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In the case of Stevensdrake Ltd v Stephen Hunt & Ors  EWHC 1527 (Ch) the High Court has dismissed an appeal in which a liquidator of a company sought to avoid being personally liable for success fees (or uplifts) and counsel's fees pursuant to a conditional fee arrangement (CFA). The terms of the CFA were plain in that if the liquidator won his claim (as he did in accordance with the definition of 'win' in the schedule), he would pay the basic charges, disbursements and success fee of the solicitors. The CFA went on to say that the liquidator was 'personally liable for any payments' that he may have to make' under the agreement. The court rejected the liquidator's argument that he was not the client and it was in fact the company: the contractual provisions of the CFA which he had signed were clear. As such, summary judgment and an order for an interim payment of £75,000 in respect of these costs stood.
What does this mean in practice?
This case involved a 'battle of the forms' type scenario. The liquidator had tried to rely on a retainer letter and correspondence that pre-dated the CFA which referred to fees and disbursements being paid out of recoveries only. However, this was contrary to, and had no bearing on, the final contractual position to which he had agreed whereby he was personally liable for payments, and not limited to the funds available in the liquidation.
Until the implementation of costs reforms in April 2013, success fees in a CFA (such as this one signed in 2008) were recoverable from the losing party. However, in insolvencies, as in this case, the other side may be a debtor who hasn't paid becau
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