Personal liability of liquidator for CFA costs

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In Stevensdrake Ltd v Hunt and others [1] the liquidator of Sunbow Limited, Mr Hunt, had brought a claim against Sunbow’s former administrators. Mr Hunt entered into a conditional fee agreement (CFA) with the solicitors instructed to pursue the claim (Stevensdrake). The CFA stated “if you [Mr Hunt] win your claim, you pay our basic charges, our disbursements and a success fee”. A settlement was agreed but one of the former administrators failed to pay the agreed sum. Stevensdrake argued that under the terms of the CFA, the agreed settlement was a “win” and Mr Hunt was liable to pay their fees, success fee and all disbursements.

Mr Hunt argued that he could only contract on behalf of the company to which he was appointed, so that he was only liable to pay the costs to the extent that there were funds available in the insolvent estate to meet them.

The High Court held that Mr Hunt was personally liable for the fees and costs of the solicitors he had instructed. The clear wording of the CFA stated that he was “personally responsible” for the costs under it, so that it was clear that he was acting in a personal capacity. There was some evidence that the parties had understood the recovery of the costs would be limited by the funds available in the liquidation so the case highlights the importance of checking carefully the precise wording of a CFA.


[1] [2015] EWHC 1527