ATTACKING THE OTHER SIDE’S CREDIBILITY: DEFENDANTS ARE THE ARCHITECTS OF THEIR OWN DOWNFALL: SELF-SERVING STATEMENTS ARE TO NO AVAIL

There are a lot of reasons why litigators should read the judgment of Mr Justice Fraser in  Riva Properties Ltd & Ors v Foster + Partners Ltd [2017] EWHC 2574 (TCC).  Not least is the judge’s assessment of the witness evidence called by the defendant. It is an important reminder to those who prepare, and those who sign, witness statements that they must be accurate. Eminence is not enough to defend against inaccurate evidence. It is also a classic example of a party using their own witness statements to attack the credibility of another and that practice totally backfiring.

“Both Mr Brooker and Mr Stewart’s written evidence was entirely self-serving, and seemed to have been drafted regardless of the  facts.”

THE CASE

The claimant companies brought an action against the defendant architects for, in essence, wasted expenditure in the way that the defendants designed a proposed hotel.  The claimant companies were all run by one person, Mr Dhanoa.   Liability was denied. The claimant obtained judgment for £3,604,694.36.

THE JUDGE’S OBSERVATIONS ON THE EVIDENCE – THE ATTACK ON THE CLAIMANT

The judge observed that the defendant had used their witness statements were disparaging of the claimant.

1. This approach to Mr Dhanoa by Fosters and its legal advisers in these proceedings has two elements, namely one concerning his approach to the project, and the second separate one concerning his involvement in issuing proceedings and taking these through to trial. It is rather stretching things to describe the design of the Fosters Scheme as his “desired hotel” given the factual issues in the case. The whole basis of Mr Dhanoa’s claim is that Fosters did not design the hotel he desired, because he desired one that could be built for a far lower cost than £195 million. The general approach to attacking Mr Dhanoa continued during the trial in his cross-examination, but also into Fosters’ Closing Submissions. It was said that some of his evidence was “demonstrably untrue” and it was submitted that “anything which Mr Dhanoa says needs to be treated with the utmost suspicion”. The written evidence of Mr Stewart and Mr Brooker (two of the Fosters’ architects) could hardly be said to be complimentary of him either; rather to the contrary, he was widely disparaged by them too.

THE DEFENDANT’S OPENING SUBMISSIONS

The Defendant pulled no punches in its opening submissions.  The Defendant promised to “expose Mr Dhanoa’s claim for the bluff that it is”.

1. 1. Mr Dhanoa is a successful businessman. He was subjected to something of a sustained personal attack in the written Opening Submissions for Fosters. There were also sustained criticisms of him in Fosters’ witness evidence. As an example of this attack, the Opening Submissions for Fosters stated the following:

“1. These proceedings are a retrospective construct designed by or on behalf of the guiding mind of the Claimants, Mr Darbara Singh Dhanoa (otherwise known as John Dhanoa), who belatedly realised the excesses of his own hubris when he was unable to achieve what he wanted.

2. Rather than take the failure of his venture on the chin, Mr Dhanoa seeks to recover from the Defendant (“F+P”) his costs of the venture and the lost profits he wishes he would have made if only he had opened a 5-star hotel in September 2012. This is in circumstances where Mr Dhanoa has never got near to putting a spade in the ground to start the construction of the hotel.

3. Indeed, despite the fact that Mr Dhanoa obtained planning permission for his desired hotel (which F+P designed), over 8 years ago, on 19 February 2009, no planning permission has been applied for, let alone obtained, for the scheme which Mr Dhanoa now says F+P should have designed (“the Acanthus Scheme”), a scheme which even now has very little detail.

4. 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. At trial, F+P will expose Mr Dhanoa’s claim for the bluff that it is.”

THE JUDGE’S OBSERVATIONS ON THE DEFENDANT’S EVIDENCE

The judge considered the defendant’s evidence. It was not particularly helpful.

1. 1. Turning to the witnesses who appeared for Fosters, these were numerous. The first was Mr Hugh Stewart, a partner at Fosters who reported to Mr Brooker, the partner in charge of the team dealing with the project called Group One. Mr Stewart was not exclusively involved in this project, and he told the court that he had about four or five projects running at one time. Mr Hammerschmidt, who was an Associate Partner, was exclusively engaged on this project and reported to Mr Stewart. Mr Stewart’s evidence demonstrated the gulf between the two contracting parties. The first meeting which Mr Stewart attended, for example, was at Mr Dhanoa’s semi-detached property in Hayes, somewhere that Mr Stewart explained in his written evidence in these terms:

“We met in what appeared to be Mr Dhanoa’s home, in a semi-detached house near the site in Hayes. We discussed the scope and ambition of the project, in which John Dhanoa used the hackneyed phrase “world class architects” and how the Foster brand would enable him to gain credibility with both operators and investors”.

• Given that Fosters do consider themselves, and almost certainly are “world class architects” – and Mr Stewart certainly gave the impression that he considers himself a world class architect who has led the design of numerous major projects – it is not clear why Mr Dhanoa’s use of that phrase should be described as “hackneyed“. Certainly the image of three of Fosters’ international architects meeting Mr Dhanoa in a room in his semi-detached house in Hayes is an incongruous one. I doubt that any of the Fosters partners in question were used to meeting anyone in such surroundings, and Mr Stewart frankly accepted that this was not the sort of meeting that would normally be held with Fosters’ clients, describing it as an unconventional setting. Mr Stewart was sceptical that matters would proceed.

1. I did not find either Mr Stewart’s or Mr Brooker’s approach to giving evidence particularly helpful, or their evidence even accurate when considered against contemporaneous documents. Rather ironically, given their criticisms of Mr Dhanoa, their evidence during their cross-examination painted a wholly different picture than that contained in their written witness statements. However, that is not to say that their actual evidence itself was unhelpful in terms of assisting me to decide the issues. On the contrary, on some very important and headline points – for instance whether there was a budget – they entirely shifted their position under moderate cross-examination and simply accepted the claimants’ case. Mr Stewart, for example, said orally in cross-examination that he “repeatedly asked” Mr Dhanoa for the budget, again and again. When this was followed up with another question on the same subject, he simply accepted a main plank of the claimants’ case, and one upon which the pleaded positions of the parties had been, pre-trial, diametrically opposed…

1. Both Mr Brooker and Mr Stewart’s written evidence was entirely self-serving, and seemed to have been drafted regardless of the facts. Their oral delivery was halting and they each seemed carefully (and on occasions ponderously) to weigh up the potential ramifications of any answer before they delivered it, and would swerve away from giving answers that might damage the Fosters’ cause. Lengthy rambling answers that were entirely off the point were commonplace during the evidence of these two architects, and also appeared to me to be part of an attempt by them to keep the oral evidence, and what the court was told in answer to questions, on a very tightly controlled course. It was highly unsatisfactory. In particular, however, two passages of Mr Stewart’s cross-examination were notable and this is addressed further in the section “The breaches”. The passage above about “repeatedly asking” Mr Dhanoa for the budget was wholly at odds with the Fosters’ case that had been advanced for a very long time prior to the trial. In that respect their evidence was important in resolving the factual disputes between the parties, but perhaps not in the way these two witnesses intended. Some of Mr Stewart’s more impromptu answers, such as “that’s what we do” and “we are Fosters” were very similar to the actual phrases that Mr Dhanoa had said that Mr Stewart had used in 2007 and 2008. Further, Mr Brooker’s rather autocratic dismissal of the option for the design initially chosen by Mr Dhanoa, and the imposition upon the scheme of the biosphere (which Mr Dhanoa told me he did not really like, evidence which I accept) are entirely at one with what I observed during his evidence about his approach to Mr Dhanoa generally. The biosphere was a structure or glass envelope within which the hotel was to sit, the entire hotel being contained within it. It was to be a very impressive and innovative feature. It was also extremely expensive.

   1. I would not describe it as a clash of personalities between these Fosters’ partners and Mr Dhanoa, rather that Mr Brooker and Mr Stewart seemed to see Mr Dhanoa as somewhat beneath them as a client. He frankly told the Fosters’ team that he wanted their brand for credibility. They not only knew that, but were of the unshakeable (and correct) view that, as Fosters, they could bestow that credibility. There is no doubt that the Fosters “brand” is of great value, and the practice is a worldwide leader in the field, and they were right that having Fosters design a scheme for Mr Dhanoa did bestow credibility upon it. This did however mean that with them, Mr Dhanoa simply had no credibility at all, although he plainly did not realise that at the time. The fact that the initial briefing was given in his semi-detached house in Hayes hardly helped, nor did the retention in the project of a ten-pin bowling alley. This planning requirement was seen by them, even during the trial, as a point almost of mockery. Mr Dhanoa’s other projects, which had led to his making profits of several million pounds, were hardly likely to impress them, although Mr Dhanoa did try to impress with his achievements, such as they were. A small hotel in Leeds, or 24 flats in a modest residential housing development, are not projects that will cut much ice with people who have been involved in designing iconic buildings across the major cities of the world. Mr Dhanoa on the one hand, and Mr Brooker and Mr Stewart on the other, were literally poles apart.

2. All of the instances I have identified in the paragraphs dealing with Fosters’ criticism of Mr Dhanoa demonstrate, in my judgment, how both Mr Stewart and Mr Brooker were extraordinarily enthusiastic in these proceedings to twist the facts. The whole tenor of their evidence was to disparage Mr Dhanoa. 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 more that Mr Dhanoa at the time in 2007 and 2008 believed he was impressing upon his professional team his own (to him) impressive international business credentials, the more this was likely simply to have re-emphasised to Fosters quite how lacking in those he was. There were two other instances that demonstrate how Fosters’ attitude to Mr Dhanoa continued past the events of 2008. I deal with these further in the section “Subsequent developments”. They involve attempts by Mr Dhanoa, through a company authorised by him to do so called Sparc, to obtain what are termed “deliverables” from the Fosters’ Scheme. The internal emails at Fosters discussing how to deal with this are most illuminating of their continuing attitude to him. Also, in this case I found the contemporaneous references in the period 2007 to early 2008 to budget of particular assistance in resolving the factual issues. The way that subject – strongly contentious at the trial – was dealt with at the time in different emails supported the evidence of one of the parties to the litigation (Mr Dhanoa), and was entirely at odds with the evidence of the other (Mr Stewart and Mr Brooker). It is not necessary for the court to resolve why things happened as they did, just to resolve what in fact happened. However, in this case the reason may well have been that the attitude of Mr Stewart and Mr Brooker towards Mr Dhanoa included the same attitude towards his budget. It just did not matter.

THE JUDGE’S ASSESSMENT OF KEY DISPUTED FACTS

The defendant asserted that no budget was in place.

1. 1. 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. There is but one entry in an e mail at the time that is not in the range above, when EC Harris stated “£130 million”. That is clearly, in my judgment, a typographical error and not matched by any of the other entries. The figures for a budget were clearly discussed and notified to Fosters and these ranged from £70 million to £100 million as can be seen above. However, this point was put beyond doubt when Mr Stewart was cross-examined on this issue which I have already addressed in paragraph 40 above. In his witness statement he had said that no “fixed budget of £70 million” was communicated to Fosters. The existence of what Mr Stewart described as a “fixed budget” was described by him as a “false premise” and something that he expressly said was “untrue”. I do not know if the use of the word “fixed” by Mr Stewart was adopted as a gloss in his witness statement to avoid accepting that a budget was provided by Mr Dhanoa. This is because the use of “fixed” was not pursued or raised in cross-examination. The point that was raised and pursued was whether a budget (as opposed to a “fixed budget”) was communicated by Mr Dhanoa. This was probably because Factual Issue 4 is in the following terms:

“Whether Foster was told (or otherwise had knowledge of) Riva’s budget for the Development (whether that be £70 or £100 million) between July 2007 and January 2008 and, if so, what did that budget relate to?”

Fosters’ position on this in the Opening Submissions was that there was no such communication to, or knowledge on the part of, Fosters. It should be noted that the phrase used in the issue is “budget”, not “fixed budget”.

1. However, and in any event, Mr Stewart when questioned about this matter finally accepted that it was. He expressly said that he asked Mr Dhanoa for the budget, and asked him repeatedly. This means that the entire defence Fosters adopted on this point was simply factually wrong. I find as a fact that the budget of £70 million was known to Fosters in the persons of each of Mr Hammerschmidt, Mr Stewart and Mr Brooker from July 2007 onwards. From August 2007 it was known to those three gentlemen that the budget was £70 to £100 million. It was also known that £100 million was the upper limit.