A Scottish court has ruled legacy firm Paull & Williamsons – now Burness Paull – did act in conflict of interest in a £200m professional negligence action brought by a former client.
Lord Tyre’s judgment, handed down on Friday (3 February), did not award any damages to the claimant, businessman Robert Kidd, instead stating a trial on damages would be held subsequently.
Burness Paull conceded its legacy firm had acted in conflict of interest in the 2008 deal late last year. Kidd had instructed the Aberdeen firm to negotiate the sale of a third of his oil services business, International Tubular Services (ITS) to US private equity company, Lime Rock Partners.
Friday’s judgment dismissed a claim by Kidd that Burness Paull had acted fraudulently or dishonestly.
It also said the “relevancy of the pursuer’s claim to have sustained loss as a consequence of the [defendant’s] breach of fiduciary duty will be determined after proof” and “the relevancy of the defence of contributory negligence will be determined after proof”.
Lord Tyre also refused a motion by Burness Paull to dismiss the case due to allegations of breach of contract and negligence being “irrelevant”.
The Lawyer reported in December that although Burness Paull had originally defended the allegations on the basis there was no conflict, upon discovering the conflicted it made a concession to the court.
The partner involved in the 2008 deal was asked to leave the firm in October 2016.
A statement from Burness Paull said it will “continue to defend the action”, which will now involve a quantum claim on alleged damages relating to the conflict.
Kidd claims ITS was valued at around $200m in 2008, but the law firm’s conflict of interest led him to lose control of the business.
Meanwhile Burness Paull claims there was no link between the conflict and the losses claimed.
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