Judge: Birss J.
Citation:  EWHC 3064 (Ch)
Notwithstanding r. 44.2(8), the court has no power to order payment on account of costs following acceptance of a Part 36 offer.
A claimant in a professional negligence claim accepted the defendant’s Part 36 offer. A settlement agreement was drawn up which provided that the defendant would pay the claimant’s reasonable costs on the standard basis to be assessed if not agreed. The claimant applied for an interim payment on account of costs in the sum of £19,000. The application was refused on the basis that the court had neither the power nor discretion to make such an order.
On appeal the Court held that under Rule 44.9(1)(b) a costs order was be deemed to have been made on the standard basis. Rule 44.2(8) provided 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 Court of Appeal in Lahey v Pirelli Tyres Ltd concluded that it had no power to vary a deemed costs order. Although that decision did not preclude the order which the appellant sought, it was not correct to look at the case as if it were seeking a variation of a deemed order. The correct analysis was that the place to find the court’s ability to make a payment on account order after acceptance of a Part 36 offer was in Part 36 itself. However, such an ability was absent from Part 36 and there was no reason to read r.44.2(8) to make a payment on account applicable when a Part 36 offer was accepted.