In the matter of Ashman v Thomas [2016] EWHC 1810 (Ch) (19 July 2016) the court provided further guidance on orders for interim payments on account of costs and when such orders can be made.
The substantial point considered was whether a request for a payment on account can only be made at the hearing itself and, if so, once the parties come to draw up the order for the court’s approval, is it then too late to argue for its inclusion?
The CPR provides guidance on the issue with the rules stating that an order for an interim payment on account of costs can only be made on two occasions:
Accordingly the rules suggest that if an order for a payment on account is not made when the costs order is being made, the next opportunity to obtain an order for an interim payment would only arise after a request for a detailed assessment hearing had been made.
In the matter of Ashman v Thomas, Chancery Master Matthews had given judgment and awarded costs to the defendant. When trying to agree the terms of the order, the claimant objected to the defendant’s request to include a term for a payment on account of costs. The matter was referred back to the Master for a decision to be made on written submissions.
The Master noted that the general rule is that an order takes effect from the moment it is made by the court, not when it is entered and sealed by the court office (see Holtby v Hodgson (1890) 24 QBD 103; CPR 40.7) and that the court retains power to alter its judgment or order at any time until it is entered and perfected by sealing (see Re Barrell Enterprises [1973] 1 WLR 19, CA).
Consequently, the Master came to the conclusion that there is nothing in the rules, nor any case, to alter the general rule in the context of payments on account of costs. He therefore found no objection in principle to considering the defendant’s request for a payment on account of costs, and further noted that there was a good reason to consider such a request, when made after the hearing but before the order is sealed, to comply with the mandatory terms of CPR rule 44.2(8).
Although the Master decided that he had the power to “alter” his order, prior to it being entered and sealed, to include provision for an interim payment, he did not expressly decide that no general power existed to make an order under CPR 44.2(8) at any stage. It is clear that the Master felt he was only able to amend the order to include the interim payment request because the final order had not been entered and sealed. If it had been the defendant would have had to wait until after filing a request for a detailed assessment hearing in line with CPR 47.16(1).
Where you are the paying party, we recommend making an interim payment as soon as possible to prevent interest accruing. However, where you are the receiving party, Ashman v Thomas confirms that unless there is a term in the sealed order for such a payment to be made, or detailed assessment proceedings have been commenced, the court has no power to order an interim payment to be made.
Hence, if you are the receiving party be sure to request an order for an interim payment on account of costs at the hearing before the order is sealed.
Kayla Rees
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