Forgot to secure a payment on account of costs at the final hearing? All may not be lost…

This brief judgment concerned whether or not a party could seek an order for a payment on account of costs after a costs award had been ordered, but before detailed assessment proceedings had begun.

In Ashman v Thomas [2016] EWHC 1810 (Ch), judgment had been given extempore on preliminary issues on 21 June 2016. Following the hearing, and as part of seeking to agree terms of the order, the defendant sought a payment on account of costs. On 23 June 2016, 2 days after the hearing, the defendant served a costs schedule totalling circa. £48,650. The claimant disputed the defendant’s entitlement to a payment on account on the basis they had failed to make the request at the time the order was made. The claimant relied on there being no provision within the rules for the defendant to now seek a payment on account of costs until they had commenced detailed assessment proceedings and sought an interim costs certificate under CPR 44.16(1).

In addition, the claimant alleged that the defendant was in breach of CPR 44PD 9.5 (4)(b), as they had failed to serve a costs schedule 24 hours before the hearing. Master Matthews dismissed this point on the basis that PD 9.5 (4)(b) concerned summary assessment of costs and was not applicable to detailed assessment.

The main issue between the parties was whether an order could be made to include a term for a payment on account of costs when that request had not been made at the actual hearing.

Master Matthews considered CPR 44.2(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”,

and decided that there was good reason to consider the defendant’s request on the basis that it had been made after the hearing but before the order was sealed. The court retains power to alter its judgment or order until it is perfected and sealed in accordance with Re Barrell Enterprises [1973] 1 WLR 19, CA.

The defendant sought a payment on account of costs in the sum of £20,000. The claimant challenged the statement of costs on several grounds, including excessive hourly rates, signature of the statement by the firm and not individual solicitor, and failure to identify which costs the statement related to.

Master Matthews accepted that the statement was restricted to preliminary issues only, and he was also not concerned with the signature challenge on the basis that the matter was not subject to a summary assessment.

He was, however, in agreement with the claimant that the hourly rates were excessive. Furthermore, he believed that some of the work undertaken by the Grade A Solicitor could have been delegated to a more junior fee earner. He stressed that “the paying party should not be asked to pay more than is reasonable and proportionate”.

Taking the above into consideration, Master Matthews agreed that a payment on account of costs was justified, however, given the excessive level of costs claimed, the award was limited to £17,500, to be paid within 14 days.

This short judgment contains several reminders about good practice. The filing of a statement of costs before any hearing ensures that the issue of a payment on account of costs can be dealt with as soon as a costs award has been made, as per CPR 44.2(8).

However, if the receiving party did not secure an order for a payment on account of costs at the time the costs award was made, they still have an opportunity to seek inclusion within the order prior to it being sealed by the Court. A statement of costs is likely to prove essential in quantifying the amount of the payment on account to be made.

If you have any questions or queries in relation this blog or legal costs in general please contact Joanne Chase (joanne.chase@clarionsolicitors.com and 0113 336 3327) or the Clarion Costs Team on 0113 246 0622.

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