REUTERS | Leonhard Foeger

How testing the evidence differs in adjudication and court

When I read Fraser J’s judgment in Riva Properties Ltd v Foster + Partners Ltd, the thing that struck me was how, in adjudication, we don’t always get the benefit of seeing the evidence tested to the same degree as you do in court or arbitration proceedings.

Riva Properties Ltd v Foster + Partners Ltd

This was a professional negligence claim brought against a firm of architects by four companies, all controlled by one person, Mr Dhanoa (who was not actually a party to the proceedings). The facts are complicated. One company bought the site on which Mr Dhanoa intended to build a hotel, another entered into a design contract with Foster + Partners Ltd (the architect). That contract identified various work stages, which included the client’s requirements and the preparation of a strategic brief. However, it did not specify a budget. Instead, Mr Dhanoa said he had told the architect that his budget was £70 million. When it became apparent that the architect’s design would cost £195 million to implement, the architect advised that it could be “value engineered” down to a price of £100 million, although that turned out to be impossible.

Ultimately, the project did not go ahead and a claim was brought against the architect, seeking repayment of the money spent on professional fees (some £4 million). There was also a £16 million loss of profits claim.

As you might imagine with a judgment running to over 300 paragraphs, Fraser J had to deal with a number of disputed factual issues (such as what had been said about the project’s  budget and the scope of the architects retainer), as well as legal issues (such as who the architect owed a duty of care to). He found that a duty of care did exist between the first claimant and the architect, but not between the architect and the other claimants. This still gave rise to damages of £3.6 million though. The loss of profit claim failed because there was a break in the chain of causation. The project did not go ahead, partly because of the cost of the architect’s design, but also partly because Mr Dhanoa was unable to secure funding and to the 2007 global financial crisis.

Testing the evidence

So, back to my point about testing the evidence.

This was a substantial trial, heard over 11 days in July. We don’t know how long the witness evidence took to hear, but it is clear that Mr Dhanoa would have been subjected to cross examination for some time, certainly long enough for Fraser J to make up his mind about him (“he was a broadly honest witness”, someone who was “prepared to take a certain amount of risk in order to generate business returns”). I was also impressed with how Fraser J dealt with the discrepancies between witness statements, contemporaneous documents and oral evidence.

In adjudication, we seldom get more than a few hours to hear evidence and ask questions of the factual and expert witnesses (if we are lucky), so it is always interesting to see what happens in court, how judges deal with the process and how they are prepared to reject the “spin” that one party may have put on its evidence.

Something that is more common in adjudication is limited evidence, since parties only have to present the evidence they wish to rely on. This may mean you don’t get a “full” picture of events, but I’m not sure I’d be prepared to go as far as drawing an adverse inference from the lack of evidence from a particular individual or professional adviser. This is something the architect’s legal team argued in court, since only Mr Dhanoa and his daughter gave evidence. I guess it all comes down to whether a witness has something material to say (or not) and whether the court is satisfied that there is a good reason why a witness is not giving evidence. Perhaps it doesn’t come up because adjudicators have plenty of latitude when it comes to how they deal with evidence. That said, I think adjudicators need to be alive to parties who may seek abuse the process (even in our quick and dirty “pay now, argue later” process).

And finally

On the subject of limited evidence, did anyone else notice what happened in the Chancery division the other week, when one party did not put forward any expert evidence on a particular issue (despite having leave to do so)? The case was  Ashdown and others v Griffin and others, and the judge said:

“The present is not a case of a single joint expert. Each side had permission to adduce evidence in the field of outdoor marketing. Only the respondents chose to avail themselves of this permission… It seems to me that I am in much the same position as the judge before whom a single joint expert gives evidence. The expert evidence is there, and being relevant must be taken into account. There is no expert evidence to contradict it. It must be weighed up together with all the other evidence to reach a conclusion. Assuming that the expert evidence tendered is not based on wrong assumptions as to the facts, or incredible, it is not likely to be disregarded, but instead accepted.”

Something similar happened in Riva v Foster + Partners in the sense that the court only had the evidence of one expert on the issue of costing something called the “Acanthus scheme” (and whether it could have been built for £100 million on 2009 prices). This was because the architect’s expert quantity surveyor refused to cost the scheme in a particular way, despite having agreed earlier (in the first joint statement) to do so. Fraser J was critical of this, saying that he:

“… was somewhat obstinate that he would not do so, and that the design needed expanding before he could do this. I do not accept that evidence. I cannot avoid reaching the conclusion that he chose not to do so because he feared the answer to the exercise would harm the case being advanced by Fosters… What is wholly unhelpful to the court is for him to have simply refused to make any assumptions, on grounds which in my judgment simply do not stack up.”

MCMS Ltd Matt Molloy

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