Court of Appeal Approve Trafigura Decision

Wednesday 26th October, 2011

The Court of Appeal has recently handed down its widely anticipated judgment in Motto v Trafigura Limited [2011] EWCA Civ 1150 and have upheld the decision to reduce Leigh Day’s 100% success fee to 58%. After reaching a settlement on behalf of
30,000 Ivorian residents who suffered harm from the dumping of toxic waste, the matter was subject to a Group Litigation Order and the Claimants’ served bills totaling approximately £105 million. The Bills contained over 55,000 Items and the costs included base costs of £49 million; 100% success fees for both Solicitors and Counsel, and a £9 million ATE premium.

It is interesting to note that although Leigh Day’s success fee was reduced significantly, the sizeable ATE premium was confirmed to be at a suitable level and was recoverable in full.

What surely has to be considered is that if the Defendant had approached this case sensibly there would have been no need for ATE insurance in the first place? Presumably the prospects of recovering their legal costs from the Ivorian nationals were
slim to none and so if the Defendant had agreed to waive their right to recover costs at the outset, there would have been no costs risk for the claimants and no ATE requirement. As it was, the Defendant’s solicitors submitted a costs estimate of around £14 million and so ATE became essential. When considering the amount of exposure to the ATE insurer if the case was unsuccessful, the £9million premium was, of course, reasonable and so the Court had little choice but to allow it in full.

In terms of the success fee, the reason given by Chief Master Hurst for the reduction was that during the course of this litigation the claimants' chance of winning gradually improved from 50% to 68% and therefore, as the claimants were added to the litigation, the success fee ought to have been amended to reflect this.

A further issue raised in this case and one important point determined was whether or not the costs incurred when setting up Conditional Fee Agreements or ATE insurance policies are recoverable. The court decided that costs could not be recovered in the particular circumstances of these cases where the litigants did not become clients until they had actually signed up to the CFA.

 

Steve Ruffle

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