(first) A & E Investments Inc. And (second) Robert Kidd Against (first) Levy & Mcrae Solicitors Llp And (second) Jonathan Brown
| Jurisdiction | Scotland |
| Judge | Lord Doherty |
| Neutral Citation | [2020] CSOH 14 |
| Date | 29 January 2020 |
| Docket Number | CA104/18 |
| Court | Court of Session |
| Published date | 29 January 2020 |
OUTER HOUSE, COURT OF SESSION
[2020] CSOH 14
CA104/18
OPINION OF LORD DOHERTY
in the cause
(FIRST) A & E INVESTMENTS INC. and (SECOND) ROBERT KIDD
Pursuers
against
(FIRST) LEVY & McRAE SOLICITORS LLP and (SECOND) JONATHAN BROWN
Defenders
Pursuers: Sandison QC; Davidson Chalmers Stewart LLP
First Defender: Duncan QC, E Campbell; DWF LLP
Second Defender: Ellis QC; Brodies LLP
29 January 2020
Introduction
[1] The principal issue in this case is whether the success fee elements of two agreements
are pacta de quota litis. The first agreement was between the pursuers and Levy & McRae.
The first defender has succeeded to the business of Levy & McRae. The second agreement
was between Levy & McRae and junior counsel instructed by them, the second defender.
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Background
[2] In 2015 the second pursuer was pursuing a commercial action (“the Kidd action”) in
the Court of Session against a firm of solicitors who had acted for him in a substantial
commercial transaction. The solicitors were Paull & Williamson LLP, and their successors,
Burness Paull LLP (which firm and successor firm are hereinafter referred to as “P & W“).
The second pursuer averred that as a result of negligence, breach of contract, breach of
fiduciary duty and fraudulent misrepresentation on the part of P & W he had suffered
substantial losses. When the action was raised the sum sued for was US $65,000,000.
During the course of the action the sum sued for was increased. Ultimately, it was
US $210,000,000. In mid-2015 the first pursuer instructed Levy & McRae to take over agency
in respect of the Kidd action and to provide it with certain further advice.
The agreements
[3] By a letter to the first pursuer dated 1 July 2015 Levy & McRae set out the terms
upon which it proposed to accept instructions. On 2 July 2015 the first pursuer accepted
those terms. The letter provided:
“Robert Kidd,
A & E investments Inc.
...
2. Identity of Client
Our client in this engagement will be A & E Investments Inc....[A]lthough A & E
Investments Inc is our client we acknowledge a duty of care owed to Robert Kidd to
the extent, if any, that he has an interest distinct to that of A & E Investments Inc ...”
3. Individuals from whom we may accept instructions
Unless advised in writing to the contrary we shall be entitled to accept instructions
from Robert Kidd, Mike Forbes or Chris Smylie. Each of A & E Investments Inc and
Robert Kidd warrants to us the authority of each of Robert Kidd, Mike Forbes and
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Chris Smylie to bind A &E Investments Inc. in respect of the matters covered by this
letter.
4. Basis of calculation of fees
You acknowledge that the exceptional nature and value of this case and the level of
commitment and responsibility involved would ordinarily justify a significantly
enhanced hourly rate. We have agreed to charge on the basis of the discounted
hourly rates set out below, such fees to be rendered at monthly intervals on an
ongoing basis and to be paid within 30 days of rendering ("the basic fee”).
The basic fee will be calculated based on the hourly rates set out below. Those hourly
rates will be subject to review no more frequently than once a year. We will notify
any reviewed rates to you in advance of incurring any charge at those rates.
Partner - £300
Associate - £230
Solicitor more than 4 years qualified - £210
Solicitor less than 4 years qualified - £190
Trainee - £120
In recognition of the fact that the basic fee represents a discount to the fee which the
instruction would ordinarily command, in the event of a successful outcome which
produces a result in excess of the value specified below ("the success fee threshold”)
we shall be entitled to charge an additional fee ("the success fee”) calculated on the
basis set out below.
The value of the result will be calculated according to the monetary value (expressed
in Sterling as at the date of payment) of either (i) a final judgment of any competent
court in your favour (or in favour of Mr Kidd); or (ii) a negotiated settlement of any
claim. In either event the value will be calculated on the basis of the sum for which
judgment is granted or the settlement sum as the case may be together with any
interest accrued thereon down to the date of payment. In this context final judgment
shall mean a judgment in respect of which all UK rights of appeal have been
exhausted.
We will have no authority to accept any offer in settlement other than on your
specific instructions.
The success fee threshold shall be TEN MILLION POUNDS (£10,000,000.00)
STERLING, or such other sum as we may from time to time agree with you in
writing. In the event that the value of the result is equal to or less than the success fee
threshold then no success fee shall be payable.
In the event that the value of the result exceeds the success fee threshold, then we
shall be entitled to charge a success fee.
The success fee will be calculated as a percentage of the basic fee. The percentage will
be calculated as follows:
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