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The Courts Continue Their Robust Approach To Costs Management

The Courts Continue Their Robust Approach To Costs Management

Be wary and don’t over budget for the costs of litigation.

Mr. Justice Stuart-Smith said in GSK Project Management Ltd. V QPR Holdings Ltd. [2015] EWHC 2274 (TCC) that the claimant’s proposed costs budget was;

 “…so disproportionate to the sums at stake or the length and complexity of the case that something has clearly gone wrong.”

and that it is,

 “…hard to imagine anything more sterile than arguing about a grossly excessive costs estimate. It does not go to the issues, it is wasteful of Court and the parties time, and it offends against the obligation to keep costs to the reasonable minimum (both in the fact of the estimate and the need to whittle it down.)”

The essentials from the Judgement:

  • the court decided that the claimant’s proposed costs budget of £825,000 (including £312,000 already incurred) was grossly disproportionate to the value of the claim, which was £805,000.
  • the court examined in detail the incurred costs and proposed future costs, for every phase of the litigation in the claimant’s costs budget, the levels of which the court criticised in the strongest terms.
  • the court proceeded to set budget figures for each phase of the litigation (including those phases already undertaken) that it would be reasonable for the claimant to incur – resulting in a total costs budget of £425,000.
  • the claimant was ordered to pay the additional costs caused by the costs budget dispute and the claimant’s solicitor ordered to notify their clients of the terms of the judgement.

Mr Justice Stuart-Smith, examined the number of hours spent, as well as the proposed hours to be spent by the claimant’s solicitors, counsel and experts and adjusted these figures, as shown above, significantly downwards, and to all ends in an attempt to ensure that the claimant’s costs of the litigation were proportionate. The judge in criticising the incurred and estimated hours utilised terms such as “astonishing”, “quite simply absurd”, “exorbitant”, and “grossly excessive”.

This decision is the latest example of the courts continuing to adopt a somewhat robust approach to costs management, with the reminder that proportionality is still, and will for the time being, be at the forefront of parties minds.

Finally, the decision also simply serves to show the importance of seeking expert advice in the preparation of and justification of costs budgets. Should you require any assistance to ensure that you avoid the above, please do not hesitate to contact a member of the PIC team for further information on 03458 72 76 78 or at info@pic.legal.

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