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Coulson J slashes “entirely unreliable” costs budget from £9.5m to £4.3m

RCJ [1]

Coulson J: Claimant did not want costs management orders

The High Court has slashed a claimant company’s costs budget from £9.5m to £4.3m, describing it as “entirely unreliable” and “deliberately manipulated”.

Mr Justice Coulson said that at one hearing last year, lawyers for the claimant argued that the court did not have the discretion to make “any costs management orders at all” because of the size of the claim – leading to his key ruling [2] that in fact it did.

“At one point, there were 26 people in court, excluding me, considering the detail of its costs budgets.

“Such satellite litigation, and the costs incurred in consequence, is very far removed from the spirit and purpose of the new costs management provisions in the CPR.

“I am bound to say that none of this reflects any credit on the claimant’s decision to contest the principle of budgeting in cases over the threshold.”

The judge later said he was “driven to conclude that the claimant’s costs budget had been “deliberately manipulated” because the claimant “did not and does not wish the court to make costs management orders”.

Delivering judgment in CIP Properties v Galliford Try and others (Costs No2) [2015] EWHC 481 (TCC) [3], Coulson J said that at the first case management conference (CMC) in February last year, the claimants estimated their costs already spent at £1.57m and for the case at £3.4m.

“Those figures are in stark contrast to the costs figures now put forward,” Coulson J said. “The claimant now claims that it has incurred costs of £4,226,768.16 and that its total estimated costs are £5,050,469, making a total of over £9.2m.

“Although some last-minute corrections have reduced this to £8.9m (changes which go to the reliability of the claimant’s own figures), other large sums have been excluded which, when added back in, take the total towards £9.5m.”

Coulson J said the claimant’s figures were to be contrasted with the other parties in the case. He said the defendant, who had also commenced proceedings against four other parties, incurred costs of just under £1.5m and estimated future costs at £3m, making a total of £4.48m. Between them the other four parties estimated their total costs at nearly £5.5m.

Coulson J said the claimant owned a large development site in Birmingham, there were alleged defects in the works carried out and it was claiming against the defendant contractor for the cost of remedial works.

The judge said that although the total damages claimed was £18m there were “significant arguments that this claim has been grossly inflated” as a result of the scope of the remedial works and the way they were carried out.

He said the defendants were now “under a greater burden” than the claimant in the litigation, because they were seeking to pass claims on to the other parties.

Coulson J strongly criticised the claimant’s costs budget in terms of the “unjustified” increase in costs incurred, “wholly unjustified” increase in estimated costs and “unjustified and unexplained” estimates for the cost of preliminary issues.

On complexity, he described the case as a “relatively standard TCC defects case” and on the value of the claim, said the claimant was “most unlikely” to recover the full sum claimed.

He said: “For the reasons that I have outlined above, I consider that the claimant’s costs budget is a wholly unreliable document. What is more, given the deliberate absence of any explanation for the huge increase in the costs incurred and estimated, and the schedule of assumptions which can only be designed to give the claimant’s legal team the maximum room for manoeuvre later on, I am driven to conclude that the claimant’s costs budget has been deliberately manipulated.

“The claimant did not and does not wish the court to make costs management orders. I find that the production of the costs budget in this format and in this way is a continuation of that stance by other means.”

Turning to proportionality, he described the claimants’ figures as “plainly disproportionate”, and said that, if anything, they should be less than the defendants.

Coulson J said that although the claimants’ solicitors, Squire Patton Boggs, were for this case based in Birmingham, they had been claiming a grade A rate of £370 an hour for a partner, when the guideline rate was £217 per hour. Further, the amount of hours was “excessive” and some of the work should have been done by more junior lawyers.

Coulson J concluded that the figures in the claimant’s costs budget were “wholly unreasonable and unjustified” and reduced them from £9.5m to £4.28m.

He reduced the defendants’ costs budget from £4.48 to £4.27m, and approved the other parties’ costs budgets in full, describing them as “proportionate and reasonable”.

Squire Patton Boggs declined to comment.