Legal costs for parties in the Brookfield Construction versus Mott MacDonald court case are set to soar to more than £65M as the two parties clash over who was to blame for overruns at Wembley Stadium.
Brookfield is claiming £253M from Mott MacDonald for alleged design failures on the £798M project. Brookfield brought stadium contractor Mulitplex Constructions in 2008.
At a case management conference (CMC) at the Construction and Technology Court last week, Mott MacDonald’s counsel advised that it has spent £6M and estimated it would spend a further £19M while Brookfield said it has spent £23M and that would rise to £40M.
“This case has a paralysing consequence for the defendant who has enormous resources tied up in the claim.”
Andrew White, Mott MacDonald
But both firms said these costs could soar further as estimates were based on a two month trial period. At the meeting, Judge Justice Coulson ruled that the case would be heard over a period of seven months, from January 2011.
“This case has a paralysing consequence for the defendant who has enormous resources tied up in the claim,” said Mott MacDonald counsel QC Andrew White.
“You might think the costs are staggering now, but the trial window had been underestimated,” he said.
Revised cost estimates are to be heard at the next CMC in November, where Mott MacDonald has indicated it will ask the court to cap the costs.
Mott MacDonald is likely to be covered by professional indemnity (PI) insurance for legal costs, but not for the full £253M that Multiplex is claiming for.
“A company of this size would typically buy in excess of £50M worth of PI cover,” said Marsh Financial and Professional Services senior vice president Martin Stubbs.
“However, the amounts vary between companies depending on their appetite for risk. PI policies provide indemnity for any costs or expenses incurred in respect of the investigation defence or settlement of any allegation or matter or claim which is or may become the subject of indemnity under the PI policy.”
“A year for this case is the likely scenario. However, it is imperative to deal with as much as possible in 2011.”
After closing submissions in July 2011, Coulson will use the following term, up until Christmas, to write a judgement, effectively devoting a whole year to the case. He warned both parties that he would be less tolerant to retrials.
“A year for this case is the likely scenario,” Coulson told the court. “However it is imperative to deal with as much as possible in 2011. I would be a lot less enthusiastic to see you back in 2013.” It would take the parties most of 2012 to work up a new case.
“I would hope by this time in two years time, you’d have filed all your submissions,” said Coulson. Brookfield has provided two A3 lever arch files identifying over 8,000 alleged failures in just one section of bowl steelwork, which Mott MacDonald contests as unrepresentative.
Brookfield is to revisit and condense the presentation of its case by the end of the year and documents held by each company, including emails, are to be disclosed to the other party by this Christmas. A pretrial review is planned for 22 October 2010.
Legal action is also ongoing in Australia where shareholders have brought a class action against Multiplex for not fully informing them of the problems at Wembley − subsequent revelations in February and May 2005 led to dramatic falls in the share price.