HT-2022-000022 - [2025] EWHC 2011 (TCC)

Mr Blackett is undoubtedly right that, at least in circumstances where ATE insurance is offered by way of security as a preference rather than necessary, that preference places a burden upon the defendant to ensure the policy was suitable. However, it does not follow from this that a defendant is entitled, as of right, to a form of indemnification of all costs in meeting that burden, irrespective of the outcome of the litigation. Had the terms of the ATE Policy and AAE themselves been agreed, but the only dispute had been whether Accor was entitled to be paid its reasonable costs of investigating the appropriateness of the policy as a condition for Lloyds having the right to rely upon it in lieu of security, it is not clear on what basis such an order would be sought. By analogy, an application for security for costs may ordinarily be preceded by a period during which the parties engage, through investigation of the claimant’s financial position, the ability and need for security. If the matter is resolved by an agreement, the costs of such investigations and debate fall naturally as costs in the case. The authorities relied upon by Mr Blackett do not suggest otherwise.

Providing the approach of both sides to the provision of alternative security is reasonable, in the ordinary course, the costs incurred on either side should not be substantial, and should, following the analogy above, ordinarily be costs in the case. If the defendant succeeds at trial, it would recover its (reasonable) costs of dealing with the ATE insurance issue; if the defendant does not succeed, it will have to bear those costs, but it incurred them as the collateral result of unsuccessfully defending litigation.

In the present case, it is clear to me that (a) had Accor engaged properly when the issue was first raised, then there is no reason why all the matters eventually ventilated would have been identified, and resolved, at a single hearing; (b) the key point of the remaining dispute in principle – namely the manner in which fraud was dealt with within the policy – was resolved in Accor’s favour; and (c) an approach by Lloyds and/or their insurers to decline changes which did not deleteriously affect their position in any way, but which they simply thought were unnecessary, was not a particularly constructive approach to agreeing suitable wording.

Stepping back and reflecting these conclusions in a single costs order, I conclude that Accor ought to be awarded 55% of its reasonable costs of dealing with the question of security for costs.

As to the reasonableness of the sums claimed, Mr Webb KC challenges in relation to the First Hearing (a) time related to 2 May 2025 hearing; (b) time spent on the Consent Order; (c) excessive time on the skeleton; (d) travel and waiting on a remote hearing. In relation to the Second Hearing, Mr Webb KC challenges (a) sums relating, directly and indirectly, to counsel work (a total of approximately £27,000 when compared with around £10,000 for Lloyds); 37.3 hours spent on correspondence.

In short responsive submissions, Mr Spence defended each of these as reasonable, emphasizing in particular the extent to which Accor was required to deal with iterations of the policy as a result of Lloyds’ actions.

As to the First Hearing, I accept that time spent on the abortive hearing of 2 May and relating to the Consent Order should not be recoverable as part of the matters before me on this application. I also accept that 33 hours is excessive for drafting the skeleton, even taking at face value the points made by Mr Spence. I do not make any further deduction to account for the failure to have engaged in discussions in advance, as contended for by Mr Webb KC, as this is reflected in the percentage deduction to be applied. I summarily assess the recoverable sum for the First Hearing as £30,000. Similarly, I accept that the time spent both on preparation and review of the skeleton argument as excessive in relation to the Second Hearing. I summarily assess costs at £40,000. The total of £70,000 is subject to a deduction of 45% as set out above. Costs to be paid by Lloyds to Accor are £38,500.

The parties are to draw up an appropriate order. Security in the form of Appendix A, and payment of costs, are to be provided within 14 days.