Are wasted management time costs recoverable in court proceedings?

What type of management time do we mean?

This could include reorganising internal resources, asking staff to help investigate, manage and/or mitigate the effects of any breach of contract.

General case law principles

The case of Aerospace Publishing v Thames Water Utilities [2007] EWCA Civ 3 is the leading case dealing with recovery of wasted management time and was applied in the Zenith case. It set out clear guidance for businesses seeking to maximise their chances of recovering wasted management costs:

1. It is for the claimant to prove that the defendant’s breach caused significant disruption to their business and that it became necessary to divert employees and/or senior management away from their usual business activities.
2. Wasted time must be quantified – that loss must be quantified as an hourly or daily rate and unjustified uplifts are likely to be rejected. Quantifying additional expenditure, loss of revenue and/or loss of profit can be difficult though. A good starting point would be based on the individual employee’s income and how much time was spent to remedy/deal with the breach.
3. Costs related to the claim cannot be claimed as damages for breach of contract – only time spent dealing with and remedying the breach will be recoverable.
4. Businesses should maintain contemporaneous records to support the claim as any retrospective assessments are unlikely to result in full recovery.

So, in answer to our first question, yes, wasted management time costs are recoverable but subject to general causation rules, quantification and substantiation.

How can you maximise your chances of recovering wasted management time?

1. Check for any contractual notice requirements that apply to make a claim. Ensure they are followed and save all correspondence.
2. Keep a detailed record showing where employees have been diverted from their usual work bearing in mind:
   • What the breach is.
   • Justifications for using the particular employees to remedy/deal with the breach.
   • An explanation of how this diversion caused disruption to the business, i.e. what should the employee have been doing and what they had to do instead.
3. Ensure that employees maintain daily time sheets that record:
   • The extent to which they have been diverted from their usual routine work.
   • The period of working to remedy the breach (include time, dates, length of time taken).
   • Keep a note of the type of work undertaken (meetings, telephone calls, letters / emails).
4. Where few records have been kept, consider preparing witness and documentary evidence to enable retrospective assessment of time spent remedying the breach. It is important to note, that courts are likely to attack a retrospective analysis, therefore best practice would be to start keeping record from the onset of time spent to remedy a breach to enable better chances of recovery.

Our Disputes team has significant experience in bringing and defending breach of contract claims, including seeking damages for wasted management time. If you are considering pursuing a claim and want to understand how to maximise your chances in successfully claiming damaged for wasted management time, the earlier we can help put systems in place to record key details, the better. Please get in touch.