How much is too much? Quantum of interim payments on account of costs.
Today we are looking at the case of Matrix Receivables Ltd v Musst Holdings Ltd (Re Costs) [2024] EWHC 2245 where the appropriate approach to an interim payment on account of costs was considered.
In this case, the Court ruled that the costs of the application for summary judgment in favour of MRL on the grounds of summary judgment and abuse of process (“the March Application”) should be paid by Musst to MRL. This was one of three applications and in respect of the other two, the appropriate order was no order for costs.
The statement of costs from MRL for the March Application amounted to £274,138.61. MRL submitted that the Court should treat the appropriate percentage for a payment on account of the costs to be 70% which amounted to the sum of £191,897.03.
Musst disagreed arguing that the appropriate percentage should be 60% not 70% and that the sum to which the percentage should be applied should be by reference to an earlier costs schedule of 2 May 2024 (of £146,213.97) adjusted upwards only by reference to the increase in Musst’s costs as an appropriate guide for this purpose.
By way of background, the hearing had been listed on Friday 3 May 2024 and Tuesday 7 May 2024 (a bank holiday weekend) and the parties lodged costs schedules prior to the hearing. After judgment had been handed down and as part of the consequentials, when the successful party could be identified, there were further costs schedules comprising substantial additional costs incurred particularly over the bank holiday weekend.
MRL’s March Application costs had increased from £146,213.97 (in their 2 May 2024 schedule) to £274,138.61 which was an increase of £127,924.64 (and of more than 87%). Musst’s March Application costs had increased by a sum of £48,246.16 to a sum of £289,949 (an increase of almost 20%).
On the basis of Musst’s arguments therefore, the appropriate sum to be paid as an interim payment to MRL should be (1) 60% of a sum of £146,213.97 (the sum in the 2 May 2024 schedule) comprising £87,728.38, and (2) 60% of an extra £48,246.16 (the Musst adjustment) comprising £28,947.70. This amounted to a total sum of £116,676.08 instead of £191,897.03 as requested by MRL.
In his judgment Mr Justice Freedman held that 70% was too high a starting point unless the calculations were straightforward and the points of dispute limited.
Summary
So, what does this mean in practice?
If the calculations are straightforward and the points of dispute limited, then 70% is a reasonable starting point for an interim payment on account, note that it is starting point, not a fixed percentage If not, and if you cannot provide clarity in respect of your spend, then be prepared for a lower percentage level to mitigate any findings in relation to reasonableness and proportionality at assessment. As always, in the world of costs, much will be dependent on the specific facts and circumstances of the case.
How can PIC help?
Our TTL+ service provides a bespoke, accurate and current costs calculation that will provide certainty and perspective when dealing with early payment on account requests, whilst also providing reasoned parameters, allowing you to advance arguments based on an accurate and understandable costs foundation, which can only improve cash flow and outcomes. Please contact us for more information.
Laura Harber, Costs Lawyer
26.09.2024