Important development in Guernsey litigation costs recovery

03 May 2013

Ability to order interim payments on account of costs confirmed

A significant decision on recovery of legal costs in Royal Court proceedings has just been published. The decision relates to a case which was heard in private in 2010. The full judgment is still embargoed from publication, but on 30 April 2013 anonymised extracts were released by the Court under the title Re a Guernsey Company. In his decision, amongst other things, the trial judge held that he had jurisdiction to order interim payments of costs, prior to taxation, which hitherto has not been clear.

Although there is no provision in either the Royal Court Civil Rules or the Costs and Fees Rules which expressly permits a judge to make an order for interim payment of costs pending taxation, the court ruled that its general discretion to determine by whom and to what extent costs are to be paid extended to an ability to make such orders. However, the amount of any interim payment should be conservatively assessed (so that it does not exceed the amount the receiving party is likely to receive after taxation).

Interim payments on account of costs are perfectly standard in many jurisdictions, notably England and Wales, and are a welcome addition to the Guernsey costs armoury. Amongst other things, they limit the potential for unsuccessful litigants to keep opponents substantially out of their money for significant periods even after costs are ordered, while the parties go through what can be a protracted process of taxation.

This decision reflects the continued evolution of Guernsey procedure in keeping with modern developments in commercial dispute resolution. For further details, please contact Alasdair Davidson or Jon Barclay.