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Costs budgets: not quite the last word

Costs management applies to all Part 7 claims below £10m.

At a CCMC the court has a discretion to make a costs management order in which it will record the extent to which the budgets are agreed by the parties, or (if not agreed) the extent of the court’s approval.  How should the court approach the latter task? 

In GSK Project Management Ltd (In Liquidation) v QPR Holdings Ltd [2015] Costs LR 729 the TCC laid down some guidelines for the consideration and approval of budgets: (1) only exceptionally will it be necessary for the court to go through a party’s costs budget with a fine tooth-comb (an eye-watering level of aggregate costs might be such an exception); (2) a case would have to be ‘wholly exceptional’ to render a costs budget of £824,000 proportionate to the recovery of £805,000 plus interest (and GSK’s claim was held not to be exceptional); (3) the other party’s budget is not a starting point for consideration of a budget because parties to litigation have different roles and responsibilities; (4) although the court cannot approve costs that have already been incurred, there is no prohibition on saying what the court would have approved if presented with an estimate of future costs rather than a fait accompli of expenditure; (5) costs estimates cannot be justified because the litigation has been (and is likely to remain) “combative” - the culture of unreasonableness, intransigence and taking every point must be viewed as exceptional and inimical to the duty to conduct litigation in proportion to what is at stake. 

In conducting this exercise, the court should follow the guidelines provided in CIP Properties v Galliford Try Infrastructure Ltd [2015] EWHC 481 (TCC) and either (i) order a new budget; (ii) decline to approve C’s costs budget; (iii) set budget figures; or (iv) refuse to allow any further costs.

Although a decision of the TCC, there is no reason to think this decision will not feed into all tribunals with a costs jurisdiction.

Derek Kerr / 4th Nov 2015


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