INTERIM PAYMENTS ON ACCOUNT OF COSTS: RECEIVING PARTY CAN ASK (AND RECEIVE) MORE THAN ONCE

I am grateful to Sam Hayman  from Bolt Burdon for sending me a note of the judgment of Master MCloud in Trotman -v- Master Brickwork London Essex Limited, a copy of which is available here.  Trotman – final judgment of Master McCloud (1) The judgment finds that a receiving party is entitled to make a second application for an interim payment on account of costs.

“…there are very good reasons why rule 44.2(8) exists in the form which it does, and I have cited those above, and accept them. Early payment of costs which will inevitably be due serves the ends for example of limiting the scope for overly protracted assessment later, enables a party not to be kept out of their money, and reducing later applications for Interim Costs Certificates once detailed assessment has been commenced.”

THE CASE

The claimant sought a second interim payment on account of costs of £215,000. The defendant objected on the basis that the court did not have power to make a second payment, an initial interim payment of £65,000 having been incorporated into a consent order. Master McCloud found that there was a power and made an order.

THE JUDGMENT

1. “This judgment is about a simple question: can a party who has the benefit of a costs order receive, before commencing detailed assessment, more than one order for a payment on account of costs under that costs order? The Defendant says ‘no’. The Claimant says ‘yes’. My answer is ‘yes’ but I do not think the authorities cited in current commentaries quite resolve the matter as clearly as has been thought. I shall explain why I reach the answer ‘yes’, below.”

THE REASON THE COURT HAS POWER

Decision

19. The existing case law in my judgment is not as useful as may appear: Cook on Costs interprets the case law, most notably the Global Assets decision, as permitting second or subsequent applications for payments on account of costs. However, the context in that case was not one of a second application, it was a first application and the issue was about whether an application has to be made at the time of the making or deemed making of an order for detailed assessment. The outcome as is I think well accepted now, is there is no such requirement. We see that also in the example of Culliford which, again, was not a case concerning a second application, rather it was a case where the trial judge had overlooked the obligation to consider making an interim order for payment on account of costs at the time the order for detailed assessment was made at end of trial.
20. In my judgment therefore the authorities themselves so not go so far as to establish that the notion of ‘no temporal link’ between the order for assessment and the order for interim costs on account, extends to the making of second or subsequent interim costs payment orders.
21. The case of Blackmore on the other hand assumes that there is a power to make a second order, and the case was decided on questions of exercise of discretion whether or not to do so. Nonetheless it is of high authority and although in my judgment the ‘second order’ question was not in issue, the fact that such a senior court with competent representation did not express any qualms over jurisdiction is indicative in my judgment of there at least being a practice that such applications are permissible. The author’s own experience is also that no challenge of this sort has been made previously in her own court. That per se does not of course answer the point.
22. In my judgment the policy considerations are the key. Going back to those, there are very good reasons why rule 44.2(8) exists in the form which it does, and I have cited those above, and accept them. Early payment of costs which will inevitably be due serves the ends for example of limiting the scope for overly protracted assessment later, enables a party not to be kept out of their money, and reducing later applications for Interim Costs Certificates once detailed assessment has been commenced.
23. Those strong policy considerations still retain their force where a second or later application is made. Moreover, if we consider the wording of the rule, it states “where a court orders”. It does not state “when a court orders” and nor does it (as it might have) state that only one such order may be made for an interim payment on account of costs. The use of “where” in my judgment connotes a state of affairs rather than an event. In that sense the expression “where a court orders”, together with the established case law construing the rule so as to permit applications after the date of the original order (or deemed order) for assessment means “where a court is making, has made, or is deemed to have made an order” for costs to be subject to detailed assessment.
24. As to the notion of ‘a reasonable sum’ I think that the expression cannot do more ‘heavy lifting’ than merely meaning that the court must order a sum (that is to say one sum of money specified in the interim payment order) and that such sum must be a reasonable amount. It cannot in my judgment be understood as meaning either that only one such sum may ever be ordered under rule 44.2(8) or that there is conceptually one, and only one ‘reasonable sum’ such that to make a later additional order must mean the later order is larger than ‘the’ reasonable sum. Many sums would amount to ‘reasonable’ for the purposes of an application under this rule, and indeed the provision of extra evidence as to the size of incurred costs not available at the time of making the first such order might well establish that a reasonable sum is one which makes the total higher than originally ordered.
25. The Claimant as something of a ‘backup’ point suggested that I would, on the facts of this case, be empowered in any event to make an order for the payment of a sum on account of the costs of quantum, if I am satisfied that the Claimant will recover his costs of that part of the proceedings. I do not need to explore that argument here as a result of my decision above.
26. I therefore on this point of law decide that CPR rule 44.2(8) permits more than one order for an interim payment on account of costs.