Axnoller Events Ltd v Brake & Anor (Costs)

Under CPR rule 44.2(8), a party ordered to pay costs subject to detailed assessment should ordinarily pay a reasonable sum on account unless there is good reason to refuse. The sum is an estimate of likely recovery, allowing an appropriate margin for assessment uncertainty. The court may order payment on account even where a debt moratorium prevents immediate enforcement. A payment order can still benefit the creditor by recording the court’s assessment and avoiding later delay. Quantification is not determined mechanically by hearing time or the length of a skeleton argument. The court may take into account uncertainty about recovery and the reasonableness of multiple counsel teams.

The judgment concerned the costs of an unsuccessful recusal application arising from post-trial proceedings. The court had ordered the Brakes to pay the Guy parties’ costs on the indemnity basis, subject to detailed assessment. The Guy parties sought an interim payment of £17,500 from costs claimed at £21,988.50.

The Brakes relied on a Mental Health Crisis Moratorium under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium)(England and Wales) Regulations 2020, arguing that an order could not be enforced and therefore should not be made. They also challenged the reasonableness of fees incurred by two counsel teams. The issues were whether the regulations prohibited the order or supplied good reason not to make it, and what sum should properly be ordered on account.

1. Order made. The Brakes were ordered to pay £15,391.95 by 4 pm on 18 June 2021, representing 70% of the claimed costs of £21,988.50.
2. Effect of the moratorium regulations. A moratorium debt under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium)(England and Wales) Regulations 2020 must satisfy the conditions in regulations 5 and 6. A debt incurred after the moratorium begins cannot satisfy the relevant condition that it was owed when the moratorium application was made. The costs order made before the moratorium created only a contingent liability of uncertain amount. The later payment-on-account order would create a qualifying debt, but not a moratorium debt: paras [20]-[22].
3. The making of the order was not an enforcement step prohibited by regulation 7. Even if enforcement could not immediately occur, the order retained practical value by recording the court’s view while the relevant information was available and avoiding later work. The moratorium therefore supplied no good reason under CPR rule 44.2(8) to refuse the order: para [23].
4. Regulation 15. The court left open whether regulation 15 requires an additional debt actually to be a qualifying debt and whether it extends to future debts. Those questions did not need determination because the debt created by the proposed order would not yet exist and the notification process had not occurred: paras [24]-[26].
5. Amount. The assessment was not a purely arithmetical exercise based on hearing time or the number of pages devoted to the application. The second counsel team’s fees were not to be excluded merely because other counsel conducted the advocacy or had greater background knowledge. The relevant assessment questions were whether the costs were reasonably incurred and reasonable in amount. Given the uncertainty of recovery, 70%, rather than the 80% sought, was appropriate: paras [27]-[30].