HT-2022-000022 - [2025] EWHC 1238 (TCC)

It is, unfortunately, necessary to recite some of the immediate background specific to the hearing of this application. Notwithstanding the exhortations of the Court in the recent past for the parties to enter a new era of co-operation, there has been on the part of Accor and its advisors a regrettable lack of communication leading to Lloyds becoming aware only upon the service of its skeleton argument of the specific bases upon which Accor relies to argue that the provision of ATE insurance would not be appropriate.

Lloyds’s proposal to rely on ATE insurance for the purposes of providing further security for costs was set out in the third witness statement of Ms Emerson, a Partner at Hill Dickinson, solicitors for Lloyds, on 16 April 2025, in the context of Lloyds’ application to re-amend its Particulars of Claim. One of the conditions for consent to the amendment by Accor was the provision of further security. A copy of the policy then relied upon was provided as an exhibit to the witness statement.

Mr Esly, a Partner at Haynes Boone CDG, solicitors for Accor, responded on 21 April 2025. This amounted, in substance, to a statement that Accor continued to seek security by way of payment into Court. Mr Esly also said, somewhat oddly given that a copy of the policy had been provided 5 days earlier, ‘If and when particulars of such policy are provided, Accor can consider whether such policy might provide adequate security’.

Ms Emerson’s further statement dated 23 April 2025 identified the lack of any substantive objections, explaining that the policy itself had not only been exhibited to her witness statement but sent separately to Accor’s solicitors under cover of a letter also dated 16 April 2025. On 29 April 2025, a letter from Haynes Boone responded: “…Having reviewed the specimen policy, Accor does not consider that any policy on those terms would provide adequate security for its costs of the Proceedings. Accor would not therefore consent to the withdrawing of funds previously paid into court upon its inception.” No indication of what features of the policy were regarded as unacceptable. On 30 April 2025, Hill Dickinson replied, with some justification, that this response did nothing to facilitate the narrowing of issues, in circumstances where Haynes Boone had not explained why Accor considered the proposed policy would not provide adequate security for its costs. Later the same day, Haynes Boone responded that, in essence, it was incumbent upon Lloyds to procure the appropriate policy and that it was not for Accor to advise Lloyds concerning what form that policy should be or how it should be drafted.

A hearing had been listed for 2 May 2025 to deal with the application to amend. By email to the Court on 30 April 2025, Accor specifically requested that this hearing deal with the question of the form of security. The Court indicated a provisional acceptance of this suggestion, but invited comment from Lloyds. Lloyds responded to the Court that it was ‘not agreeable to Accor’s wider security for costs application being dealt with at Friday’s hearing because Accor has not explained the grounds on which it considers Lloyds’ proposed ATE/ AAE policy will not provide sufficient security. The grounds of objection would usually have already been set out in correspondence or in witness statements but that has not happened. This means that Lloyds is unable to address Accor’s objections in its skeleton argument and will have very little time to consider these between receipt of Accor’s skeleton argument and the hearing taking place.’ Having considered this objection, the Court directed that the question of the form of security would be held over to another hearing listed for 13 May 2025. It should have been obvious that, in so directing, the Court had agreed with Lloyds’ submission that it was appropriate for there to be meaningful communications between the parties in advance as to the grounds of objection, so that they could be addressed with insurers (possibly dispensing with the need for a hearing at all) and/or in any event dealt with in skeleton arguments in advance if a hearing remained necessary.

Thereafter, Mr Webb KC (for Lloyds) repeated the request in his skeleton argument for the hearing on 2 May 2025, asking for Accor to share its objections in advance so that they could be addressed by Lloyds.The only further answer given was on 6 May 2025 when Accor said:

“…Accor’s current principal concern… is that there are circumstances in which the insurer would be entitled not to (and so would not) pay Accor its costs of the Proceedings for reasons outside of Accor’s control. As such, Accor considers that the specimen policy and endorsement are inferior to payment into court and do not offer sufficient protection to Accor.”

This was not an answer of any substance, and still left Lloyds in the dark about what specific problems (if any) the policy presented for Accor.

In his skeleton argument for the hearing on Tuesday 13 May 2025, required to be served by noon on Friday 9 May 2025, Mr Blackett, for Accor, identified three specific points of concern, none of which had therefore been identified or discussed between the parties in advance. As it happens, one of the points had been foreseen by Mr Webb KC and, as explained further below, dealt with both substantively (in seeking a revision of the policy to remove a clause) and by way of submissions from Mr Webb. The other two points were not. This meant that Lloyds had no notice of the points upon which the Court was to be addressed at the substantive hearing and had not been able to address them either with insurers or in Mr Webb KC’s skeleton argument.

In answer to the Court’s concern that Accor’s approach had been obviously incompatible with modern ‘cards on the table’ approach to the management of litigation, Mr Blackett, at least at first, repeated Haynes Boone’s previous line that it was not for Accor to advise Lloyds on the terms of the policy. In general terms that is, of course, right; but it completely misses the point. The adequacy of the policy was, given the pending application by which the issue would be dealt with by the Court, going to be considered by the Court. It was, of course, entirely open to Accor to advance no positive case about the inadequacy of specific parts of the policy and limit itself perhaps to a broad point of principle about ATE insurance in general (which would be unlikely to succeed in light of the authorities). However, to the extent that Accor intended to advance a positive case that there existed specific concerns in support of a submission that the policy was inadequate (as it did), it was obviously incumbent upon it in the context of co-operative case management and in an attempt to narrow issues to identify those concerns in good time. This is particularly so given the repeated requests by Lloyds, and where the Court had specifically put back the consideration of the issue to allow such communications to take place. The failure to do so deprived Lloyds not only of the opportunity to deal with points in its skeleton argument (and thus reduced the efficiency of the hearing, and wasted the Court’s time) but also deprived Lloyds of the opportunity to see if any of the points could be resolved with changes to the policy wording.

No doubt Accor’s approach will be revisited on the question of costs. However, it is also relevant in circumstances where, as I find below, there are some inadequacies in the ATE policy placed before the Court. Whilst the Court might, having rejected a particular policy, thereafter reconsider a new policy (as it did in Lewis Thermal Limited v Cleveland Cable Limited [2018] EWHC 2654 (TCC) and [2018] EWHC 3033), there are limits to the extent that a party seeking to give security otherwise by payment into Court will be permitted to revisit the question. This is illustrated by Re Ingenious Litigation [2020] EWHC 235 (Ch) in which Nugee J (as he then was) held at [137(3), 138] that there was a real, and not a fanciful risk, that a policy might not respond in full, due to various problems with the policy which “could be cleared up fairly easily. … But it has not in fact been done” and despite that “I suspect the problems that have been identified could be solved… But… I am not persuaded that has been done in the present case”. Moreover, once a payment in has been ordered, revisiting the form of security has to be justified, usually by a material change in circumstances: see e.g. Recovery Partners GB Ltd v Rukadze [2018] 1 WLR 1640 at [42], albeit in the context of revisiting an undertaking where Nicholas Vineall KC sitting as a Deputy High Court Judge said as follows:

However, in circumstances where Lloyds have been deprived of the opportunity of (at least potentially) providing a policy which meets any legitimate concern raised by Accor because of Accor’s failure to engage in any substantive communications in advance of the hearing, it would be wrong to make an order today which cements the position ‘against’ Lloyds.