Inability to pay not a good reason not to make order for interim payment

An interesting High Court decision involving actor and director Noel Clarke and The Guardian newspaper group. The Defendant succeeded in defending the liable claim brought against it. 

In Clarke v Guardian News & Media Ltd [2025] EWHC 2575 (KB) (23 September 2025) the court ordered the Claimant to pay the Defendant's costs on an indemnity basis. It was noted that the claim had been brought or maintained dishonestly, made baseless accusations against witnesses and moreover, maintained and publicly aired the same. 

As a practice point the case highlights some commentary on the making of an indemnity costs award, determining the appropriate level of interim payment and reinforces that means to pay has no influence over the making of an order for costs or for a payment on account.  

Speed Read 

The case highlights some interesting points as to both indemnity costs and payments on account: 

1. The ability to pay is not relevant to either the making of an order for costs or the making of an order for a payment on account. It is only relevant to enforcement.  

2. Where a claim has been brought or maintained dishonestly it is normal for the court to mark its disapproval by making an order for indemnity costs. Here the Claimant had made false accusations within the claim, including very serious allegations against witnesses for the Defendant which were both maintained and aired very publicly.  

3. It is not necessary for a party to show that unreasonable conduct increased its conduct where an order for indemnity costs is sought.  

4. Where there is an indemnity costs order then the court is not required to take into account the approved or agreed budget. Here the Defendant's budget was approved at circa £3.1m but costs in excess of £6m had been incurred. It was noted that the court had dispensed with budgeting for the disclosure phase (a reminder that not all costs within a CMO are necessarily always budgeted).  

5. The Defendant here set out explanations as to why they had exceeded the budget including the Claimant's conduct, complexity, expansive disclosure and work on interim applications.  

6. The Defendant sought a payment on account of £3m, circa 50% of the costs claim. The Defendant contended that this was reasonable and ordinarily a higher payment on account could be sought.  

7. The Claimant had sought to dispute an order for a payment on account on the basis of his modest means and also the fact that he wished to appeal the claim. Both of these issues were ultimately rejected by the court.  

8. The court considered what an appropriate level of interim would be, noting that "what is a reasonable sum on account of costs will often be one that is an estimate of the likely level of recovery subject to an appropriate margin to allow for error in the estimation." The High Court did not believe there was a real prospect that the Defendant's costs would be reduced by half and as such an interim of £3m would provide an appropriate margin. The Claimant was ordered to pay £3m on account within 28-days. As no application for permission to appeal had been made there was no basis to stay the costs order.  

The Case 

It was noted that to obtain an indemnity costs order "it is not necessary for the Defendant to show that the Claimant's unreasonable conduct increased its costs". 

The court then considered the issue of an interim payment, it was noted that: 

1. The Defendant's total costs were significantly in excess of £6m. 

2. The Defendant's approved budget was £3.1m. 

3. The Defendant's set out that the costs incurred were substantially more than foreseeable. They cited work around disclosure, trial preparation and interim applications. 

4. The court accepted that the total costs would be a matter for detailed assessment. 

5. The Claimant argued that any interim should be modest and proportionate to his means. 

The court held that "In my judgment, Mr. Clarke's asserted inability to pay (about which I make no findings as I have heard no evidence on the issue) is not a good reason not to make an order for payment on account in favour of the Defendant and there is no other good reason. The Defendant is entitled to receive a payment on account so I turn to the question of the amount." 

The Claimant argued that the Defendant's costs were excessive and disproportionate and would be reduced on assessment. He argued that there were also conduct issues relating to the Defendant. 

The court's view was that "a reasonable sum on account of costs will often be one that is an estimate of the likely level of recovery subject to an appropriate margin to allow for error in the estimation. The Claimant is, of course, right that the total sum in excess of £6 million that Defendant has stated it will be seeking on detailed assessment if costs are not agreed would be likely to be reduced on detailed assessment. But there is no real prospect that they will be reduced so drastically that half that sum does not allow an appropriate margin." 

The court took into account the nature of the claim, the Claimant's conduct, the fact the Defendant's hourly rates and use of delegation in their budget appeared reasonable and the indemnity costs order to determine that the £3m interim sought by the Defendant appeared reasonable, allowing for a suitably wide margin of error. 

Accordingly the court made an order for the Claimant to make a payment on account in the sum of £3m within 28-days.