By

Stevensdrake Ltd v Hunt & Ors [2015] EWHC 1527 (Ch) (20 May 2015)

In Stevensdrake Ltd v Hunt & Ors, the High Court has dismissed an appeal brought by a liquidator seeking to avoid personal liability for legal fees under the terms of a Conditional Fee Agreement. Despite prior correspondence suggesting that the liquidator would only be liable for the solicitors’ fees and disbursements to the extent that such sums could met out of recoveries in the litigation, the language of the CFA eventually entered into stated: “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 QC rejected the liquidator’s argument that he was entering into the CFA as liquidator of the company and not in his personal capacity and upheld Chief Master Marsh’s first instance decision that the language of the CFA conferred personal liability on the liquidator, Mr Hunt, which was not limited to the monies recovered from the Defendants in the underlying litigation conducted by Stevensdrake.
This case serves as a useful reminder of the importance of ensuring that funding agreements are drafted correctly in order to limit the personal exposure to costs of insolvency practitioners.
Most IPs entering into CFAs and After the Event insurance policies will do so on the expectation that the liability for the CFA success fee and deferred and contingent upon success ATE premium will be limited to the actual sums recovered in the case, as opposed to being triggered by a judgement/settlement irrespective of recovery.However, this understanding is not always properly reflected in the drafting of the CFA or ATE policy, creating a risk of personal liability to the liquidator, as arose in this case.
At TheJudge, we offer a range of ATE products tailored to the insolvency market, which contractually limit the IP’s liability for the premium to the sums recovered in the case. Please do not hesitate to contact us to discuss your requirements.

James Blick, Director, TheJudge Limited james.blick@thejudge.co.uk