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Trafigura costs bill to proceed to detailed assessment

Biggest ever conditional fee agreement bill cut by 40 per cent

17 October 2011

The costs bill for 30,000 Ivorian villagers in their case against oil giant Trafigura is set to proceed to detailed assessment after clearing a critical stage in the Court of Appeal last week.

Upholding the decision by senior costs judge Master Hurst, the appeal judges agreed the £105m bill - the largest known for a CFA - presented by their lawyers, Leigh Day, should be cut by more than 40 per cent.

The firm took on the case on the basis of a conditional fee agreement and the costs bill included a 100 per cent uplift and an after-the-event premium of £9m.

Giving the lead judgment in Motto v Trafigura [2011] EWCA Civ 1150, Lord Neuberger also reversed Master Hurst’s findings on the point of necessity.

The senior costs judge found that where a costs bill had the appearance of being disproportionate, it would remain open to him to assess individual items or a group of items as proportionate and therefore not apply the necessity test.

Disagreeing with this finding Lord Neuberger said Master Hurst should revisit his view on the applicability on the necessity test when he carries out the detailed assessment.

“Any item on the bill is only to be allowed if it was necessary,” he said.

In a further blow to the claimants, Lord Neuberger also rejected their argument that the costs of preparing and negotiating the ATE premium were recoverable.

However, the Master of the Rolls rejected Trafigura’s appeal in relation to two other points.

He said Leigh Day had not failed to comply with pre-action protocols and that the firm should be allowed to recover costs where applicable, and that costs in respect of abandoned claims could also be recovered subject to passing the necessity test.

Commenting on the outcome, senior partner and co-founder of the firm Martyn Day said he was “pleased that the Court of Appeal has largely upheld the decision of Master Hurst that we have always been content with”.

He went on: “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.”

The claimants brought the case against Trafigura after one of the company’s contractors, they said, illegally dumped 400 tons of toxic waste along the coast near Abidjan, causing injuries to local residents.

The case settled in September 2009 with no admission of liability, but in a consent order Trafigura agreed to pay damages of £30m, with claimants awarded about £1,000 each.

The judge awarded costs against Trafigura and Leigh Day entered a bill of costs totalling £104.8m.

In a judgment on pre-liminary issue in February, Master Hurst reduced the uplift to 58 per cent (Motto and Ors v Trafigura [2011] EWHC 90201 (Costs)).

The senior costs judge said as the case progressed from the original group litigation order in 2007, the prospects of the claimants improved. With Trafigura accepting to compensate the claimants, their chances of winning improved to 68 per cent rather than the original 50/50, the judge said.

Categorised in:

Costs Local government