Unless Orders and Relief from Sanctions: Striking the Balance in Fee Disputes — Fieldfisher v Scherbakova
Detailed Assessment — 2026-01-20
Costs Judge Nagalingam dismissed applications to discharge an unless order requiring interim payment of £741,122.85 and for relief from sanctions, where defendants claiming impecuniosity assembled a £200,000 war chest and four-lawyer team to challenge the order while failing to provide any cogent financial evidence. The decision applies the Denton three-stage test and Michael Wilson impecuniosity standard, confirming that interim payment orders backed by unless orders are robust enforcement tools in solicitor-client fee disputes.
Overview
Date: 20 January 2026
Judge: Costs Judge Nagalingam
Nature of Proceedings: Application to discharge or vary an unless order for interim payment of solicitors' fees; application for relief from sanctions
Key Issues:
- Whether an unless order requiring payment of £741,122.85 should be discharged under CPR 3.1(7)
- Whether relief from sanctions should be granted under CPR 3.9 (Denton principles)
- Standard of evidence required to establish impecuniosity
- Whether an unless order for non-payment of an interim payment constitutes a "variation" under CPR 25.20(6)
- The consequences of failing to pursue available statutory remedies under the Solicitors Act 1974
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The Facts
Fieldfisher LLP was engaged by Olga Scherbakova and Alexander Scherbakov in December 2022 and January 2023 to provide probate and legal services relating to their father Vladimir's estate. Over a period of approximately eight months, the firm incurred total fees of £1,944,078.48 across multiple invoices from 31 December 2022 to 31 August 2023.
The defendants paid £461,832.78 before standing the firm down in August 2023, leaving an outstanding balance of £1,482,245.70. Fieldfisher commenced proceedings for the unpaid fees in February 2024. In December 2024, HHJ Pearce entered judgment for the claimant for "an amount to be decided by the court," with damages to be assessed.
The procedural history that followed was marked by repeated non-compliance by the defendants. On 7 July 2025, Costs Judge Nagalingam ordered an interim payment of £741,122.85 by 5 August 2025. The defendants did not pay. On 12 August 2025, Fieldfisher applied for an unless order. On 1 September 2025, the court made an unless order requiring payment by 22 September 2025, with sanctions of striking out both defences and entering judgment for the full claim amount of £1,482,245.70 plus interest of £270,953.69. The defendants did not attend the unless order hearing.
On 22 September 2025 — the very deadline for compliance — the defendants applied for relief from sanctions.
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The Impecuniosity Defence
The defendants' primary argument was that they were unable to pay. They pointed to prolonged estate litigation in multiple jurisdictions, vast legal expenditure, unemployment, debt, and potential liabilities to Belgian tax authorities of up to £31 million. They also raised the spectre of bankruptcy.
Costs Judge Nagalingam subjected these claims to detailed scrutiny, applying the standard from Michael Wilson & Partners Ltd v Sinclair [2017] EWHC 2424 (Comm), which requires a party claiming impecuniosity to provide:
> "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."
The judge found the defendants' evidence fell far short of this standard:
> "The Defendants' witness statements amounts to allusions at best, relying heavily on inference rather than evidence."
A promised independent financial statement was never filed. Most damaging was the inconsistency between the defendants' claims of impecuniosity and their ability to instruct leading counsel (Mr Kirby KC) and assemble a team of four lawyers with a reported "war chest" of £200,000 for this very application. The judge noted the disparity:
> "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."
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Material Change of Circumstances
The defendants sought to discharge the unless order under CPR 3.1(7), arguing that a report from costs draftsman Stuart Waters identifying "significant issues" with Fieldfisher's fees constituted a material change of circumstances. The Waters report raised concerns about duplication from multiple fee earners, excessive internal meetings, "grossly excessive" disclosure review expenditure, and block billing.
The judge dismissed this argument, applying the guidance from Tibbles v SIG plc [2012] EWCA Civ 518 that variation under CPR 3.1(7) is justified "normally only" where there is a material change of circumstances since the order was made, or where the facts on which the decision was based were misstated. The observations in the Waters report were matters the defendants could — and should — have raised at the interim payment hearing:
> "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."
If anything, the changed circumstances cut the other way: the defendants had demonstrated they could raise £200,000 when previously claiming they had no funds at all.
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The Denton Analysis
Applying the three-stage test from Denton v TH White Ltd [2014] EWCA Civ 906 to the application for relief from sanctions under CPR 3.9, the judge found against the defendants at every stage.
Stage 1 — Seriousness and significance of the breach: The breach was "serious and significant." The proceedings existed precisely because fees were unpaid. Judgment had already been entered. The outstanding sums ran to seven figures. There had been multiple breaches of court orders.
Stage 2 — Reason for default: The defendants' explanations were inadequate. Their claim that they could not reasonably have anticipated an interim payment order was dismissed as "simply not good enough." Their non-attendance at the unless order hearing "was a choice." Their impecuniosity was never "adequately evidenced."
Stage 3 — All the circumstances: The judge rejected the argument that enforcing the unless order would amount to the claimant "weaponising" the interim payment process to prevent a proper costs assessment:
> "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."
The judge also noted the absence of any public interest consideration, stating that "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."
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The Solicitors Act Point
A particularly telling element of the judgment was the court's observation about the defendants' failure to pursue assessment under the Solicitors Act 1974. Section 70(1) permits a client to apply for assessment before the solicitor has commenced proceedings for payment. The defendants had that opportunity and did not take it. The judge found:
> "There remains no credible explanation why the Defendants did not utilise the powers available to them under the Solicitors Act 1974."
This failure undermined the defendants' complaint that the unless order was preventing them from challenging the reasonableness of the fees.
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Key Takeaways
For Solicitors
1. Interim payments are enforceable — Where judgment has been entered and an interim payment ordered, the court will enforce compliance through unless orders. Solicitors should not hesitate to pursue this route where clients fail to pay.
2. Impecuniosity claims require hard evidence — Inference and assertion are not enough. A party claiming inability to pay must provide detailed, cogent, and full financial disclosure. Inconsistencies — such as claiming poverty while instructing leading counsel — will be fatal.
3. The Solicitors Act is a two-way street — Clients who fail to pursue assessment under s.70 when the opportunity is available will find it difficult to complain later that enforcement prevents them from challenging fees.
For Clients
1. Engage early or face the consequences — Non-attendance at hearings, failure to file evidence, and letting deadlines pass without engagement will almost certainly result in adverse orders that are very difficult to undo.
2. Use statutory remedies when available — If you dispute your solicitor's fees, apply for assessment under s.70 before proceedings are issued. Waiting until enforcement is underway dramatically weakens your position.
3. Raising funds selectively undermines credibility — A court will draw adverse inferences from a party who claims inability to pay a court-ordered sum but is able to fund substantial legal representation for the application to set that order aside.
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Conclusion
Fieldfisher v Scherbakova is a striking example of the court's willingness to hold parties to their obligations, even where the sums at stake are very large. The judgment makes clear that impecuniosity is not established by inference or assertion; it requires detailed, transparent evidence of the kind the defendants repeatedly promised but never provided.
The decision is also a powerful reminder that procedural choices have consequences. The defendants' failure to attend the unless order hearing, to file promised financial evidence, to pursue statutory assessment when available, and to engage meaningfully with the court's processes left them with no viable route to relief. The court was careful to distinguish between genuine inability to pay — which might engage the court's sympathy — and strategic non-compliance dressed up as hardship.
For practitioners, the case reinforces the importance of the Michael Wilson framework for impecuniosity and confirms that interim payment orders, backed by unless orders, are robust tools for solicitors seeking to recover undisputed fees. The judgment also underscores a recurring theme in costs jurisprudence: the court expects parties to use the mechanisms available to them, and will be unsympathetic to those who ignore those mechanisms and then complain about the result.
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Citation: Fieldfisher LLP v Scherbakova & Anor [2026] EWHC 104 (SCCO)
Full judgment available at: BAILII
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