C’s budget reduced by more than 50% and C ordered to pay costs of the hearing
GS Woodland Court GP 1 Limited & Anor v RGCM Limited & Ors [2025] EWHC 285 (TCC)
Background
This was a claim relating to numerous alleged defects at a block of student accommodation.
There are, on paper at least, seven defendants. The first (D1) is the construction manager. The second (D2) is the architect. The third (D3) is responsible for the cladding on the external walls. The fourth (D4) supplied the modular units. The fifth (D5) was the developer. They (D4 and D5) were being represented jointly. Sixth (D6) was responsible for fire-stopping works. The seventh was the installer.
Incurred Costs
“In terms of headline points to make at this stage, in relation to incurred costs, I am not in a position today to form a view on the material I have, or any time available, as to whether or not the incurred costs are excessive. That does not preclude an argument on detailed assessment that they are excessive, but I am certainly not in a position to make a finding at this stage that they are.
What I can do, on any view, however, is take the incurred costs well into account when I am considering the overall costs that would be expended in relation to any particular phase.”.
Proportionality
“In terms of proportionality, it is not helpful in an over generalised way to take broad comparisons with other cases between the amount at stake and the overall costs incurred and estimated by ratio. One of course steps back and looks at the number -- the overall total here, some now £11 million being claimed against a potential remediation cost of £30 million -- but making comparisons to other cases can be unhelpful. A £100 million case may turn on a point of contractual interpretation. The fact that £100 million is in dispute has little to do with the amount that it would be reasonable and proportionate to spend on a contractual-interpretation dispute. Similarly, you could have a low-value claim that is a ‘death-by-a-thousand-cuts’ type of case where costs may end up being ‘disproportionate’ if only the amount claimed, and not the complexity, is considered.
…That said, in my experience in a case such as this, whilst the Claimants’ costs will likely exceed the highest of the Defendants’, it is unlikely that they will be significantly higher than the highest of the costs of the Defendants; and certainly not approaching the aggregate of all of the Defendants’ costs taken together. Each of the Defendants have to, for example, instruct their own experts, go through their own disclosure exercises, and there will some be necessary duplication, if it can be put that way, of costs between each Defendant facing the same allegations. That is not so for the Claimants, who will have a single team and will therefore have a more efficient mode of working.
Standing back, the costs of £11 million or so (and £12 million as it was before concession this morning), against the aggregate of around £12 million to £13 million of all of the Defendants is a preliminary indicator that the costs claimed by the Claimants may potentially be disproportionate and/or unreasonable.
Hourly Rates
“In terms of rates, it is not for me to provide any particular rates that ought to be substituted for those claimed. However, the rates claimed are significantly in excess of the guideline rates. The claimed rates by Jones Day for the Claimants: Grade A, £1,089 each, compares with Band 1 London of £566; Grade B, £450 against £385; Grade C, £421 and £446 against £299; and trainee paralegal, £248 against £205. I do think a case of this nature justifies London Band 1, but I am reminded of the clear words of Lord Justice Males in Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor (Costs) [2022] EWCA Civ 466, where he recognises that, when it has been determined that Band 1 is appropriate, that in itself recognises that the litigation is substantial and complex, and it qualifies as very heavy commercial work.
In that case, as this, the Claimants have not attempted to justify their solicitors’ charging rates substantially in excess of the guideline rates. The only justification that Ms Packman advances for the rates claimed is that the other Defendants have claimed in excess of the guideline rates. But that is no justification. If the Claimants wanted to take a point about the Defendants’ rates they could have done so; instead they have agreed them. That does not mean that I am bound to take the same view in relation to the Claimants’ claimed rates. I do not take that view.
The rates are excessive and, in due course, whilst of course I am not going to say anything specific in terms of what the rates should be or the precise calculation, I will take account of a relatively sizeable downward adjustment in each of the phases where there are heavy time costs to reflect the excessive rates. An overview of the extent of that contribution to the overall claim has been provided by Ms Stephens. If one substitutes the guideline rates for those that are claimed, it takes about £1.4 million off the overall budget.”.
Conclusion
The Claimant’s budgeted costs were reduced from £8.7m to £4.2m.
Costs of the Costs Management Conference
“The traditional view has been that costs generally in relation to costs management are in the case. That, as Ms Packman rightly says, is the appropriate starting point. There have been two recent authorities demonstrating a trend, at least before Master Thornett, that the Court should take a more proactive view in considering the approach of parties in their cost management and the extent to which the way in which they have approached the matter has led to a hearing, or has increased the likelihood of a hearing, which causes the parties to incur costs and, of course, uses judicial resources.
…I fully endorse the approach taken by the Master. It is plainly appropriate that a party that resolutely proceeds to a separately listed cost-management hearing with an overly ambitious budget should not readily assume that it will avoid any potential consequence in costs.
I also agree that, in considering whether a party has ‘succeeded’, it is not determinative that the sum allowed exceeds the amount they have been offered. Equally, the mere fact of a reduction, as a matter of course, will not itself mean ‘success’ for the opposing party.”.
Despite the fact that the best offer received by the Claimant was £3.5m, the Precedent H was said to be unrealistic both in terms of reasonableness and proportionality. The judge commented that some of the hours claimed for specific phases were implausible.
D2, D3, and D4 and D5 were entitled to their reasonable costs of the hearing from the Claimants limited to the costs of attendance of counsel and one solicitor at the hearing today and that the Claimants shall bear their own costs of the costs management hearing in any event.
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