JN Dairies Limited -v- (1) Johal Dairies Limited & (2) Gurbir Singh [2011] EWHC 90211 (Costs)

Posted on Tuesday, August 23rd, 2011

The Claimant argued that shortly after the termination of his employment, the Second Defendant had returned to the Claimant’s premises and removed a number of documents which the Defendants then used to solicit the Claimants’ customers. Proceedings were issued and a trial of the preliminary issues listed. Meanwhile the Second Defendant disappeared to India. The Claimant was successful and the First Defendant was ordered to pay its costs of the preliminary issues with £200,000 to be paid on account. The First Defendant appealed unsuccessfully and was ordered to pay the Claimant’s costs with £250,000 to be paid on account. Up to one month before the hearing of the appeal, the Claimant instructed its solicitors on a private paying basis. Funding became a problem and, at that point, the Claimant entered into retrospective conditional fee agreements with both solicitors and Counsel which stipulated for success fees of 100% on both work to be done and work already done. The First Defendant argued that, although following Birmingham City Council -v- Rose Ford [2009] EWHC 12 (QB), there was no public policy prohibition on retrospective success fees, the overnight increase of £295,000 in the Claimant’s costs in the event of success, of which the First Defendant had no notice, was unreasonable. The Claimant argued that there was no other way for it to fund the litigation and that its representatives were running a substantial risk. Furthermore, there was no indication that the First Defendant would have acted differently had notice of the retrospective additional liabilities been given. Master Gordon-Saker found that the retrospective success fees were unreasonably incurred within the meaning of CPR 44.4(1) and were therefore disallowed inter partes.


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