Case: GS Woodland Court GP 1 Ltd & Anor v RGCM Ltd & Ors [2025] EWHC 285 (TCC)
The matter related to claim in respect of numerous alleged defects at a block of student accommodation. There are seven defendants. D1 was the construction manager. D2 was the architect. D3 was responsible for the cladding on the external walls. D4 supplied the modular units. D5 was the developer. (D4 and D5 are being represented jointly). D6 was responsible for fire-stopping works. D7 was the installer.
The matter proceeded to a cost management hearing.
Mr Justice Constable acknowledged the Claimant’s submission that the claim was potentially more complex than a case against a single Defendant and that it was particularly complex in that the onus was on the Claimant to determine which allegations should be made against which particular Defendant. Equally, he acknowledged the Defendant’s submission that there was nothing particularly novel in relation to this case. ‘It is an expert-driven defect case and it is not the sort of case that needs to be over-lawyered, either in terms of rates reflecting overly complex litigation of this type, or, indeed, the number of hours that lawyers need to put in in order to support the investigations and, in due course, presentation of the case’.
Mr Justice Constable was not prepared however to make a finding in relation to incurred costs but rather take them into account when considering the overall costs.
In terms of proportionality, Mr Justice Constable took the view that ‘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’.
As regards to rates, Mr Justice Constable noted that the rates claimed were significantly in excess of the guideline rates. The Claimant was seeking the following rates: Grade A, £1,089.00/hr, Grade B, £450.00/hr, Grade C, £421.00 and £446.00 /hr Grade D at £248.00. The only justification provided by the Claimant was that the other Defendants had claimed in excess of the guideline rates. Mr Justice Constable advised this was no justification and that if one substitutes the guideline rates for those that were claimed, it reduced the budget by circa £1.4 million.
Following costs management, the estimated costs were reduced from £8,743,141 to £4,212,126, a reduction in the region of 50%.
The next question for the Court was how to proceed with the costs of the cost management hearing. An application was made by D2 and was supported by D3, D4 and D5, who had each submitted an N260. D6 and D1 did not submit their own N260s’. They did however, support the submission that the Claimant should not recover their costs. Mr Justice Constable referenced the cases of Nicholas Worcester v Dr Philip Hopley [2024] EWHC 2181 (KB) as well as Jenkins v Thurrock Council [2024] EWHC 2248 making it clear that he fully endorsed the approach of Master Thornett. Mr Justice Constable also made it plain that ‘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’.
Ultimately, the Claimant was ordered to pay the costs of D2, D3, D4 and D5 (albeit limited to the costs of attendance of counsel and one solicitor at the hearing) and that the Claimants should bear their own costs of the costs management hearing in any event. D1 and D6 did not get their costs but were not be responsible for any part of the Claimants’ costs.
Commentary – And again, a warning of the importance of proportionality in cost management. This ruling highlights that the Court will not hesitate to impose specific costs orders when a party’s approach is deemed excessive or unrealistic. Parties need be prepared to account for not just what work justifies their estimated costs but why the figure claimed is also proportionate. If not, there appears to be an unsettling trend that the Court will make you pay.
What is also worth noting is that, an Application was made ahead of the hearing in respect of the question of the costs of cost management with all but two of the Defendants lodging N260s. Such Applications are not routine in cost management. This case appears to promote (albeit indeliberately) an added layer of complication on what should be a simple ‘broad-brush’ exercise. Ultimately, the Court did not appear to in fact summarily assess the victor’s costs but rather allowed the reasonable costs of the day limited to costs of attendance of counsel and one solicitor at the hearing. This poses the question whether the Application and N260s were in fact necessary? Ultimately a formal Application is not required to make such submissions on the question of cost management costs. However D1 and D6, as a result of not filing/serving N260s in support of the Application, were not awarded their costs of the day. So the Application & N260s did pay off here, for some of the Defendants.
Perhaps a reminder of the need to ‘step back’ and consider the reasonableness of the budget before submission.