Brake & Ors v Lowes & Ors

In deciding costs applications, the court should ordinarily make a payment on account where costs are payable subject to detailed assessment. Permission to appeal, a real prospect of success, or alleged inability to pay does not by itself constitute a good reason to refuse such an order. The payment should be a reasonable estimate of likely recovery, allowing for uncertainty, rather than a summary assessment. Reciprocal interim costs payments may ordinarily be set off. A stay of enforcement is exceptional and requires evidence of substantial, ordinarily irreparable, prejudice. Indemnity costs require conduct or circumstances taking the case outside the norm.

The judgment determined paper applications concerning costs in three related insolvency proceedings. Earlier orders had awarded costs arising from strike-out, security for costs, summary judgment, disclosure and cottage-related applications. The court was required to decide whether to order payments on account, whether reciprocal liabilities should be set off, whether enforcement should be stayed, the appropriate percentage of the costs claimed, and the basis and amount of costs for later applications.

The central issues were the meaning of a reasonable sum on account, the effect of pending appeals, the operation of the general costs rule, and whether the parties’ conduct justified indemnity costs.

1. Payments on account. There was no good reason under CPR rule 44.2(8) to refuse payments on account. The late applications, the alleged disparity in means, the possibility of recovery from another party, and a real prospect of success on appeal did not justify withholding payment. A real prospect of success is a low threshold and does not mean that an appeal is likely to succeed. Permission to appeal does not automatically stay a costs order.
2. The appropriate payment is an estimate of likely recovery, subject to a margin for error. The court should not conduct a summary assessment at this stage. Having regard to the uncertainties concerning rates, staffing, attendance and counsel’s fees, 60% of Chedington’s claimed costs was reasonable. The same percentage was applied to the Brakes’ awarded costs, with reciprocal sums set off.
3. Under CPR rule 52.16, an appeal does not operate as a stay unless ordered otherwise. The burden lies on the applicant for a stay. A stay is exceptional and ordinarily requires evidence of irreparable harm or comparable solid grounds. No such evidence was provided.
4. For the later applications, Chedington was the overall successful party. The general rule in CPR rule 44.2(2)(a) therefore applied. The Brakes’ allegations of procedural game-playing did not justify a different order or reservation of costs. Their conduct was unhelpful and wasteful in some respects, but did not take the case outside the norm. Costs were therefore payable on the standard basis, not the indemnity basis.
5. Chedington’s costs of the later applications were summarily assessed at £10,000, payable within 14 days.

This was a first-instance costs judgment. It concerned consequential applications arising from interlocutory costs orders made on 3 March 2020 and a written judgment and order dated 23 March 2020 in the same proceedings. No lower-court decision was under appeal.