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High Court issues “novel” conditional costs order

Donald: Order made sense

The High Court has issued what a conditional order for an interim payments on account of costs in the event of a party not complying with an unless order.

A solicitor has predicted that more parties will now seek the “novel” order.

The case of Orexim Trading Ltd v Mahavir Port And Terminal Private Ltd (Costs) [2019] EWHC 2338 (Comm) [1] also highlighted the value of having an approved costs budget when seeking an interim payment on account of costs.

Christopher Hancock QC, sitting as a High Court judge, made an unless order against the defendant, with judgment being entered if it failed to comply.

In a subsequent costs decision, he said the claimant would “clearly” be entitled to its costs in the event this happened, but the claimant also sought an order for £369,000 on account of the costs.

The claimant’s Precedent H was for just short of £1.1m, including pre-action costs of £48,537 and costs of £266,731 in respect of incurred at the time of the case management conference. Save a minor reduction in the costs of expert reports, the Precedent H was approved.

At the time of the present hearing, the claimant had incurred costs of £410,004, plus £29,352 for the costs of the application.

Mr Hancock QC followed the approach of Mr Justice Coulson (as he then was) in McInnes v Gross [2017] EWHC 127 (QB) [2], in which he said the approved costs budget was the “appropriate starting point for the calculation of any interim payment on account of costs”.

Coulson J then reduced the figure by 10%, “which I regard as the maximum deduction that is appropriate in a case where there is an approved costs budget”.

Mr Hancock QC said: “Using the same approach, 90% of £410,004 is £369,003. The claimant seeks a payment on account of £369,000.

“In view of the fact that I have not ordered indemnity costs, I have concluded that a slightly lower figure should be adopted, and I order that, if the unless order is not complied with, an interim payment on account of costs in the amount of £350,000 should be paid within 28 days of judgment being entered and served on the defendant.”

Commenting on the case on her firm’s website, Hill Dickinson senior associate Stephanie Donald said: “This was a novel order, but one that makes perfect logical sense. We can no doubt expect to see requests for conditional orders for interim payments on account of costs being incorporated into appropriate orders.”