Group M UK Ltd v Cabinet Office

The court has a broad discretion to order a losing party to pay the reasonable costs of an interested party. A separate costs order may be justified where that party has a substantial independent interest and makes a useful contribution.

Late service of a statement of costs requires assessment of the breach’s seriousness, the reason for default and all the circumstances. Where prejudice is limited and no automatic sanction applies, proportionate deductions may be preferable to refusing all costs.

The claimant challenged the Cabinet Office’s procurement process for a Media Services contract. The court had previously lifted the statutory suspension and awarded the Cabinet Office its costs.

Carat, the successful tenderer and an interested party, sought its costs from Group M. Group M argued that Carat’s late statement of costs required the court to allow nothing, and also challenged the level and composition of the bill.

1. Interested party costs. Section 51 of the Senior Courts Act 1981 gives the court a broad discretion over the incidence and amount of costs. The court may order a losing party to pay an interested party’s costs. The approach in Bolton Metropolitan District Council v The Secretary of State for the Environment [1995] 1 WLR 1176 supported an award where the interested party had a substantial independent interest requiring separate representation.
2. Carat had a serious commercial interest in the outcome. Its evidence addressed, from its own knowledge, the allegation that its tender could not have been priced sustainably. Its representation and submissions were useful. It was therefore appropriate in principle that Group M bear Carat’s reasonable costs.
3. Late statement of costs. The three-stage approach in Denton v TH White and others [2014] EWCA Civ 906, restating the guidance in Mitchell v News Group Newspapers Ltd [2013] EWCA Civ 1537, applied. The late service was serious and significant because it frustrated the purpose of the 24-hour requirement. The default was understandable in the context of late confirmation of the hearing and intense procurement litigation. It would have been unjust and disproportionate to refuse all costs.
4. The failure to provide a breakdown of the documents figure was also a breach, but disallowing the whole sum would have been disproportionate. Appropriate deductions reflected the limited prejudice and additional work caused by the breaches.
5. The bill of £70,072.50 was reduced by £29,945. Carat’s costs were summarily assessed at £40,127.50, payable within 14 days of hand-down.

Group M UK Ltd v Cabinet Office [2014] EWHC 3659 (TCC) was the earlier judgment in the same proceedings, in which the statutory suspension was lifted and the Cabinet Office succeeded against Group M. This judgment determined Carat’s costs.