It’s a well-known fact that if you win your case at court you can claim from the other side in order to get your legal costs paid for. But what about all the man hours wasted beyond that – the hours preparing for court or hours spent dealing with problems caused by the other side’s breach? Is there any way that, as a litigant, you can claim that back?
Legal costs aside, the court procedure can be timing-consuming and costly. Finding the resources to produce a strong case against your opponent is a laborious process and can result in significant wasted time. There is a chance that there are terms in your contract with the other party that clearly state whether such costs may be recovered. However, it is more than likely that parties will have not made provisions for circumstances such as these.
When looking at the costs and hours spent working towards a case, doing preparation such as finding evidence, preparing submissions or collecting witness statements… etc forms part of the costs of bringing the claim. Generally, you cannot recover the costs and time it has taken to prepare for a case unless you are acting as your own solicitor or if your own expert staff were employed for the purposes of the case. In one case, the court decided that because the freelancers a company had hired were doing things like drafting witness statements this needed to be claimed as part of the costs of litigation, therefore their claim for damages failed.
On the other hand, in cases that involve a breach of contract, for example, wasted management costs (employee time) are seen as legitimate damages which can be claimed. It can be a fine line trying to differentiate between work carried out remedying the breach of contract and work relating to the claim.
To succeed in a claim for recovery of wasted management costs the claimant must demonstrate the defendant’s breach caused significant disruption to the business. Disruption to the business can involve things like diverting staff away from their normal tasks to assist with the consequences of the defendant’s breach. There is case law that tells us that employees need not have been otherwise involved in profit-making activities for a wasted management claim to be successful.
The tricky part is calculating the loss suffered from diverting employees. Generally speaking it will be based on their annual income as a member of staff and how much time was spent on remedying the defendant’s breach.
Practical steps to improving the chance of a successful recovery of management time
Work out what time is being spent on dealing with the breach (i.e. remedying defects… etc) and what time is being spent on claim preparation. Generally, only time spent dealing with the breach will be recoverable, so it makes sense to focus on that.
A good level of recovery is only likely to be achieved if detailed and accurate records are kept of the time engaged dealing with the breach. If no records are kept, the court will either allow no recovery or only a limited (discounted level of) recovery.
Ensure that all employees involved in dealing with the breach are instructed to maintain daily time sheets that record:
- The extent to which they have been diverted from their routine work to deal with the issue
- The duration worked (length of time, date, time, place)
- A description of the work undertaken at those times (meeting, telephone call to x, preparing letters/emails…etc).