Conditional Costs Order, guidance on the calculation of interim payments on account of costs

In Orexim Trading Ltd v Mahavir Port and Terminal Private Ltd (Costs) [2019] EWHC 2338 (Comm) the Claimant applied to strike out the Defendant’s defence for failure to comply with directions. The application resulted in a peremptory “unless” order, compelling the defendant to comply with directions, failing which judgment (in excess of $7m) would be entered.

The Claimant sought a payment on account of its costs pursuant to 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”.

Noting that the Claimant’s costs, of £410,004, excluding the costs of the strike-out application, were within the approved budget, the judge set out the approach to ascertaining the level of a payment on account. Citing McInnes v Gross [2017] EWHC 127 (QB):

  • The approved costs budget is the starting point for the calculation
  • CPR 3.18 provides that “the court will… not depart from such approved or agreed budget unless satisfied that there is good reason to do so”
  • In McInnes the court reduced the approved budget by 10% “which I regard as the maximum deduction that is appropriate in a case where there is an approved costs budget”.

Using this approach, the Judge calculated 90% of £410,004 (£369,003). Indemnity costs had not been ordered (as “the Defendant can[not] be said to have behaved so unreasonably as to justify [such an] order”). Therefore, “a slightly lower figure should be adopted” and the Judge ordered that, if the unless order is not complied with, an interim payment of £350,000 should be paid within 28 days of judgment being entered.

The Claimant was awarded, in addition, its full costs of the application.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: