Fieldfisher LLP v Olga Scherbakova & Anor

An unless order may enforce payment of an interim payment ordered during proceedings, including by debarring a party from continuing to defend. The power to vary or revoke an order under CPR r3.1(7) is broad but is constrained by finality and is normally exercised only where there has been a material change of circumstances, a material misstatement of facts, or another sufficiently unusual circumstance. CPR 25.20(6)(b) concerns adjustment of the amount or terms of an interim payment; it is not a means of challenging an unless order. Relief from sanctions requires application of the Denton principles. Alleged impecuniosity must be supported by detailed, cogent and proper evidence of the party’s financial position and ability to raise funds. Repeated non-compliance, unsupported assertions of inability to pay and failure to use available costs procedures justified enforcement of the sanction.

Fieldfisher LLP sued its former clients, Olga Scherbakova and Alexander Scherbakov, for unpaid legal fees. Judgment had been entered for the claimant, with the amount to be assessed as damages. The Senior Courts Costs Office directed a procedure for assessing the disputed fees and ordered the defendants to make an interim payment of £741,122.85.

The defendants failed to pay. An unless order required payment by a further date, providing that their defences would be struck out and judgment entered for the claimed sum if they remained in default. They applied under CPR r3.1(7) and r3.9 for discharge of the unless order or relief from sanctions, and under CPR 25.20(6) to vary the interim payment order by reference to Belgian security. The central issues were whether there had been a material change of circumstances, whether the unless order was a variation of the interim payment order, and whether relief should be granted.

1. Application under CPR r3.1(7). The power to vary or revoke an order is wide, but it is guided by finality and the need to prevent litigants having a second opportunity to advance arguments which could have been made earlier. The primary circumstances are a material change of circumstances or material misstatement of the facts. The defendants’ costs criticisms, the information concerning Belgian properties and the alleged impecuniosity were not material changes. They were matters known or capable of being raised when the earlier orders were made. The application to discharge the unless order was therefore dismissed.
2. Relationship between the orders. CPR 25.20(6) permits adjustment of an interim payment, including repayment or variation of the amount. The unless order did not alter the amount of the interim payment or the terms of the earlier order. It imposed a conditional further date for payment and a sanction for continued default. It was a separate order, and CPR 25.20(6)(b) was not the correct mechanism to discharge it.
3. Relief from sanctions. Applying the Denton approach, the failure to pay a substantial interim sum, followed by failure to comply with the unless order, was serious and significant. The defendants’ asserted inability to pay was not adequately evidenced. Their statements relied principally on inference, while the promised independent evidence of their financial position was never produced. Their ability to raise €200,000 for legal representation further weakened the assertion that they could not raise funds.
4. The defendants had been represented when the interim payment order was made, had not applied to vary, set aside or appeal it, and had chosen not to attend the unless-order hearing. They had also failed to pursue available Solicitors Act costs-assessment procedures or make sensible payment proposals. No disproportionate prejudice, public-interest concern or unjust enrichment was established. Relief from sanctions was dismissed, and the unless order remained effective. The defendants were ordered to pay the claimant’s costs of the application, summarily assessed if not agreed.

The judgment records earlier case-management and interim-payment orders in the same proceedings:

• County Court order — HHJ Pearce entered judgment for the claimant for an amount to be decided by the court and transferred the claim for damages to be assessed.
• Senior Courts Costs Office — directions were given for assessment of the disputed fees, followed by an interim payment order dated 7 July 2025 and an unless order dated 1 September 2025.
• High Court (Senior Court Costs Office) — the defendants’ application to discharge the unless order, obtain relief from sanctions or vary the interim payment order was dismissed.