Two sides in a court case had very expensive plans to cover their legal costs. The judge thought these plans were too expensive for the kind of case it was, so they had to make new, cheaper plans. One side's plan was accepted, but the other side's had to be reworked because it wasn't reasonable given the evidence.
Key Facts
- •Costs management hearing for a s.423 Insolvency Act 1986 claim.
- •Claimants' budget: approximately £1.927 million; Defendants' budget: approximately £1.2 million.
- •Judge's initial impression: budgets appeared excessive, anticipating £350,000-£600,000.
- •Claim concerns beneficial ownership of property, potentially involving a fraudulent transfer.
- •Issues include beneficial ownership of a Liberian corporation, purchase funds, renovations, a legal charge, and the purpose of a trust transfer.
- •Extensive documentary evidence (381,324 documents initially reviewed by Claimants) and potential witness testimony.
- •Significant time lapse impacting witness memory and evidence reliability.
Legal Principles
Costs must be reasonable and proportionate.
CPR Rules 44.3(5) and 44.4(3)
Costs management should further the overriding objective.
CPR
Section 423 Insolvency Act 1986: transactions at an undervalue or for the purpose of defeating creditors.
Insolvency Act 1986, s.423
Section 425 Insolvency Act 1986: relief granted for transactions under s.423
Insolvency Act 1986, s.425
Outcomes
Defendants' budget of £850,355.00 agreed.
No issue raised.
Claimants' budget provisionally assessed at £893,455.00, but deemed unreasonable and disproportionate.
Lack of justification for high costs; excessive time allocated to various tasks; insufficient explanation for initial document review; concerns about the number of lawyers involved and their hourly rates.