Oil tycoon in second bid for major business deal payout
WHEN oil tycoon Robert Kidd launched a legal case against Burness Paull in 2015 his claim was thought to be the largest ever filed in the Scottish courts.
Accusing the firm’s Aberdeen legacy practice Paull & Williamsons of being conflicted over the advice given on a 2009 business transaction, Mr Kidd said Burness Paull should pay him
£160 million because he believed that conflict was the reason his business ultimately failed. The matter settled for £20m before making it to a full hearing.
Two years on from that settlement and Mr Kidd is making a second attempt at scoring a major payout related to the same business deal, launching a £175m claim against Aberdeen law firm Ledingham Chalmers, US private equity house Lime Rock Partners, and a number of individuals from both organisations.
Again, if successful, it is thought the case would result in the largest payout ever won in
Scotland’s courts.
Though not all awards are made public, it is believed the £109m that German construction business Hochtief was ordered to pay SSE Generation in 2018 is the largest secured to date.
That case, which related to the collapse of a tunnel at the Glendoe hydro-electric power scheme, concluded in the Inner House of the Court of Session after SSE Generation initially sued for £130m. Hochtief was given permission in June 2018 to appeal the matter to the UK Supreme Court.
As with the Burness Paull case, the latest matter relates to a deal that saw Mr Kidd sell Lime Rock a £34.5m stake in drilling business ITS Tubular Services more than a decade ago.
Following the investment Mr Kidd retained a majority shareholding in the business, which he had set up in the mid-eighties, but in 2013 resigned as its chairman and chief executive after falling out with his investors.
The firm went into administration with debts of around £145m later that year.
In the action against Burness Paull, Mr Kidd had claimed the losses he incurred when the business failed were due to a conflict of interest on the part of a Paull & Williamsons lawyer who had advised on the Lime
Rock deal.
That lawyer, Mr Kidd claimed, had acted both for his business and Lime Rock and, his court papers stated, used Ledingham Chalmers as a front “to convey the impression that Lime Rock were being appropriately and independently advised”.
Although Burness Paull admitted there had been a conflict, because the matter settled the court was unable to determine whether Mr Kidd’s claimed losses could be directly attributed to the firm’s actions or not.
It is understood the claim he is now pursuing against Ledingham Chalmers and Lime Rock is of a similar nature, although Mr Kidd, who was contacted via his current legal advisers at Harper Macleod, did not comment.
Lime Rock also declined to comment, but Ledingham
Chalmers chairman Jennifer Young said the firm believes the allegations made against it
“are unfounded”.
“Given we have received intimation of a summons from Robert Kidd’s lawyers, it would be inappropriate to comment further other than to say the firm holds itself to the highest of ethical and professional standards,” she said.
In the meantime, Mr Kidd is now locked in dispute with the lawyers who negotiated his £20m settlement with Burness Paull after claiming the £3m of success fees they charged had been unlawfully calculated.
In an opinion released at the end of January, Outer House judge Lord Doherty agreed with
Mr Kidd that Levy & Mcrae and advocate Jonathan Brown should not have charged fees that were linked to the size of the award he received because rules allowing that kind of arrangement were not in place at the time of the case and even now are still in the process of being drawn up. However, the judge said a further hearing is required to determine whether Mr
Kidd has the right to challenge the fees.
Levy & Mcrae is seeking leave to appeal Lord Doherty’s decision, with a spokesman for the firm stating that the agreement it made with Mr Kidd in relation to fees was “entirely appropriate”.
“The damages case we were asked to undertake by Mr Kidd was among the most challenging and highly complex seen in the Scottish courts for many years,” he said.
“For that reason, before proceeding with the case, detailed discussions took place and advice was sought on the proposed fee arrangements to ensure they complied with all necessary legislation.
“This included advice from the Dean of the Faculty of Advocates, who stated: ‘I am content with this. It is of the essence of a speculative fee that the amount of the fee will be linked to the outcome. We crossed that
Rubicon long ago.’
“We remain of the opinion that these fee arrangements complied with the rules.”
If successful, it is thought the case would result in the largest payout ever won in Scotland’s courts.