The High Court has ruled that national firm Leigh Day breached a contract and its duty of care by failing to protect a multi-million-pound fund for victims of a discharge of chemical waste in Ivory Coast.
The firm had secured a £30m settlement in September 2009 from global energy company Trafigura, with the settlement paid into an Ivorian bank nominated by Leigh Day.
But the firm had not taken account of the potential for corruption or fraud.
A third-party organisation made a fraudulent claim against the funds which was upheld in the Ivorian Supreme Court, a decision the firm admitted was 'borne of corruption'. By March 2010, Leigh Day had made an agreement with the organisation for 23,000 of the victims to be paid their share of the settlement sum, leaving 6,624 claimants with nothing.
Sylvie Aya Agouman, one of those claimants to receive nothing, sued Leigh Day for professional negligence for her share of the settlement – around £1,000 – saying the settlement should not have been paid in one sum into the bank and that the firm was in breach of its duties as trustee of the sum.
Leigh Day argued in court that losses suffered by the claimant were not of a kind that would have been ‘within the parties’ contemplation’ because the firm could not reasonably have been expected to foresee funds would be ‘attacked by a corrupt judicial decision’.
The firm also argued the loss was too remote to be recoverable.
But the court ruled Leigh Day did not take proper steps to protect the settlement sum from being acquired dishonestly by third parties making claims to it.
Agouman, and other claimants in her position, did not receive their due as a result of the firm’s negligence.
In Agouman v Leigh Day (a firm), Mr Justice Andrew Smith said Leigh Day ‘should have at least recognised’ the risk of a dishonest claim.
He added: ‘They should also have recognised that they might not be able to protect a fund held in an account in the Ivory Coast without a robust legal system and a judicial system of reliable integrity and independence; and they knew that they could not be confident of either.’
Smith upheld Agouman’s claim for damages for breach of contract and duty of care. He asked to hear further submissions about the claim for breach of trust and about directions for assessing damages.
Speaking after the judgment, a Leigh Day spokesperson said: ‘We are entirely sympathetic with the position the claimant, Ms Sylvie Aya Agouman, and others find themselves in.
‘We fought hard to gain compensation for all 30,000 of our clients and we were devastated when some of the monies were misappropriated. We did our damnedest to recover the monies resulting in the great majority of our clients having received their compensation.
‘We understand the attempt by Ms Agouman and others to try to recover their compensation through this claim however we believe the judgment of Mr Justice Smith looks at what happened through the prism of hindsight.’