Applications for Interim Payments on Account of Costs and When to Make Them

CPR r. 44.2(8) states that: ‘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’.

There were, broadly, two schools of thought as to when a payment on account could be ordered.

On one view, such an order could only be made at the same time as the order to pay costs. Proponents of such a view relied on CPR r. 47.16(1), which allows a receiving party to seek an interim costs certificate, but only after a detailed assessment hearing has been requested. What, they rhetorically ask, would be the point of this limitation on obtaining an interim costs certificate if it could be undermined by applying for an order under CPR r. 44.2(8) at any time?

There are policy grounds in support of the first view. If the court is limited to making a payment on account when ordering a party to pay costs, then it will have just heard argument in respect of the merits of the case and will be in the best position to judge the appropriate amount of such an order. If an application can be made at any time post-judgment, potentially to a differently constituted court, then the court will have limited information on which to base its decision as to amount. Indeed, that would explain why the interim costs certificate is limited in availability until after a detailed assessment hearing is requested, by which point the judge hearing the application will have the benefit of a bill of costs, points of dispute and replies.

The contrary view was that such an order could be made at any time. Proponents of this view relied on the wording of CPR r. 44.2(8) itself, which sets no time limit. Why, they rhetorically ask, would the draftsman not have used ‘when’ instead of ‘where’ at the start of CPR r. 44.2(8) if that were the intended result?

There are policy grounds in support of the second view. It can take some time, particularly in complex cases, for the parties to progress to a point where a detailed assessment can be requested. It is unfair for a party who the court has recognised is entitled to his costs in principle to be deprived of the use of the money expended on the litigation. An award of interest can only partly remedy this unfairness. Furthermore, in these days of costs management, even a differently constituted court will have a good indicator on which to base the amount of any order in the shape of an approved or agreed budget.

The matter was considered recently in Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) and was determined in favour of the second school of thought. The court had awarded the successful Defendant their costs subject to detailed assessment. Neither party raised CPR r. 44.2(8), and the court did not take the point of its own motion.

It was held that the court had jurisdiction to consider an application for a payment on account of costs even after the order awarding costs had been sealed. When considering the discretion under CPR r. 44.2(8), the fact that the Defendant had not raised the request at the time of the order for costs was not, by itself a good reason not to award a payment on account. On the facts of the case, the discretion was resolved in the Defendant’s favour and a payment on account was ordered.

Does that mean that interim costs certificates are redundant? Not quite.

Firstly, where a receiving party’s entitlement to costs arises out of a deemed order following acceptance of a Part 36 offer then because the court has not ordered a party to pay costs, CPR r. 44.2(8) does not apply: Finnegan v Frank Spiers [2018] EWHC 3064 (Ch). In such cases the interim costs certificate under CPR r. 47.16 is the only opportunity for a payment on account.

Secondly, if the court exercises its discretion not to make an order pursuant to CPR 44.2(8), there may still be scope to apply for an interim costs certificate at the appropriate time.