Motto v Trafigura – Interest on Costs

Master Hurst has ruled in Motto & Others v Trafigura (SCCO, 29/06/2011) (click for judgment) that in a CFA funded case interest on costs should not begin to run until costs have been assessed, rather than the earlier date when judgment is given.

This follows earlier decisions reaching the same conclusion, although not necessarily for identical reasoning, in Bridle v Ikhlas (22nd February 2011, Oxford County Court) and Gray v Toner (11 November 2010, Liverpool County Court).

This decision is likely to be appealed direct to the Court of Appeal.

7 thoughts on “Motto v Trafigura – Interest on Costs

  1. In fact, the master accepts that absent special order interest on costs continues to run from the date of the substantive judgment. So he rejects Gray v Toner. But, on the facts of these cases, he holds that there is a special reason not to award interest: because the claimants’ CFA does not provide that interest belongs to the solicitors. Rejecting an implied terms argument, he therefore concludes that, since any interest would belong to claimants who are not out of pocket, there is a good reason not to award interest at all.

    Or at least that is how I read a somewhat disorganised and rambling judgment.

    Since most CFAs are Law Soc CFAs which DO have an interest provision, then this judgment appears to support the recovery of interest under those CFAs.

    So, this is in fact a rejection of Gray v Toner in the reasoning, even though, for highly case specific reasons the result is the same.

    I am sure it will be appealed on the implied term point (as it appears to me there was a very good argument for such a term) and cross-appealed by the defendants on the Gray v Toner issue. So the stage is set for an interesting, and hopefully rather more readable, judgment from the C of A.

  2. Jacques,

    I read the judgment in a similar way. However, the Law Society standard wording is that “We are allowed to keep any interest your opponent pays on the charges”. It does not create a primary liability on the claimant to pay interest. It simply deals with who gets to keep any interest that is awarded. If the purpose of interest is to compensate the client (rather than the solicitor), if there is no primary liability on the claimant to pay interest there is under the Law Society standard CFA still nothing for which the client needs to be compensated.

    It would be different if you had a CFA that stated, for example, that the client was liable to pay interest on costs from the date of an award of damages.

  3. You are quite right, and the question boils down to whether a mere liability to account is sufficient to allow recovery. In other contexts it is, but the point is not certain.

  4. I would add that in Hunt v Douglas Roofing – which the master said he was following – the House of Lords held that there was no difficulty in a retainer which simply provided that any interest recovered belonged to the solicitor. So my impression is that the master would have awarded interest if these cases had involved a Law Soc CFA.

  5. What about when a Defendant takes something to trial and then seeks to appeal, losing on appeal. Does justice provide that interest should be payable from date of the authority even if the provisions above applied?

    The Defendant sought to appeal which delayed the matter and not the Claimant and the Defendant has caused the Claimant’s solicitors hardship and precluded them from gaining interest for the period whereby they should have had their costs

  6. Well, the point in this case was that the award of interest would not have compensated the solicitors, because the costs judge held that the interest would have been the clients’ to keep. Since this was a CFA lite, I have to say that I think this a very problematic ruling. The interest must have belonged to someone, and if the CFA was silent on the subject, then it is necessary for the court to work out what was implicitly provided for. With a CFA lite, it is surely a no-brainer that the interest would belong to the person who was out of pocket – the solicitor. I am afraid I do not think this is dealt with all that convincingly by the master.

  7. in terms of CFA Lites its somewhat perverse that you cannot charge anything for postponement and then cannot get interest

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