Professional negligence solicitor Emma Slade looks at legal costs in a professional negligence case and the costs issues arising in a recent claim involving a negligent architect.
Very few people relish the thought of engaging in litigation, unless they have very deep pockets. Just thinking of the potential costs liability can lead many to suffer sleepless nights. The usual costs rule is that the unsuccessful party will pay the costs of the successful party. However, in so doing, the court “will have regard to all the circumstances including… the conduct of all the parties” . The rule goes on to give examples of the sort of conduct it has in mind, but it is not an exhaustive list. So it will be interesting to be a fly on the wall during the costs arguments following the recent court decision in Riva Properties Ltd & Others –v- Foster & Partners Ltd  EWHC 2574 (TCC).
I have dealt with the main legal issues that arose from the judgment elsewhere on this website. But the costs issues were particularly interesting and it is very clear that the presiding judge, HHJ Fraser, was not impressed by the attitude of the Defendants towards the Claimant’s representative, John Dhanoa, right from the beginning of their collaboration and all the way through the litigation.
According to the judgment, the Claimant had previously been involved in some building development but nowhere near the scale of projects that the Defendants - who are world-renowned architects - were used to. Rather than dealing with Mr Dhanoa as a valued client, it would appear that two of the main architects involved were quite condescending towards him, making (to my mind) unnecessary reference to Mr Dhanoa’s “semi-detached property in Hayes” and that he “used the hackneyed phrase ‘world class architects’” to describe Fosters. (That particular comment was the subject of mild judicial rebuke.) Later in the judgment, HHJ Fraser commented that the two architects “seemed to see Mr Dhanoa as somewhat beneath them as a client” and that they viewed him “with a degree of superiority; he was not the sort of client for whom Fosters was used to acting…[and] not the sort of client that Fosters really wanted” .
It doesn’t end there. The judgment notes that they ignored their client’s wishes about instructing a certain expert, were dismissive of his own choice, were autocratically dismissive of Mr Dhanoa’s proposed designs and unilaterally amended their client’s brief, all whilst ignoring the expressed budget.
Obviously all of that is partly why the claim was brought, but their conduct during the proceedings has also been commented on. The judge found that the two senior architects who were involved – Brooker and Stewart – gave written evidence that was “entirely self-serving” and even inaccurate when considered against contemporaneous documents, seemingly having “been drafted regardless of the facts ” and even twisting them . The Defendants were also disparaging of Mr Dhanoa with opening submissions accusing him of “playing with other people’s money, trying to bluff his way through Court as if civil litigation were some game of high stakes poker. At trial, F+P will expose Mr Dhanoa’s claim for the bluff that it is.”
Importantly, throughout the entire litigation, Fosters had denied that there had ever been a budget for the project or that it was a responsibility of theirs to ask the Client about a budget. HHJ Fraser went through the evidence quite carefully and concluded “In the presence of such clear contemporaneous communications that refer to the budget figure for the project, I simply cannot accept the position advanced by Fosters in these proceedings that no budget was indicated to Fosters by Mr Dhanoa in 2007”.
The judge specifically noted that when “Mr Stewart was questioned about this matter [he] finally accepted that [a budget had been discussed]… This means that the entire defence Fosters adopted on this point was simply factually wrong.” There is more in that vein. Needless to say, judgment was found against Fosters, although the issue of costs has yet to be decided.
It undoubtedly follows that Fosters will have to pay the Claimant’s costs, but how much of them will they have to pay? Usually, a losing party will pay in the region of 70% of the winner's costs, but with obvious conduct issues like those detailed above, I suspect that they will probably be paying a much higher proportion of the costs. These days, parties are actively encouraged to avoid litigation, to mediate, to – in effect – play nicely. All the while with the threat of a nasty costs order hanging over their head if they don’t.
Just reading through the judgment, it would appear that the Defendants were hostile to the Claimant, were condescending and made many disparaging remarks. The whole premise of their defence failed when they admitted under cross examination that a budget had been mentioned. And importantly, their evidence was at considerable odds with even the written contemporaneous documents of the time. The real sting in the tail though is that the Claimant’s claim was funded by way of a pre-Jackson Conditional Fee Agreement, so Fosters will have to pay the success fee as well.
It is worth reading the judgment if anything to consider the Defendants “rather grubby behaviour” . Even more importantly, it will be worthwhile keeping an eye out for any subsequent costs decisions as it could be an interesting read. Unfortunately, their behaviour is probably going to cost them a pretty penny as well as some adverse publicity albeit that they are “undertaking a review …to see what lessons or actions should be taken from this case.” The moral of the story though is simple: play nicely children!
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