Payment on account of costs: how much the court will order and when

CPR 44.2(8) provides that where the court orders a party to pay costs subject to detailed assessment, it will order that party to pay a reasonable sum on account of costs, unless there is good reason not to do so. The rule creates a strong presumption in favour of a payment on account.

A good reason not to order one might include a real prospect that the costs order will be overturned on appeal, a counterclaim yet to be determined, or uncertainty about whether costs are recoverable at all. Mere inconvenience to the paying party is unlikely to be enough.

The sum must be a reasonable one, generally an estimate of the likely level of recovery on assessment, often with a margin for error. Courts commonly look at the costs claimed, any approved budget and the likely reductions. Where costs have been budgeted, a payment on account may be set at a higher proportion of the budget than in an unbudgeted case, because the budget gives the court greater confidence about the final figure.

Evidence matters. A clear schedule of incurred costs, supported by a brief explanation of rates and the main phases of work, helps the court reach a figure that properly reflects the likely outcome rather than a cautious guess.

The best time to ask is at the hearing where the costs order is made. Prepare the figure in advance and have a short summary ready. If that opportunity is missed, an application can still be made later, but it adds cost and delay.

The order should state the date for payment, commonly 14 or 28 days. Where payment is not made, the receiving party may enforce in the usual way, and non-payment can be relevant to later case management or costs decisions.

A payment on account is credited against the final assessed sum. If assessed costs are lower than the payment, the receiving party must repay the difference, usually with interest. That is why the figure should be realistic, and why receiving parties should not view a generous payment on account as a final indication of value.

For paying parties, an early payment on account can also help reduce interest accruing on costs and may support a more constructive approach to negotiation in detailed assessment proceedings.