The Senior Courts Costs Office’s decision in Fieldfisher LLP v Scherbakova & Anor [2026] EWHC 104 (SCCO) confirms that parties seeking relief from unless orders on grounds of impecuniosity must adduce proper evidence, not rely on inference.
Background
The Claimant, Fieldfisher LLP, provided legal services to the Defendants, Olga Scherbakova and Alexander Scherbakov, in relation to a contentious probate claim concerning their late father’s estate, under engagement letters dated December 2022 and January 2023 [§3, §5]. The Defendants ceased instruction in August 2023 [§7]. During the retainer, the Claimant issued invoices totalling £1,944,078.48, of which a substantial balance remained unpaid [§8].
The Claimant commenced proceedings to recover the unpaid fees as a debt [§9]. In their Defences, the Defendants admitted liability to pay costs subject to reasonableness [§20–21]. On 2 December 2024, HHJ Pearce entered judgment for the Claimant for an amount to be decided and transferred the matter to the Senior Courts Costs Office for “damages to be assessed” [§48]. A directions order on 29 April 2025 set a timetable for the assessment of the disputed fees, adopting a procedure akin to CPR 46.10 by analogy, though the proceedings were not brought under the Solicitors Act 1974 [§10–12, §24].
The Claimant’s application for an interim payment was heard on 7 July 2025 [§25]. The Defendants opposed it, alleging impecuniosity, but the court was not persuaded by the evidence provided [§28–30]. Costs Judge Nagalingam ordered the Defendants to pay an interim payment on account of £741,122.85 by 5 August 2025, with summarily assessed costs of £20,000 [§33]. The judge regarded this sum—approximately 50% of the outstanding balance—as modest [§30–32].
The Defendants did not pay, apply to vary, or appeal this order [§34]. On 12 August 2025, the Claimant applied for an unless order [§35]. The Defendants said they would be unrepresented due to a lack of funds and did not attend the hearing on 1 September 2025, instead submitting written representations—a course the court later characterised as a choice rather than a necessity [§37, §142]. The court made an unless order requiring payment by 22 September 2025, failing which the Defences would be struck out and judgment entered for the full claimed sum plus interest [§42]. The Defendants again did not pay by the deadline, instead issuing the present application on 22 September 2025 [§43].
Costs Issues Before the Court
The Defendants’ application, as refined at the hearing, raised three core costs issues for determination [§2, §191]. First, whether the unless order dated 1 September 2025 should be discharged pursuant to the court’s general case management powers under CPR 3.1(7). Second, and alternatively, whether the Defendants should be granted relief from the sanctions imposed by that unless order under CPR 3.9. Third, whether the interim payment order should be varied under CPR 25.20(6) to account for security the Claimant allegedly held over the Defendants’ Belgian properties, a route which the Defendants argued could also lead to the discharge of the unless order. The Defendants had abandoned their request for permission to appeal [§189].
The Parties’ Positions
The Defendants’ Position: The Defendants contended that enforcing the unless order would cause unjust enrichment, as the Claimant would recover the full invoice value without undergoing an assessment that would likely result in significant reductions [§65–66]. They relied on a report from a costs draftsman, Mr Stuart Waters, which criticised the level of fees, suggesting duplication, excessive internal meetings, and unreasonable time [§58–63]. The Defendants argued that this report constituted a material change of circumstances—an argument the court rejected, holding that these were points always capable of being raised earlier [§59, §75, §181–184].
They maintained they were impecunious and that an unless order would stifle their defence, constituting a denial of justice [§73, §80]. They submitted that the unless order was effectively a variation of the interim payment order under CPR 25.20(6)(b) and should be discharged [§71, §78]. They also argued that the Claimant had security over Belgian properties, an assertion the court found was unsupported by reliable evidence as to value or priority [§74, §204–209].
The Claimant’s Position: The Claimant argued there had been no material change in circumstances to justify varying or revoking the unless order under CPR 3.1(7) [§92–93]. The points in Mr Waters’ report were always available to the Defendants and did not justify revisiting the orders [§84]. The Claimant stressed that the Defendants had never provided cogent evidence of impecuniosity, a point noted when making both the interim payment and unless orders [§94, §101]. The fact the Defendants could now fund leading counsel with a €200,000 loan undermined their impecuniosity claim [§97, §105].
The Claimant submitted that CPR 25.20(6) was the wrong mechanism, as the unless order was a separate sanction for non-compliance, not a variation of the interim payment amount [§82, §116]. On relief from sanctions, the Claimant argued the breach was serious and significant, the reason for default (alleged impecuniosity) was unevidenced, and all circumstances pointed against granting relief [§118–121]. The Claimant also noted the Defendants had forgone the opportunity to trigger a Solicitors Act assessment, which would have stayed the debt claim [§133–135, §162].
The Court’s Decision
Costs Judge Nagalingam dismissed the Defendants’ application in its entirety [§248].
On CPR 3.1(7) and Discharge of the Unless Order: The court applied the principles from Tibbles v SIG plc [2012] EWCA Civ 518 [§113, §193–194]. It found no basis to discharge the unless order. There was no “manifest mistake” in the order’s formulation [§196]. Crucially, there was no material change of circumstances since the order was made [§199–200]. The contents of Mr Waters’ report represented arguments the Defendants could and should have raised at the earlier hearings [§181–182, §184]. The existence of Belgian properties was known at the interim payment hearing, and the court found the purported security was of uncertain value and potentially illusory given competing claims from Belgian tax authorities [§52, §204–209]. The court noted that the only apparent change was the Defendants’ newfound ability to raise €200,000 for legal fees [§201].
On CPR 25.20(6) and Variation of the Interim Payment Order: The court rejected the argument that the unless order was a variation of the interim payment order under CPR 25.20(6)(b) [§213–214]. The two were separate orders; the unless order imposed a conditional sanction for non-compliance with the first, not an adjustment of the payment amount [§214–215]. Even if wrong on this point, the court saw no basis to discharge the order for the same reasons outlined elsewhere [§222].
On Relief from Sanctions under CPR 3.9: Applying the Denton principles [§223], the court held:
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- Stage 1: The breach (non-payment of a substantial interim costs order) was serious and significant [§227].
- Stage 2: The reason for the breach—alleged impecuniosity—was not made out. The Defendants had consistently failed to provide “detailed, cogent and proper evidence” of their financial position, including full and frank disclosure of their means and prospects of raising funds, as required by authorities such as Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm) [§103–104, §231, §250]. Their evidence relied on inference rather than disclosure [§177, §254].
- Stage 3: Considering all circumstances, relief was not justified [§233–248]. The Defendants had ample opportunity to challenge the fees via a Solicitors Act assessment but did not [§135, §237]. They ignored the interim payment order without applying to vary or appeal it [§34, §164–165]. Their non-attendance at the unless order hearing was a choice, not a necessity [§142–143, §230]. There was no public interest in allowing parties to ignore court orders based on unevidenced assertions [§236]. The Claimant’s legitimate interest in not litigating further without payment was recognised [§185].
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On Impecuniosity and Unjust Enrichment: The court found the Defendants had not established impecuniosity, even to a prima facie standard [§232, §247]. The claim that enforcing the unless order would lead to unjust enrichment was rejected [§262]. The judgment sum represented a contractual debt, and the entry of judgment consequent upon the Defendants’ default was “a consequence of the default”, not unjust enrichment [§263–265]. The loss of the chance to argue reasonableness at an assessment was a direct consequence of the Defendants’ own conduct in breaching court orders [§246, §264–265]. The court also accepted the Claimant’s assurance that any recovery would be netted off against any security held [§260].
Consequently, the unless order and its sanctions remained in effect. The Defendants were ordered to pay the Claimant’s costs of the application, to be summarily assessed on the standard basis [§269].
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