The Court of Appeal has handed down the first of its decisions in respect of the cases heard by Master Hurst in the Trafigura Group Litigation.

Of most interest is issue (vii) dealt with by the court, namely whether the costs of funding are recoverable from paying parties.

The Court of Appeal, has held that the Costs of Funding are not recoverable, and instead form part of office overheads. The decision applies to the costs incurred setting up a Conditional Fee Agreement, discussing a Conditional Fee Agreement and, most surprisingly, the costs of dealing with an ATE insurer.

The court went further in extending its decision to include the costs of updating an ATE insurer throughout the conduct of claim, holding that they were collateral to the litigation.

Whilst this decision has led to greater clarity as to what is and what is not recoverable on a detailed assessment, it could potentially lead to a substantial reduction in what is recoverable by way of costs.

The other issues determined by the court include:-

1. The application of the test of proportionality,
2. The costs of vetting the Claimants,
3. Whether a reduction should be made in costs for non-compliance with a pre-action protocol,
4. Whether undisclosed medical reports are in principle recoverable,
5. Whether the costs of abandoned claims are recoverable,
6. Whether the costs of distributing settlement monies are recoverable,
7. The amount of a success fee and,
8. The amount of an insurance premium.

Respectively, the court held that in the Giambrone test of proportionality, the Master had not erred in holding that the Claimant should not be penalised for non-compliance with the protocol, holding that in principle the costs of 4-6 above are recoverable in principle, the Master had awarded the correct success fee and that the premium would not be reduced.