No payment on account “after DA has been ordered”

The latest ruling on seeking payment on account of costs suggests that it cannot be done after a detailed assessment has been ordered.

According to Giles Peaker, a housing law partner at London solicitors Anthony Gold, this is an argument being had in courts, especially in the wake of Chancery Master Matthews’ July ruling in Ashman v Thomas, in which he said a request for payment on account of costs need not be made at the hearing, and can be sought before the order is sealed.

Mr Peaker acted for the defendant in a leasehold disrepair claim, which had settled at trial at Oxford County Court for £2,000 and an agreement on works. A final order was made recording the settlement and the defendant was ordered to pay 80% of the claimant’s costs. An order for payment on account of costs of £25,000 was made pursuant to CPR 44.2(8).

Writing on the Nearly Legal housing law blog, Mr Peaker said: “Some while later, after serving the bill of costs (and after points of dispute were served in response), but before commencing detailed assessment proceedings, the claimant made an ex parte application for a further payment on account of costs of £80,000. The bill was enclosed with the application, but not the defendant’s points of dispute.

“The court refused the ex parte application and set it down for a hearing. The defendant opposed the application and, before the hearing, the High Court ruling in Ashman was handed down and raised by the defendant in correspondence with the claimant. The claimant did not reply and the hearing went ahead.”

The claimant’s application argument was, effectively, that the court’s discretion at CPR 44.2 meant that an order for payment on account of costs could be made at any time.

The defendant argued that CPR 44.2(8) meant that a court shall make an order for payment on account of costs of a reasonable sum when detailed assessment of costs was ordered, and that there was no jurisdiction after that order, let alone make a subsequent supplementary or second order for payment. The claimant could seek an interim certificate in the detailed assessment proceedings once they had been commenced, but not a payment on account before then.

The defendant also submitted that the Ashman judgment only made sense if an application for costs on account under CPR 44.2(8) or, generally, could not be made after the order for detailed assessment.

In addition, the notes on CPR 44.2(8) in the second edition of CPR Costs and Funding Commentary say: “This provision has also changed, seeming to make a temporal link between the order for costs to be assessed and the payment on account. Many courts interpret this to mean that there can only be one payment on account, with this being ordered at the time of the costs order and that any further interim sums can only be obtained under the procedure for an interim costs certificate after the receiving party has filed a request for a detailed assessment hearing.”

Mr Peaker said the defendant also argued that in any event there were good reasons why the order sought should not be made, such as the timing of the application, which came a few days after serving the bill of costs and shortly before the detailed assessment.

He reported: “The court held that it had no jurisdiction to consider a further application for costs on account after the point where detailed assessment of costs was ordered. That this was an application for a second order for payment on account was a further factor, but the jurisdictional point was that no order for costs on account could be made after the order for detailed assessment, and before seeking an interim certificate in assessment proceedings.

“If it were necessary, the court would also have held that there would have been a clear difficulty in assessing ’a reasonable sum’ in the circumstances.”

Mr Peaker concluded: “I have taken this to be the case – and indeed had my local court rule that it was – for quite some time. But it appears that this is a contentious issue, with the claimant’s Costs Lawyers in this case adamant that such an application could be made. I’ve also seen Costs Lawyers arguing the issue after Ashman v Thomas. So, this is a data point on the way the argument is running in the county courts.”

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Costs News
Published date
15 Sep 2016

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