The recent Court of Appeal case of Stevensdrake Limited v Stephen Hunt  EWCA Civ 1173 provides guidance on whether the office holder is liable to meet the legal costs in CFA cases where there are insufficient recoveries in the estate to meet those costs.
Central to costs assessments in litigation proceedings is what is known as the Indemnity Principle which effectively caps the sum of recoverable costs to the amount that a client is liable to pay their solicitor. Therefore, in order to recover costs from the defendant, office holders must accept personal liability for their solicitor’s costs, but are understandably reluctant to do so in nil asset cases. Equally, solicitors do not wish to incur substantial amounts of work in progress without some comfort that they will be paid for it, or will obtain a benefit of taking such a risk. Often solicitors will require a Conditional Fee Agreement (‘CFA’) as a prerequisite of acting as a result. This case deals with the situation where those interests collide. Continue Reading