It has become clear in recent years that orders for interim costs are vital in long running and high costs cases. Effective cash flow management has become even more important during the current coronavirus outbreak which have placed an additional strain on the income of solicitors.
The entitlement to interim costs has been the subject of a recent High Court decision in Vadim don Benyatov v Credit Suisse Securities (Europe) Ltd –
This is a high value commercial dispute in which the defendants applied –
1. To strike out the claim,
2. For an order that £1.5m be paid into court
3. For security of costs of £1.5m
Following a 3-day hearing the defendants succeeded on 1 in part and failed in part.
Applications 2 and 3 were dismissed. Roger ter Haar QC sitting as a High Court Judge ordered the Defendants to pay 1/3 of the claimant’s costs. The Claimants asked for an order for interim costs. That application led to this judgment. As parts of the Particulars of Claim had been struck out there was also an order that the Claimant pay part of the Defendants’ costs. The latter did not apply for an interim costs order.
The judge referred to the relevant rule as a starting point –
“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.” – CPR 44.2 (8).
He noted that the default position is that the court will make an order, unless there is good reason not to. The defendants argued that there was good reason here because –
1. There were costs in both directions
2. There could be further costs in the defendants’ favour
3. The defendants were seeking permission to appeal,
4. They might have to recover the costs from the claimant in the future
The first, and strongest, point was dismissed. The Claimant was seeking a specific sum by way of an interim payment. The Defendant relied on an entitlement to costs, not yet quantified, in respect of which there was no application. This was not a case where summary assessment was appropriate. The learned judge found that it would undermine the effect of 44.2 (8) – “as a party would be able to bring into account contingent and uncertain entitlements as to costs to defeat an otherwise sure entitlement on the part of the other party to an interim payment”
The other submissions were also rejected. An interim order could not be refused because of a costs order that might be made in the future. The appeal was relevant to a limited degree. Time for payment would not begin to run until that application was concluded. Finally, the judge was satisfied that the claimant would be able to repay any costs if required.
The judge found that both sides costs were high which was why summary assessment was not appropriate. He found that he “did not feel comfortable” contemplating costs at more than £120k on a 100% basis. The defendants were ordered to pay 1/3 of this – £40k.
This case raises a number of important issues bit the most important is that, even in a highly contentious case with costs orders going in many directions, the default position is that an order for costs will mean an order for interim costs. The paying party faces substantial hurdles in seeking to argue that there is good reason not to do so.