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Trafigura successful in Court of Appeal

Date: 12/10/2011

The Court of Appeal has handed down its long awaited decision in the biggest costs case in English legal history, Motto v Trafigura. The case was heard over three days in June 2011 by a Court of Appeal comprising the Master of the Rolls Lord Neuberger, Lord Justice Kay and Lord Justice Hughes. The matter involved a range of appeals and cross-appeals from judgments given earlier this year by the Senior Costs Judge, Master Hurst, and was leapfrogged directly to the Court of Appeal due to the importance of the issues raised.

In a comprehensive judgment given by the Master of the Rolls, the Court of Appeal upheld Trafigura’s appeal on several significant points of principle, overturning Master Hurst’s decision in a number of respects. In particular, the Court of Appeal has confirmed that the approach to proportionality set out in its previous judgment in Home Office v Lownds: Practice Note [2002] EWCA Civ 365, must be adhered to, rejecting the Master’s departure from that decision. Further and importantly, the Court of Appeal concluded (in accordance with Trafigura’s submissions) that expenses of getting business, including the cost associated with arranging or advising upon a Conditional Fee Agreement or After-The-Event insurance, as well as the cost of advertising to or identifying potential clients, are not costs which can be claimed from that client, and are therefore not recoverable from the other side in litigation.

Further, the Court of Appeal rejected the Claimants’ appeal relating to the recoverability of costs incurred before Conditional Fee Agreements have been entered into, concluding that the natural presumption is that a contract between solicitor and client relates to work going forward only.

Trafigura was awarded a proportion of its costs of the appeal to reflect its success on the balance of the issues.

Nicholas Bacon QC and Daniel Saoul of 4 New Square, in addition to Charles Gibson QC and Malcolm Sheehan of Henderson Chambers, acted for Trafigura.

The Court of Appeal’s judgment is linked here

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