Wright Hassall Llp v Morris

An insolvency administrator acts as agent for the company when exercising statutory functions. Where that agency is disclosed, contractual liability ordinarily falls on the company, unless the contract provides otherwise. Naming the individual followed by as administrator ordinarily identifies a representative, not personal, capacity. Personal liability must be specifically alleged where it is relied upon. The general rule also applies to costs orders made against an administrator defending proceedings arising from obligations undertaken as administrator, unless the court exceptionally orders personal liability.

Wright Hassall LLP had obtained an order for damages and costs in earlier proceedings concerning conditional fee agreements entered into by Duncan Morris while acting as administrator of two companies. The order named him as administrator. The companies lacked sufficient assets, and Wright Hassall applied for relief intended to make Mr Morris personally liable and to remove him as administrator.

The central issue was whether the earlier order imposed personal liability on Mr Morris or liability only on the estates of the companies. The court also considered whether personal liability had been determined expressly, impliedly, or on a common assumption at the earlier trial.

1. Nature of an administrator’s liability. An administrator’s powers are statutory, and Insolvency Act Sch B1 provides that, in exercising those functions, the administrator acts as the company’s agent. Where the agency is disclosed, the general contractual rule is that the agent is not personally liable unless the contract, properly construed, provides otherwise. The absence of an express exclusion of personal liability does not itself establish an intention to impose it (paras [21] and [26]).
2. Meaning of the title to proceedings. Where proceedings arise from contractual obligations undertaken by an administrator in that capacity, an individual described as acting “as administrator” is ordinarily sued as agent and not personally. A claimant seeking personal liability should plead it specifically. The same implication is reinforced for costs by the general rule that an office-holder defending proceedings is not personally liable for costs unless the court exceptionally so orders (para [22]).
3. Trustee analogy rejected. The position of a trustee is materially different because a trust has no separate legal personality. The policy rule making a liquidator personally liable for costs in proceedings initiated by him does not establish personal liability where the office-holder is sued as defendant in relation to acts undertaken in office. Re Wilson Lovatt & Sons Ltd and Re London Metallurgical Co Ltd supported that distinction (paras [19]-[20]).
4. Effect of the earlier order. The wording of the order did not necessarily impose personal liability. The earlier trial had proceeded on the common basis that liability fell on the companies’ estates. Personal liability was not a live issue, was not argued, and was not determined by the earlier judge. References to Mr Morris as party to the contract did not decide whether he acted personally or representatively (paras [23]-[27]).
5. The order therefore imposed liability only on the estates of the two companies, not personally on Mr Morris. Any unresolved issue concerning priority within the insolvent estates was adjourned for further consideration (para [29]).

The judgment itself does not state an appellate history. It records that the earlier order had not been appealed and that time for seeking permission to appeal against the present decision was extended until written reasons were handed down.