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Recovery for Wasted Staff Time in IT Disputes | Commercial | Legality
Recovery for Wasted Staff Time in IT Disputes
27 March 2007 02:03 PM Filed in:
Commercial
The Court of Appeal has provided
guidance on the circumstances in which a claimant can successfully
claim damages for wasted staff time.
Whilst generally applicable to all commercial disputes, the issue of wasted staff time is particularly relevant to IT contracts, where problem contracts readily swallow up significant amounts of management time. This is exacerbated by the fact that IT project staff are often an expensive resource, and that their time is typically shared across several projects.
In Aerospace Publishing Ltd v Thames Water Utilities [2007] EWCA, the Court of Appeal concluded that:
(a) The fact and extent of any diversion of staff time have to be properly established;
(b) The claimant will have to prove that the diversion of staff time caused significant disruption to the business; and
(c) The claim should be described in terms of 'loss of revenue' that is attributable to the diverted time of the staff concerned. However, unless the defendant can provide evidence to the contrary, it would be reasonable for the Court to infer that had staff not been diverted, they would have generated revenues in other parts of the business. The Court suggested that the amount recoverable could be at least equal to the costs of employing the staff concerned.
The decision of the Court of Appeal will be welcomed by those seeking to recover wasted staff time. However, as many limitation of liability clauses explicitly seek to exclude "loss of revenues", claimants should be prepared to fully document and prove any claim for wasted staff time.
Whilst generally applicable to all commercial disputes, the issue of wasted staff time is particularly relevant to IT contracts, where problem contracts readily swallow up significant amounts of management time. This is exacerbated by the fact that IT project staff are often an expensive resource, and that their time is typically shared across several projects.
In Aerospace Publishing Ltd v Thames Water Utilities [2007] EWCA, the Court of Appeal concluded that:
(a) The fact and extent of any diversion of staff time have to be properly established;
(b) The claimant will have to prove that the diversion of staff time caused significant disruption to the business; and
(c) The claim should be described in terms of 'loss of revenue' that is attributable to the diverted time of the staff concerned. However, unless the defendant can provide evidence to the contrary, it would be reasonable for the Court to infer that had staff not been diverted, they would have generated revenues in other parts of the business. The Court suggested that the amount recoverable could be at least equal to the costs of employing the staff concerned.
The decision of the Court of Appeal will be welcomed by those seeking to recover wasted staff time. However, as many limitation of liability clauses explicitly seek to exclude "loss of revenues", claimants should be prepared to fully document and prove any claim for wasted staff time.
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