Exceptional circumstances not needed for interim expenses payment order
A party does not have to show exceptional circumstances to justify an order for interim payment of expenses, and the court has a discretion to depart from the ordinary practice on sufficient reason being shown, a Court of Session judge has held.
Lord Tyre made the ruling in ordering legal firms Paull & Williamsons and its successor Burness Paull to pay £1m in interim expenses to Robert Kidd, in his action for damages of $210m arising from Paull & Williamsons having acted for him in the sale of his interest in a company. Proof in the action had been set for January 2018 but the defenders had been found liable in expenses on an agent and client, client paying basis for expenses including amendment, discharge of a diet of proof and one half of the expenses to date so far as not otherwise dealt with, with the pursuer entitled to an additional fee. No account of expenses had been lodged but the pursuer sought an interim payment of £2m, supported by letters from two law accountants.
The defenders did not challenge the competency of the motion, but argued that such an award should only be made in special circumstances, of which there were none here. In any event if they were ultimately successful there would be a large contra-award.
After reviewing the authorities, Lord Tyre said he did not read them as meaning that an order would only be made in exceptional circumstances. "As with other aspects of expenses, it is in my opinion within the discretion of the court to depart from the 'ordinary way', provided the court is satisfied that there is sufficient reason for so doing", he stated.
While the pursuer could not found on the defenders' conduct of the litigation, since that had already been reflected in the award in his favour, three features when taken together were sufficient to justify an order for interim payment:
- the size of the sum likely to be found due, and the injustice if the receiving party was deprived of it for an extended period;
- the scale, complexity and cost of the process of preparation and taxation of the account, involving 50 volumes of solicitors' correspondence and hundreds of thousands of pages of electronic documents;
- there was no good reason for the pursuer to have to fund the ongoing cost of the litigation while being kept out of the sum owed to him by the defenders.
"It is not in the interests of justice that [the pursuer] should be deprived for an indefinite period of the whole of the expenses to which he has been found entitled", the judge continued. "I am not persuaded by the defenders’ argument that the possibility of a substantial – and possibly equally large – contra-award were the pursuer’s case ultimately to fail constitutes a good reason for refusing an interim award. The fact that a litigation is continuing does not preclude a party from having an account of expenses taxed in order to enable him to obtain an extract decree and enforce it, even though a future contra-award remains a possibility."
However it was appropriate to adopt a conservative approach, especially where little detail had been provided, and allowing for the fact that given the basis of the award, there was unlikely to be significant taxing off, the sum awarded would be £1m, on which interest would run after 14 days from the order.