Cip Properties (AIPT) Ltd (Formerly known as Norwich Property Trust Ltd) v Galliford Try Infrastructure Ltd EIC Ltd (Third Party) Kone Plc (Fourth Party) DLG Architects Llp (Fifth Party) Damond Lock Grabowski & Partners (Sixth Party)
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Coulson |
| Judgment Date | 05 March 2015 |
| Neutral Citation | [2015] EWHC 481 (TCC) |
| Docket Number | Case No: HT-13-390 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 05 March 2015 |
[2015] EWHC 481 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Rolls Building
Fetter Lane, London, EC4A 1NL
The Honourable Mr. Justice Coulson
Case No: HT-13-390
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Andrew Post QC and Frances Pigott (instructed by Squire Patton Boggs) for the Claimant
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
COSTS JUDGMENT [No. 2]
INTRODUCTION
This Judgment arises out of an all-day hearing on 13 February 2015 in which all the other parties made extensive and sustained criticisms of the claimant's costs budget. Towards the end of the hearing I indicated that I considered that the claimant's costs budget was an entirely unreliable document, and that both the costs already incurred by the claimant, and its estimated costs for the future, were disproportionate and unreasonable. I also said that I thought that a reasonable and proportionate figure for the entirety of the claimant's costs of this action would be broadly equivalent to £4.3 million, which is what its say it has already spent. I then canvassed the parties' views as to what, in those circumstances, the court should do.
This Judgment explains in detail why I have formed such a dim view of the claimant's costs budget, and which of the various options suggested by the parties I have felt obliged to take. Along the way, a number of points of principle fall to be considered and decided.
Thus, in Section 2 below I set out the applicable parts of the CPR. In Section 3, I deal with the background and history of the litigation. Then, in Sections 4, 5 and 6, I deal with the reliability of the claimant's costs budget, its proportionality and its reasonableness. Thereafter, in Sections 7–12, I set out the various options and my conclusion as to the appropriate option in this case. In Section 13 there is a short discussion of the other parties' costs budgets.
This is the second time that the parties have spent a full day before the court arguing about costs budgets. During the CMC held on 3 October 2014, there was a major dispute as a result of the claimant's novel argument that, because of the relatively high value of the claim, the court did not have the discretion to consider making any cost management orders at all. I ruled against the claimant on that topic ( [2014] EWHC 3546 (TCC)). The latest hearing follows on from that ruling. This hearing focused on issues which, in my view, stemmed from the unreasonable stance adopted by the claimant. At one point, there were 26 people in court, excluding me, considering the detail of its costs budgets. Such satellite litigation, and the costs incurred in consequence, is very far removed from the spirit and purpose of the new costs management provisions in the CPR. I am bound to say that none of this reflects any credit on the claimant's decision to contest the principle of budgeting in cases over the threshold.
THE APPLICABLE REGIME
The regime that applies in this case issued on 23 October 2013 is the version of the relevant Costs Management Rules as set out in the 2014 White Book. The relevant provisions are as follows:
" 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.)"
Practice Direction 3E provides as follows:
" 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."
It should be noted that, subsequently, Practice Direction 3E paragraph 2.4 has been amended and, instead of saying that the court "should" take the incurred costs into account, it now says that the court "will" take those costs into account when considering the reasonableness and proportionality of the costs to be incurred.
For reasons which will become apparent later, one of the difficulties in the present case is the very high level of costs which the claimant says it has already incurred. There have been two cases recently in which the level of costs already incurred has been considered by the court.
In Redfern v Corby Borough Council [2014] EWHC 4526 (QB) HHJ Seymour QC upheld the decision of Deputy Master Eyre in a case where the Deputy Master considered that a proper figure for the costs of the case as a whole was £220,000. That was broadly equivalent to what had already been...
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