Keep it Real – Keep it Reasonable!
GS Woodland Court GP 1 Limited & Ors v (1) RGCM Limited & Ors [2025] EWHC 285 (TCC)
This case provides a reminder of the importance of submitting a reasonable costs budget. Where the Claimant’s budget was found to be unrealistic in terms of reasonableness and proportionality, the Claimant was ordered to pay the Defendants’ costs of the costs management hearing, and to bear their own costs of the hearing in any event.
This Judgment followed a half day Costs Management Hearing in proceedings arising from numerous alleged defects at a block of student accommodation. The matter was complex but not novel. The Claimant had submitted a budget in the total sum of £8,743,141 in respect of both incurred and anticipated costs. The Claimant’s Budget was ultimately approved in the sum of £7,374,370, a reduction of over £1 million. In reaching this decision the Court noted in particular that the Claimant’s costs would not be expected to approach the aggregate of all of the Defendants’ costs taken together. The fact that the Claimant’s costs in this case did approach the aggregate of the Defendants’ costs was a preliminary indicator that the costs claimed by the Claimants may be potentially disproportionate and/or unreasonable.
It was further noted that the hourly rates claimed significantly exceeded guideline hourly rates and no attempts had been made by the Claimants to justify their charging rates. It was not sufficient for the Claimant to argue that the other Defendants had also claimed rates in excess of guideline rates. It had been open to the Claimants to dispute the Defendants’ hourly rates and they had not done so.
The Defendants subsequently applied for their costs, or in the alternative sought an order that the Claimant do not recover their costs of preparation and attendance at the CCMC.
The Court accepted the traditional view that the starting point is that costs relating to costs management are generally costs in the case. However, where a party resolutely proceeded to a separately listed costs management hearing with an overly ambitious budget there is a risk of potential costs consequences.
The Court ordered the Claimant to pay the Second, Third, Fourth and Fifth Defendants’ costs of the CCMC Hearing, and to bear their own costs of the costs management hearing in any event. The First and Sixth Defendants were not awarded their costs (having not submitted costs schedules prior to the hearing) but were not responsible for any part of the Claimant’s costs of the CCMC.
Although the Claimant’s approved Budget exceeded the offers made by the Defendants, the scale of the reduction to the Claimant’s Budget was relevant.
This case is not binding but provides useful guidance as to the Court’s approach to overly ambitious budgets.
How can PIC help?
We pride ourselves on preparing Costs Budgets that properly reflect the nature of the case and are proportionate to the issues.
We are always happy to advise on any costs issue!
Catherine Moran, Costs Lawyer
27.02.2025