Lyubov Kireeva v Georgy Ivanovich Bedzhamov

An interim payment on account of costs is ordinarily required where costs are subject to detailed assessment. A party’s inability to pay is not, by itself, a good reason to defer payment. Departure from that position is exceptional and must be justified by the overriding objective and the interests of justice.

The court may defer enforcement where immediate payment would create a real risk of loss of legal representation, undermine existing protective orders, prejudice the preservation or realisation of assets, or create sanctions risks. The court should assess the position holistically and consider which order would cause the least irremediable prejudice. Any deferment should be limited and subject to prompt review.

The applicant, a Russian bankruptcy trustee, and the respondent made cross-applications concerning paragraphs 6 and 8 of an order dated 9 November 2022. That order required interim payments totalling £325,000 after the sale of a property, with restoration for directions if no sale occurred by 4 January 2023.

The trustee sought payment within seven days. The respondent sought restoration for directions and continuation of the existing arrangement until 30 April 2023. The applications raised the effect of enforcement on the proposed property sale, the respondent’s legal representation, sanctions concerns and developments concerning the debt underlying the bankruptcy petition.

1. Disposition. The court ordered that the matter be restored for directions after 31 March 2023 if the interim payments had not been made. The respondent’s request for a longer period was not granted.
2. Under CPR 44.2(8), an interim payment is the norm where costs are subject to detailed assessment. Inability to pay is insufficient. The respondent had to establish that deferral was consistent with the overriding objective and amounted to an exceptional course required in the interests of justice.
3. The court considered the position holistically. Immediate enforcement created a real risk that the respondent would lose legal representation and could undermine the court’s earlier orders governing the proposed disposal of the property and the use of its proceeds. Enforcement might also prejudice the objective of preserving and maximising the value of the estate.
4. The court could not ignore genuine concerns that payment might breach sanctions legislation. The concern could be raised by the court of its own initiative. The evidence did not dispel the possibility that a transaction concerning A1 had been arranged to avoid sanctions consequences. The appropriate course was to await a forthcoming hearing addressing that issue.
5. Developments concerning discharge of the VTB debt were potentially relevant to future assistance and discretionary relief, although the court did not decide whether they justified varying or setting aside recognition. The deferment was short, expressly non-open-ended, and intended to allow assessment of real progress towards a property disposal and resolution of the sanctions issue.

The applications concerned variation of an order made on 9 November 2022 after certain issues had been remitted following a Court of Appeal decision. The judgment does not state the citation of that decision.