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£9.7 million After the Event Insurance Policy Allowed by Court of Appeal

The Court of Appeal has just heard a costs appeal in Motto & Ors v Trafigura - the group action brought by Leigh Day and Company on behalf of 30,000 Ivory Coast claimants who sufferred illness following the fly tipping of toxic waste by the defendant. Now I have written about this case before but this time the hearing was looking at the ATE Insurance policy and the original 100% success fee being charged by Leigh Day and Co and counsel. In an earlier decision, Master Hurst had allowed the ATE premium in full but had reduced the success fees to 58%.

Well to cut a long story short, the success fees reduction to 58% was upheld and so was the decision to allow  the After the Event insurance premium in full. So that's nearly £10 million for the underwriter. Nice.

Some important legal points were decided as well. One of the issues were the costs incurred by Leigh Day & Co in dealing with 30,000 CFAs and liaising with the ATE insurer throughout the case. It was decided that these costs couldn't be recovered from the defendant. Logically, the Court of Appeal said that, when a solicitor was dealing with the signing of the CFA by a client, they weren't actually a client at that point - and so the time spent was really down to marketing or negotiating rates with the client i.e. an overhead. It was only after they had signed that they became a client. All costs prior to that couldn't be the responsibility of the defendant.

In relation to the costs associated with the ATE policy, Lord Neuberger said:

"The precise dividing line between recoverability and irrecoverability is, perhaps inevitably, somewhat blurred and subjective. However, as I see it, 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.”

So there you have it. You can't charge the defendant for dealing with your client's CFA nor their After the Event Insurance. So make sure you pick an ATE policy that doesn't require any admin.

I wonder who could supply one of those.....

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