Scottish solicitors who concluded agreement with Dubai firm to act for Hong Kong client fail to recover fees

About this case:

• Citation:
  [2025] CSOH 120
• Judgment:
  External link
• Court:
  Court of Session Outer House
• Judge:
  Lord Lake

DAC Beachcroft Claims (Scotland) Ltd sought payment from Mohammed Al Dahbashi Advocates (t/a ADG Legal) in respect of invoices rendered for legal services provided in relation to litigation in the Court of Session. The defender did not dispute that the services were provided but argued that they entered into agreement with the pursuer as agents and thus incurred no liability of their own.

The case was heard by Lord Lake, with Brown, advocate, appearing for the pursuer and Black, advocate, for the defender.

Underlying reality

On 20 December 2021, the defender emailed the pursuer to enquire whether they could assist with a debt recovery matter as a matter of urgency. Another emailed dated 22 December 2021 named the defender’s client as Leander CB Consultants Ltd, a Hong Kong company. On the same day, the pursuer replied stating that it would be “simplest and quickest” if they engaged the defender as the client, “essentially as instructing agents”, to which the defender replied, “that would certainly make things easier”.

The pursuer emailed a letter of engagement and standard terms and conditions to the defender on 23 December 2021, which was addressed to ADG Legal and included reference to “the work instructed by you” and a term under which invoices could only be issued against “the Client” and not a third party. The defender accepted these terms, but when the interim account of fees was emailed on 31 May 2022, they queried why it was addressed to them rather than Leander.

It was submitted for the pursuer that the wording of the contract did not support the view that the obligations were only undertaken on behalf of another party. The anti-money laundering checks were done by reference to the defender and when there was discussion about novating the agreement, it was on the common understanding that, as matters then stood, the defender was the party obliged to pay.

For the defender it was submitted that it was clear from the correspondence that they were contracting on behalf of their named client as the disclosed principal who was the party to the underlying litigation. There was an inference throughout that the inquiry for the defender was as an agent for the named client, and recognition that this was the underlying reality.

Benefit of another

In his decision, Lord Lake said of the underlying transaction: “Each communication has a specific role to play in the transaction and that is relevant to whether the liability is that of the firm that has sent the communication or the clients on whose behalf they act. There is a large element of expectation of the parties as part of the surrounding circumstances and this can affect the question of who is bound. Nonetheless, the issue of who incurs liability turns on the terms of the communication in question. This is illustrated by Digby Brown & Co v Lyall (1995) in which a letter of obligation which began with the words ‘we hereby undertake on behalf of our above named clients’ was held not to bind the firm that sent it.”

He added: “When the initial approach was made on 20 December 2021 saying ‘we need some assistance’, although it was apparent that the defender was a legal firm, it was not clear whether they were seeking to instruct the pursuer on their own account or on behalf of clients. They described the work to be undertaken as ‘debt recovery’ and it could have been a situation in which the debt was owed to the firm. There was no mention of a client. Even in the second email from the defender where they identify the debtors, it is not made clear to whom the debt was owed and therefore for whom the work will be undertaken.”

Contrasting this with the later correspondence, Lord Lake said: “This changed with the email [of 22 December]. When it was received by the pursuer it would have become apparent that the work was to be for a client of the defender. Leander are named as that ‘client’ and their details are provided to the pursuer for ‘Know Your Client’ purposes. While the beneficiary of the services is not inevitably the party that incurs liability to pay for them, it is apparent that the work is being instructed for the benefit of another party and the identify of that party is disclosed.”

He concluded: “The agreement thereafter that the defender should be designated as client was with a view to avoiding regulatory checks. There was nothing in the exchange of emails at this point which suggested an intention to alter the capacity in which the defender was acting in introducing Leander. To adopt the phrasing from Lindsay v Craig (1919), there was nothing from which it could be concluded that from that point the defender intended to interpose its own credit. Thereafter, there was nothing to change the contract that had by then been concluded.”

The action was accordingly dismissed.