If your supplier gets it wrong and costs you sleepless nights and wasted days, you can claim money for your lost time. A recent case illustrates the latest legal thinking on how you do it …
The recent Technology and Construction Court ruling in the case of Bridge UK Com vs Abbey Pynford illustrates how the courts are willing to accept a retrospective assessment of the time spent by an individual dealing with the problems caused by a defendant. The case relates to breach of contract for the defective installation of a floor slab.
In 2002, Bridge, a commercial printing and mailing business, decided to move premises. The firm wanted to install a 62-tonne printing press in the premises before it moved in and so it employed Abbey to install an adequate piled foundation to take the weight. The piling was completed in August 2002 and the slab installed in September.
However, it was soon discovered that the slab was out of tolerance and therefore the press was unworkable. In an attempt to solve the problems Abbey carried out remedial works but they were unsuccessful. So the defendant tried again and they were completed in October 2002. The levels were deemed satisfactory and the installation commenced.
A claim for damages was issued in May 2006 for the sum of £81,912 covering several heads including a loss of profit and management time in dealing with the defective installation.
Loss of profit: Claims for loss of profit are straightforward and as long as they are foreseeable they are usually recoverable. Because of remedial works the claimant had to outsource work, pay the rental value of the press and pay the salaries of the printers who were to operate the press. The claimant sought to recover profit on the work it had to turn away and loss of profit on the work it was unable to carry out.
The court held that the loss of profit on the outsourced work should be based on the additional expenditure incurred by the claimant in relation to that outsourced work but allowance must be made for the expenditure that the claimant would have incurred in any event (such as ink and power).
Management time : Compensation for having senior management deal with the consequences of a breach of contract is a common claim
The rental value of the press and the printers’ salaries could be recovered as loss of profit, provided that the cost of an element of the rental value and salaries was deducted to reflect those costs that would have been expended to earn the profit.
The court was not provided with any information on the resources that the outsourced work would have taken the claimant in terms of the cost of the press or the printers’ salaries. The court assessed the loss of profit at 50%.
Management time: Compensation for having senior management deal with the consequences of a breach of contract is a common claim. Bridge claimed £7,680, incurred by the managing director. The number of hours was based on his own assessment and was made retrospectively. In the past insufficient records would usually have ended claims. However, the court was content to allow a retrospective assessment following the 2001 judgment in Holman Group vs Sherwood, where the judge indicated that, in absence of records, evidence in the form of a reconstruction from memory was acceptable. However, the judge in this case noted that this retrospective assessment was only an approximation.
The court accepted the approach to a claim for management time as set out by Gloster J in R + V Verischerung vs Risk Insurance & Reinsurance Solutions. The judge in the Bridge case accepted the managing director’s claim that the business “suffered losses due to lost opportunities” as he was new business development director at the time and was unable to carry out other duties.
The court did reduce the amount of time claimed by 20% to £4,800, but the crucial factor is that it allowed the claim for management time to succeed without detailed time records.
This case also shows the importance of keeping contemporaneous records showing the time spent dealing with the issue and any disruption caused to normal working routine: if the records had been kept then the court might not have knocked 20% off.
Laurence Sheppard is a partner in the construction department at Weightmans