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You are here: BAILII >> Databases >> England and Wales High Court (Technology and Construction Court) Decisions >> CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd (Costs NO. 2) [2015] EWHC 481 (TCC) (05 March 2015) URL: https://www.bailii.org/ew/cases/EWHC/TCC/2015/481.html Cite as: [2015] EWHC 481 (TCC), [2015] BLR 285, [2015] 2 Costs LR 363, 158 Con LR 229 |
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QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Rolls Building Fetter Lane, London, EC4A 1NL |
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B e f o r e :
COULSON
____________________
![]() ![]() (Formerly known as Norwich Property Trust Limited) |
Claimant |
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- and - |
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Galliford Try Infrastructure Limited - and - EIC Limited - and - Kone PLC - and - DLG Architects LLP - and - Damond Lock Grabowski & Partners |
Defendant Third Party Fourth Party Fifth Party Sixth Party |
____________________
Adam Constable QC and Richard Coplin (instructed by CMS Cameron McKenna) for the Defendant
Joanna Smith QC and Michael Wheater (instructed by Plexus Law) for the Third Party Kate Livesey (instructed by Norton Rose Fulbright) for the Fourth Party
Fiona Sinclair QC and Siân Mirchandani (instructed by Mills and Reeve LLP) for the Fifth and Sixth Parties
Hearing date: 13 February 2015
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Crown Copyright ©
The Hon. Mr Justice Coulson:
1. INTRODUCTION
2. THE APPLICABLE REGIME
"Costs management orders
3.15-(1) In addition to exercising its other powers, the court may manage the costs to be incurred by any party in any proceedings.
(2) The court may at any time make a "costs management order". Where costs budgets have been filed and exchanged the court will make a costs management order unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made. By a costs management order the court will—
(a) record the extent to which the budgets are agreed between the parties;
(b) in respect of budgets or parts of budgets which are not agreed, record the court's approval after making appropriate revisions.
(3) If a costs management order has been made, the court will thereafter control the parties' budgets in respect of recoverable costs.
…
Court to have regard to budgets and to take account of costs
3.17-(1) When making any case management decision, the court will have regard to any available budgets of the parties and will take into account the costs involved in each procedural step.
(2) Paragraph (1) applies whether or not the court has made a costs management order.
Assessing costs on the standard basis where a costs management order has been made
3.18 In any case where a costs management order has been made, when assessing costs on the standard basis, the court will–
(a) have regard to the receiving party's last approved or agreed budget for each phase of the proceedings; and
(b) not depart from such approved or agreed budget unless satisfied that there is good reason to do so.
(Attention is drawn to rule 44.3(2)(a) and rule 44.3(5), which concern proportionality of costs.)"
"Budget format
3EPD.1
1 Unless the court otherwise orders, a budget must be in the form of Precedent H annexed to this Practice Direction. It must be in landscape format with an easily legible typeface. In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings. A budget must be dated and verified by a statement of truth signed by a senior legal representative of the party. In cases where a party's budgeted costs do not exceed £25,000, there is no obligation on that party to complete more than the first page of Precedent H.
(The wording for a statement of truth verifying a budget is set out in Practice Direction 22.)
Costs management orders
3EPD.2
2.1 If the court makes a costs management order under rule 3.15, the following paragraphs shall apply.
2.2 Save in exceptional circumstances-
(a) the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the approved budget; and
(b) all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the approved budget.
2.3 If the budgets or parts of the budgets are agreed between all parties, the court will record the extent of such agreement. In so far as the budgets are not agreed, the court will review them and, after making any appropriate revisions, record its approval of those budgets. The court's approval will relate only to the total figures for each phase of the proceedings, although in the course of its review the court may have regard to the constituent elements of each total figure. When reviewing budgets, the court will not undertake a detailed assessment in advance, but rather will consider whether the budgeted costs fall within the range of reasonable and proportionate costs.
2.4 As part of the costs management process the court may not approve costs incurred before the date of any budget. The court may, however, record its comments on those costs and should take those costs into account when considering the reasonableness and proportionality of all subsequent costs.
2.5 The court may set a timetable or give other directions for future reviews of budgets.
2.6 Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions. Such amended budgets shall be submitted to the other parties for agreement. In default of agreement, the amended budgets shall be submitted to the court, together with a note of (a) the changes made and the reasons for those changes and (b) the objections of any other party. The court may approve, vary or disapprove the revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed.
2.7 After its budget has been approved or agreed, each party shall re-file and re-serve the budget in the form approved with re-cast figures, annexed to the order approving it.
2.8 A litigant in person, even though not required to prepare a budget, shall nevertheless be provided with a copy of the budget of any other party.
2.9 If interim applications are made which, reasonably, were not included in a budget, then the costs of such interim applications shall be treated as additional to the approved budgets."
"That, I think, must be a consequence, potentially, of taking into account in fixing the budgets the amount of the costs already incurred in deciding what would be reasonable and proportionate in respect of all subsequent costs. The only way in which one can take into account excessive costs already incurred in determining the reasonableness and proportionality of subsequent costs is to limit the approved subsequent costs at figures below what they might otherwise have been approved at but for the excessive sums which have already been expended."
"61. However, if by the time the costs management process takes place substantial costs have been incurred, one thing the court may do is to "record its comments on those costs": see PD3E 7.4. What the court will do is to "take those costs into account when considering the reasonableness and proportionality of all subsequent costs": ibid. The court may reduce a budget for reasons which apply equally to incurred costs, or for reasons which have a bearing on what should be recoverable in that respect, for instance, that so much had been spent before the action began that the budgeted cost of preparing witness statements is excessive. If so, it is likely to help the parties reach agreement without detailed assessment later on if these reasons are briefly recorded at the time the budget is approved. I make some comments of this kind below."
3. BACKGROUND
(a) Drainage defects in the plaza area (£3 million odd);
(b) Defective car park ventilation (£2 million odd);
(c) Defective escalators (£1 million odd);
(d) Defective storm water drainage to the plaza (£771,288);
(e) Defective finish to steel work (£434,301); and
(f) The need for a new plant room (£288,261).
All of these costs are exclusive of fees and other 'soft' costs, which appear from the pleadings significantly to increase the overall value of the claim.
4. THE RELIABILITY OF THE CLAIMANT'S COSTS BUDGET
1. General
2. The Increase in Costs
3. Increase in Estimated Costs
4. Costs of Preliminary Issues
5. The Schedule of Assumptions and Contingency
6. Conclusions
5. THE PROPORTIONALITY OF THE CLAIMANT'S COSTS BUDGET
1. General
"Costs incurred are proportionate if they bear a reasonable relationship to –
(a) The sums in issue in the proceedings;
(b) The value of any non-monetary relief in the proceedings;
(c) The complexity of the litigation;
(d) Any additional work generated by the conduct of the paying parties; and
(e) Any wider factors involved in the proceedings, such as reputation or public importance."
"In the light of the above, and for the purposes of costs assessment, the Court should have regard when assessing proportionality and the reasonableness of costs, in the context of the current case or type of case, to the following:
(a) The relationship between the amount of costs claimed for and said to have been incurred and the amount in issue. Thus, for example, if the amount in issue in the claim was £100,000 but the costs claimed for are £1 million, absent other explanations the costs may be said to be disproportionate.
(b) The amount of time said to have been spent by solicitors and barristers in relation to the total length of the hearing(s). For example, if 3,000 hours of lawyers time is incurred on a case which involves only a one day hearing, that might well point to a disproportionate incurrence of time spent.
(c) In the context of time spent, the Court can have regard to the extent to which the lawyers for the party claiming costs and the party itself has incurred cost and spent time before the Court proceedings in connection with any other contractual dispute resolution machinery agreed upon between the parties. Here, for instance, there was provision for adjudication, in which the parties were required to pay their own costs of that process. If and to the extent that the work in connection with the adjudication duplicates the work done in the Court proceedings, or, put another way, if the same issue arises and was addressed in the Court proceedings as in the adjudication, it may be disproportionate to expend anew what is repetitious effort and time in the later proceedings.
(d) The extent to which the case is a test case or in the nature of a test case.
(e) The importance of the case to either party. If for instance an individual or a company is being sued for everything which he, she or it is worth, it may not be disproportionate for that individual to engage a QC even if the amount in issue is objectively not very large."
2. The Complexity of the Case
3. Value of the Claim
4. Conclusions as to Proportionality
6. THE REASONABLENESS OF THE CLAIMANT'S COSTS BUDGET
1. The Five Points
(a) The outcome of the proceedings was likely to be that the defendant would be ordered to pay the claimant's costs in full or in part, and the defendant in such a situation "has an incentive to advance low figures in its costs budget".
(b) By virtue of its role as claimant, this claimant has been obliged "to bear the lion's share of the proceedings". Mr Post submitted that a claimant had to advance a case whilst a defendant "was free to criticise the claimant's analysis without going to the expense of undertaking an equivalent analysis".
(c) The defendant had largely failed to engage with the issue of remedial works.
(d) The claimant was having to respond and deal with the issues raised by all four of the additional parties and was therefore facing multiple teams of lawyers and experts.
(e) Difficulties with disclosure had led to problems with the formulation of the claim. It is said that the defendant should have been more forthcoming at the pre-action protocol stage.
2. Hourly Rates; Work Done; Estimated Hours
3. Pre-Action Costs
4. Issue/Statement of Case
5. CMCs
6. Disclosure
7. Witness Statements
8. Experts' Reports
9. PTR
10. Trial Preparation
11. Trial
12. Contingencies
13. Conclusions
7. SUMMARY OF OPTIONS
8. OPTION 1A: ORDERING A NEW BUDGET
9. OPTION 1B: DECLINE TO APPROVE CLAIMANT'S COSTS BUDGET
10. OPTION 2: SETTING BUDGET FIGURES
11. OPTION 3: REFUSE TO ALLOW ANY FURTHER COSTS
12. CONCLUSIONS ON THE AVAILABLE OPTIONS
(a) In relation to the Pre-Action Costs, I conclude that, on assessment, those should not exceed £680,000. I take that figure into account when assessing each element of the prospective/estimated costs dealt with below. To the extent that the claimant recovers more than £680,000 on assessment under this head, it would mean that more work had been legitimately done in the earlier stages of the case than I thought, which would in turn mean that less remained to be done in the future. Thus the prospective costs figures approved below would fall to be reduced by an equivalent sum.
(b) In relation to the Statement of Case, I conclude that, on assessment, the costs incurred should not exceed £500,000. I take that figure into account when assessing each element of the prospective/estimated costs below. Again, to the extent that the claimant recovers more than £500,000 on assessment, it would mean that more work had been legitimately done in the earlier stages of the case than I thought, which would in turn mean that less remained to be done in the future. Thus the prospective costs figures approved below would again fall to be reduced by an equivalent sum. I allow nothing in the costs management order for the estimated costs of any future amendments because such costs have already been allowed for/included in the £500,000. That will therefore be a 'nil' item in any costs management order.
(c) In relation to the CMCs I consider that £50,000 is recoverable on assessment by way of the costs so far incurred. If more is recovered on assessment, there would have to be an adjustment in the future costs, as noted above. I allow a prospective figure of an additional £50,000 for future CMCs. Nothing beyond the £50,000 by way of prospective costs will be recoverable for the future CMCs. That makes a total of £100,000 for this item.
(d) In relation to disclosure, I conclude that, on assessment, only £350,000 will be recoverable by way of disclosure. If more is recovered on assessment, there would have to be an adjustment in the future costs, of the same type and for the same reason, as noted above. No prospective costs will be recoverable by way of disclosure; that will therefore be a 'nil' item in any costs management order.
(e) In relation to Witness Statements, I approve the prospective costs in the maximum sum of £150,000.
(f) In relation to the £1.2 million already incurred in respect of Experts, I find that only £550,000 will be recoverable on assessment. If more than £550,000 is recovered on assessment, there would have to be an equivalent downward adjustment in the future costs of the experts, because it would mean that the experts were further advanced than I had thought, which in turn meant that there was less work for them to do in the future. In relation to the estimated future costs in respect of experts, I allow an additional £650,000 making a total for this item of £1.2 million.
(g) In relation to the PTR, I allow the sum of £50,000.
(h) In relation to the Preparation for Trial, I allow the prospective sum of £625,000.
(i) In relation to the Trial, I allow the prospective sum of £575,000.
(j) In relation to ADR and settlement discussions, I allow the prospective sum of £50,000.
13. OTHER PARTIES' COSTS BUDGETS