Citation: [2025] EWHC 285 (TCC)
Background
A number of defendants applied for their costs following a Costs Management hearing.
The underlying dispute concerned alleged fire-safety defects in a block of student accommodation that was being built in a modular-unit fashion. There were seven defendants to the action. The First Defendant (D1) was the construction manager. The entirety of the claim was passed on to the construction manager. The Second Defendant (D2) was the architect. The Third Defendant (D3) Tom Coulson was responsible for the cladding on the external walls. The Fourth Defendant (D4) supplied the modular units. The Fifth Defendant (D5) was the developer. D4 and D5 were represented jointly. The Sixth Defendant was responsible for the fire-stopping works. The Seventh Defendant was the installer of the works.
The claimants sought costs of approximately £11 million against the potential remediation cost of £30 million. The issue before the court was whether these costs were reasonable and proportionate.
Decision (Constable J)
Mr. Justice Constable granted the defendants’ applications, finding the claimants' budgeted costs to be excessive and disproportionate. The judge endorsed the views of Master Thornett in Nicholas Worcester v Dr Philip Hopley [2024] EWHC 2181 (KB) and Jenkins v Thurrock Council [2024] EWHC 2248, two decisions confirming the adverse cost consequences for parties that proceed to Cost Management hearings with overly ambitious budgets.
In the present case, a number of factors pointed to the claimants’ budgeted costs being unreasonable: (i) the claimants’ total costs of £11 million almost matched the aggregate costs of all the defendants (which were between £12 and £13 million); (ii) the rates claimed for the claimants’ solicitors were significantly in excess of the guideline rates, which if followed, would have taken £1.4 million off the claimant’s overall budget; (iii) the claimants had not taken a realistic view as to what was likely to be recovered – during the hearing it sought costs of £8.74 million while the highest offer it received was £3.539 million from D4 and D5.
Following a budgeting exercise, the court ultimately allowed the claimant costs of £4,212,126 and total of incurred and estimated costs of £7,374,370. D2, D3, and D4 and D5 recovered the reasonable costs of the hearing from the claimants. The claimants were ordered to bear their own costs of the hearing.
Representation
Sarah Williams acted for the Fourth and Fifth Defendants, instructed by Walker Morris LLP.
