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Morrison & Foerster (MoFo) has successfully defended a professional negligence claim in the High Court brought against it by energy investment company Petrocapital Resources over a share transaction.
The case, heard by Exchange Chambers’ Mark Cawson QC sitting as a deputy High Court judge, centred on the alleged failure by Morrison & Foerster partner Edward Lukins to properly advise Petrocapital on matters concerning the acquisition of 95.7 per cent of its shares. The hearing ended in June (26 June 2013).
Both sides turned to 4 New Square for advice. Petrocapital was represented by Memery Crystal partner Harvey Rands, who instructed Justin Fenwick QC and Michael Ryan. Clyde & Co partner Fergal Cathie instructed Patrick Lawrence QC and Anneliese Day QC for Morrison & Foerster.
Petrocapital claimed that it paid £1.45m for loan notes after originally failing to meet an agreement to redeem the notes for £40,000 within a 12-month deadline. It alleged that advice given by Lukins was “wholly incorrect” and that the correct remedy would have been for the shareholders to sue Petrocapital for the £40,000 and compensation.
The claimant also argued that Lukins was negligent in advising the shareholders, who were also directors of the company at the time that the loan notes were due to be redeemed, when he had been appointed to act for the claimant on its acquisition.
According to the judgment, Cawson found a number of difficulties in Petrocapital’s way in establishing any claim for damages.
“In the circumstances, I do not consider that I can be satisfied on the balance of probability that if the relevant advice had been given, the relevant sums would have been paid,” he ruled. “Further, it is not immediately clear that Petrocapital itself would have suffered any loss had it succeeded on this head alone. Had it received the appropriate advice, then it says that it would have made sure that the two sums of £20,000 were paid.”
The legal line-up
For the claimants, Petrocapital Resources
4 New Square’s Justin Fenwick QC and Michael Ryan, instructed by Memery Crystal partner Harvey Rands
For the defendants, Morrison & Foerster UK
4 New Square’s Patrick Lawrence QC and Anneliese Day QC, instructed by Clyde & Co partner Fergal Cathie