Claiming for managerial time to prepare a claim

When a claim is mounted, whether in litigation, arbitration or by way of CIPAA proceedings, obviously there would be hard costs involved. These would include costs paid to consultants, lawyers, Court fees, payments to the arbitrator or adjudicator as well as payments to the regulatory bodies like AIAC or PAM.

In addition to these hard costs, there would also be soft costs involved. By these I mean the cost of managerial time required to prepare a claim. Obviously the more complex the claim is, the more managerial time would be incurred.

Query: Can a company claim for managerial time incurred to prepare a claim?

One interesting case on this point would be that of Aerospace Publishing Ltd v Thames Water Utilities Ltd.

Aerospace Publishing is a publisher of aviation and military history. They stored their archives of photographs and reference materials in a basement, which unfortunately was flooded. Thames Water Utilities Ltd was responsible for the flooding of the basement.

Aerospace Publishing sought to claim as damages its staff costs required to prepare its claim. Thames Water Utilities disagreed. After all, such staff costs would be incurred in any event.

The UK Court of Appeal however allowed the claim. However, the Court imposed the condition that in order to succeed in such a claim, there must be evidence that the managers involved in preparing the claim were diverted from their other work, and that if the diversion did not occur, they would have generated revenue to the value that is at least equivalent to their cost of employment.

Hence, whilst managerial seems prima facie to be claimable, however the claim would be subject to somewhat stringent conditions, which most litigants may not readily fulfill.

Kheng Hoe Advocates is a firm of construction lawyers in Malaysia. Presently, a lot of our work revolves around CIPAA claims. We can be contacted at khenghoe@khenghoe.com. 

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