Julian Thirsk & Anor v Berkeley Homes (North East London) Limited & Anor

Costs budgeting is concerned with approving phase totals falling within the range of reasonable and proportionate costs. It is not a detailed assessment conducted in advance, nor does it ordinarily involve fixing hourly rates. A broad-brush approach is appropriate, but the court may examine a budget in greater detail where the aggregate figure is plainly disproportionate to the sums at stake or the complexity and length of the litigation. The court should approve reasonable phase totals while recording the extent of agreement and making appropriate revisions to disputed phases.

The claimants, owners of a flat, alleged that the defendants’ construction and remediation works caused defects, giving rise to claims in contract, under the Defective Premises Act 1972 and in negligence. The claim was valued at more than £858,000 and had increased to £1,201,141.25, with an eight-day trial anticipated.

At a case management conference on 10 October 2025, costs budgeting was adjourned because agreement had not been reached. The claimants’ budget was agreed at £1,157,107.19. The defendants’ budget, totalling £2,132,168.22, remained disputed. The court determined the appropriate estimated costs for each phase and the costs of the budgeting exercise.

1. The court held that a costs management order should be made where costs budgets have been filed and exchanged unless the litigation can be conducted justly and at proportionate cost without one. The order must record agreed sums and the court’s approval, with appropriate revisions, of unagreed phases.

2. In reviewing disputed budgeted costs, the court does not conduct a detailed assessment in advance. The relevant question is whether the proposed phase totals fall within the range of reasonable and proportionate costs. The underlying breakdown is a reference tool, and the court does not approve hourly rates as part of costs management.

3. The court relied on GSK Project Management Ltd v QPR Holdings Ltd [2015] EWHC 2274 (TCC); [2015] 4 Costs LR 729 for the ordinary broad-brush approach and the exception permitting closer examination where the aggregate budget is so disproportionate that something has clearly gone wrong.

4. The defendants’ overall budget was prima facie disproportionate because it was almost twice the amount claimed and almost twice the claimants’ agreed budget. The judge therefore examined the phases in detail, but approved only phase totals rather than individual underlying items.

5. The estimated costs allowed for the defendants were £85,235 for disclosure, £68,400 for witness statements, £220,000 for expert reports, £60,000 for the pre-trial review, £404,250 for trial preparation, £285,000 for trial, £37,700 for ADR and £15,688 for contingent costs. The issue/statements of case and CMC figures were recorded as incurred costs.

6. The costs of both the original and revised costs-budgeting exercises were ordered to be costs in the case. The parties were directed to produce updated budgets, with permission for the claimants to revise their agreed budget where necessary.

The judgment records that a case management conference took place on 10 October 2025. Costs budgeting was adjourned for agreement and was subsequently determined on the papers by this court.