GS Woodland Court GP 1 Limited & Anor v RGCM Limited & Ors

In costs management, the ordinary starting point remains that costs are in the case. That starting point may be displaced where a party adopts an unrealistic or over-ambitious budget and resolutely causes a separate hearing, thereby imposing unnecessary costs and using judicial resources.

Whether a party has succeeded is not determined solely by whether the approved sum exceeds its opponent’s offer, nor does every reduction establish success for the opposing party. The court must assess the parties’ conduct, the realism and proportionality of the figures advanced, the offers made, and the scale of the reductions. Excessive solicitor rates, without meaningful justification, may justify substantial reductions from guideline rates.

The claim concerned alleged defects in a modular student-accommodation development, including alleged failures in fire-safety attenuation. The claimants advanced claims against several defendants and sought costs management of a substantial, expert-driven construction dispute.

At the costs management hearing, the claimants’ budget was reduced substantially. The Second Defendant applied for its costs of the hearing, supported by the Third and Fourth and Fifth Defendants. The central issue was whether the ordinary costs order of costs in the case should be displaced because of the claimants’ approach to budgeting.

1. Costs application allowed in part. The claimants’ budget was reduced from approximately £8.74 million to estimated costs of £4.212 million. The resulting total of incurred and estimated costs, approximately £7.374 million, was considered reasonable and proportionate for the complexity and value of the dispute.
2. The ordinary starting point in costs management is that costs are in the case. However, the court should take a proactive and rounded view where a party’s conduct has caused, or increased the likelihood of, a separate costs management hearing. The approach in Nicholas Worcester v Dr Philip Hopley [2024] EWHC 2181 (KB) was endorsed, and the same approach in Jenkins v Thurrock Council [2024] EWHC 2248 was adopted.
3. Success is not determined merely by comparing the approved sum with an opponent’s offer. A reduction does not automatically mean that the opposing party succeeded. The court must assess whether the parties acted reasonably, whether the figures were realistic and proportionate, and whether the case was on the wrong side of the line.
4. The claimants’ budget was unrealistic in both reasonableness and proportionality. The scale of the reduction, implausible hours on particular phases, and excessive rates justified treating the claimants as having lost the hearing for costs purposes.
5. Following Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor (Costs) [2022] EWCA Civ 466, London Band 1 guideline rates recognised substantial and complex commercial work, but the claimants had provided no adequate justification for rates substantially exceeding those guidelines.
6. The Second, Third, and Fourth and Fifth Defendants were awarded their reasonable costs of the hearing, limited to counsel and one solicitor’s attendance. The claimants were ordered to bear their own costs of the costs management hearing. The First and Sixth Defendants recovered no costs but were not made liable for any part of the claimants’ costs.