Lloyds Developments Limited v Accor Hotel Services UK Limited

On a multi-issue interlocutory application, costs should reflect the parties’ overall success and the conduct that made the application necessary. A party may be successful on the principal issue even if the amount sought was exaggerated, with that exaggeration taken into account through a percentage reduction in recoverable costs or summary assessment. Success on a discrete issue does not necessarily determine the overall costs order where other issues required substantial court involvement. The court may also reduce costs for excessive correspondence, duplicated work, repetitive witness statements and skeleton arguments, while recognising the supervisory work required when more junior fee earners undertake substantial tasks.

Accor applied for additional security for costs, review of documents withheld on privilege grounds, an order concerning trust instruments, disclosure of family documents, and directions concerning redactions to a Cooperation Agreement.

Accor obtained substantial additional security, an independent privilege review, directions concerning the trust instruments and Cooperation Agreement, but failed entirely on its application for disclosure of family documents. The security application was settled at £2.3 million shortly before the hearing. The court therefore had to determine which party was successful overall and how the parties’ conduct and partial success should affect costs.

1. Outcome. Accor was treated as the successful party on the security application. Lloyds was ordered to pay 75 per cent of the costs summarily assessed, reflecting Accor’s success, the exaggeration of the security claim and Lloyds’ complete success on the family-document issue.
2. The application was necessary to bring the security issue to a conclusion. Lloyds had not engaged meaningfully with the earlier requests, and its first offer was substantially below the amount eventually agreed. The fact that Accor ultimately accepted less than it had claimed demonstrated that the claim had been exaggerated, but did not make Lloyds the successful party.
3. On the family-document issue, a comprehensive order requiring production of approximately 48,000 to 50,000 documents was disproportionate. In the absence of clear evidence that the relevance assessment itself was wrong, and given the substantial disclosure already provided, the court would not require production of every document in the relevant family groupings. Applications concerning particular documents supported by surrounding material could be different.
4. The costs order also reflected the parties’ success and conduct on the remaining issues. Lloyds had effectively conceded deficiencies in the privilege review, while other matters had been resolved by offers or steps taken close to the hearing.
5. On summary assessment, the court reduced the amount claimed for correspondence by £5,000 and reduced the sums claimed for Mr Spence’s work by £7,000. A further reduction to the work of senior fee earners was not made because their supervision and checking of more junior work required time. The court also criticised lengthy witness statements and repetitive skeleton arguments.