Adam Newman v Gordon Dadds LLP

JurisdictionEngland & Wales
CourtSenior Courts
JudgeMaster Leonard
Judgment Date04 June 2020
Neutral Citation[2020] EWHC B23 (Costs)
Docket NumberCase No: CL1805128

[2020] EWHC B23 (Costs)



Thomas More Building

Royal Courts of Justice

Strand, London WC2A 2LL


Master Leonard

Case No: CL1805128

Adam Newman
Gordon Dadds LLP

Robin Dunne (instructed by Fahri) LLP for the Claimant

John Churchill (instructed by Gordon Dadds LLP) for the Defendant

Hearing date: 13 March 2020

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Master Leonard Master Leonard

On 16 November 2018, on the application of the Claimant, the court made an order under section 70 of the Solicitors Act 1974 for the detailed assessment of six bills rendered by the Defendant between 31 January and 31 May 2018. The bills, including VAT, come to £84,919.90. According to the evidence of Mr Nicholas Yapp, the Defendant's current head of dispute resolution for the Defendant, the first of this series, totalling £27,300.00, was part paid with an outstanding balance of £5,242.40. The rest are unpaid.


Most of these bills were rendered at the end of each calendar month, with some in between.


These were not the first bills rendered to the Claimant by the Defendant. Between 31 August 2017 and 31 December 2017 the Defendant had rendered a series of bills totalling £75,827.40, not included in the Claimant's application. Mr Yapp confirms that they were paid in full. I understand that one more bill rendered after 31 January 2018 was also not included in the Claimant's application. The Defendant claims an outstanding balance due from the Claimant of £61,205.


In his Points of Dispute the Claimant has raised the question of estimates, relying upon the only estimate given by the Defendant, in a letter of retainer dated 21 August 2017, of £10,000. The Claimant argues that the Defendant's recoverable fees should be limited to that figure. On 17 December 2019 the court ordered that the issue of estimates and their effect upon the Claimant's bills be heard as a preliminary issue. The purpose of this judgment is to address that issue.

The Retainer


The letter of retainer sent by the Defendant to the Claimant on 21 August 2017 was signed by Nick Goldstone, (then a partner in the Defendant and its head of dispute resolution) and insofar as pertinent reads as follows.


Under the heading “Scope of Our Work”, at paragraph 1.1:

“1.1 The initial work will involve our advising you and representing you in the correspondence with Jabac Ltd and its directors and shareholders in seeking to establish the present operation of the company is unfairly prejudicial to your interests such that a petition should be issued under section 994 of the Companies Act 2006… It is currently intended that the threat of such action will bring the opposing parties to a mediation in an attempt to forge a way forward…


At paragraph 1.2:

“Our work will not include advising on… any tax, accounting, actuarial or financial aspect of the matter… any due diligence other than as expressly set out at paragraph 1.1 above… the laws of any jurisdiction other than England and Wales.”


Under “Standard Hourly Rates”:

“The standard hourly rates exclusive of VAT of members of the Litigation and Dispute Resolution department are currently as follows…. Partners £375–£550… Associates £300–£375… Assistants £240–£300… Trainees/paralegals £130–£180… My hourly rate for this matter will be £450…”


Under “Fee Estimate”, at paragraph 5.1:

“I estimate that our charges for the work set out in paragraph 1.1 above will be no more than £10,000 exclusive of VAT and disbursements ( Estimate). The Estimate is based on the assumptions set out in paragraph 5.2 below and is only an estimate and not a fixed fee. As the matter proceeds, we will inform you if we consider that our charges will exceed the amount of the Estimate.”


At paragraph 5.2:

“The Estimate is based on the following assumptions… our work will not extend beyond the scope set out in paragraph 1.1 above… My time on the matter in the initial phase will not exceed 23 hours of chargeable time…


At paragraph 5.4:

“If we are required to undertake work outside the scope of the work set out in paragraph 1.1 we will charge separately at a normal, applicable hourly rates. Where it is practicable to do so, we will provide an estimate for any such additional work in advance…”


Under “Invoicing and Payment Terms”:

“It is this Firm's policy to invoice on a monthly basis or earlier if appropriate…


At paragraph 11, under the heading “Accepting Instructions”:

“We have been dealing with you but you agree that we can also accept and agree to instructions from others you nominate or authorise during the course of this matter and it is intended that you/the Company will be bound by such instructions.”


Standard terms and conditions accompanying the letter of retainer included confirmation where it was not possible to give a meaningful estimate the Defendant would endeavour to give the Claimant the best information available at the time.

The JFL Litigation


Underlying the matters upon which the Claimant sought the Defendant's advice and representation was a family dispute. The company in question was Jabac Finances Limited (“JFL”), a lending company owned and controlled by members of the Claimant's family and of which he was a director with a 20% shareholding.


The intention referred to in the retainer letter of 21 August 2017 (of using the possibility of litigation to resolve matters in mediation at relatively low cost) was not achieved. His pre-action letters were sent in September 2017. On 6 November 2017, JFL suspended the Claimant and subsequently issued a claim against the Claimant for breach of fiduciary duty. I understand that it also made an application for pre-action disclosure. The Claimant's section 994 unfair prejudice petition was issued on 15 March 2018. He also issued whistleblowing and discrimination proceedings in the Employment Tribunal. The Claimant has become caught up in a web of interconnected litigation involving JFL and members of his family.


It would seem that a mediation did take place in March 2018, and from the evidence I have seen the parties came close to agreement at that time, but it was evidently ultimately unsuccessful. The contract of retainer between the Claimant and the Defendant terminated in May 2018 when the Claimant instructed his current solicitors Fahri LLP.


In June 2019, the Claimant issued a Part 8 claim against JFL and its solicitors seeking declarations that his purported suspension was unlawful; that JFL's solicitors (in acting for JFL as well as other respondents to the section 994 application) were acting in conflict of interest; that fees paid to them by JFL should be repaid; for disclosure and inspection of relevant documentation; and for an injunction preventing JFL from financing the unfair prejudice, employment tribunal and High Court proceedings.

The Claimant's Complaints against the Defendant


Although they are not matters raised for the purposes of this detailed assessment and I make no finding on them, I should refer to a number of complaints made by the Claimant against the Defendant which have an obvious bearing on his view as to how much the Defendant should be paid.


It would seem that Mr Goldstone was, by October 2017, engaged with other matters to the extent that he had to be effectively replaced by Mr Yapp. The Claimant expressed dissatisfaction with Mr Yapp's contribution to a conference with Counsel and the matter was then taken over by Mr David Gore (at the same charging rate as Mr Goldstone; £450 per hour).


The Claimant takes issue with much more than the Defendant's failure to provide any further costs estimates beyond that given on 21 August 2017. A non-exclusive list of his complaints is as follows.


The Claimant says that Mr Gore failed to set out his position in writing prior to a round table meeting with his fellow directors on 6 November 2017, and at the meeting itself failed effectively to present his case. Mr Gore did not challenge the fact that JFL was funding the defence of his section 994 petition, or that its solicitors were acting for JFL as well as other respondents to the section 994 application, which says the Claimant created a conflict of interest. He failed effectively to challenge the Claimant's suspension as director (whilst he remained as such on the public register), which was, according to the Memorandum and Articles of Association of JFL, unlawful, or to advise on the appropriate remedy. The challenge raised by the Claimant in June 2019 should have been raised, on the Defendant's advice, at the time, and he says may have been raised too late.


The Defendant, says the Claimant, also failed to advise properly on the need to contact the Financial Conduct Authority (“FCA”) and advise it of his suspension, forcing him to seek independent advice in that respect from Shakespeare Martineau, solicitors with whom he has incurred substantial fees to maintain his FCA authorisation. It included, as defendants to his section 994 petition two minority shareholders, forcing him to amend the petition and pay their costs, claimed at over £15,000. It failed to prepare his Employment Tribunal claim properly so that his current solicitors had to amend, or to obtain, is as it should have done, a copy of JFL's disciplinary procedures. It failed to give appropriate advice on the pre-action disclosure application, in particular on JFL's reliance on hearsay evidence or the fact that some disclosure would have to come from third parties.


The Claimant blames the Defendant for the deterioration of his health during the period of suspension for salary losses in excess of £200,000...

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