£105m Trafigura costs dispute settles, leaving lawyers seeking clarity on interest

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By Legal Futures

18 January 2012

Court of Appeal: interest hearing this month

The dispute over Leigh Day & Co’s £105m costs bill in the Trafigura litigation has settled before it could reach the Supreme Court, it has emerged.

The confidential settlement in Motto v Trafigura came shortly before Christmas, leaving costs specialists frustrated that the question of the date from which interest on costs runs remains unresolved.

The Court of Appeal ruled on a range of preliminary costs issues in October, while a separate hearing on the interest point was due at the end of this month.

Leigh Day senior partner Martyn Day told Legal Futures: “This was the most difficult, complex case I have ever had to deal with in over 30 years of practising. Acting for 30,000 clients from one of the most dangerous countries in the world and taking on one of the largest and toughest private companies anywhere was a combination that ensured I have slept, eaten and drunk the case day in and day out for five years.

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“I am very pleased that we have at last been able to reach a resolution of the costs in the case. The costs process was lengthy and at times tortuous; however, we are content with the outcome as being a fair recompense for the time and effort the firm had to put into the case.

“We can now concentrate our energies on the remaining clients who are still to receive their compensation following the theft of their monies in the Ivory Coast. Only then can we truly put this case to bed.”

Costs lawyer Andy Ellis, managing director of costs specialists Practico, said the case had reinforced his view that “the need for budgetary control and costs management is paramount if detailed assessment is not to be marginalised as a way to resolve costs disputes”.

He explained: “The shortcomings of detailed assessment under the current regime were startling when applied to such a large case as Motto. There were simply no tools available to the court to assist in cutting through the woods of the major quantum issues, even after many of the issues of principle had been resolved.”

Peter Smith, managing director of after-the-event (ATE) insurer FirstAssist, which recovered its £9.7m premium in full, said that by defeating “numerous challenges”, the case had provided “helpful support for the recovery of ATE premiums”.

There has been heated debate in costs circles over the past year on the date from which interest on costs should run in a case funded under a conditional fee agreement. First, renowned circuit judge HHJ Stewart (in Gray v Toner) and then Senior Costs Judge Hurst in Trafigura – albeit for different reasons – said interest should not begin to run until costs have been assessed, rather than the earlier date when judgment is given, as had been the common practice.

Both Mr Ellis and Iain Stark, chairman of the Association of Costs Lawyers, said the point needed to be resolved – Mr Stark noted that before-the-event cases were also affected.

Attention is now turning to the case of Simcoe v Jacuzzi UK Group plc, which was to be heard with Motto and remains live. According to Simon Gibbs of costs consultants Gibbs Wyatt Stone, Simcoe concerns interest in the county court, rather than in the High Court (as in Motto), and the rules are different, but it is hoped the decision will be broad enough to resolve the issue.

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