Liability of an Administrator for costs under a CFA
Liability of an Administrator for costs under a CFA
The Solicitors sued for fees pursuant to two conditional fee agreements under which they had acted for two companies in administration against third parties.
They obtained a judgement for their costs under the CFA.
The issue was whether or not the order for costs was personally the liability of the Administrator or that of the Companies in administration.
If it was to be the liability of the company in administration those companies had insufficient assets to satisfy the judgments.
The issue to be considered by the judge was whether an order against the administrator was to be paid personally.
The judge thought the position of an Administrator was not like that of a Liquidator.
A liquidator is personally liable for costs not withstanding he brings proceedings as an agent of an Insolvent company because it is he who imposes on the opponent the obligation to incur those costs.
The judge stated it was equally clear that a Liquidator is in general not liable for costs where he is made a Defendant to proceedings arising out of acts as the office holder.
An administrator is an agent of the company and does not incur personal liability for obligations entered into. The Administrator was agent and therefore not personally liable.
An administrator’s powers are statutory the Insolvency Act provides
“In exercising his functions under this Schedule the administrator of a company acts as its agent”.
The purpose is to ensure that in so doing the administrator does not normally incur personal liability for obligations entered into.