Introduction
Experts can find themselves in especially hot water if they give any indications that their dispassionate opinions are tainted by the adversarial process. In a previous article Dr J was castigated by the Court for acting as an advocate for his client (in addition to a catalogue of other failings).
Paternalism
The written decision is laced with comments that Foster and Partners demonstrated a colourfully condescending attitude as they gazed down on their client. They viewed from on high the retention of a bowling alley as part of the development with detached amusement: to them this symbolised the rather plebeian foundations of Mr Dhanoa’s business experience and aspirations.
Meeting in the inauspicious surroundings of Mr Dhanoa’s semi-detached home, they stated that they would require an up-front non-refundable deposit of £150,000. It is possible that they anticipated that such a request would be the end of the matter, and that they were rather surprised when this amount was paid to them.
When the case was brought they felt free to unleash some of their true feelings:
“Mr Dhanoa has no case at all. Instead, having instructed solicitors on a CFA and taken out ATE insurance, he is playing with other people's money trying to bluff his way through the Court as if civil litigation were some game of high stakes poker.”
The Evidence
The Judge gave his views on Mr Brooker and Mr Stewart, two of the partners of Foster and Partners who gave evidence:
“In my judgment both those gentlemen viewed Mr Dhanoa with a degree of superiority; he was not the sort of client for whom Fosters was used to acting, and Mr Stewart in particular gave me the impression that he was not the sort of client that Fosters really wanted. They certainly wished to portray him to the court as entirely lacking basic business common sense.”
The Judge continued to describe the comments made relating to Mr Dhanoa as an “exercise in business-character assassination” to which he had been subject in the litigation.
The Judge was not impressed with either Mr Brooker or Mr Stewart: he described their evidence as being self-serving and as being drafted regardless of the facts.
A central bastion of their defence was that they had never been informed that there was a budget of £100 million for the build costs; however, they conceded on this point in some moderate cross examination once faced with the unforgiving rigorous realities of the courtroom.
The Foundations of the Claim
The essence of the claim made by Mr Dhanoa can be expressed in simple terms: he engaged Foster and Partners to design an iconic 5-star hotel, with a build cost of £100 million. However, the creative flair of the architects drove the project, with the design being costed at £195 million once finalised.
A keystone of the case was whether or not it was possible to design such a hotel, albeit lacking some of the architectural flourishes, but still with 500 rooms, for a price of £100 million.
The Experts
There were a total of six experts, two of whom were quantity surveyors. The quantity surveyors were there to give their opinions on that central question.
There was an initial agreement, set out in their initial joint statement, that each of these experts would conduct an exercise to establish the costing of the alternative design of the hotel. Despite this initial agreement one of the experts then demurred from undertaking this exercise.
The Judge disagreed strongly with the reasons given by the expert: the expert had stated that making assumptions was "unsafe" because he was not the designer of the alternative scheme. The Judge commented that this approach had no intellectual justification whatsoever and as an approach by an expert witness was “wholly flawed”.
The Judge saw the making of assumptions as being an ingredient in the work of experts in respect of building projects and by many disciplines of expert witness. He found it unhelpful to the court for him to refuse to make any assumptions, on grounds which he considered did not stack up.
The Judge made a final excoriating comment:
“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.”
The Judge concluded that he preferred the evidence of the other expert in all respects. This expert had concluded that the hotel could have been built in terms of 2009 costs for £200,000 per room. This was consistent with other evidence which was given.
The Damage
The Judge found against Fosters in the sum of just under £3,605,000.
Comment
This case supports the reality that business valuation work is necessarily girdled with assumptions which are wrapped within various hypotheses. There is no need to apologise for this simple fact.
Andrew Strickland, Consultant, Scrutton Bland
