Hotelier loses costs appeal because of uncertainty over Covid

A hotelier has lost an appeal over court costs because of uncertainty over how the Covid pandemic would affect its business.

The case involved Engie Power Ltd, which supplied electricity to a hotel owned by Douglas Hospitality Ltd.

A dispute arose after Engie cut off the supply in October 2019. Douglas claimed this was unlawful and sought damages.

Engie applied for security for costs in case Douglas would be unable to pay if it lost the case.

In February 2021, the deputy master ordered Douglas to give security for costs in the sum of £40,000. She found that, having regard to the hotel accounts, there was no evidence that it would be able to satisfy a costs order against it.

Douglas appealed. It accepted that its ability to operate as a hotelier had been severely restricted during 2020 because of lockdown but given that restrictions on staying in hotels in England would be lifted in May 2021 and there was a significant pent-up demand for stays in England because of prohibitions on international travel, it was likely to generate significant levels of income once its business re-opened.

The High Court upheld the deputy master’s decision. It held that the restrictions on Douglas’ ability to generate income during the COVID-19 pandemic gave rise to a concern that it might be unable to meet any costs order.

There was no cogent evidence before the court to show what its financial position was likely to be later in the year.

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