This applies for expenses awards made while a court action is ongoing (interim awards) as well as for expenses awards made at the end of an action. However, there have been a few recent cases where parties, who have obtained an interim expenses award, have then asked the court to grant an order for an interim payment of a fixed sum to go towards the expenses before they have gone through the process set out in the court rules.
A recent opinion by Lord Tyre in the case of Robert Kidd v Paull & Williamsons LLP and Burness Paull LLP looked again at this issue. You can view the decision on the Scottish Courts and Tribunals website via this link.
Background
The pursuer was awarded expenses for various parts of the procedure in the case including an amendment procedure and the discharge of a proof. The expenses award provided for the usual procedure including taxation of an account of expenses by the Auditor.
However, rather than following the usual procedure, the pursuer instead asked the court to grant an order for an interim payment of expenses. The pursuer was looking for payment of £2,000,000 to be made within 14 days of the order being granted. This was opposed by the defenders.
The pursuer argued that the court had discretion to decide whether or not to grant the order. They also claimed that, if they needed to show special reasons as to why the order should be granted, there were four applicable reasons. These were (i) the conduct of the defenders which had led to the expenses award being made on a basis which allowed the pursuer to recover expenses at a higher rate than usual, (ii) the size of the sum due, (iii) the complexity of the process of making up the account and (iv) the prejudice the pursuer would suffer by having to continue to litigate without access to funds which he had been found entitled to.
The defenders argued there were no special reasons which justified the order in this case. They also said that it was not appropriate for the order to be made at this time because, if they were successful they would also be entitled to a large amount of expenses and that the sum of £2,000,000 which the pursuer was looking for was excessive.
Previous authorities
It was the more modern authorities which were of most assistance to Lord Tyre.
The first of the modern authorities considered was the case of Martin & Co (UK), Petrs [2013] CSOH 25. In this case Lord Drummond Young made an order awarding an interim payment of £50,000 in respect of expenses estimated to amount to £75,000. The petitioner's arguments as to why the order should be granted included (i) that an award of expenses in other proceedings had not yet been settled and (ii) they wanted to have a means of protecting their interest until a taxation could take place. The respondent did not turn up at the hearing to oppose this.
In Martin & Co Lord Drummond Young referred to the English High Court case of Mars UK Ltd v Teknowledge Ltd [1999] 2 Costs LR where it was observed that, in principle, a successful party ought to get his expenses as soon as possible but delays are caused by the difficulty in establishing how much the successful party should get. In those circumstances, a payment of an amount which was less that the amount which the successful party will almost certainly collect was considered to be a closer approximation to justice. Lord Drummond Young thought that the comments were equally applicable in Scotland but, as there was no normal practice of making this type of order in Scotland, it would be necessary to show special reasons for making an order for an interim payment.
The approach of looking at whether there were special reasons to allow an order was followed in Tods Murray WS v Arakin Ltd [2013] CSOH 134. The special reasons which were held to exist in this case were (i) the defender's previous conduct which indicated he would resist payment for as long as possible and (ii) questions over his ability to satisfy any award of expenses. Lord Woolman was persuaded to make an order for an interim payment. However he ordered an interim payment only in the sum of £150,000 rather than the £1,000,000 sought.
Lord Tyre's decision
Lord Tyre observed that although special circumstances as mentioned in the Martin & Co case were relevant, he did not consider that this meant than an order could only be made in exceptional circumstances.
As regards the proposed reasons for making an order in this case, he rejected the argument that the defenders' conduct (which had resulted in the expenses award being made on a basis which entitled the pursuer to recover a higher rate of expenses that usual) was a relevant special reason. This conduct had been dealt with by making the award on that basis so further punishment in the form of an interim payment was not required. However he was satisfied that the other three reasons put forward by the pursuer were, when taken together, a sufficient reason to grant the an order for an interim payment.
The sum awarded for the interim payment was £1,000,000 rather than the £2,000,000 which the pursuer had sought. Lord Tyre accepted submissions about likely approach to the assessment of the fees which were based on information provided by two different law accountants. However in the circumstances (which included an absence of a detailed explanation of the fees and outlays incurred) he felt the court should adopt a conservative approach to the amount of payment to be made interim basis.
Comments
Obtaining an order for an interim payment towards expenses may be tempting if there are concerns about the ability of the party who is due to make payment to settle the expenses or where it is likely to take some time to get an account prepared because it is particularly complicated. It is clear that orders for an interim payment are possible but the party asking for this type of order will need to satisfy the court that there are reasons why the court should use its discretion to depart from the usual procedure which applies to recovery of expenses. Being able to provide the court with some information about the likely level of expense which will be recoverable, such as the information from the law accountants provided to Lord Tyre, will be crucial. However, the court is likely to take a conservative approach to the amount of payment to be ordered. Accordingly, whilst this type of order may well be of benefit in the short term, the party entitled to expenses will also need to follow the usual process of having an account prepared and taxed in order to recover the full amount of expenses to which they are entitled.
