House of Cards
A house of cards is a structure created by stacking playing cards on top of each other pyramidally. This may be a pastime used to ‘pass time,’ or competitively, in creating intricate structures, earning a coveted place in a well-known Book of Records.
However, let the ‘builder’ beware:
“House of cards” is also an expression meaning a structure or argument built on a shaky foundation or one that will collapse if a necessary (but possibly overlooked or unappreciated) element is removed.
The expression in the specific context of an argument can be applied in the case of Global Assets Advisory Services Ltd & Anor v Grandlane Developments Ltd & Ors  EWCA Civ 1764.
According to Lady Justice Asplin’s opening paragraph:
The principal issue on this appeal is whether there is jurisdiction to order an interim payment on account of costs pursuant to CPR r 44.2(8) where a Part 36 offer has been accepted within the relevant period. In those circumstances, CPR r 36.13(1) provides that the claimant is entitled to the costs of the proceedings (including recoverable pre-action costs) up to the date on which the notice of acceptance is served. Costs are to be assessed on the standard basis if not agreed: CPR r 36.13(3). A costs order to that effect is deemed to have been made: CPR r 44.9.
The Court at first instance refused to order an interim payment under Part 36.
In dismissing the application for an interim payment, Mr Justice Teare, concluded that he was bound by the decision of the High Court in Finnegan v Spiers  6 Costs LO 729;  EWHC 3064 (Ch). In so doing he decided there was no power to make an order for a payment on account in the above circumstances.
The ‘house of cards,’ on which the decision was founded, had its essential underpinning reliance on Part 36 being a self-contained code, as expressed in Finnegan:
- CPR Part 36 deals with the incidence of costs and the basis of assessment and accordingly, the majority of CPR r 44.2 was not applicable.
- CPR 44.2(8) applies when a court has ordered payment of costs, not where there is a deemed order under Part 36.
- Proudman J’s decision in Barnsley v Noble  2 Costs LO 150;  EWHC 3822 (Ch) related only to a deemed Order on discontinuance.
- CPR Part 36 holds all the costs consequences on accepting a Part 36 offer, including the availability of payments on account, whether expressly or applying an express. There is no such express provision in relation to CPR 36.13(1) where the offer is accepted within the relevant period.
The reasons expressed in Finnegan were the ‘cards’ on which the whole ‘house’ was constructed. How strong or shaky a foundation the above reasoning was, made it key to the appeal in the Global Assets case.
Analysing the structure and logic in the Finnegan case, turned into an exercise in deconstruction of the various elements (cards) on which it was built. Argument after argument was considered to have no place in the overall structure, and as each ‘card’ was withdrawn, the coherence and strength became shakier.
As imposing a structure, it appeared to be, casting a shadow over later decisions, it was held to have been incorrectly decided.
The Court of Appeal determined that:
- It was wrong to look to Part 36 only to find jurisdiction to order an interim payment on account.
- There can be no reason to conclude that the power contained in CPR r 44.2(8) can or should only be exercised by the judge who has heard the substantive proceedings.
- There is no reason why the power to make an order under CPR r 44.2(8) should be restricted to circumstances in which the court has made the order as opposed to circumstances in which an order of the court is deemed to have been made.
- A person entitled to costs should not be kept out of the portion of those costs to which he is plainly entitled, pending a detailed assessment. Those policy reasons remain the same whether or not the order is deemed to have been made.
- There is no logical distinction to be made between the circumstances in which a deemed order is made on discontinuance under CPR r 44.9(1)(c) and where a deemed order is made following the acceptance of a Part 36
- There would be perverse results, and anomalies if there was no such power.
The eventual collapse was inevitable and the appeal in Global Assets was successful:
- As I consider there is a jurisdiction to make an order for an interim payment on account of costs in this case, it leaves me to consider whether to exercise the jurisdiction in relation to the costs in the substantive action and to determine the level of such a payment. I can see no good reason why the jurisdiction should not be exercised. Furthermore, in the light of Master Gordon-Saker’s order for a costs certificate in the sum of £225,000, it seems to me that it is not necessary to consider the details of the costs schedules in this matter or to restrict the payment to the sum of £215,000 which was sought originally. The Master considered all of the relevant details and arrived at the figure of £225,000. It seems to me to be appropriate, therefore, that the order for an interim payment should be for the same amount.
A valuable exercise, in immediate monetary terms, and one of considerable worth for the future. The Global Assets case is another significant decision, enabling an easier access to cash flow in the context of Part 36.
Guidance and advice on how to successfully construct your own carefully crafted arguments in terms of costs recovery, is available from Partners in Costs.
We also have substantial experience in deconstructing the ‘house of cards’ constructed by paying parties, to bring their arguments tumbling down.
Contact us for further advice and assistance.