| Date | 25 April 2007 |
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| Judgment | Bridge UK Com Ltd (Trading As Bridge Communications) v Abbey Pynford Plc (2007), TCC, 4 April 2007 |
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| The Issue | Whether management costs may be recovered in the absence of a detailed record of the time spent. |
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| Implication |
If the ingredients required to found a claim for management time are established then it seems that the Court will seek to award such damages provided some basis for the quantum of such damages is put before the Court, even though that basis is not a precise contemporaneous record of the time actually spent. |
printEarlier this year, Owen Fox wrote about the Court of Appeal decision in Aerospace Publishing Limited v Thames Water Utilities Limited which considered the basis upon which the employment costs of staff could be recovered as damages. In that case the Court established three propositions that should be applied to the recovery of staff costs, the first two being that the diversion of resources must actually have occurred and that such diversion must have caused a significant disruption to the business. In reviewing the authorities, the Court considered the TCC decision of HHJ Bowsher QC in Horace Holman Group Ltd v. Sherwood International Group Ltd [2001]. In that case the claimants claimed as damages the wasted time of their directors and staff dealing with the inadequacies of a software package provided by the defendants. HHJ Bowsher QC noted what Forbes J. had said in the Tate and Lyle case and observed that, by contrast with that case, he at least had some evidence of the amount of time spent by the directors and staff, albeit only in the form of a reconstruction from memory. He continued at paragraph 73: "I cannot and do not say, in the absence of records there is to be no recovery."The Court of Appeal in Aerospace Publishing v Thames Water observed that both the significant disruption of business as well as the alleged diversion of time had been well demonstrated before HHJ Bowsher QC. Thus it seems that if these ingredients are established, the Court will seek to award such damages provided some basis for the quantum of such damages is put before the Court, even though that basis is not a precise contemporaneous record of the time actually spent. The same approach to the question of evidence was adopted by Mr Justice Ramsey in connection with management time in the TCC case of Bridge UK.Com Limited v Abbey Pynford Plc [2007]. The claimant was a commercial printing and mailing business and the defendant was a specialist ground engineering company that carries out, among other things piling and the construction of plant bases. This case concerned the design and construction of foundations and a base for a printing press to be installed in the claimant’s new premises in good time for occupation by the claimant. There were problems with the slab that required remedial works before the press could be installed. The judge found that, although the initial work to the slab was a few days late, this would not have been a significant cause for complaint since the press could have been installed and commissioned by 18 September 2002, well before the claimant’s moving date of 23 September 2002. However, the requirement for remedial works to the slab meant that the press was not installed and commissioned until 28 October 2002. The Judge found that there was a delay to the commencement of the operation of the press from 18 September 2002 until 28 October 2002 caused by the defendant. There were various heads of cost claimed by the claimant as a result of this delay and the work required to remedy the defective slab. The claimant was largely successful in claiming the costs of outsourcing work, the costs incurred by the press installers whilst awaiting preparation of a suitable base, the shut down and cleaning of other equipment and offices and accommodation as a result of the remedial work carried out to the slab, consultants’ costs, additional transport and lifting charges, manufacturing disruption, printers wages, thrown away rental costs of the press during the period of delay, executive time and loss of profits and wasted expenditure. In relation to the executive time, the claimant claimed £7,680 for management time incurred by Mr Ruck in dealing with the problems caused by the claimant. In his witness statement Mr Ruck set out a calculation of 128 hours spent from 31 August 2002 to 30 April 2003 dealing with the problems caused by the defendant. This was determined by a retrospective assessment of the time spent on the various matters based on a review of the various documents recording what had happened. Mr Justice Ramsey was referred to and expressed agreement with the judgment of HHJ Bowsher QC in the Holman case referred to above, where the Judge indicated that in the absence of records, evidence in the form of a reconstruction from memory was acceptable. However, Mr Justice Ramsey, went on to say that “it must be borne in mind that such an assessment is an approximation of the hours spent and may over-estimate or under-estimate the actual time which would have been recorded at the time.” He then applied a 20% discount from the total hours claimed to allow for the fact that some hours had been included for organising the outsourced work and for the inherent uncertainty in this retrospective method. He found that the claimant was able to recover the cost of 100 hours of Mr Ruck’s time. Whilst this approach seems eminently sensible in the circumstances, whether or not it is appropriate to apply a discount of 20%, or any other discount, must depend upon the reasonableness of any assessment in the first instance. Another point of interest arises on the calculation of the rate applied to these hours. Upon the evidence of an expert accountant, Mr Ruck’s salary was divided by 2080 hours (52 weeks at 40 hours per week) to derive an hourly rate of £48 per hour, resulting in an award of damages of £4,800. In this calculation however there is no recovery being made for holiday time. Assuming that the Mr Ruck was allowed 8 days of statutory holiday and 25 days of annual leave, then the rate required to recover this non-working time should have been £55. Finally Mr Justice Ramsey accepted that the claimant could recover loss of profit on the outsourced work and loss of profit on the work which it was unable to carry out which may be calculated as expenses thrown away or lost revenue, provided there is no duplication between the two.
CJ-0716
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