The High Court has awarded the Claimant, Thomas Pink Ltd, 90% of their approved cost budget with regards to an interim payment to be made, following their successful trademark infringement claim against the Defendant, Victoria’s Secret UK Ltd.
Payments on account of costs can be made by a paying party as soon as they are subject to an adverse costs order (such as a defendant being ordered to pay a claimant’s costs upon a successful claim by the claimant at trial) and it is often advisable to do so, given that it will reduce the amount of interest payable in the event of later determination at assessment.
Under the CPR, should a payment not be made by the paying party voluntarily then the Court should order that a reasonable amount be paid on account before costs are assessed, unless there is good reason not to do so. The Court’s general approach in determining the amount to be paid by a paying party was set out in the case of Mars UK Ltd Teknowledge Ltd (No2)  2 Costs LR 44 (“Mars”) which stated:
“Where a party is successful, the Court should, on a rough and ready basis, also normally order an amount to be paid on account; the amount being a lesser sum than the likely full amount.”
It should be noted that Mars was decided at a time when cost budgeting had not yet been introduced, with the Court determining that 40% of the costs claimed was to be the amount that would not be reduced if assessed and therefore ordered this amount to be paid on account.
The Court’s Decision
In determining the interim payment amount in this case, the Court believed the case of Marsapplied to the extent that it should avoid any overpayment being made by the paying party and consider a non-reducible figure. However, such a figure should also reflect the impact of the Claimant’s approved cost budget.
The Court felt that cost budgeting held significant weight in determining the amount of an interim payment on account of costs, because under the CPR, if a Cost Management Order had been made then the Court would have to have regard to a receiving party’s last approved or agreed cost budget when assessing costs. In spite of this rationale however, the Court did not believe that the sum that had been provided within the Claimant’s cost budget could be awarded, given the unpredictable nature of litigation and the fact that costs may be reduced on assessment. The Court therefore awarded 90% of the Claimant’s total cost budget by way of an interim payment on account of costs.
This decision is good news for successful litigants, as it will speed up the process of securing interim payments by cutting down on the debate surrounding the amount that should be paid. The Court’s robust attitude to enforcing costs budgets should facilitate costs settlements, thereby curtailing the need to incur the time and costs of detailed assessment.