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Interim Payments

I previously wrote about interim payments on account of costs on 21 June 2019 found here.  In that blog I explained the importance of seeking an interim payment when the Court makes an order for costs and explained the potential difficulties in securing an interim payment if that opportunity is missed, or when acceptance of a Part 36 offer has provided a deemed order for costs,  until a provisional or detailed assessment of costs is requested.

The Court of Appeal has now confirmed that where a Part 36 offer is accepted courts do have the authority to order the paying party to make an interim payment on account of costs.

The decision in Global Assets Advisory Services Ltd and Anor v Grandlane Developments Ltd and Ors [2019] EWCA Civ 1764 overturns the decision in Finnegan v Spiers which I considered in my previous blog.

The Appellants/Claimants had sought an injunction and during the Appeal had made a Part 36 offer in December 2018 which was accepted within the relevant period resulting in there being a deemed order for costs in accordance with CPR 44.9.

The Appellants issued an application for an interim payment on account of costs in the sum of £250,000.  Mr Justice Teare dismissed the application in accordance with the guidance in Finnegan and ordered the Appellant to pay the Respondents' costs of the application, in the sum of £22,500.

The Court of Appeal however, accepted the Appellants' argument that the reasoning of Mr Justice Birss in Finnegan was wrong.

Lady Justice Asplin confirmed the unanimous decision of the Court which included Sir Rupert Jackson saying:

"I can see no reason why the power to make an order under CPR r 44.2(8) should be restricted to circumstances in which the court has physically made the order as opposed to circumstances in which an order of the court is deemed to have been made. In both circumstances, it is the court which has ordered the party to pay the costs and accordingly, it seems to me that the circumstances fall within the wording of CPR r 44.2(8). A deemed order is no less an order of the court. It is made in order to enable the matter to be progressed in a fair and proportionate way without further need for costs to be expended and court time and resources wasted. It would be perverse if, as a result, the successful party was at a disadvantage because an interim payment on account of those costs could only be made where the original order for costs had been made following a hearing or by consent."

Asplin LJ. also confirmed that Mr Justice Birss was wrong to consider that he was restricted by the terms set out in Part 36, concluding that there was no conflict between the provisions of rules 36.13(1) and 44.2(8) concluding that:

"In this case, once one has concluded that it is possible to look outside CPR Part 36 itself, it seems to me that there is no conflict or tension between CPR r 36.13(1) and CPR r 44.2(8) at all. It is not necessary to determine which provision must prevail. The former entitles a party to its costs of the proceedings on a particular basis and is complemented or supplemented by the latter which creates the jurisdiction to order a payment on account of those costs. CPR r 44.2(8) does not undermine or conflict with CPR r 36.13(1) at all"

The Respondent was ordered to make an interim payment on account of costs in the sum of £225,000.










About the author

Gavin Elliott

Gavin Elliott

Gavin is a Costs Lawyer, regulated by the Costs Lawyers Standards Board and a member of the Association of Costs Lawyers.

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