Stevensdrake Ltd v Hunt & Ors

A liquidator’s usual position does not prevent personal liability where the retainer expressly imposes it. The court must give effect to clear contractual wording, including a term making the liquidator personally responsible for payments not limited to funds available in the liquidation. That wording may support summary judgment for counsel’s fees. Earlier correspondence cannot override the concluded agreement. Pleadings alleging estoppel, breach of fiduciary duty or undue influence must be properly formulated. A recently proposed amendment should be dealt with on a formal application, rather than by re-hearing the earlier decision on new material.

The claimant solicitors appealed from a decision of Chief Master Marsh dated 15 October 2014. The Master had granted summary judgment for an indemnity in respect of counsel’s fees, ordered an interim payment of £75,000, struck out parts of the defence and counterclaim, and permitted the remaining case to continue subject to payment into court of £100,000.

The defendants included Mr Hunt, acting as liquidator of Sunbow Ltd, and his firm. They contended that the solicitors’ fees were recoverable only from recoveries in the liquidation and relied on estoppel, breach of fiduciary duty and undue influence. The central issues were whether the CFA imposed personal liability on Mr Hunt and whether the struck-out allegations should remain excluded.

1. Permission and summary judgment. Permission to appeal was granted at the rolled-up hearing. The appeal was dismissed. The CFA and its schedules expressly stated that Mr Hunt was personally responsible for payments under the agreement and that those payments were not limited by funds available in the liquidation. The term applied to counsel’s fees and disbursements.
2. The general position that a liquidator does not ordinarily contract personally could not displace the particular contractual wording. The word “responsible” meant personal contractual responsibility in context. Earlier or later correspondence could not override the plain terms of the concluded CFA. The provision allowing recovery proceedings against an opponent was an additional contractual remedy, not recognition that personal liability was absent.
3. The Master was therefore entitled to grant summary judgment for an indemnity in respect of counsel’s fees and to order an interim payment of £75,000. The remaining fee issues were to proceed to trial.
4. The condition requiring payment into court of £100,000 for continuation of the defence and counterclaim was maintained. The estoppel plea had been inadequately pleaded before the Master. Its reformulation could not be determined on the basis of a recently produced draft without a formal application to amend. The struck-out paragraph therefore remained struck out, subject to any properly pleaded later application.
5. The same approach applied to the allegations of breach of fiduciary duty and undue influence. The Master was justified in striking out the pleading as formulated. A properly pleaded case might, however, be sustainable, including because of the influence presumed in a solicitor-client relationship. If established, relief might include setting aside the CFA or ordering compensation, with appropriate adjustment for counsel’s fees. Those matters required a properly argued hearing.

The appeal was dismissed in its entirety.

• High Court (Chancery Division): On appeal from the decision of Chief Master Marsh dated 15 October 2014, the appeal was dismissed in its entirety. The summary judgment, interim payment order and payment-into-court condition were maintained, while the remaining issues continued towards trial.