Court of Appeal rules on landmark UK costs case
The Court of Appeal has given judgment on the biggest costs case in English legal history.
Motto v Trafigura [2011] EWCA Civ 1150 concerned Leigh, Day & Co’s claim for £100m costs for its group action on behalf of about 30,000 citizens of the Ivory Coast against Trafigura. This followed an incident where a Trafigura-chartered ship hired contractors to dispose of toxic waste, which was then dumped in Abidjan, the Ivorian capital. The case settled for just under £1,000 per claimant plus costs.
The court upheld Trafigura’s appeal on proportionality, holding that any item on the bill is only to be allowed if it was necessary. It held Leigh, Day & Co could recover costs in respect of “abandoned claims” in so far as it was “reasonable and proportionate to plead, investigate and pursue them”.
The court upheld the costs judge’s determination of a 58% success fee rather than the 100% claimed by Leigh, Day & Co. It held that the cost of advertising to or identifying potential clients, and the cost of arranging a conditional fee agreement (CFA) are not recoverable costs amd that costs incurred before CFAs have been entered into cannot be recovered.
Delivering judgment, Lord Neuberger said: “Until the CFA is signed, the potential claimant is not merely not a claimant: he is not a client…It seems to me that the expenses of getting business, whether advertising to the public as potential clients, making a presentation to a potential client, or discussing a possible instruction with a potential client, should not normally be treated as attributable to, and payable by, the ultimate client or clients. Rather, such expenses should generally be treated as part of a solicitor’s general overheads or expenses, which can be taken into account when assessing appropriate levels of charging, such as hourly rates.”
In a statement, Leigh, Day & Co said: “We’re pleased that the Court of Appeal has largely upheld the decision of Master Hurst that we’ve always been content with. This is another step within the detailed assessment of our costs and we now move on to going through the bill of costs, item by item.”
