| Date | 29 January 2003 |
|
|
| Judgment | HOK Sport Limited (formerly Lobb Partnership Limited) v Aintree Racecourse Company Limited, TCC 12 November 2002 |
|
|
| The Issue | The basis of the quantum of damages arising as a consequence of a breach of a designer's duty to warn. |
|
|
| Implication |
Where a professional person's duty is limited to the supply of information, the measure of damages will be the foreseeable loss attributable to the inaccuracy of that information. |
printThe Grand National is held at Aintree Racecourse in early April of each year. In 1995, Aintree embarked on a scheme to replace the northern end of its main stand which was to commence after the 1997 Grand National and be completed in time for the 1998 Grand National. The original architects were dismissed in October 1996 and were replaced by a firm called Lobb Partnership Limited in November 1996. Even with this late change, the new stand was completed with a day to spare before the 1998 Grand National. Despite having won that race, Aintree were not satisfied with the performance of Lobb. Within a year the parties were appointing an arbitrator to deal with disputes which had arisen in connection with the project. At the heart of the dispute lay an argument concerning the reduced occupancy of the stand. Aintree's case was that it required the new stand to have a standing capacity of at least 2,800 paying spectators on the viewing terrace and a further 300 in front of the boxes. Aintree argued that these numbers were dictated by the minimum annual income stream needed for the new stand to be financially viable. As events unfolded, the maximum standing capacity provided in the viewing terrace of the new stand was only 2000. The primary reasons for this reduction were a change in the type of crush barrier, a reduction in the rake of the terrace, an increase in the width of the gangway and a redesign of the concourse and bar areas to eliminate congestion. Aintree contended that Lobb should have advised it that the standing capacity of the viewing terrace had been reduced and that this advice should have been given in sufficient time before Aintree took the financial decision to proceed. This would have allowed, according to Aintree, a decision to have been taken to postpone the construction of the new stand by one year, whilst it was redesigned to achieve a stand of sufficiently greater capacity to provide the required income to finance the project. The arbitration was arduous and long and the arbitrator confined himself to issues of liability, with the intention that he would make later awards to deal with the quantum of damages. Essentially the arbitrator found in favour of Aintree, noting that "Aintree have been deprived of the opportunity to procure a building which would have had the required standing capacity and which, as a natural consequence of the redesign required to achieve that, would have had certain collateral benefits. The arbitrator concluded that "Aintree is entitled to recover from Lobb the financial consequences of loss of the standing spaces and collateral benefits, less the costs which Aintree would have incurred in gaining those lost spaces . . ." Lobb appealed that decision on the basis that the arbitrator had wrongly formulated the measure of damages to which it should be liable. Lobb contended that the duty it owed to Aintree, if any, was to warn that there would be a reduced number of standing spectators. Lobb did not owe a duty to advise Aintree of the loss of revenue or other financial consequences of the reduction in standing capacity, or of the steps Aintree could take to eliminate those adverse financial consequences. Lobb argued that the damages characterised in the manner set out by the arbitrator failed to recognise the proper question of foreseeability. Attention was drawn to the 1996 decision of the House of Lords 1996 decision in the case of South Australia Asset Management Corporation v York Montague. The background to that case, together with a series of similar cases, was the lending boom in the UK property market in the late 1980's, followed by the crash in property values in early 1990. When lenders then sought to enforce their securities, it was discovered that there had been wholesale negligence and fraud by both valuers and solicitors in connection with securing loans from the lenders. The losses that many financial institutions sought to recover fell into two layers. Firstly, the loss associated with the excessive valuations, and secondly, the further huge losses resulting from the exceptional and dramatic collapse in property values. The House of Lords held that a person under a duty to take reasonable care to provide information, on which someone else would decide a course of action is not generally regarded as responsible for all the consequences of that course of action. He is only responsible for the consequences of the information being wrong. In the case of property transactions, the valuer was not giving an undertaking concerning the wisdom of the wider commercial policies of the lender. Accordingly, in normal circumstances the valuer would not be liable for the second layer of damages claimed by the lender, unless the valuer had been under a duty to give advice generally in connection with the investment, or had given a warranty in respect of the valuation. His Honour Judge Thornton QC considered that these principles applied equally to an architect giving advice concerning the design of a project. Accordingly the matter was referred back to the arbitrator who was directed to ensure that the quantum of damages should be based upon and limited to the loss which flowed as a foreseeable consequence of Lobb's failure to warn Aintree that the standing capacity had been reduced. Whether, in practical terms, this would make any difference to the actual assessment of damages remains to be seen.
CJ-0303
|
|||
|
© Brewer Consulting |
|||
 |
|||