The time for making the application for a payment on account is changing.
It has been established that any request for a payment on account should be requested as soon as possible following the settlement of the substantive matter. The application is made with the Trial Judge when the liability decision is made, or in the event that an agreement is made between the parties, when the Consent Order is drawn.
Pre-Jackson
Originally the rule under CPR 44.3 provided the Court with discretion regarding whether to Order a payment on account and it laid out the circumstances to be taken into account when exercising its discretion as to costs.
At this point it was not a requirement for the court to make an order.
Post-Jackson
Following 1st April 2013 and the Jackson reforms, CPR 44.2(8) now provides 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.”
Therefore, where a party has made an application at the judgment of the substantive matter, unless there is a good reason as to why he should not, the judge will order a payment on account to be made.
Following Ashman v Thomas [2016] EWHC 1810 (Ch) the judge found that, where the application for a payment on account was made prior to the order had being sealed, the Court had discretion to include this request where that request was reasonable. This is one instance where the Court has allowed the application to be made after the judgment. However, this is still in close proximity to the judgment. The application had been made between the hearing and the sealing of the order, rather than weeks later, therefore the judge saw fit to include the order for a payment on account.
The next point at which a party can request a payment on account, is when requesting an interim payment upon Detailed Assessment proceedings when the application for a hearing is made under CPR 47.12.
However, following this judgment it now seems that an application for a payment on account can be made after the judgment has been made. His Honour Judge Matthews, sitting at the High Court in Culliford & Anor v Thorpe [2018] EWHC 2532 (Ch) ordered a payment on account on behalf of the Defendant following the parties successful defence and counterclaim in a possession matter and was awarded costs to be assessed on the standard basis. The Defendant did not make an application at the time the judgment was made, however raised the matter of a payment on account after the order had been sealed. Despite this, the court ordered the Claimant to make a payment on account.
HHJ Matthews averred that there was nothing within the rules from preventing him making and order for a payment on account: –
“Although rule 44.2(8) contemplates that the court will decide this question at the time of making the order for costs, to my mind this does not exclude the possibility that the court should decide it later. I see no justification in the rules or authorities for the claimants’ view that, if an application is not made at the time, the next opportunity arises only after detailed assessment proceedings have been commenced.”
It was pointed out that the mere fact that the Defendant did not raise the question of a payment on account, was a good reason not to award one at a later time.
Not only has the court made an award for a payment on account, he ordered the Claimant to pay the Defendant the full amount as requested. The judgment of Thomas Pink Ltd v Victoria’s Secret UK Ltd [2014] EWHC 2631 (Ch) was relied on and HHJ Matthews stated that the amount was wholly reasonable where the approved budget was £45,580.00 and the Defendant had only requested £30,000.00.
It is interesting to consider the ruling in this matter, which may now open doors for many more applications and orders for payments on accounts to be made.
It will also be interesting to see whether in future cases, the Court will take into consideration the judgments of Capital For Enterprise Fund A LP and another v Bibby Financial Services Ltd [2015] and Cleveland Bridge UK Ltd v Sarens (UK) Ltd [2018] EWHC 827 (TCC). Should a party request a payment on account in the sum of 90% of the total approved budget, should the 90% be applied to incurred costs and how much weight the Court will put on the comments made at the CCMC regarding incurred costs, specifically if such comments have not been recorded.
