Good News for Defendants

Motto v Trafigura Ltd and another [2011] EWCA Civ 1150

The issues of costs in relation to funding and the application of a retrospective success fee were finally clarified in the recent appeal of Motto v Trafigura. The resulting position will not please solicitors for the receiving party but is likely to benefit the paying party in reducing recoverable costs.

The Claimant was one of thousands who suffered illness following the illegal fly-tipping of chemical waste by one of the Defendant’s local contractors. The claimants were represented by Greenpeace under a Group Litigation Order and each of them had to sign a Conditional Fee Agreement before they could be added to the proceedings.

Once the case of Motto v Trafigura Ltd had concluded, the Claimant submitted a Bill of Costs which went to Detailed Assessment, however following the judge’s ruling the Defendant was given leave to appeal on a number of points, which included issues in relation to the application of the success fee and the costs of funding.

In respect of the uplift, Lord Justice Kay held that, unless the wording of a CFA explicitly stated that the success fee was to be applied retrospectively, it could not be applied to work done prior to the CFA having been signed, stating:

“…any CFA which limits the client’s liability to work done after the CFA is entered into, cannot extend to work done before that date….The natural presumption in a contract by which a person engages a solicitor to act for him must be, in the absence of such a term, that he is agreeing to pay for work done in the future, not for work already done.”

Lord Justice Kay then went on to consider the matter of the costs incurred in relation to funding and held that these costs were not recoverable, saying:

“One would not expect a prospective contractual provider of services or goods to charge his client or customer for advising on the terms of the contact under which the goods or services are to be provided….” and

Our Law costs draftsman states “It seems to me that the expenses of getting business, whether ……… 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.”

Lord Justice Kay also held that the costs of discussing the progress of the litigation with the ATE provider were not recoverable from the Defendant as these discussions did not form part of the litigation itself, but were a cost of ensuring that the Claimant was not at risk on costs. Motto v Trafigura Ltd law costs draftsman