In proceedings involving costs budgeting, it is not uncommon for a party’s proposed costs budget (Precedent H) to be either unrealistically too high or too low. This issue played a role in the case of GS Woodland Court GP 1 Ltd & Anor v RGCM Ltd & Ors [2025] EWHC 285 (TCC), where the High Court dealt with significant challenges in costs management in a complex construction dispute.
Background
The claimants, GS Woodland Court GP 1 Ltd and GS Woodland Court GP 2 Ltd, represented by Jones Day solicitors, initiated proceedings against several defendants. The case centred on substantial defects in the fire-safety measures of a modular student accommodation project. The defendants included the construction manager, architect, cladding contractor, modular unit supplier, developer, fire-stopping works contractor, and installer. The complexity of the case arose from the numerous parties involved and the intricate nature of the allegations.
Costs Management Hearing
During the costs management hearing, the claimants submitted a budget estimating their total costs at approximately £8.74 million. This figure was significantly higher than the budgets of the defendants, which ranged from £2.7 million to £3.539 million. The claimants’ budget also included hourly rates for Grade A fee earners at £1,089 per hour, far exceeding the guideline rates of £566. However, the claimants did not provide any justification for these elevated rates.
Court’s Findings
Mr. Justice Constable critically assessed the claimants’ proposed budget, describing the costs as “unrealistic both in terms of reasonableness and proportionality.” The judge noted that the claimants had failed to justify the elevated solicitor rates, which were well above the guideline rates. The only justification given was that other defendants had claimed rates in excess of the guidelines, but this was deemed insufficient by the court. Ultimately, the judge concluded that the claimants’ budget was “on the wrong side of the line” and ordered a substantial reduction in the budget, cutting it down to £4.212 million.
Costs Order
In addition to the reduction in the claimants’ budget, the court addressed the issue of costs arising from the costs management hearing. The defendants applied for an order that the claimants pay the costs of the hearing, arguing that the claimants’ unrealistic budget had led to unnecessary expenditure and use of judicial resources. The court agreed, asserting that the traditional view, that costs of costs management should be costs in the case, was displaced when a party advanced an unrealistic budget. The claimants’ failure to adopt a proactive approach resulted in unnecessary costs being incurred by the defendants. As a result, the claimants were ordered to pay the reasonable costs of the defendants for the costs management hearing.
Implications
This judgment underscores the court’s commitment to ensuring that costs budgets in litigation are reasonable and proportionate. It highlights the importance of providing realistic and justifiable proposed costs budgets, including adequate explanations for elevated hourly rates. The decision serves as a cautionary reminder to all parties that claimants can be penalised for submitting an unrealistically high budget, and presumably defendants who submit unrealistically low budgets also face similar risks. Costs budgets submitted via Precedent H must realistically reflect the complexity and value of the case. Failure to do so may result in significant reductions to the budget and potential adverse costs orders.
Conclusion
In summary, GS Woodland Court GP 1 Ltd & Anor v RGCM Ltd & Ors [2025] EWHC 285 (TCC) illustrates the court’s rigorous approach to costs management, emphasising the need for realistic budgeting and adequate justification for the proposed costs.
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