Page 6 - Inside Law Magazine Issue 10 - Spring 2015
P. 6

High Court Slashes
“Deliberately Manipulated”

              Budget

CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors considered.

Mr Justice Coulson hearing the case,              The Claimant’s suggestion that the Court                       Tom Loia
          has ruled that the costs budget         should not take into account the other
          proposed by the Claimant had been       sides’ costs budgets because they had              Tom is currently undertaking the Legal
“deliberately manipulated”, and has therefore     “an incentive” to advance low figures was          Practice Course (LPC) with a Master’s
ordered that it be reduced from the estimated     swiftly rejected. Ultimately, to do this would     Degree in Law, at the University of Law
£9.5 million, to just £4.3 million – just 45% of  inherently prejudice the credibility of the        in Moorgate, London.
the original budget. The judge decided that       Defendants’ cases. The Judge made his
both costs already incurred and future costs      thoughts plain:                                  “In my view, even if I took a value of £12m
were disproportionate and unreasonable,                                                            for this claim, it would not be appropriate
and not in keeping with CPR Part 44.              “It seemed to me to be an unwarranted            for the claimant’s costs to be assessed at
                                                  accusation. In truth, the party who was          75% of the value of the claim. That would
By coincidence, the reduction to £4.3 million     most vulnerable to such an accusation            be disproportionate.”
almost brought the figure in line with what       was the claimant itself […] In my view, the
the Claimant had already spent.                   unexplained and significant increase in          Within the Judge’s considerations on
                                                  costs said to have been incurred renders         reasonableness were the hourly rates
This is not the first time the matter has been    the claimant’s costs budget unreliable.”         and the estimated hours budgeted for.
put before the Court on the issue of costs.                                                        The Claimant’s solicitors were based in
In Autumn 2014, Mr Justice Coulson found          The Claimant was equally inexplicit as to        Birmingham, and were claiming the grade
that the Court has an “unfettered discretion”     how its future costs figure had been blown       A rate of £370 per hour. The grade A rate
to order costs budgets, regardless of the         up so much, which was prima facie “wholly        in Birmingham is only £217. This, coupled
value of damages at stake. In this instance,      unjustified”. This added to the Judge’s          with the masses of hours charged at grade
the Judge noted that there were a total of        scepticism of the reliability of the Claimant’s  A and relatively few by junior lawyers, was
27 people in the courtroom considering the        costs budget.                                    considered unreasonable by Coulson J:
detail of the costs budget. He had this to say:
                                                  In addition to all of the uncertainty, the       “The hourly rate is too high but more
“Such satellite litigation, and the costs         Claimant’s schedule of assumptions and           importantly, the claimant is using the grade
incurred in consequence, is very far removed      alleged contingencies totalled no less than      A partner for work which is inappropriate
from the spirit and purpose of the new costs      65, which were “so widespread in nature          and could be done more cheaply by lower
management provisions in the CPR. I am            and effect, that they alone rendered the         grade assistants. This goes right through
bound to say that none of this reflects any       Claimant’s costs budget wholly uncertain         the claimant’s costs budget. […] I consider
credit on the claimant’s decision to contest      and therefore unreliable.” Coulson J, on         that the hours said to have been worked so
the principle of budgeting in cases over the      this, said:                                      far and the hours estimated to be worked in
threshold.”                                                                                        the future, particularly in the trial preparation
                                                  “The schedule of assumptions goes far            and trial stages, are both excessive for
At the first CMC, around a year earlier, the      beyond the legitimate identification of          each phase of costs. The hours claimed are
Claimant indicated that it had spent some         contingencies in Precedent H. I find that it     much more extensive than is reasonable or
£1.6 million and had forecasted that the          is designed to ensure that the Claimant’s        appropriate for a case of this type.”
total spend would be circa £3.4 million. A        legal team is not limited to the already vast
year on and the costs incurred figure had         costs in the budget document, and can come       I expect the picture is now clear.
tipped the £4 million mark, with disclosure,      back under a vast range of heads in order
witness and expert meetings and reports,          to claim more than the amount in the costs       In considering where to go from here,
and other matters not yet started. Costs ‘not     budget. It is a wholly illegitimate exercise     Coulson J found that the only feasible
yet incurred’ were estimated at £5 million,       in avoiding the certainty and clarity that       remedy to this issue was to make a costs
and the total budget fixed at £9.5 million.       comes from costs management orders; it           management order, setting out various
                                                  is designed to undermine the whole basis         figures within the budget to suit the phase
Mr Justice Coulson added:                         of such orders. […] I am driven to conclude      of costs in question.
                                                  that the claimant’s costs budget has been
“The claimant has not sought to explain           deliberately manipulated. The claimant did
how such a vast increase in costs has             not and does not wish the court to make
come about, nor why such an increase              costs management orders. I find that the
can be justified […] I find that nothing that     production of the costs budget in this format
has happened over the course of the last          and in this way is a continuation of that
year could begin to justify an increase in        stance by other means”.
the costs actually incurred by the claimant,
and I take the absence of any attempt to          On the issue of proportionality, the Judge
justify this increase as a tacit acceptance       recognised that the value of the claim is a
by the claimant that the costs incurred over      factor in determining whether or not costs
the last year are unjustified.”                   are proportionate to the issue; but that it is
                                                  not as important as complexity:

6 Inside Law Issue 10 | Spring 2015
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