This case is of interest to litigators who seek interim payments following the making of Costs Orders in favour of both parties, or as was the case here, seek to oppose an Application for an interim payment.
The matter before the Court stemmed from three Applications brought by the Defendant:
- To strike out or for summary judgment in respect of the claim brought by the Claimant;
- If or insofar as that application did not succeed, for a conditional order requiring the Claimant to pay £1.15m into Court;
- Alternatively, for an Order that the Claimant provide security for costs in the sum of £1.15m.
The last two Applications failed, the first Application party failed but was also party successful. Roger ter Haar Q.C ordered that the Defendant should pay 1/3 of the Claimant’s costs of the three Applications. The Claimant was ordered to pay the Defendant their costs of Defending the claim which related to the elements of the claim which had been struck out under the first Application.
Hence, both parties had Costs Orders in their favour. The Claimant made an Application for an interim payment of costs, the Defendant sought to resist this Application on the following grounds:
- There were costs orders in both directions;
- There was a likelihood of a further costs order in the Defendant’s favour as a result of the Claimant’s proposed amendment application;
- The Defendant had sought permission to appeal; and
- The prospects of recovering costs from the Claimant paid to him on an interim basis at a later stage.
With regards to the first ground, this was considered a novel point. The Defendant’s costs were not properly identifiable given that their entitlement to costs was only in relation to the costs of Defending the elements of the claim which had been struck out; the Defendant had not quantified those costs but proposed a sum of circa £27,000 which represented a 35% share of their costs prior to the service of the Defendant. The Defendant sought to set off their costs against the Claimant’s costs, however the Defendant had not made an Application for an interim payment.
Given that the Defendant had not made an Application for an interim payment and given that they had calculated their costs in a “necessarily imprecise way”, the Court was of the opinion that the only way to properly assess the Defendant’s costs was when a Costs Judge considers the Costs at a later stage. In view of this the Court was of the view that if the Defendant’s position was accepted it would “have the potential not only to undermine CPR rule 44.2(8) but also to encourage satellite disputes”
The Court therefore rejected the first ground of the Defendant’s Application.
With regards to the second ground of the Defendant’s Application the Court confirmed that this would not prevent an interim payment being ordered. The Court confirmed that the costs implications of Orders would be dealt with as and when Orders were made. The second ground was therefore rejected.
In relation to the third ground the Court confirmed that the time for making an interim payment under an Order would not start to run until the Defendant’s Appeal had been heard. In relation to the fourth ground the Court rejected this proposal as the Court had already considered an Application for Security for Costs, wherein the Claimant’s assets were considered.
Accordingly when considering the facts of the case the Court made an Order for an interim payment of £40,000 in favour of the Claimant, whose costs relating to the Applications were in excess of £360,000.
This appears to be a sensible decision in relation to ground one. The Court can only consider matters based upon the information before the Court. The Court did not have the necessary information from the Defendant in order to consider the costs payable to them under their entitlement to costs; if this information was available then maybe the Court could have assessed an appropriate interim payment payable to the Defendant. In relation to the second, third and fourth grounds the decision seemed appropriate and is as one would expect given the facts of the case.
If you would like any assistance in relation to Applications for interim payments during the course of litigation or once the litigation has ended please do not hesitate to get in touch.