Associated Newspapers Ltd v Buckingham Group Contracting Ltd (Cost Budgeting)  EWHC 2767 (TCC)
Issue – Cost Budgeting
Background –The claim relates to a construction dispute whereby the Claimant alleges various defects with the works and site of the plot. Damages are estimated to be worth as much as £10m. The matter proceeded to a Costs and Case Management Conference in front of Mr Roger ter Haar KC
The judge made a number of observations in so far as cost budgeting was concerned.
- Cost Budgeting should be broad-brush except under exceptional circumstances; where costs are overtly disproportionate. Mr Roger ter Haar KC Referenced GSK Project Management Ltd v QPR Holdings Ltd  EWHC 2274 (TCC);  4 Costs LR 729 in support of the same.
- Rates are not to be assessed however it is imperative to have in mind proportionality when applying hourly rates. As Mr Roger ter Haar KC put so elegantly ; ‘it is relevant to have regard to the hourly rates of different fee-earners in order to see whether the proposed deployment of the legal team is reasonable and proportionate, subject to avoiding any temptation to micromanage the expenditure or costs’. Mr Roger ter Haar KC referenced GSK Project Management Ltd as mentioned above and Yirenki v Ministry of Defence  EWHC 3102 (QB) in this regard.
- Mr Roger ter Haar KC then moved on to proportionality. In this regard, Mr Roger ter Haar KC took into account value; which was likely to be in excess of £10 million. He then considered complexity and referenced the length of Trial in this regard; being 12 days. Finally, Mr Roger ter Haar KC was critical of the lack of use of delegation.
- Mr Roger ter Haar KC also took the opportunity to indulge in commenting that the incurred costs were very substantial.
- Mr Roger ter Haar KC then applied a blanket reduction of 15% to the overall estimated phases
Commentary – The findings of the judge highlight a number of points:
- Cost management is a broad brush exercise.
- Keep a tab on your hourly rates. Despite the guideline rates being revised upwards last year, the courts can exercise their powers to restrict costs where hourly rates are particularly high.
- Value and complexity are key factors when determining the reasonableness of a cost budget.