Another “overly ambitious budget” leads to costs order against claimants

High Court reduced budget by half and found £1,089 grade A rates excessive

The move towards making costs orders other than in the case following costs management hearings has continued with Mr Justice Constable ordering costs against claimants whose budget he halved.

He said a party pursuing “an overly ambitious budget” could face costs consequences.

Constable J also found “excessive” the grade A rates charged by the claimants’ solicitors, where they were nearly twice the guideline hourly rate and no justification was provided.

He was ruling in GS Woodland Court GP 1 Ltd & Anor v RGCM Ltd & Ors [2025] EWHC 285 (TCC), concerning alleged defects at a block of student accommodation. There are seven defendants, although only the first, the construction manager, faces all the allegations, while one is insolvent.

He said there was “nothing particularly novel in relation to this case”, continuing: “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.”

On proportionality, the judge said his experience of case like this was that, whilst the claimants’ costs were unlikely to be “significantly higher” than the highest of the defendants’ – “and certainly not approaching the aggregate of all of the defendants’ costs taken together”, given they had to instruct their own experts, go through their own disclosure exercises, and so on.

“Standing back, the costs of £11m or so (and £12m as it was before concession this morning), against the aggregate of around £12m to £13m of all of the defendants is a preliminary indicator that the costs claimed by the claimants may potentially be disproportionate and/or unreasonable,” he said.

Though not determining rates, Constable J noted that the rates claimed by Jones Day for the claimants significantly exceeded the guideline rates: £1,089 for grade A, against the guideline rate of £566; grade B, £450 against £385; grade C, £421 and £446 against £299; and grade D, £248 against £205.

The claimants had not attempted to justify the rates beyond saying the defendants had claimed in excess of the guideline rates too. “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…

“If one substitutes the guideline rates for those that are claimed, it takes about £1.4m off the overall budget.”

The budgeting exercise ended up with total estimated costs of £4.2m compared to the £8.7m claimed. The offers from the defendants ranged from £2.7m to £3.5m.

This meant the total of incurred and estimated costs was £7.4m, which “seems to me to be a reasonable and proportionate sum in view of the complexity of the matter and the amount in dispute”.

Four of the defendants sought their costs of the costs management exercise and Constable J approved the approach taken by Master Thornett last year in Worcester and Jenkins.

“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.”

It was a case-by-case assessment and here there were “a number of features… that suggest that the claimants’ position is clearly on the wrong side of the line”.

The scale of the reduction showed that the claimants’ Precedent H was “unrealistic both in terms of reasonableness and proportionality”, the judge said. “It is not necessary to ascribe the word ‘success’ or ‘loss’ to that, but if it were, the claimants ‘lost’ the hearing.”

Constable J continued: “In addition, I had to make a number of remarks on a phase-specific basis in relation to the hours, which at one point I remarked as ‘implausible’.” In light of his earlier comments, it was also “pretty obvious, what this court’s approach would have been to the rates claimed”.

He concluded that the applications for costs were well founded, with the four defendants able to recover their reasonable costs of the hearing, limited to the costs of attendance of counsel and one solicitor. The other two active defendants did not get their costs but would not be responsible for any part of the claimants’ costs.

We reported last week on another case where the High Court agreed with the approach of Master Thornett.

Ms Packman KC (instructed by Jones Day) appeared for the claimants. Ms Stephens KC (instructed by Reynolds Porter Chamberlain) appeared for the first defendant. Mr Fowler (instructed by Keoghs) appeared for the second defendant. Mr Coulson (instructed by Eversheds Sutherland) appeared for the third defendant. Ms Williams (instructed by Walker Morris) appeared for the fourth & fifth defendants. Ms Keating (instructed by Howes Percival) appeared for the sixth defendant.