Motto v Trafigura Appeal Judgement

Following the mammoth judgement that was Motto v Trafigura by Senior Costs Master Hurst, permission to appeal certain issues was given. These were:

i) Proportionality;

ii) Vetting costs;

iii) Pre-Action Protocol;

iv) Medical reports;

v) Abandoned claims;

vi) Settlement and distribution;

vii) Cost of funding;

viii) Success fee;

ix) ATE premium.

The interesting and useful findings that have general application are as follows:

ii) Vetting Costs – subject to a valid retainer being in place to cover the work, and any arguments over proportionality, reasonableness and necessity, the work done in vetting the clients is recoverable.

With regards vii) costs of funding, the Court of Appeal have ruled:

The time, expertise and effort devoted by solicitors to identifying a potential claimant, and negotiating the terms on which they are to be engaged by the claimant, in connection with litigation, cannot, in my view, be properly described as an item incurred by the client for the purposes of the litigation. Until the CFA is signed, the potential claimant is not merely not a claimant: he is not a client. When advising a potential claimant on the terms and effect of the CFA, the solicitors are acting for themselves, not for the potential claimant: the solicitors are negotiating with him as a prospective client, not for him as an actual 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.

the cost incurred in having such discussions and taking such instructions was not so much a cost of the litigation as a cost which was collateral to the litigation, being a cost incurred to ensure that the claimants were not at risk on costs.

The remainder of the judgement is largely case sensitive and we await the Court of Appeal’s findings on interest