting these proceedings and the costs approved by Andrew Burrows QC. That analysis shows that the total costs incurred by Orexim to date are £410,004.31. This figure does not include the costs of this application which total £29,352.00.
At paragraphs 25 to 29 of his judgment in McInnes v Gross  EWHC 127 (QB) (attached hereto) Coulson J sets out the approach to be adopted to a payment on account where there is an approved costs budget. At paragraphs 25 and 28 of his judgment Coulson J states:
“25. I reject Mr Mansfield’s submission on the materiality of the costs budget figure. In my view, the first defendant’s approved costs budget is the appropriate starting point for the calculation of any interim payment on account of costs. CPR 3.18 makes plain that, where there is an approved or agreed costs budget, when costs are assessed on a standard basis at the end of the case, “the court will…not depart from such approved or agreed budget unless satisfied that there is good reason to do so.” The significance of this rule cannot be understated. It means that, when costs are assessed, the costs judge will start with the figure in the approved costs budget. If there is no good reason to depart from that figure, he or she is likely to conclude the assessment at the same figure: see Silvia Henry v News Group Newspapers Ltd EWCA Civ 19…
28. Accordingly I take, as my starting point for the calculation of the interim payment, the approved costs budget figure of £570,000. I make a reduction of 10% (£57,000) which I regard as the maximum deduction that is appropriate in a case where there is an approved costs budget. I add back £15,000 to reflect the interest on costs which I have awarded. That produces a figure of £528,000.“
In view of the fact that I have not ordered indemnity costs, I have concluded that a slightly lower figure should be adopted, and I order that, if the unless order is not complied with, an interim payment on account of costs in the amount of £350,000 should be paid within 28 days of judgment being entered and served on the Defendant.
USEFUL LINKS ON INTERIM PAYMENTS
- The Law Society Gazette Clear guidelines on where the ‘goalposts’ are when it comes to requesting interim payments.
- John Hayes Applications for Interim Payments on Account of Costs and When to Make Them
- ACL Court can order interim costs in detailed assessment between solicitor and client
- Kerry Underwood INTERIM COSTS ORDER CAN BE MADE EVEN IF CLIENT APPLIES WITHIN ONE MONTH
- AJM Legal Ltd Interim Payments
- MRN ORDERS FOR INTERIM PAYMENTS AFTER JUDGMENT
- GWS Interim costs payment following acceptance of Part 36 offer
- Keoghs Interim payments during the life of a claim
- TMC INTERIM PAYMENTS IN SOLICITORS ACT DETAILED ASSESSMENTS
- MRN discuss the cases where the courts have found it unreasonable for a paying party to withhold a payment on account of costs.
- 4 KBW consider multiple applications for interim orders for costs.
- The Lawyer carries an article reminding us that interim costs orders are a power and a presumption
- Costs Monkey has a brief summary of the principles relating to interim costs.
- A Neat Legal Services have a succinct account of the principles relating to interim costs orders
- R Costings consider Payments on Account of Costs