Inner House refuses appeal in large damages claim by owner of failed company who alleged unlawful conspiracy

About this case:

• Citation:
  [2025] CSIH 11
• Judgment:
  External link
• Court:
  Court of Session Inner House
• Judge:
  Lord Malcolm

Robert Kidd alleged that Lime Rock Management LLP and seven other defenders had colluded in an unlawful means conspiracy resulting in a $150 million loss to the pursuer. The commercial judge held that there was no such conspiracy, and nothing done by the defenders had resulted in any loss or damage.

The appeal was heard by Lord Malcolm, Lord Doherty, and Lady Wise.

Typical transaction

The pursuer was the 100 per cent shareholder of a company, ITS, which leased oil and gas equipment. By 2009 ITS was the holding company of a multinational group of enterprises with a combined annual turnover of over $100 million. From 2007, Mr Kidd sought to realise the value of his shareholdings by finding a buyer or private-equity investor for the company and concluded an investment and share purchase agreement with Lime Rock in September 2009.

It was the pursuer’s case that the key terms of this agreement were never explained to him and were highly disadvantageous to him, resulting in his shareholding in ITS becoming worthless and depriving him of better opportunities to dispose of his assets. A partner in the solicitors firm Paull & Williamson, Kenneth Gordon, played a key role in the transaction despite a conflict of interest between his fiduciary duties to Mr Kidd and his role at P&W dealing with Lime Rock, which eventually led to his resignation and investigation by the Scottish Solicitors’ Discipline Tribunal.

Mr Kidd averred that the defenders were aware of Mr Gordon’s conduct and, by continuing to negotiate with him, created a false impression of an arms-length commercial transaction whilst concealing the fact that Mr Kidd was not receiving independent legal advice. The commercial judge held that neither Mr Gordon nor the individual defenders acted with the intention of causing loss or injury to Mr Kidd and that the terms of the agreement reflected a typical private equity transaction for the time.

It was submitted for the pursuer on appeal that the judge reached conclusions that were plainly wrong on the evidence before him and erred in repelling an objection that evidence as to the objective fairness of the transaction was irrelevant. This error led to unfavourable factual findings and led the judge to consider irrelevant matters.

In their submissions, the defenders drew attention to the caution required of an appellate court when asked to interfere with findings in fact, and to an earlier £20 million settlement Mr Kidd had reached with P&W’s successor firm in another action. The sum sought, which would total over $500 million with judicial interest, was unconscionable, especially since Lime Rock had lost its entire investment when ITS failed.

Fell at first hurdle

Lord Malcolm, delivering the opinion of the court, said of the relevant findings: “The case fell at the first hurdle, namely the need to prove an express or tacit agreement to cause Mr Kidd injury involving one or more of the named defenders. Nonetheless the judge separately addressed whether the alleged unlawful means, namely fraudulent concealment of Mr Gordon’s conduct, had been established. The contemporaneous material suggested that Mr Gordon was open with everyone as to his intentions. There was no evidence that Mr Kidd was being deceived by anyone, either by a misrepresentation or concealment.”

He added: “This was not a zero-sum game. The desire was that everyone would gain, not that Lime Rock would benefit at the expense of their business partners. A contrast can be drawn with cases where a competitor captures a rival’s business by the use of unlawful means. It can be noted that the courts have often warned of the danger of expanding the scope of economic torts in a manner harmful to free trade and legitimate competition. The finding that the transactions were in terms to be expected and fair to both sides militates against the notion that the defenders were engaged in a conspiracy designed to harm Mr Kidd.”

Evaluating whether the judge was right to repel the objection to evidence, Lord Malcolm said: “Mr Kidd introduced the issue of the alleged unfairness and prejudicial nature of the transaction; indeed it was a main plank of the case of an unlawful means conspiracy as pled and initially presented prior to the expert led for Mr Kidd disowning it. Mr Kidd cannot object to evidence in contradiction, nor to the implications of a finding that the transaction was in fact a fair one.”

He said of factual causation: “The judge found that Mr Kidd would have entered into the transaction absent any unlawful means conspiracy. On that basis the straightforward outcome is that he has failed to establish that the alleged wrongdoing caused the claimed loss. This is hardly surprising given that it cannot be said that anything done by any of the alleged wrongdoers influenced Mr Kidd’s conduct or changed the terms of the transaction.”

Lord Malcolm concluded: “[The judge] held that the circumstances which resulted in the decline of ITS’s business were not caused or materially contributed to by its entering into the transaction with Lime Rock; and that it was unlikely that the difficulties would have been avoided by a trade sale prior to their occurrence. He found that Mr Kidd sustained no loss which he would not have sustained if there had been no transaction. In our view the judge was entitled to make all of the findings which he made. He provided clear and adequate reasons for making them. It cannot be said that he was plainly wrong to make those findings.”

The reclaiming motion was therefore refused.

Representation:

Pursuer and reclaimer: Smith KC, Anderson and Reid; Harper Macleod LLP

First to fifth defenders and respondents: McBrearty KC, McKenzie KC and Roxburgh; Gilson Gray LLP

Sixth to eighth defenders and respondents: Dean of Faculty and Paterson KC; CMS Cameron McKenna, Nabarro and Olswang LL