Quick, pass the binoculars

Litigation and horse racing often seem to have something in common. Surefire winners fail and rank outsiders sneak home. Lawyers assess the chances of success in the same language as bookies on the racecourse, and are accused of being the only ones who ever really win. It's not often, though, that a member of the Technology and Construction Court finds himself at the races in quite such a literal sense as Judge Anthony Thornton in HOK Sport vs Aintree Racecourse.

Aintree retained HOK Sport, then known as Lobb Partnership, as architect for the design of a stand to replace the County Stand, next to the winning post. It had been there for more than a century, and was deemed unsuitable for 21st-century racegoers. Lobb was appointed in November 1996, and rapidly came under starters orders. The brief was to start construction after the 1997 Grand National, and to have the stand finished in time for the 1998 race. So far as timing was concerned, they succeeded. The work was finished with a day to spare.

Aintree had done its sums on the basis that there would be 2800 spectators paying for places on the viewing terraces. A number of variations were introduced as safety measures. As a result, the capacity of the stand fell to 2000 punters. That meant a hole in Aintree's budget.

Aintree blamed its architect. It said it should have been advised that the capacity was being reduced, and that Lobb should have given that advice in sufficient time for Aintree to postpone construction for a year and have a new design prepared. It claimed a capitalised sum for the loss of income from the missing spectators, as well as collateral benefits that it said would have come from a larger stand. Those included additional seated places and valuable boxes at the front of the stand.

This all went to arbitration before John Sims, a well-known and respected arbitrator and formerly a regular contributor to these pages. After a long hearing, he decided that he would deal first with liability, and then move on to consider the amount that could be claimed, if anything.

Lobb complained to Judge Thornton that Aintree was recovering for all the financial benefits of a larger stand

He decided that Lobb had not been under an obligation to provide a specific number of places, but that it had been in breach of an obligation to warn Aintree of the loss of space. He found that if Aintree had known, it would have postponed the development. As a result, Aintree had lost the chance to do something about it, and was entitled to recover the loss that it had suffered by not delaying and redesigning a bigger and better stand, less the additional building cost that would have been incurred in the hypothetical revised development.

Lobb complained to Judge Thornton that this meant that, as well as recovering for the loss of the places, Aintree was recovering for all the other financial benefits that would have accrued from a larger stand. The judge agreed. Lobb's duty had been to warn that the stand was not going to be big enough. It had failed to do so and would be liable for losses resulting from that failure, in so far as they were foreseeable consequences of the failure. Aintree would only be able to recover the "collateral benefits" of the larger stand if their loss was foreseeable. The arbitrator had decided that it had been foreseeable that there might be a redesign, and had therefore lumped all the consequences of such a redesign into the calculation, foreseeable or not. He should have asked himself whether the loss of "collateral benefits" was foreseeable as well.

The judge did not try to answer the questions he had posed. He sent the whole lot back to the arbitrator with a strict timetable to sort it all out.

The moral in all this: if your professional adviser makes a mistake, and a whole load of expensive consequences follow, you should not assume that all of them can be made good by a claim against the adviser. The consequences must have been foreseeable before a claim can be made.