Gattaz Property Limited & Anor. v Versant Developments & Homes Ltd & Ors

When approving a costs budget covering conjoined proceedings, the court may approve a combined budget where the claims are case managed together and will have a joint trial. The order need not add directions governing hypothetical future events or explain how costs might later be allocated between defendants. At the budgeting stage, the court should avoid adverse comments on incurred costs where it lacks sufficient access to the underlying materials to assess reasonableness and proportionality reliably. Estimated costs may be reduced on a broad assessment where the overall figure is disproportionate to the value and anticipated scope of the claims. Costs reasonably incurred in correcting and responding to an excessively high revised budget may be awarded against the party responsible.

The judgment concerned costs budgeting in two related proceedings: a development claim brought by Gattaz Property Limited and Fortimat Properties S.A. against Versant Developments & Homes Ltd and others, and a negligence claim brought by Fortimat Properties S.A. against Pinsent Masons LLP. The proceedings were being case managed together and were listed for a joint trial.

The court considered the form of the costs order, the parties’ incurred and estimated costs, the appropriate level of the trial preparation and trial budget, and responsibility for costs incurred in dealing with a revised costs budget.

1. Form of order. The approved costs budget properly recorded that it was a combined budget for the two proceedings, because the claims were case managed together and would be tried jointly. The court declined to add further directions concerning possible future allocation between defendants or hypothetical settlement-related obligations.
2. Incurred costs. Although the incurred costs appeared high and potentially disproportionate, the court made no adverse comment. It had only limited access to the underlying materials and insufficient opportunity to investigate the explanations advanced. Any detailed assessment could consider those matters more fully.
3. Estimated costs. The court applied a broad assessment. In view of claims worth approximately £3 million and a trial estimated at 12 days including reading time, the combined figure for trial preparation and trial was reduced to £700,000. The court took into account the fraud allegations and the fact that the claimants were contesting both proceedings.
4. Further costs exercise. The defendants were entitled to the costs of responding to the revised budget. The original figures had been far too high, and the further exercise had been necessary because of them. Each of the IGD Defendants and PM was awarded £3,500, summarily assessed.
5. The claimants were directed to prepare a further revised Precedent H. The defendants’ budgets were approved without further deduction.