A Monaco-based property entrepreneur has successfully challenged a legal bill that was almost five times larger than expected after he settled a lawsuit with millionaire Scottish businessman Lord Irvine Laidlaw.
The entrepreneur, Mark Harrison, claimed that his costs should be limited due to earlier cost estimate given to him by his solicitors, Eversheds LLP.
According to a judgment made public this week, Harrison became involved in a £9m legal dispute with Laidlaw, a Monaco-resident Scottish businessman with a fortune in excess of £700m, according to the Sunday Times.
According to the judgment, Harrison “uses his experience to identify opportunities to purchase and then develop properties in which high net worth individuals invest”.
“Typically, in his business model, Mr Harrison and his companies earn their fees in three ways. The first is a finder’s fee based on a percentage of the purchase price. In the present case that was a sum of £1m. The second income stream is a percentage of the capital gain on the property after a fixed term. In this case it was 30% of the gain after three years. The final income is generated by the appointment of PREM [the Claimant’s property management company] to manage the property during the fixed term.”
Laidlaw invested in special purchase vehicles set up by the Harrison for investment in properties. Laidlaw, who had paid a finder’s fee of £1m, sought to terminate the involvement of PREM in managing the properties. Harrison instructed Eversheds and brought a claim they valued at £9m against Laidlaw.
The case went to trial in March 2014, and settled on a confidential basis after five days.
Following settlement, Laidlaw’s lawyers invoiced Harrison’s lawyers for costs of £1,602,436.66 net of VAT, made up of £863,283.72 profit costs and £739,152.94 disbursements.
Harrison challenged this figure, and in November last year, costs judge Master Rowley limited the profit costs to £650,000 plus VAT, but placed no limit on disbursements.
Harrison challenged this decision, saying the cost judge had erred, and that Eversheds’ earlier quote of total costs of £308,102.30 should be taken into account.
High Court judge Mrs Justice Slade ruled on the matter this week.
“The overarching question is the sum which it is reasonable for the client to pay,” she said in her ruling. “A solicitor is not restricted to an estimate. An estimate of costs is not a quotation. A client is not required to establish an estoppel before reliance on an estimate is to be taken into account in assessing costs. In determining what is reasonable for the client to pay, the costs judge is to have regard to the estimate.”
However, she ruled that the costs judge “reached a conclusion on the profit costs which it was reasonable for the claimant to pay that was not supported by his findings of fact, was based on a mistake on the figures and erred in principle.”
She said the costs should be reassessed.
Mark Andrew Harrison v Eversheds LLP
High Court of Justice (Slade J) 24 October 2017
