XYZ v Various

Where a court orders costs subject to detailed assessment, it should order a reasonable payment on account unless there is good reason not to. A claimant’s conditional fee agreement may make the claimant immediately liable for charges covered by an interim costs award, so payment on account does not necessarily breach the indemnity principle. The managing judge may determine the amount where the case is familiar, the application is straightforward and no novel issue arises. The amount should reflect the evidence available, the likely recoverability of the costs and the risk of overpayment. A court may adopt a cautious percentage where individual costs are insufficiently explained, but should not make an interim award for costs that may not ultimately be recoverable.

The judgment concerned an application in group litigation for payment on account of costs after the trial was adjourned by consent pending separate insurance litigation between Transform Medical Group (CS) Ltd and Travelers Insurance Company Ltd. The claimants sought £705,933.93, including counsel’s, solicitors’ and expert fees. Transform and Travelers argued that the claimants’ conditional fee agreements created no present liability because the claimants had not yet succeeded, and that the matter should be left to the costs judge. The issues were whether there was good reason not to order payment on account and, if not, what sum was reasonable.

1. Payment on account. CPR 44.2(8) requires a reasonable sum on account where costs are subject to detailed assessment unless there is good reason not to. The claimants’ conditional fee agreements expressly made them liable for charges to the extent of an interim costs payment. Payment would therefore not breach the indemnity principle.
2. Role of the managing judge. The court distinguished Dyson Ltd v Hoover Ltd (no 4), where a successful party applied to a judge who was not the trial judge. This was different: the judge had managed the litigation since 2012 and had already directed that the interim payment be assessed by the managing judge. The application was straightforward and raised no novel point. There was consequently no good reason to leave the matter to the costs judge.
3. Assessment of the reasonable sum. Two leaders and two juniors were reasonable given the size and complexity of the group litigation. The court awarded one half of the agreed brief fees, £267,500, because the disparity between the parties’ individual barristers’ fees and the unexplained division of labour made the usual 70 per cent figure inappropriate. It awarded £16,000, being 80 per cent of the solicitors’ costs claimed, out of caution. No interim payment was made for conference fees because it was uncertain whether those costs would ultimately be recoverable.
4. Order. Travelers and Transform were directed to make an interim payment on account of costs of £283,500.

The judgment records an earlier order dated 12 September 2014 requiring Transform and Travelers to pay the claimants’ costs of the adjournment and a payment on account, with the amount to be assessed by the managing judge if not agreed. The present first-instance decision determined the amount payable.