[2024] EWHC 1238 (TCC)

The first application that I have in relation to costs is for Lloyds to pay Accor’s costs of producing a document called the Particulars of Non Compliance. Having had some difficulty initially in understanding the chronology of events, it is now clear to me that the position is as follows. The Claim Form was served with Particulars of Claim in January 2022 and Lloyds’ pleaded case was that its design for the hotel had been approved by Accor. The Defence said that the design was not approved. The Reply pleaded a case that the design was compliant with the Accor “brand standards” and ought to have been approved, even if, in fact, it was not approved.

I accept from Mr Bowling that what happened thereafter, I assume in correspondence, was that Accor adopted the position that that case in the Reply ought to be incorporated into an Amended Particulars of Claim. That was done and Her Honour Judge Kelly gave permission for those Amended Particulars of Claim on 14 October 2022. Her order provided that the claimant had permission to file and serve Amended Particulars of Claim by 10 October 2022. She gave permission for and a date for the filing and service of a consequential Amended Defence and Counterclaim and for a consequential Amended Reply and Defence to Counterclaim. She ordered that the claimant would pay the costs of and occasioned by the amendments referred to in the preceding paragraphs.

Accor’s application is made on the basis that the costs of preparing Particulars of Non Compliance are costs of and occasioned by the amendments so referred to in that Order. I will return to that point in a moment.

Accor’s Amended Defence asserted that the Lloyds’ design did not comply with the brand standards (and therefore ought not in any event to have been approved).

Lloyds asked for Further Information, by a Part 18 Request, of the respects in which the design did not comply. That was resisted by Accor on the basis that they needed to say no more than they had currently pleaded.

The matter came before Mr Justice Waksman in January 2023 and Mr Blackett has explained to me that the dispute between the parties at that point was, in a sense, who should go first, that is whether Lloyds should say how their design did comply with the brand standards to which Accor would respond or the other way round, such that Accor should say first how the design did not comply with the brand standards to which Lloyds might respond. The order of Mr Justice Waksman was, in effect, that Accor should go first by serving the Particulars of Non Compliance, which they did. He made no further order in respect of the costs of serving that document which has been referred to as the PNC.

The arguments line up essentially as follows. As I have indicated, Mr Blackett says that the origin of the PNC was, therefore, in the amendments that were made to the Particulars of Claim. Thus, he submits, the costs of the PNC are costs of and occasioned by the amendments. Mr Bowling says that, even if that was in one sense right, that was overtaken by the order of Mr Justice Waksman in which he ordered the PNC to be provided and made no order as to costs. In any event, Mr Bowling submits that the costs of and occasioned by the amendments could not conceivably be the whole of the costs of drafting that document which particularises the Amended Defence. That would have the effect of making the entirety of the pleading at the claimants’ cost. What “costs of and occasioned by the amendments” means is not that the whole of the costs are recoverable by the defendants from the claimants but rather that what I referred to as the extra over cost, and he referred to as the friction cost, is recoverable, that is the costs that would not have been incurred if the case had been pleaded on that basis in the first place. Those costs are likely to involve revisiting the document, reconsidering the statements of case, and so forth.

Both of those submissions seem to me to be right. It seems to me the order of Mr Justice Waksman necessarily means that the costs of the PNC were dealt with by him on that occasion and do not fall within the compass of costs of and occasioned by the amendments even if that was, in the sense of “but for” causation, the origin of that document being produced. If I were wrong about that I would accept Mr Bowling’s submission in relation to the meaning of “costs of and occasioned by” the amendments although not necessarily his terminology. Yet further, and in any event, I have, as I said in the course of argument, never seen an application made for costs of an amendment to be paid in the course of the proceedings rather than at the end of the proceedings, when they are subject to detailed assessment, and certainly not where no such order for immediate payment was made on the application to amend. That procedural point is met by the application being one for an interim payment but such an application, it seems to me, is equally unusual. So for those reasons I do not make any order for any payment of costs in relation to the PNC.

There is an argument between the parties as to whether costs of that document have or will be wasted. I do not propose to recite those arguments or make any decisions in that respect because that is not the basis of the application that is before me. However, I will bear in mind that additional costs in the pleading of amended statements of case have been incurred by Accor when I come to deal with the application or applications in respect of security.