Global Assets Advisory Services Ltd & Anor v Grandlane Developments Ltd & Ors

A deemed costs order following acceptance of a Part 36 offer is an order of the court for the purposes of CPR r 44.2(8). The jurisdiction to order a reasonable payment on account is therefore not confined to costs orders physically made after a hearing. Part 36 is not an exclusive code for every costs consequence. Its provisions on entitlement and assessment are supplemented by CPR r 44.2(8). The current rule applies whether or not the judge hearing the application conducted the substantive proceedings, subject to the exception where there is good reason not to order payment.

The appellants obtained final injunctive relief after the respondents accepted a Part 36 offer within the relevant period. The acceptance entitled the appellants to their costs under CPR r 36.13(1), and a deemed costs order arose under CPR r 44.9.

The High Court, applying Finnegan v Spiers, cited at [2018] EWHC 3064 (Ch), held that it had no jurisdiction to order an interim payment on account and dismissed the application: [2019] EWHC 947 (Comm). The central issue on appeal was whether CPR r 44.2(8) applied to a deemed costs order arising from acceptance of a Part 36 offer within the relevant period.

1. Appeal allowed. Lady Justice Asplin delivered the judgment, with Sir Rupert Jackson and Lord Justice Patten agreeing.
2. Under the Civil Procedure Rules 1998, CPR r 44.2(8) applies where the court orders a party to pay costs subject to detailed assessment. That wording includes a deemed costs order under CPR r 44.9. A deemed order is no less an order of the court than an order physically made after a hearing.
3. The purpose of an interim payment is to enable the receiving party to recover part of costs before potentially protracted detailed assessment. That rationale applies equally to actual and deemed orders. It would be perverse to deny the jurisdiction merely because costs arose from acceptance of a Part 36 offer within the relevant period.
4. Part 36 is described as a self-contained procedural code, but it is not an exclusive code for every costs consequence. CPR r 36.13(1) establishes entitlement to costs and the basis of assessment. CPR r 44.2(8) supplements that entitlement by providing the jurisdiction to order payment on account. There is no conflict between the provisions. Section 51 of the Senior Courts Act 1981 is expressly subject to the rules and adds nothing to the analysis.
5. Finnegan v Spiers was wrongly decided on this issue and was not followed. Barnsley v Noble was rightly decided, and there was no logical distinction between a deemed order following discontinuance and one following acceptance of a Part 36 offer. Lahey v Pirelli Tyres Ltd concerned variation of a deemed order; the present application sought additional relief and did not attempt to vary the deemed order.
6. The current wording of CPR r 44.2(8), which provides that the court will order a reasonable sum unless there is good reason not to do so, does not require the application to be heard by the trial judge. The jurisdiction may be exercised by the judge hearing the application. In the circumstances, there was no good reason to refuse payment, and the appropriate interim payment was £225,000, reflecting the costs certificate already ordered by the costs judge.

1. Court of Appeal (Civil Division) allowed the appeal and held that an interim payment on account could be ordered under CPR r 44.2(8).
2. High Court, Queen’s Bench Division (Commercial Court) followed Finnegan v Spiers, dismissed the application for an interim payment, and ordered costs against the appellants: [2019] EWHC 947 (Comm).