Fieldfisher LLP v Olga Scherbakova & Anor

Costs Judge Nagalingam: Introduction

1. This judgment follows the Defendants’ application dated 22 September 2025 that:

1. The unless order dated 1 September 2025 ("the Unless Order") be discharged pursuant to CPR r3.1(7) and/or CPR r3.9;

2. Alternatively, that the Defendants be granted relief from the sanctions set out in the Unless Order pursuant to CPR r3.9;

3. The order ordering the Defendants to pay the Claimant the sum of £741,122.85 as an interim payment on account by 4pm on 5 August 2025 ("the Interim Payment Order") be set aside pursuant to CPR 25.20(6)(b); or alternatively

4. The Interim Payment Order be varied pursuant to CPR 25.20(6) to reflect the security already obtained by the Claimant in Belgium.

5. Alternatively, permission to appeal the Unless Order and extension of time for appealing.

2. As confirmed in the course of Mr Kirby KC’s submissions, the application advanced is now far more focused, and takes a slightly different tack to the application as originally pleaded. Background

3. The Claimant, Fieldfisher LLP, were instructed by the Defendants (by virtue of engagement letters dated 16 December 2022 and 5 January 2023) to provide legal services in respect of a contentious probate claim (claim numbers PT-2018-000247 and PT-2019-000932).

4. The terms of both engagement letters were accepted by the Defendants and there is no dispute in this regard.

5. Specifically, the Claimant was engaged to provide advice in respect of the estate of Vladimir Alekseyevich Scherbakov (the "Estate"), the Defendants' father, who died on or around 10 June 2017.

6. The instruction/advice covered UK tax, probate and succession law in relation to the Estate (the "Estate Advice"); and advice/representation in respect of domestic court proceedings in which the Defendants were engaged with regard to the Estate.

7. Ahead of the trial in the probate claim the Defendants stood the Claimant down, in August 2023.

8. During the period covered under the retainers, the Claimant incurred fees totalling £1,944,078.48. The invoice amounts which make up this sum are detailed at paragraph 5 of the directions order dated 29 April 2025.

9. Upon there being a substantial balance of unpaid fees, the Claimant sued the Defendants for the same. Judgment was subsequently entered for the Claimant, with an amount to be assessed. The assessment of the Claimant’s unpaid fees was transferred to be determined by a specialist costs judge in the Senior Courts Costs Office.

10. The invoices in question range in date from 31 December 2022 to 31 August 2023, and the order dated 29 April 2025 sets out the usual directions one would expect to see in order to assist the court in assessing disputed fees. These include a timetable for the service of a breakdown of the bills, points of dispute, points of reply and an assessment hearing.

11. Whilst the ultimate exercise envisaged is an assessment of the Claimant’s disputed fees, the intended exercise is not an assessment under the auspices of the Solicitors Act 1974 . However, it is generally accepted that the procedure under CPR 46.10 may be sensibly adopted, modified as may be necessary, where a court is required to assess disputed solicitors’ fees, even where they are sued upon as an unpaid debt – as is the case in this matter.

12. In this regard, I do not consider CPR 46.10 is drafted in terms such that the procedure contained therein cannot be adopted where the court has not made an order under Part III of the Solicitors Act 1974 . To put it another way, there is nothing in CPR 46.10 which suggests that the procedure therein may only be adopted exclusively in Solicitors Act disputes.

13. In any event, both parties were represented at the hearing on 29 April 2025 and fully participated in the directions element of the order which followed. My CE File recorded note of that hearing records (verbatim): “Today's hearing was utilised to agree directions (which Mr Marven and Mr Strickland will draw up) and the costs of that element should be costs in the assessment. However, the hearing was also intervened by the Claimant's attempt to have an application for interim payment heard today (despite the application not yet being sealed or formally listed). I heard submissions on whether to hear the application today and ruled no. Parties then took instructions and agreed timetable for assessment and timetable to hear interim payment application. Draft orders to be agreed and sent to PN for approval”.

14. What followed is set out in the order dated 29 April 2025.

15. The need for the formality of ‘points of dispute’ flows from the lack of protection that would have been afforded to the Defendants were they bound by their defences only, which reflect: “2. Paragraph 2 is admitted save that the First Defendant is unable to comment on the last known address of the Second Defendant.

3. Paragraphs 3-6 are admitted.

4. As to paragraph 8, it is admitted that the Claimant undertook work under the terms of the retainer.

5. It is admitted that invoices were raised by the Claimant per the terms of the retainer. The Defendants have paid £461,832.78 and there is an outstanding balance of £1,482,245.70.”

16. Thereafter, the defences aver that the balance sought of £1,482,245.70 is “unreasonable”, that the Claimant has not suffered a loss in this amount, and that the Claimant is not entitled to that sum as damages or a debt.

17. The defences explicitly recognise that what will take place is not to be a statutory assessment under the Solicitors Act 1974 but an assessment of damages.

18. In this regard, one observes that at no time have the Defendants sought to seek a stay of the current proceedings in order to pursue their own Part 8 costs only proceedings.

19. The Defendants are therefore taken to be content with the current process and regime by which the Claimant’s disputed fees will be assessed.

20. Paragraph 10 of the defences avers: “10. The Claimant is only contractually entitled to reasonable costs and charges. Where the court assesses any element of the invoices to be unreasonably incurred or unreasonable in amount, the Claimant is not entitled to recovery of the same from the [Defendants].”

21. Thereafter, the Defendants supported the transfer of this matter to the Senior Courts Costs Office on the basis that the Defendants accept “a primary liability for costs subject to the test of reasonableness” and that “there should be judgment for the Claimant for damages to be assessed.”

22. Thus whilst the defences were in response to the pleaded claim, the consequence was that judgment was entered for the Claimant.

23. The directions dated 29 April 2025 simply set in place a sensible timetable and framework in which the Claimant is required to set out their claim in detail, and afford the Defendants an opportunity to demonstrate why and where reductions on an assessment ought to apply, in the form of points of dispute.

24. The directions dated 29 April 2025 included provision for the hearing of the Claimant’s application for an interim payment, which was listed for 7 July 2025.

25. The interim payment application proceeded as listed and both parties were represented, with consideration given to witness statements from each Defendant (both dated 9 April 2025), and two statements from the Claimant’s James Lappin (dated 27 March and 29 April 2025 respectively).

26. Paragraph 5 of the 1st Defendant’s witness statement dated 9 April 2025 avers that “For the reasons that I set out in this statement and in the event that such an Order was made, neither I nor my brother would be able to satisfy such an Order because regrettably I am without the funds to make payment of the sum sought by the Claimant.”

27. Further, at paragraph 17, the 1st Defendant stated: “17. I wish to defend the current claim to obtain the fair and just result. I do not wish for the case to be decided without me and my brother having legal representation. It would be unfair for an order for an interim payment be made at this stage as it would stifle my and my brother’s ability to defend this claim. In any event, as I set out above, the Claimant already has significant protection by way of charges over my family home and also my shares in other two properties in Belgium. In addition, it is also entitled to interest.”

28. Impecuniosity is a factor a court may take into account when deciding whether to an order an interim payment. However, I found that the reasons given for the 1st Defendant’s difficulties in meeting any interim payment order relied on inference as to her liquidity and was otherwise not supported by evidence.

29. The 2nd Defendant’s witness statement set out: “4. I have read my sister, Olga’s Witness Statement and confirm that it is true that as a result of the prolonged and still continuous litigation in various jurisdictions in relation to my late father's estate I am left without funds. I and my sister have spent vast sums of money on legal fees and we are also facing a further judgement in this claim for the amount to be determined by the Court in due course. The Claimant’s fees as claimed are incredibly high and incurred unnecessarily. The fees are excessive, and they do not even cover the trial where me and my sister acted in person. The Claimant knows that we have no money because the retainer was ended by us as we were unable to pay. Also, we only received, as far as I am aware, one costs estimate which was significantly lower than the bills now rendered by the Claimant.

5. However, if the Court makes an Order for an interim payment at this stage, it is likely that I and my sister will be unable to continue to defend this claim which would be extremely unfair.

6. I am unemployed and debt ridden. Like Olga, I consulted a bankruptcy practitioner to consider whether to file for bankruptcy. However, I would like to avoid bankruptcy if I can, as this would be fair to the creditors and also better option in respect of my creditworthiness. However, I was advised that if an interim payment is ordered, it would make me insolvent.

7. I also wish to defend the current claim to obtain the fair and just result. I do not wish for the case to be decided without us having legal representation. It would be unfair for an order for an interim payment to be made at this stage as it would stifle our ability to defend this claim.”

30. As with the 1st Defendant, I was unpersuaded as to the 2nd Defendant’s inability to pay and accordingly I made an order for an interim payment. I was also persuaded as to the amount sought by the Claimant, being some 50% of the amount outstanding (not accounting for contractual interest) and absent the benefit of any cogent argument as to where reductions might apply.

31. To put it another way, recognising that the Defendants accepted a contractual liability to pay, but absent the Defendants setting out even a semblance of where reductions may arise from, I was satisfied that the amount ordered to be paid on account would at least equate to total sums paid that were less than the amount that might ultimately be assessed.

32. This is not uncommon. Whether it be damages or fees, judges and courts generally strive to not make orders for interim payments which are likely to exceed the disputed sums once assessed. In the index matter, I considered the amount ordered to be paid on account was in fact modest.

33. Accordingly, and given judgment had already been entered on the basis of the Defendants’ acceptance of a liability to pay the Claimant’s fees, on 7 July 2025 I ordered that: “1. Pursuant to CPR 25.23(1)(a) and (b), the Defendants shall pay to the Claimant the sum of £741,122.85 as an interim payment on account by 4pm on 5 August 2025.

2. The Defendants shall pay the Claimant's costs of the Application within 14 days, summarily assessed in the sum of £20,000.”

34. There was no subsequent application to set aside or vary this order, nor any efforts made to appeal my decision.

35. The Defendants subsequently failed to comply and on 12 August 2025 the Claimant submitted an application for an ‘unless order’ which sought payment of the ordered sum within 7 days failing which both defences would stand as struck out and judgment be entered for the full amount of the Claimant’s claim, plus interest.

36. A hearing notice dated 14 August 2025 notified the Defendants’ legal representatives that the hearing of the Claimant’s application for an unless order had been listed for 2pm on 1 September 2025.

37. On 29 August 2025, the 2nd Defendant sent an e-mail to my clerk which attached a letter dated 28 August 2025, written on behalf of both Defendants. The letter explained that the Defendants will be unrepresented at the unless order application “Due to a lack of funds” but that the letter would stand in place of any oral submissions.

38. The letter contained what effectively amounted to a proposal to pay £20,000 towards the sums ordered, and asked for a further 28 days to make that payment. Whilst the sum proposed was the same as the amount that was summarily assessed at the interim payment order application, the 2nd Defendant’s letter did not seek to distinguish how the offered £20,000 was to be apportioned.

39. Thereafter the letter cited a “lack of funds, and an inability to procure them personally within the period of the Interim Payment Order”. The letter also expressed the Defendants’ view “that the Claimant’s fees are incredibly high, incurred unnecessarily, and are excessive”.

40. The letter thereafter proceeded to state: “It is important that we are allowed to continue to defend the current claim to achieve a fair and just result. If the Claimant is granted the unless order, that would stifle my and my sister’s ability to defend this claim, which would be extremely unfair. I would like to reiterate that the Claimant already has significant financial protection by way of charges over my sister’s properties. I would like to emphasise my commitment to payment, rather than resorting to bankruptcy as my sister, Olga Scherbakova, has now done. In order to make a payment at this time, I can only do so by way of obtaining a bank loan. This process may take several weeks. Given my financial situation, I am harshly scrutinized by any financial institution, and I am likely to be granted only a small amount. In the circumstances I respectfully request the court to grant me an order of extension of 28 days in which to make a payment of 20,000 GBP. This is an amount that I can pay to the Claimant (provided I am given an extension of time of 28 days to obtain a personal loan). I would also like to request the court to direct the parties that the Claimant’s application is decided on paper so as to save the costs of all the parties involved. As I say, I am without funds to instruct my legal representatives to attend the hearing.”

41. The hearing of the unless order application proceeded in the absence of the Defendants and the subsequent order included the following recitals: “AND UPON reading the documents on the court file, to include the Second Defendant’s letter dated 28 August 2025 AND UPON hearing leading counsel for the Claimant and there being no attendance on behalf of the Defendants AND UPON there being no effective application to adjourn the hearing, no effective application to hear the application on the papers only, and no effective application to vary the amount payable or time for payment required by the order dated 7 July 2025”

42. The resultant order, dated 1 September 2025, recorded that: “Unless the Defendants do comply with paragraphs 1 and 2 of the Interim Payment Order dated 7 July 2025 by 4pm on 22 September 2025, then: 1.1 The First Defendant’s defence dated 19 June 2024, shall stand struck out; 1.2 The Second Defendant’s defence dated 10 September 2024, shall stand struck out; 1.3 Judgment be entered in favour of the Claimant against the Defendants for the full amount of its claim in the sum of £1,482,245.70 plus interest of £270,953.69 and with costs to be assessed if not agreed.”

43. On the last date for payment, the Defendants submitted the application which was heard today. That application was supported by a witness statement from the 2nd Defendant, dated 22 September 2025.

44. The Claimant is again represented by Mr Marven KC. The Defendants are represented by Mr Kirby KC. I am assisted by the skeleton arguments of respective leading counsel, and various authorities bundles.

45. I am also assisted by a 930 page core bundle of documents which both leading counsel widely referenced during their submissions. Mr Kirby KC’s submissions

46. Following confirmation of my pre-hearing reading, Mr Kirby helpfully accepted that the 2nd Defendant’s witness statement read more akin to a skeleton argument than a document giving evidence.

47. That statement has been taken into account, but only to the extent that it gives evidence. Where the statement descends into legal argument, the skeleton of argument of leading counsel has been preferred.

48. Mr Kirby began by taking me to the order of HHJ Pearce (dated 2 December 2024) and invited me to note the wording of that order as follows (with emphasis added by Mr Kirby): “UPON consideration of the First Defendant's and Second Defendant's Defence AND UPON the Claimant's application dated 22 November 2024

1. Judgment be entered for the Claimant, against the First and Second Defendant, for an amount to be decided by the court .

2. The Claim be transferred to the Senior Courts Costs Office forthwith, for damages to be assessed and set down for a directions hearing on the first available date with an estimated length of hearing of one day.”

49. Mr Kirby thereby sought to stress that judgment was entered for the Claimant and an order made for the assessment of damages, as opposed to a Solicitors Act assessment of costs.

50. Mr Kirby submits that the consequence of that order is that whilst there were defences to the claim, judgment was entered because those defences recognised a liability to pay costs but did not descend into detail as to arguments on quantum. He submits that the order created an entitlement to be heard in a quantum assessment of damages.

51. Next, Mr Kirby referenced the Claimant’s application for an interim payment dated 27 March 2025. He accepts that the Claimant was entitled to make this application.

52. Mr Kirby also accepts that evidence and information regarding the Defendants’ Belgian properties was before the court when the 27 March 2025 application was heard, such that the existence of that information could not be treated as a material change of circumstances. Mr Kirby submits however that a letter dated 19 September 2025 from Roland Forestini, of Belgian firm Forestini Duarte, (exhibited to the 2nd Defendant’s witness statement dated 22 September 2025) was not available at the time the order for an interim payment was made, nor the subsequent unless order. That letter states: “Further to our conversation, I am pleased to confirm, in the event of a judgment that is enforceable in the United Kingdom, Fieldfisher is entitled to enforce it and to have the seized immovable property in Belgium sold.”

53. Thereafter, Mr Kirby cited the first witness statement of the Claimant’s James Lappin, dated 23 March 2025, where in support of the interim payment application Mr Lappin said: “14. On 16 August 2024, BAM requested that the proposed interim payment on account of costs be removed and expressed that their view was that any application for interim payment on account should be made following the transfer to the Senior Court Costs Office ("SCCO"). In that same email (page [426]), BAM stated that D1 was "not in a position to make any payment at this time". An interim payment on account of costs will flush out whether that is still the case. It would in our respective submission be unjust to require the Claimant to spend more time and significant costs prosecuting its claim against the Defendants to a final hearing if one or both of the Defendants are impecunious, being the reason given for non-payment of the invoices in the first place.”

54. “BAM” are Branch Austin McCormick, who each Defendant instructed following service of the Claimant’s debt claim.

55. Mr Kirby says Mr Lappin’s choice of words demonstrate that the Claimant was aware the 1st Defendant was impecunious, i.e. “not in a position to make any payment at [that] time”, and that the true purpose of the interim payment application was to frustrate the Defendants’ ability to challenge the Claimant’s costs by obtaining an order the Claimant knew the Defendants could not satisfy.

56. Mr Kirby referenced the relevant period, i.e. the stage at which issued invoices remained unpaid (and the Defendants were not in a position to pay), leading to the Claimant coming off the record.

57. Mr Kirby submits that the Claimant has adopted a stance that an impecunious client should not be able to challenge a bill.

58. Mr Kirby then referred me to another document which he says was not before the court when my I made my earlier orders, but is before the court now. Namely, a report from a Mr Stuart Waters, “Senior Costs Draftsman”.

59. Mr Kirby says this report identifies significant issues, which were not previously before the court, regarding the Claimant’s fees.

60. With reference to that report, Mr Kirby cited that in total the Claimant had incurred around £1.75m in fees in the space of 8 months. Citing paragraphs 8 and 9 of Mr Waters’ report, Mr Kirby submits the Defendants are concerned that the number of fee earners engaged creates a risk of duplication, and queries why, in some instances, there are wide variations in rates related to the same fee earner.

61. Mr Kirby, whilst acknowledging that the guideline hourly rates were of little relevance in the circumstances of this matter, also cited references to averaged or blended rates in some of the delivered bills.

62. Thereafter, Mr Kirby quoted paragraph 14 of Mr Waters’ report: “The descriptions provided do not support the time claimed and there is a large amount of internal fee earner emails and discussions throughout. There are weekly team meetings, team calls and team emails throughout attended by a number of fee earners (for example see 16/01/2023 - with UK team - Monday weekly catch up; and 26/01/2023 - GENERAL READING IN - weekly catch up meeting, reviewing various emails in from opponents re upcoming deadlines, considering tracker of actions). The amount of costs charged for weekly catch ups and discussions is grossly excessive. Searching for the term “internal” or “catch up” brings up 100s of entries.”

63. Mr Kirby also cited paragraph 17 of Mr Waters’s report, which may be summarised as covering: - The average number of hours claimed per month and duplication. - The number of e-mails considered by one fee earner in a 20 day period. - So-called “bulk recording” or “block recording”. - Criticism of one fee earner for counting up and charging the number of e-mails sent on any particular date. - Internal fee earner discussions - That “The time claimed is generally excessive” with some examples given. - Excessive routine items. - “grossly excessive expenditure on disclosure review”.

64. Mr Kirby wished to be clear that the Defendants were not seeking any form of assessment today, but rather acknowledgment that Mr Waters’ report indicated that the Claimant’s cost were “clearly unreasonable”.

65. Mr Kirby submits that the net effect of judgment being entered for the Claimant in the amount claimed will result in the recovery of costs the Claimant should not be entitled to, because elements of the Claimant’s fees are unreasonably incurred or unreasonable in amount.

66. As such, the Defendants’ case is that the effect of the unless order, if enforced, would be unjust enrichment.

67. Mr Kirby then referred to HHJ Pearce’s order for the Claimant’s fees to be assessed, and the fact that the assessment envisaged will not occur if the effect of the unless order is allowed to stand.

68. Mr Kirby also submits that the net effect of the unless order is a disproportionate and unjust variation of the interim payment order. This is on the basis that, in the Defendants’ view, the unless order is a variation which altered the date for payment, and introduced a sanction.

69. Mr Kirby referenced CPR 25.20(6)(a) and (b) in the context of my discretion to vary or discharge an interim payment order, the relevant rule providing that: “(6) The court may adjust any interim payment whether or not any payment has yet been made (voluntarily or under a previously made order). The court may in particular — (a) order all or part of the interim payment to be repaid; (b) vary or discharge the order for the interim payment;”

70. Mr Kirby also referred me to paragraph 25.25.10 of the 2025 White Book, at page 738: “Discharge, variation, repayment The court has wide powers to discharge or vary an interim payment order, including the power to order any money paid repaid. Further, in certain circumstances the court may order a defendant to reimburse, either wholly or partly, another defendant who has made an interim payment (r.25.20(6)). The court may adjust an order that has been made but not yet paid. The court may make an order under this rule without an application by any party if it makes the order when it disposes of the claim or any part of it (r.25.20(8)) by final judgement. Otherwise an application for the relief permitted under this rule may be made by any party at any time.”

71. Mr Kirby submits this underlines the court has a wide and unfettered power under this rule. In that regard, he says that the unless order was, in fact, a variation of the interim payment order, and it is the unless order which should be discharged.

72. Mr Kirby submits that discharging the unless order (by treating it as a varied interim payment order) is justified because the effect of the unless order (if allowed to stand) is that sums due to the Claimant would be payable even though the Claimant is not entitled to the full amount – on the basis that, in Mr Kirby’s view, the Claimant is very unlikely to recover the full amount if an assessment took place.

73. With regard to impecuniosity, Mr Kirby submits that the Claimant is well aware that we find the proceedings in their current state because the Defendants could not afford the Claimant’s fees. Further, he says that the Claimant is well aware that the Defendants ended up acting for themselves in the underlying high court proceedings because of their financial state.

74. As well as an inability to pay, Mr Kirby advised that the Claimants are also facing claims from the Belgian tax authorities which could be as much as €31m, and that the Claimant has presented no evidence to counter what the Defendants say with respect to their inability to pay the interim sum ordered.

75. Mr Kirby submits that, taken together, the lack of defence representation at the unless order hearing, and the evidence the Defendants have since obtained from a law costs draftsman, mean the unless order should be set aside.

76. He says the alternative would mean that the Claimant will benefit from their own “inappropriate” conduct, by debarring the Defendants from challenging the full amount just because they cannot meet an interim payment order.

77. Mr Kirby further expressed the view that there has to be an assessment of damages because that is what HHJ Pearce ordered, and because we now have the benefit of “evidence” from a law costs draftsman which demonstrates that the Claimant’s bills “would” be reduced on assessment.

78. Mr Kirby wished to be clear that the Defendants are not seeking to set aside the original interim payment order. Instead, the Defendants invite the court to treat the unless order as a CPR 25.20(6)(b) variation to the interim payment order, and it is the varied order the Defendants seek be discharged.

79. With regards to appealing the unless order, Mr Kirby accepts the Defendants are out of time to seek permission to appeal from me, nor can they seek a retrospective extension of time to seek leave for permission to appeal. Instead, the Defendants will await the outcome of this decision and explore potential routes of appeal, if so advised.

80. Mr Kirby closed by warning of the disproportionate impact on the Defendants because, he avers, the effect of enforcing the unless order would be to prevent impecunious litigants from challenging a solicitor’s bill simply so that the solicitor can avoid the ‘hassle’ of assessment.

81. Finally, and in seeking to pre-empt any related queries from Mr Marven KC, Mr Kirby informed the court that the 2nd Defendant had obtained a loan of €200,000 to cover the Defendants’ costs of this hearing and a potential appeal. Mr Marven KC’s submissions

82. Mr Marven submits that references to CPR 25.20(6) are irrelevant because the court is being asked to grant relief / set aside a sanction for breach. He submits that CPR 25.20(6) is a mechanism by which to vary the amount of an interim payment.

83. In so far that an application under CPR 25.20(6) is referenced, Mr Marven acknowledged that point 3 of the Defendants’ application (i.e. to set aside the order dated 5 August 2025) was no longer pursued. Instead the application was pursued on the basis of a variation under CPR 25.20(6), discharge of the unless order under CPR 3.1(7) and/or 3.9, or the granting of relief under CPR 3.9.

84. As to the report of Mr Waters, Mr Marven submits all such arguments should have been before the court by the time of the hearing of the interim payment order application.

85. Mr Marven submits that notwithstanding today should not be the forum for a “mini-assessment” of the disputed fees, Mr Waters’ comments only go to what the interim payment amount ought to have been and not to whether an interim payment should have been ordered at all.

86. In seeking to dissect Mr Waters’ comments, Mr Marven queried the sustainability of a duplication argument which is only speculative at this stage.

87. As to the variations in rates referenced in Mr Waters’ report, Mr Marven confirmed that the rate variations were simply a consequence of accounting for those elements of work emanating from the Manchester office, and those from the London office.

88. Mr Marven also explained that any pro-rata rates took into account dual location conduct.

89. Mr Marven reflected that the Defendants’ argument is effectively to say that it is wrong to apply a sanction because of what the Defendants ‘might’ have done had the sanction not been in place. He submits that if such an argument is sufficient then the sanction is both “toothless and worthless”.

90. Mr Marven sought to remind the court that the Claimant already has judgment in their favour, with damages to be assessed. He says there are “hundreds of pages to support the sum due” and that if the unless order sanction was for “assessment of damages”, then that would amount to no sanction at all.

91. Mr Marven avers that what the Defendants are trying to say, without actually saying it, is that I was wrong to make the unless order. Mr Marven submits that if that is a route the Defendants wish follow, then it is a matter for appeal, not a matter for variation or discharge.

92. Mr Marven submits that there is categorically no material change in circumstances. He says that Mr Kirby KC’s skeleton argument, and the 2nd Defendant’s witness statement, go to great lengths to argue there has been a material change in circumstances, but in fact do little more than confirm what the Defendants’ wished they had argued before the court at earlier hearings.

93. Mr Marven submits that neglecting to raise points at an earlier stage does not amount to a material change of circumstances where in reality those points were capable of being raised sooner, and where no material change of circumstances has in fact been demonstrated.

94. As to impecuniosity, Mr Marven sought to remind me that such arguments were raised and not evidenced at the time of the making of the interim payment order, and further not evidenced when the unless order was made.

95. Regarding Mr Kirby KC’s critique of Mr Lappin’s witness statement dated 27 March 2025, and in particular paragraph 14, Mr Marven averred that Mr Lappin’s evidence cannot reasonably be condensed down to a statement that ‘if the Defendants can't pay, then the assessment is a waste of time’. Mr Marven submits that Mr Lappin’s comments simply reflected that an order for an interim payment ought to result in a payment being made, or the Defendants evidencing their alleged impecuniosity. In the event, neither has occurred.

96. Mr Marven submits my consideration should be based on what was known at the time the orders were made, and what material change of circumstances has arisen since – if any.

97. Thus Mr Marven avers that I cannot now retrospectively reopen the question of whether the Defendants were impecunious at the time of making my earlier orders. He further submits that in any event it is difficult to envisage how such an argument could be made out today, whilst there is simultaneously no explanation as why the Defendants could not afford even one lawyer to attend the application for an unless order, yet today the Defendants have four lawyers at court and a reported “war chest” of €200,000.

98. In so far as I might be persuaded to infer the financial status of the Defendants, Mr Marven took me to paragraph 25 of Mrs Justice Bacon’s judgment dated 19 December 2023 in which the following conclusions were drawn regarding the 1st Defendant: “25. Olga Scherbakova was an argumentative witness, who repeatedly challenged the relevance of the questions in an attempt to avoid answering them. Her evidence on key issues was inconsistent with the documentary evidence or otherwise implausible. It became apparent that the explanations given in her witness statements as to her relationship with Ms Avdoyan were (at best) evasive and incomplete. When put to her that she, Elena and Alexander had obtained and suppressed the 2015 Will, she expressed shock and outrage, despite the fact that she must (from the pre-trial correspondence) have been well aware of the case that the claimants intended to advance in this regard. I consider Olga to be a dishonest witness who was willing to advance outlandish accusations against others in order to avoid giving a truthful explanation of her role in the events in question.”

99. Mr Marven invited me to note such observations, and that I should be willing to “anxiously scrutinise” what the Defendants have said in pleading a lack of funds.

100. He cited the example of when the 1st Defendant stated she was in receipt of child benefit payments in Belgium, and had sought that the court draw an inference that a person in receipt of child benefit equated to that person being in a parlous financial state. In fact, almost every child in Belgium qualifies for child benefit payments and as such it bears no equivalence to the types of welfare benefits that are only available to those in financial distress.

101. Mr Marven submits there is no evidence of impecuniosity now, nor has there been at any stage from the application for an interim payment order onwards.

102. Mr Marven cited page 85 of the 2025 White Book, and paragraph 3.1.14.8, Stays or unless orders for non-compliance with interim orders for costs: “Where a party refuses to comply with an order to pay costs which they have the means to pay the court may make an order debarring them from taking any further part in the proceedings unless, by a date stated in the order, they comply with the previous order ( Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC 1444 (QB) ; [2006] 4 All E.R. 233 , QB. An intentional failure to comply with an order made in proceedings the litigant seeks to participate in may also amount to a contempt of court ( Days Healthcare UK Ltd , above).

103. Mr Marven also cited Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm) ; [2017] 5 Costs L.R. 877, where Sir Richard Field, sitting as a deputy judge of the High Court, considered earlier decisions on the making of unless orders as a means of enforcing interim costs orders, and set out the following principles: (1) The imposition of a sanction for non-payment of a costs order involves the exercise of a discretion pursuant to the court’s inherent jurisdiction. (2) The court should keep carefully in mind the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation, namely, that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications. (3) Consideration must be given to all the relevant circumstances including: (a) the potential applicability of Art.6 of ECHR; (b) the availability of alternative means of enforcing the costs order through the different mechanisms of execution; (c) whether the court making the costs order did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question; and where no such submission was made whether it ought to have been made or there is no good reason for it not having been made. (4) A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Art.6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness’s financial position including his or her prospects of raising the necessary funds where his or her cash resources are insufficient to meet the liability. (5) Where the defaulting party appears to have no or markedly insufficient assets in the jurisdiction and has not adduced proper and sufficient evidence of impecuniosity, the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering. (6) If the court decides that a debarring order should be made, the order ought to be an unless order except where there are strong reasons for imposing an immediate order.”

104. Mr Marven submits that the Defendants have “not even remotely satisfied” that they lack the means to pay and have consistently failed to provide “detailed, cogent and proper evidence which gives full and frank disclosure of the [Defendants’] financial position including [their] prospects of raising the necessary funds where [their] resources are [demonstrably] insufficient to meet the liability”.

105. Mr Marven observed that not only has the 2nd Defendant now sourced access to €200,000 for legal fees, but they have now fallen silent on previous suggestions that their so-called “wealthy” mother would be able to effectively underwrite the value of whatever the assessed sum might ultimately be.

106. Citing the 2nd Defendant’s second witness statement, dated 22 September 2025, at paragraph 14, Mr Marven observed the stated intention that: “The financial situation of both defendants will be (Mr Marven’s emphasis added) evidenced in detail by an independent witness statement which demonstrates the current financial position of both parties and our inability to meet the interim payment order.”

107. Mr Marven wished to make it clear that the promised independent witness statement had not materialised and as such, as of today, the Defendants continue to fail to evidence their alleged impecuniosity.

108. Next, Mr Marven sought to address the suggestion that the Claimant held sufficient security over property owned by the Defendants in Belgium.

109. In so far as the Defendants have referenced a letter from Forestini Duarte dated 2 December 2025, Mr Marven submits there can be no dispute that the Belgian tax authorities will be first in line to realise the value of those properties.

110. Further, unless those properties are worth in excess of €31m, or the Defendants are successful in significantly reducing their tax liabilities, there will not be sufficient monies left to satisfy any final assessed sum such that, in effect, the Belgian securities appear worthless.

111. With regards to the Defendants’ unjust enrichment argument, Mr Marven sought to dismiss the same as absurd. He relies on paragraph 27 of Mr Lappin’s 4th witness statement, where Mr Lappin confirms that: “If the Claimant was to receive monies towards the debt, whether by way of payment of funds from the Interim Payment Order or by recovering monies under the seizure orders (albeit we say this would not happen), the monies received would be netted off the security obtained.”

112. Mr Marven also makes the point that an interim payment is not ordered for security. It is ordered where the court is satisfied a claimant is owed money and should be entitled to a reasonable proportion of it.

113. As to the application of CPR 3.1(7), Mr Marven relies on Tibbles v SIG plc (trading as Asphaltic Roofing Supplies) [2012] EWCA Civ 518 , at paragraph 39: “39. In my judgment, this jurisprudence permits the following conclusions to be drawn: (i) Despite occasional references to a possible distinction between jurisdiction and discretion in the operation of CPR 3.1(7), there is in all probability no line to be drawn between the two. The rule is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal. (ii) The cases all warn against an attempt at an exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated. (iii) It would be dangerous to treat the statement of these primary circumstances, originating with Patten J and approved in this court, as though it were a statute. That is not how jurisprudence operates, especially where there is a warning against the attempt at exhaustive definition. (iv) Thus there is room for debate in any particular case as to whether and to what extent, in the context of principle (b) in (ii) above, misstatement may include omission as well as positive misstatement, or concern argument as distinct from facts. In my judgment, this debate is likely ultimately to be a matter for the exercise of discretion in the circumstances of each case. (v) Similarly, questions may arise as to whether the misstatement (or omission) is conscious or unconscious; and whether the facts (or arguments) were known or unknown, knowable or unknowable. These, as it seems to me, are also factors going to discretion: but where the facts or arguments are known or ought to have been known as at the time of the original order, it is unlikely that the order can be revisited, and that must be still more strongly the case where the decision not to mention them is conscious or deliberate (Mr Marven’s emphasis added). (vi) Edwards v. Golding is an example of the operation of the rule in a rather different circumstance, namely that of a manifest mistake on the part of the judge in the formulation of his order. It was plain in that case from the master's judgment itself that he was seeking a disposition which would preserve the limitation point for future debate, but he did not realise that the form which his order took would not permit the realisation of his adjudicated and manifest intention. (vii) The cases considered above suggest that the successful invocation of the rule is rare. Exceptional is a dangerous and sometimes misleading word: however, such is the interest of justice in the finality of a court's orders that it ought normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation.”

114. Mr Marven reiterated his view that what the Defendants are attempting to say is that I fell into error in making the unless order, but pursue the current application when the Defendants know they should have lodged an appeal – for which they are now out of time.

115. Mr Marven also repeated the Claimant’s bemusement that the Defendants can fund the presence of four lawyers on their behalf today, yet put forward no representation at the hearing of the application for an unless order.

116. Mr Marven reiterated the view that CPR 25.20(6) is not the correct mechanism by which to set aside an unless order, and that the Defendant’s application may only be considered under CPR 3.1(7).

117. With regards to whether relief should be granted, Mr Marven cited Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537 and in particular paragraph 45 of the same where the court found that: “On an application for relief from a sanction, therefore, the starting point should be that the sanction has been properly imposed and complies with the overriding objective. If the sanction for relief is combined with an application to vary or revoke under CPR r 3.1(7), then that should be considered first and the ‘Tibbles’ criteria applied. But if no application is made, it is not open to him to complain that the order should not have been made, whether on the grounds that it did not comply with the overriding objective or for any other reason.”

118. Mr Marven submits there is no basis for the Defendants to advance arguments that the unless order should not have been made because, absent an appeal, the court should not revisit the correctness of the earlier order when considering the result.

119. The Court of Appeal guidance is that where an application to vary or revoke under CPR r 3.1(7) has been made then that should be considered before any relief is considered. Mr Marven submits that Defendants have failed in their CPR 3.1(7) application and the unless order should stand.

120. Regarding the authorities relied on by Mr Kirby KC in his skeleton argument, Mr Marven submits that all are distinguishable because in those cases the court concluded that the paying party could not afford to pay. Therefore in all those cases, impecuniosity was established.

121. In closing, Mr Marven observed Mr Kirby did not appear to have pressed the application for relief, but observed that in any event there is no suggestion that the Defendants are going to pay even if relief were granted and the time for payment extended further.

122. Mr Marven submits that in reality this application is not about setting aside the interim payment order, but rather avoiding the making of any payments at all. The result contended for the by the Defendants is “an order with no teeth”.

123. Mr Marven submits that the Defendants are either saying the court got the facts wrong or the law wrong, and observed that I cannot sit on an appeal of my own decision. Mr Marven closed by declaring that the unless order was not a variation, but rather a last chance for the Defendants to comply ( after an interim payment order had already been breached). Mr Kirby KC’s response

124. Mr Kirby maintained that CPR 25.20(6) can apply, that the unless order amounted to a variation under that rule, and that it was open to the court to exercise that discretion further to discharge the unless order.

125. With regards to the particulars of claim dated 9 February 2024, Mr Kirby accepts the claim is framed in terms of a debt, but submits that disputed solicitor's costs are unliquidated sums until they have been assessed.

126. Mr Kirby accepts what evidence is before the court, but submits the fact the Defendants were compelled to act alone for parts of the arbitration matter and in these proceedings demonstrates their collective lack of funds. Mr Kirby repeated his earlier arguments that an impecunious Claimant should not be debarred from defending a claim on the grounds of their impecuniosity alone.

127. Mr Kirby took issue with Mr Marven’s suggestion that the case law requires absolute proof of impecuniosity, citing Northern Powerhouse & Ors v Woodhouse [2023] EWHC 1331 (Ch) , at paragraph 27: “The question for the court, as expressed by Lord Wilson in Goldtrail , is whether an unless order would probably stifle the defence. The defendant's evidence prima facie establishes that he is presently impecunious and the claimants' observations do not lead me, on a balance of probabilities, to the conclusion that the defendant has assets available to him from which he is able to meet the costs order.”

128. Mr Kirby submits that the same approach could reasonably be applied to the circumstances of the index matter, such that I may consider the evidence prima facie and draw my own conclusions as to the Defendants’ impecuniosity on the balance of probabilities.

129. In doing so, Mr Kirby observed that the Claimant cannot point to anything to suggest there are monies elsewhere that the Defendants could access.

130. As to the Defendants’ unjust enrichment arguments, Mr Kirby says that the Defendants are not saying the Claimant would try to get paid twice for the same amount, but simply warns against any unintended consequences of the court’s order that may result in the Claimant recovering more than they are reasonably entitled to.

131. Mr Kirby concluded by expressing the view that the Defendants cannot conceive of such a large amount not being subjected to any reductions at all on assessment. Therefore, to effectively lock the Defendants out of the opportunity for an assessment now would lead to unjust enrichment because the Claimant will recover a sum in excess of the amount they would have been entitled to had the costs been assessed. Analysis

132. I consider it helpful to set out the relevant chronology of the proceedings in this matter: - 16 December 2022 and 5 January 2023 – client care letters confirming the engagement of the Claimant to act on behalf of the Defendants. - 31 December 2022 to 31 August 2023 – various invoices issued to the Defendants. - August 2023 – Defendants ceased instruction of the Claimant. - 9 February 2024 – Claimant’s claim form in respect of the unpaid element of invoices raised. - 29 September 2024 – Claim form issued. - 22 November 2024 – Claimant’s application for judgment. - 2 December 2024 - Order of His Honour Judge Pearce (sealed on 20 December 2024) entering Judgment for the Claimant for an amount to be decided by the court. - 28 March 2025 – Claimant’s application for an interim payment. - 29 April 2025 – Directions order providing a timetable for the assessment of the disputed bills. - 7 July 2025 – Defendants ordered to make an interim payment of £741,122.85 by 4pm on 5 August 2025. - 12 August 2025 – Claimant’s application for an unless order. - 1 September 2025 – Unless order made, requiring payment be made by 4pm on 22 September 2025. - 22 September – Application for relief from sanctions.

133. The first key point to note is that whilst I accept many clients feel uncomfortable challenging their solicitor’s fees before the relevant matter has concluded, the Defendants had a right to seek the assessment of any of the issued invoices.

134. Alternatively, the Defendants could have sought redress or compromise via the Claimant’s complaints procedures.

135. It is difficult to comprehend why, if the Defendants thought that the Claimant’s fees were unreasonable, the Defendants didn’t simply invoke their prerogative to issue a Part 8 claim and seek a Solicitors Act assessment of costs. They had ample time do so and have not provided a cogent explanation of why they didn’t.

136. The second key point to note is that the Claimant waited until February 2024 to pursue a claim which included fees incurred dating back to December 2022. This demonstrates the significant amount of time the Defendants had to pursue a Solicitors Act assessment, explore a potential compromise, and take steps to arrange their finances to at least contribute to the sum outstanding.

137. The third key point is that at the time the interim payment order and unless order were made, there was no indication that the Defendants did not accept their liability to the Claimant. The defences explicitly recognised a liability to pay, but raised the spectre of arguments as to reasonableness. As set out above, it was not until this application for relief that the Defendants began to articulate on what basis arguments as to reasonableness might be founded, via Mr Waters’ report.

138. In any event, no technical points have been raised as to enforceability, for example, nor any fundamental arguments as to hourly rates or fixed costs arrangements, i.e. the type of arguments that might otherwise place a different complexion on the question of an interim payment.

139. Arguments as to reasonableness were thus far alluded to at best, but had not even come close to being articulated until the report of Mr Waters was produced – long after the interim payment order and unless order were made.

140. Faced with no proposals, no apparent prospect of payment, and no Part 8 proceedings instituted by the Defendants, the Claimant brought their claim to recover their unpaid fees.

141. The Claimant now finds themselves approaching the eve of 2026, still seeking recovery of fees incurred in 2022 and 2023. Hearing of the unless order application

142. In so far that unfairness is pleaded by the Defendants with regards to my decision to hear the application for an unless order in the absence of the Defendants, I observe that the Defendants had ample opportunity to attend or be represented, and elected not to attend nor instruct an advocate.

143. In fact, the 2nd Defendant requested a decision be made on the papers, accounting for the written submissions advanced on behalf of the Defendants ahead of the hearing. As such, this was not a case of proceeding with a hearing despite a party’s unavailability, but rather a conscious decision to refrain from attending.

144. Notwithstanding their non-attendance, I read aloud the Defendants’ written submissions in opposition. Indeed, in the absence of the Defendants, the Claimant’s application was closely scrutinized by the court and Mr Marven KC was made to work very hard to achieve the order sought.

145. Further, no application followed to vary or set aside the unless order, nor to appeal the same.

146. In all the circumstances, I do not consider there was any unfairness in proceeding with the unless order application hearing. HHJ Pearce’s order

147. In Days Healthcare UK Ltd v Pihsiang Machinery Manufacturing Co Ltd [2006] EWHC 1444 (QB) , Mr Justice Langley found that the court may debar a party from taking any further part in proceedings where that party had failed to comply with an order to pay costs which they had the means to pay, had failed to comply with a previous interim payment order, and thereafter failed to comply with an unless order compelling payment by a specified date.

148. In the more recent decision of Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm) , Sir Richard Field considered earlier decisions on the making of unless orders as a means of enforcing interim costs orders, and stated the following principles: (1) The imposition of a sanction for non-payment of a costs order involves the exercise of a discretion pursuant to the court’s inherent jurisdiction. (2) The court should keep carefully in mind the policy behind the imposition of costs orders made payable within a specified period of time before the end of the litigation, namely, that they serve to discourage irresponsible interlocutory applications or resistance to successful interlocutory applications. (3) Consideration must be given to all the relevant circumstances including: (a) the potential applicability of Art.6 of ECHR; (b) the availability of alternative means of enforcing the costs order through the different mechanisms of execution; (c) whether the court making the costs order did so notwithstanding a submission that it was inappropriate to make a costs order payable before the conclusion of the proceedings in question; and where no such submission was made whether it ought to have been made or there is no good reason for it not having been made. (4) A submission by the party in default that he lacks the means to pay and that therefore a debarring order would be a denial of justice and/or in breach of Art.6 of ECHR should be supported by detailed, cogent and proper evidence which gives full and frank disclosure of the witness’s financial position including his or her prospects of raising the necessary funds where his or her cash resources are insufficient to meet the liability. (5) Where the defaulting party appears to have no or markedly insufficient assets in the jurisdiction and has not adduced proper and sufficient evidence of impecuniosity, the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering. (6) If the court decides that a debarring order should be made, the order ought to be an unless order except where there are strong reasons for imposing an immediate order.”

149. In so far that Mr Kirby KC referenced the terms of HHJ Pearce’s order, I do not accept that included a fetter being placed upon my case management of the assessment exercise envisaged.

150. For example, the order included no provision that certain categories of applications or case management decisions must be directed or referred back to HHJ Pearce.

151. Further, I very much doubt that upon transfer to the SCCO it was the intention of HHJ Pearce to create an environment in which the parties could ignore rules and orders on the basis that no form of sanction could be applied as a consequence.

152. If one takes the example of a personal injury claim in which liability is admitted such that judgment is entered with damages to be assessed; if an interim payment application follows and, despite opposition, is ordered, then what is the court and claimant in that scenario to do if the ordered payment is not made?

153. Mr Kirby KC’s submissions suggest that nothing may be done. Thus absent the ordering and imposition of a sanction, a claimant with a good claim may be forced to expend significant resources pursuing a defendant who has no intention of paying and who is interested only in delaying the time to make any payments. Conduct of the parties

154. In the course of Mr Kirby KC’s submissions, the Claimant’s conduct was described as “inappropriate”. However, the Defendants have not made good on this suggestion.

155. I am not aware of any conduct points being raised in the originating proceedings before HHJ Pearce, which ultimately led to a straightforward order that judgment be entered in favour of the Claimant with damages (in the form of costs) to be assessed.

156. Neither the claim, the application for an interim payment order, or the application for an unless order could be described as premature. Further, I do not consider any of the Claimant’s procedural steps thus far could be described as tactical.

157. Indeed, given judgment was entered based on admissions in the defences, and given the interim payment order is no longer disputed, any arguments as to ‘tactics’ or “inappropriate” conduct must rest with the pursuit of an unless order only.

158. Mr Kirby KC suggested the Claimant does not want the “hassle” of an assessment. I find quite the contrary to be the case. The Claimant is ready for their bills to be assessed but wish to be reassured that funds are available if they continue with this assessment.

159. Substantial sums are outstanding, judgment has been entered, and the Defendants accept they are liable to the Claimant for the Claimant's fees. The only issue in dispute is quantum.

160. The unless order isn’t tactical and no cogent argument is made out that the Claimant’s conduct is inappropriate.

161. Turning to the Defendant’s conduct, it is not lost on me that the Defendants have pursued a line of argument to have the unless order discharged or varied, because they are out of time to appeal the unless order and alternatively will have to seek the permission of a higher court otherwise.

162. There is also the fact that the Defendants have long given up the opportunity to commence their own costs only proceedings, in which case they could have avoided the ordering of an interim payment altogether. See, for example, section 70(1) of the Solicitors Act 1974 which provides that: “Where before the expiration of one month from the delivery of a solicitor’s bill an application is made by the party chargeable with the bill, the High Court shall, without requiring any sum to be paid into court, order that the bill be assessed and that no action be commenced on the bill until the assessment is completed.”

163. Having given up that opportunity, the Defendants failed to advance any cogent arguments to support either not making an interim payment order, or for a lower sum than that order.

164. The interim payment order having been made, no application was made thereafter to vary or set it aside, nor to appeal the making of the order.

165. Thereafter, the Defendants simply let the deadline for payment pass without making an application to extend the time to pay, or otherwise make any sensible proposals that the Claimant could have at least considered consenting to.

166. Then, and despite today being able to fund the attendance of leading counsel, the Defendants acknowledge that upon the application for an unless order being listed they elected to be unrepresented and did not attend.

167. Thereafter, and despite being unrepresented, the Defendants failed to apply to vary or set aside the unless order, or appeal the making of that order. In one sense, that is of no surprise at all given that there had been no change of circumstances and the Defendants had no evidence or argument in support of an alternative outcome.

168. Thereafter, the Defendants again ignored the court’s order and allowed the second deadline to pass, notwithstanding the sanction which would apply in the face of continued non-compliance.

169. Again, no application was made to extend the time for payment, nor were any sensible settlement proposals advanced.

170. As such, the Defendants found themselves in the position of having to make the application heard today. Impecuniosity

171. Notwithstanding Mr Kirby KC’s submissions to the contrary, I do not consider that Mr Lappin’s first witness statement is intended to support the contention that an impecunious person should not be able to challenge a bill. What Mr Lappin is contending is that such a person should be required to prove their impecuniosity.

172. In any event, the Defendants have not proven impecuniosity. At best they seek to infer it, and make arguments that suggest the burden is on a receiving party to show that a paying party is not impecunious.

173. It is also something of a curiosity that whilst claiming impecuniosity, the 2nd Defendant has been able to secure €200,000 to fund opposing the imposition of the unless order.

174. Further, one cannot ignore that despite accepting a liability to make further payments to the Claimant, and the apparent ability to secure a six-figure sum to pay their currently instructed lawyers, the Defendants did not even contemplate using those funds to at least part pay the interim sum ordered and thereafter seek to agree or apply for an extension of time to pay the balance.

175. Despite ample opportunity, neither of the Defendants have evidenced impecuniosity and at best have relied on the drawing of inference.

176. In so far that Mr Marven KC took me to paragraph 25 of Mrs Justice Bacon’s judgment dated 19 December 2023 (quoted above), there is in fact little by way of evidence for me to “anxiously scrutinise” as to either Defendants’ ability to pay.

177. The Defendants’ witness statements amounts to allusions at best, relying heavily on inference rather than evidence.

178. Further, the Defendants are not assisted where, by reference to paragraph 14 of the 2nd Defendant’s second witness statement (dated 22 September 2025), it is stated: “The financial situation of both defendants will be (emphasis added) evidenced in detail by an independent witness statement which demonstrates the current financial position of both parties and our inability to meet the interim payment order.”

179. In doing so, the 2nd Defendant at least implicitly accepts a requirement to evidence the Defendants’ impecuniosity, and yet no such independent witness statement was filed or served by the time of the hearing of this application.

180. For the avoidance of doubt, Mr Waters’ report does not meet the threshold of providing evidence of “the current financial position of both [Defendants] and [their] inability to meet the interim payment order.” Costs Draftsperson’s opinion

181. Prior to even dealing with the question of whether I should consider Mr Waters’ report, I must also be alive to the fact that simply because costs arguments are being raised now which were not raised at the two earlier hearings, that does not equate to a material change of circumstances.

182. The content of Mr Waters’ report are points and queries it was always open for the Defendants to make, based on the circumstances as they stood when my earlier orders were made.

183. The report of Mr Waters is not evidence. It is opinion. I know not of Mr Waters’ experience but whilst many of his observations might sound in a traditional inter partes detailed assessment of costs, the assessment of fees (whether treated as costs or as part of a damages claim) as between solicitor and client are very different to an inter partes assessment.

184. Further, there is nothing in what Mr Waters says now that could not have been raised at the time of the making of the interim payment order or the unless order.

185. The fact is that the Claimant has real and genuine concern that they risk throwing good money after bad if the Defendants either cannot pay or have no intention of paying the balance of the Claimant’s fees whether assessed or not. The Claimant’s concern is that the Defendants’ intention is to delay an assessment for as long as possible.

186. Had Mr Waters’ observations been raised when the interim payment order was made, I may have been persuaded to order a lower sum. However, the sum ordered is already substantially less than the amount owed, and there is no indication or argument raised from the Defendants, via Mr Waters’ opinion, that a lower sum would have been justified.

187. Crucially, no argument is raised in Mr Waters’ report that would have called into question the making of an interim payment order at all. Thus even now that report has been produced and disclosed, it does nothing to dispel the notion that an interim payment order ought to have been made.

188. Further, given that even if a lower sum had been ordered, the Defendants’ stance is that they still would have breached the order such that an application for an unless order would still have followed. Decision

189. During the course of submissions, Mr Kirby KC made it clear that the Defendants were no longer seeking an extension of time to appeal, nor permission to appeal from me. My judgment therefore does not address point 5 of the application.

190. Mr Kirby KC also made it clear that the Defendants were no longer seeking that the original interim payment order be set aside, as per point 3.

191. As such, this judgment focuses on points 1, 2 and 4:

1. The unless order dated 1 September 2025 ("the Unless Order") be discharged pursuant to CPR r3.1(7) and/or CPR r3.9;

2. Alternatively, that the Defendants be granted relief from the sanctions set out in the Unless Order pursuant to CPR r3.9;

4. The Interim Payment Order be varied pursuant to CPR 25.20(6) to reflect the security already obtained by the Claimant in Belgium.

192. CPR 3.1(7) is found under “The court’s general powers of [case] management” and provides that: “A power of the court under these Rules to make an order includes a power to vary or revoke the order.”

193. In effect, the Defendants seek that I use my discretion under CPR 3.1(7) to “discharge”, i.e. revoke the unless order.

194. As to the application of CPR 3.1(7), the Court of Appeal’s guidance, as cited in paragraph 39 of Tibbles v SIG plc (trading as Asphaltic Roofing Supplies) [2012] EWCA Civ 518 , states: “39. In my judgment, this jurisprudence permits the following conclusions to be drawn: (i) Despite occasional references to a possible distinction between jurisdiction and discretion in the operation of CPR 3.1(7), there is in all probability no line to be drawn between the two. The rule is apparently broad and unfettered, but considerations of finality, the undesirability of allowing litigants to have two bites at the cherry, and the need to avoid undermining the concept of appeal, all push towards a principled curtailment of an otherwise apparently open discretion. Whether that curtailment goes even further in the case of a final order does not arise in this appeal. (ii) The cases all warn against an attempt at an exhaustive definition of the circumstances in which a principled exercise of the discretion may arise. Subject to that, however, the jurisprudence has laid down firm guidance as to the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised, namely normally only (a) where there has been a material change of circumstances since the order was made, or (b) where the facts on which the original decision was made were (innocently or otherwise) misstated. (iii) It would be dangerous to treat the statement of these primary circumstances, originating with Patten J and approved in this court, as though it were a statute. That is not how jurisprudence operates, especially where there is a warning against the attempt at exhaustive definition. (iv) Thus there is room for debate in any particular case as to whether and to what extent, in the context of principle (b) in (ii) above, misstatement may include omission as well as positive misstatement, or concern argument as distinct from facts. In my judgment, this debate is likely ultimately to be a matter for the exercise of discretion in the circumstances of each case. (v) Similarly, questions may arise as to whether the misstatement (or omission) is conscious or unconscious; and whether the facts (or arguments) were known or unknown, knowable or unknowable. These, as it seems to me, are also factors going to discretion: but where the facts or arguments are known or ought to have been known as at the time of the original order, it is unlikely that the order can be revisited, and that must be still more strongly the case where the decision not to mention them is conscious or deliberate. (vi) Edwards v. Golding is an example of the operation of the rule in a rather different circumstance, namely that of a manifest mistake on the part of the judge in the formulation of his order. It was plain in that case from the master's judgment itself that he was seeking a disposition which would preserve the limitation point for future debate, but he did not realise that the form which his order took would not permit the realisation of his adjudicated and manifest intention. (vii) The cases considered above suggest that the successful invocation of the rule is rare. Exceptional is a dangerous and sometimes misleading word: however, such is the interest of justice in the finality of a court's orders that it ought normally to take something out of the ordinary to lead to variation or revocation of an order, especially in the absence of a change of circumstances in an interlocutory situation.”

195. The starting point is to recognise I have a wide discretion under CPR 3.1(7). However, it is not a discretion to be exercised on a whim. One is instead guided by the notion that something out of the ordinary ought to have arisen to justify varying or revoking an order.

196. Of the possible reasons that might apply, I do not consider I am being invited to conclude that I committed a “manifest mistake” in “the formulation of [my unless] order”.

197. Whilst the Court of Appeal were otherwise careful not to suggest there is an exhaustive list of reasons which might lead to an order being varied or revoked, the appeal court did recognise that “the primary circumstances in which the discretion may, as a matter of principle, be appropriately exercised” was where there had been a material change of circumstances since the order was made, or where the facts on which the original decision was made were (innocently or otherwise) misstated.

198. I do not understand there to be any allegations that the Claimant or Mr Marven KC caused any facts to be misstated at the hearing of the unless order application, and in any event I consider the order to have been made on the basis of a true and sound factual matrix.

199. The primary question is thus whether there has been “a material change of circumstances since the order was made”.

200. In my view, the answer to that question is no. As outlined above, there is nothing in the report of Mr Waters which the Defendants could not have known at the time of the hearing of the unless order application. Information regarding the Defendants’ Belgian properties were made known to the court at the time of the interim payment order hearing.

201. Indeed, if there has been any change of circumstances it is the apparent ability of the Defendants to raise €200,000 when at the time of the earlier hearings the Defendants had originally argued they had no funds to access, followed by a suggestion they could raise £20,000.

202. The point is that there has been no material change in circumstances which would lead me to revoke the unless order pursuant to CPR 3.1(7), nor is there any other arguments advanced that would convince me to revoke the order under this rule.

203. In drawing that conclusion, I take into consideration the Defendants’ liability to the Belgian tax authorities, which is also not a material change of circumstances.

204. I also pause to observe a potential inconsistency in the Defendants’ referencing of that liability. On the one hand, the court is being told there is no need to enforce the unless order because the Claimant has the benefit of securities over properties held in Belgium by the Defendants. However, on the other hand the court is being told that the Defendants’ liabilities to the Belgian tax authorities ought to be taken into account in deciding whether or not the Defendants are impecunious.

205. That suggests an unclear picture of in what preference the proceeds of the sale of any of the named properties would be distributed.

206. That is all in the vacuum of any certainty as to the actual valuation of the properties referred to, what proportion of interest the Defendants hold in those properties, and the order in which creditors (including the Belgian tax authorities) will be paid.

207. One cannot also help but observe that unless the properties in question are worth in excess of €31m, or the Defendants have good prospects of substantially reducing their outstanding tax liabilities, the properties referenced may ultimately provide no security at all.

208. Thus whilst reliance is placed in a letter dated 19 September 2025 from Roland Forestini, of Belgian firm Forestini Duarte, the content of the same does nothing to address the evidential concerns I have set out above.

209. Turning next to CPR 25.20, one is minded to recognise the provision of CPR 25.20(8) and in that regard I recognise my discretion to award the Defendants interest on any overpaid amount from the date when an interim payment is made (where the Claimant is awarded or agrees to accept less than amounts already paid).

210. As to CPR 25.20(6), one recognises the rule is a mechanism by which an interim payment may be adjusted. Thus under “SECTION V Interim Payment Orders” and the court’s powers under CPR 25.20(6) provide: “The court may adjust any interim payment whether or not any payment has yet been made (voluntarily or under a previously made order). The court may in particular— (a) order all or part of the interim payment to be repaid; (b) vary or discharge the order for the interim payment;”

211. Sub-section (a) thus sensibly provides the means by which all or part of an interim payment may be repaid – which is clearly necessary where a claimant has been awarded or recovered less than the sum of a received interim payment, or failed in their claim.

212. Sub-section (b) provides a mechanism to vary the order for the interim payment.

213. The unless order did not vary the amount of the interim payment. Further, the unless order did not vary what the 7 July 2025 order says.

214. The unless order set a conditional date for payment with an attached sanction for non-payment. As such, I do not consider that the making of the unless order equates to the interim payment order being varied.

215. They are two separate orders. The interim payment order carried no automatic sanction, the intention of the court being that the Defendants should be afforded an opportunity to comply without proceeding under the threat of a sanction.

216. The fact that a sanction was later introduced is simply a reflection of the fact that absent the sanction, all the Claimant’s application would have achieved is an extension of time for payment – which would only benefit the Defendants, and notwithstanding the fact the Defendants had made no application of their own to extend time for payment.

217. Further, one cannot ignore the absence of any effort on the part of the Defendants to apply to vary or set aside either of the orders that preceded the present application.

218. Mr Kirby KC described the impact of the unless order as disproportionate and unjust. In my view, neither of these allegations can reasonably be levelled in so far that the Defendants were in fact given additional time to pay.

219. I disagree that the imposition of a sanction for future non-compliance with an order which has already been ignored may reasonably be described as disproportionate and unjust. That is especially so given the Defendants’ own conduct in these proceedings.

220. It is not unjust to require parties to comply with orders. Especially orders which the defaulting party took no steps to vary, set aside or appeal. One is also minded to recall the Defendants could have commenced their own Part 8 costs only proceedings, and the arguably generous length of time the Claimant waited before formally suing for their unpaid fees.

221. In so far that I am instead invited to treat the unless order as a CPR 25.20(6)(b) variation to the interim payment order, I reject that invitation. The interim payment order was not varied and CPR 25.20(6)(b) is not the correct mechanism to have an unless order varied or discharged.

222. In any event, even if I am wrong about that, I see no basis upon which I would otherwise by minded to discharge the unless order. My reasons for drawing that conclusion are, in effect, the same factors I have taken into account when considering whether to grant relief, for which see below.

223. In that regard, one is directed to consider CPR 3.9 and apply the Denton principles.

224. The Defendants accept that the failure to pay the interim payment ordered “is significant in monetary terms” but otherwise downplays the failure, distinguishing the same from a failure to comply with a case management direction or take a required procedural step.

225. The Defendants cite an inability to pay as the reason, to be contrasted with disrespect for the court, tactical non-compliance or the deliberate flouting of order (references taken from paragraph 40 of Mr Kirby KC’s skeleton argument).

226. It seems to me those are arguments that go to why the default occurred and all the circumstances, i.e. stages 2 and 3 of the Denton test.

227. The proceedings were started because the Defendants have not paid their fees. They are being sued for those unpaid fees and the amount outstanding runs to seven figures. The Defendants failed to agree or propose a voluntary interim payment. The Defendants failed to comply with an interim payment order. The Defendants have failed to comply with an unless order. The starting point therefore is that the breach is serious and significant.

228. As to why the default occurred, it is simply not good enough to argue that “D2 could not reasonably have anticipated that an interim payment order would be made without proper judicial consideration of the substantial security that the Claimant had already obtained in Belgium.”

229. The Defendants were represented at the interim payment order hearing and the ‘Belgian security’ point was raised and considered. If the Defendants consider the subsequent order was made “without proper judicial consideration” then they ought to have said as such, applied to set aside or vary that order, or appeal that order.

230. The Defendants non-attendance at the hearing of the unless order application was a choice, because whilst the Defendants may well have been unable to instruct someone to attend on their behalf, they were not prevented from representing themselves.

231. In any event, the primary reason given – that the Defendants simply don’t have the funds to pay anything – has never been adequately evidenced. That is an argument of impecuniosity and I have commented extensively in that regard above.

232. I do accept that, pursuant to paragraph 27 of Northern Powerhouse & Ors , that it is open to me to consider if the Defendants’ evidence prima facie establishes impecuniosity. However, in my view, there is insufficient evidence to draw such a conclusion, even on the balance of probabilities.

233. Taking into account all the circumstances, the Defendants are absolutely correct to recognise that the imposition of the sanction eliminates their right to an assessment of damages. However, no public interest concerns arise. The concerns are limited to the Defendants named in this matter only.

234. The vast majority of defendants to money only claims, especially those who have admitted liability and had judgment entered against them, will either make voluntary payments on account or otherwise comply with orders to pay.

235. Indeed, the vast majority of clients will not even require any court proceedings to be instituted against them to settle their unpaid fees.

236. There is no public interest in permitting parties to wilfully ignore orders and rely only on inference and/or novel interpretations of the civil procedure rules to escape their obligations under such orders.

237. References to the Solicitors Act 1974 at best introduce elements of the principles that might apply to the assessment of damages exercise that was intended to follow. As repeatedly stated above, the Defendants had their chance to commence their own Part 8 costs only proceedings and neglected to.

238. Further, in so far as Solicitors Act 1974 principles are relied on, the protections built into the same are designed to protect clients and solicitors alike. In this case, the Defendants are seeking to deny the Claimant any protection, by compelling the Claimant to continue expensive litigation with no certainty that the principal sum nor the costs associated in pursuit of the same will ever be paid.

239. I disagree with the suggestion that interim payment orders would become a strategic tool by which to prevent costs challenges if the unless order is permitted to stand.

240. Interim payment orders and interim costs certificates are extremely common. Further, it is not as though the original interim payment order attached an automatic sanction, or that the Defendants did not have ample opportunity to plead either impecuniosity or for a lower interim payment amount.

241. The Claimant has not weaponised an unless order in this matter. The Defendants find themselves in this position entirely as a product of their own conduct.

242. The Defendants have failed to establish that the Claimant faces “minimal prejudice” because the Defendants have failed to sufficiently evidence that the Claimant has “substantial security in Belgium” for the reasons stated above.

243. As to whether either Defendant will suffer “disproportionate prejudice”, this ignores the fact that they have had the right to challenge the Claimant’s bills ever since the first bill was delivered, and the fact the Claimant did not rush into issuing their own claim.

244. Further, this judgment does not create “a precedent whereby interim payments can circumvent costs procedures”. It simply reflects the fact that a defendant who repeatedly passes up opportunities to challenge costs cannot additionally wilfully repeatedly ignore orders of the court based on arguments that are repeatedly unevidenced.

245. Additionally, and absent a fundamental retainer argument (which incidentally has not been identified), enforcing the unless order will not cause “the Claimant to be paid costs to which it would otherwise not be entitled”. The Claimant is contractually entitled to seek they be paid the full amount of the costs they incurred when representing the Defendants.

246. The question is one of whether the Defendants should be entitled to progress to assessment to make their arguments based on reasonableness. That is an entitlement the Defendants retained from the moment the first bill was delivered. The Defendants have now lost that entitlement as a consequence of their own conduct. It is entirely of their own making.

247. The Northern Powerhouse principles have been considered above, but in summary I do not consider that genuine impecuniosity has been established nor has a prima facie case been made out such that I could conclude impecuniosity on the balance of probabilities. I am not satisfied that the Defendants have established a genuine inability to pay.

248. In all the circumstances, the application for relief is dismissed. Concluding remarks

249. One recalls that the Defendants were represented and heard at the interim payment order hearing, and as of today do not object to the making an interim payment order.

250. In terms of a denial of justice, the Defendants cannot claim that their application is “supported by detailed, cogent and proper evidence which gives full and frank disclosure of the [DEFENDANTS’] financial position including his or her prospects of raising the necessary funds where his or her cash resources are [said to be] insufficient to meet the liability”.

251. The index dispute is one in which the Defendants claim to “have no or markedly insufficient assets in the jurisdiction” yet have “not adduced proper and sufficient evidence of impecuniosity”.

252. Consistent with the view expressed by Sir Richard Field in Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm) , I concur that “the court ought generally to require payment of the costs order as the price for being allowed to continue to contest the proceedings unless there are strong reasons for not so ordering”.

253. The Defendants have not advanced any strong reasons.

254. Where impecuniosity is claimed in this matter, it is by means of inference rather than evidence at best. The Defendants stated an intention to produce independent evidence in support and yet no such evidence has been filed or served.

255. Judgment has been entered for the Claimant and the Defendants explicitly recognise they have a liability to pay costs to the Claimant.

256. A substantial sum of unpaid fees remains outstanding and notwithstanding the interim payment order was limited to 50% of the outstanding amount, the Defendants have not meaningfully engaged in any steps which might at least part-comply with the original interim payment order.

257. That is notwithstanding the Defendants’ case being that they were able to raise €200,000 to fund a challenge to complying with the interim payment order.

258. Further, there remains no credible explanation why the Defendants did not utilise the powers available to them under the Solicitors Act 1974 and proactively pursue an assessment of costs, if they thought the Claimant’s fees were unreasonable. Nor why the Defendants cannot demonstrably show they exhausted any available complaints procedures or otherwise sought to negotiate a compromise with the Claimant over their fees.

259. Instead, it appears the Defendant was content to make no further payments until and unless they were ordered to, and it was left to the Claimant to sue upon their unpaid fees.

260. In so far as concerns of unjust enrichment have been raised, paragraph 27 of Mr Lappin’s 4th witness statement confirms that “If the Claimant was to receive monies towards the debt, whether by way of payment of funds from the Interim Payment Order or by recovering monies under the seizure orders (albeit we say this would not happen), the monies received would be netted off the security obtained.”

261. In addition, I concur with Mr Marven KC’s observation that an interim payment order is not an order for security, but rather where the court is satisfied a claimant is owed money and should be entitled to a reasonable proportion of it.

262. However, the overarching point here is that I am satisfied that the making of the interim payment order, enforced as it now is by the unless order, will not lead to the Claimant being unjustly enriched.

263. There is a contractual maximum sum the Claimant is entitled to and the parties are well aware that the indemnity principle is breached if the Claimant were to attempt to retain any sums in excess of the contractual maximum.

264. In so far that the effect of breaching the unless order is that “Judgment be entered in favour of the Claimant against the Defendants for the full amount of its claim in the sum of £1,482,245.70 plus interest of £270,953.69 and with costs to be assessed if not agreed”, the Defendants must understand that is a consequence of their conduct.

265. When judgment in default is entered, it is not unjust enrichment. It is a consequence of the default. As to notions of proportionality, had this been proceedings under the Solicitors Act 1974 , then the costs would be assessed on the indemnity basis and not the standard basis. In any event, it was the Claimant who brought these proceedings such that the Claimant’s unpaid fees are sued upon as a debt and were to be assessed as damages.

266. In either approach, arguments of a disproportionate outcome as a result of the Defendants’ default are not made out. Next steps

267. It is my understanding that the Defendants intended to await the outcome of this judgment before deciding whether to appeal the making of the unless order.

268. Absent any such steps being taken, and conscious of the need to conduct a summary assessment of the costs of these proceedings now that the claim is effectively concluded, the parties are directed to file their available dates and a time estimate to deal with the summary assessment of the Claimant’s costs of these proceedings and any other consequential matters.

269. The order that shall accompany this judgment will record that the Defendants’ application dated 22 September 2025 is dismissed and that the Defendants shall pay the Claimant’s costs of and occasioned by the application, to be summarily assessed on the standard basis if not agreed.