1 June 2015Print This Post

High Court upholds claim against liquidator “personally responsible” for paying CFA fees

RCJ

Judge Purle: “plain words” cannot be ignored

The High Court has rejected an appeal against a Master’s decision to hold that a liquidator was “personally responsible” to pay his solicitors and barristers’ fees under a conditional fee agreement (CFA).

Judge Purle QC, sitting as a High Court judge, held that Crawley law firm Stevensdrake had achieved a “success” in insolvency proceedings against two administrators, by securing Tomlin orders in settlement.

Judge Purle said the order against the first administrator, for £125,000, was paid, but the order against the second, for £1.9m was not. Under the terms of the CFA, Stevensdrake demanded just under £1m in costs and success fees from their client, liquidator Stephen Hunt.

Counsel for Mr Hunt argued that both the law firm and its counsel’s fees were, according to the retainer, “recoveries-based”.

However, giving judgment in Stevensdrake v Hunt [2015] EWHC 1527 (Ch), Judge Purle said that one of schedules to the CFA with Mr Hunt contained the following statement: “You are personally responsible for any payments that you may have to make under this agreement. Those payments are not limited by reference to the funds available in the liquidation.”

Judge Purle said that, on the evidence before him, Chief Master Marsh was entitled to enter summary judgment against Mr Hunt, and order him to make an interim payment to Stevensdrake of £75,000, in respect of counsel’s fees.

“Whatever the starting point, the plain words of the schedules to this CFA cannot be ignored. Correspondence from two years previously, or subsequently, cannot override those words.

“Mr Hunt’s responsibility under the CFA and its schedules was to pay the disbursements as well, as was conceded below.”

Judge Purle concluded that there was “no basis” on which he should set aside the order granting summary judgment. He went on to rule that on other issues regarding the fees, the action should proceed to trial.

He decided that the parts of the defence pleadings struck out by the Master should remain struck out.

“The Master, though he was plainly unimpressed by the defences advanced, allowed most of them to proceed upon condition of a payment into court of £100,000. It seems to me that he was plainly entitled, for the reasons I have given, to be unimpressed by the defences, and to proceed in that way.”

Judge Purle advised that “matters might look different” if a counterclaim for breach of fiduciary duty or undue influence was properly pleaded.

“Undue influence one thinks of as being there to protect the vulnerable and weak, but it is also there to protect those to whom fiduciary duties are owed, and the consequence may be, if the complaint is made good, that the CFA will be set aside, or compensation will be ordered.”

However, Judge Purle dismissed the defendant’s current appeal “in its entirety”. He said the “appropriate course” for defence counsel would be to reconsider his pleas in this light and for the revised pleading to be considered at a further hearing.

By Nick Hilborne

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