A liquidator and firm of solicitors entered into a conditional fee arrangement (CFA). The solicitors pursued the liquidator for fees under the CFA and lost in the lower court. The central issue was whether the solicitors were only entitled to fees out of recoveries as a matter of contract under the CFA and, if not, whether the solicitors were prevented from recovering those fees by reason of “estoppel”, undue influence or breach of duty. The solicitors appealed to the Court of Appeal.
The solicitors began acting on the basis that they would only be paid from recoveries in the litigation. At the start of 2009, the solicitors produced a CFA which provided for payment on success, rather than recovery, and entered into a parallel arrangement with the barrister. The claim settled. The solicitors had to pay the barrister’s fees, following arbitration, and sued the liquidator for those and their own fees.
The Court of Appeal disagreed with the lower court, saying that the CFA provided that fees were payable as success had occurred. However, they agreed with the lower court that there was ample evidence to support the argument that the solicitors were estopped from relying on the terms of the CFA and were only entitled to their fees from recoveries, not on success.