Source Article

Tate & Lyle Food and Distribution Ltd v Greater London Council [1982] 1 WLR 149; [1981] 3 All ER 716, QBD


Assessment of managerial costs incurred in attending meetings with GLC and PLA, organising dredging operations and in "rearranging berthing schedules.." - evidence of loss/injury - liability/burden of proof discharged: "there must have been a great deal of managerial time involved" - difficulty of assessment: "I would also accept that it must be extremely difficult to quantify." - difficulty in deciding appropriate % uplift: "But what percentage?" - claimant seeking compensation for managerial time on the basis of a 2.5% (£13750) uplift on recoverable dredging costs of £550000 - only % referred to in support of the claim was admiralty practice of awarding 1% of damage to owners in collision damage cases - admiralty % not relevant or questionable reliability: "this appears to cover the work of port agents as well as that in the shipowner’s office." - claimant’s annual accounting data not referred to since the claimant would not normally have been engaged in dredging operations (not therefore relevant and same problem as admiralty %) - Held: - "....modern office arrangements permit of the recording of the time spent by managerial staff on particular projects." [error of law/best estimate rule applies and not the best evidence rule] - "I am not prepared to advance into an area of pure speculation .....the plaintiffs have failed to prove that any sum is due under this head." (Best estimate/Chaplin v Hicks rule not cited; Ashcroft v Curtin (very similar problem) not cited).

Extracts from Judgment [1981] 3 All ER 716 at 720-721:

"Originally, the first plaintiff asserted that such expenditure could not be quantified, but by a reamendment it now claims such expenditure at 2·5% of the total loss and damage. Counsel for the plaintiffs accepts that there is no direct evidence, other than passing references, of the fact that such managerial and supervisory resources were expended or of the extent to which managerial time was deployed on attending to the problems involved. He takes his stand on established practice in the Admiralty Court (this case was started as an Admiralty case) and he has referred me to standard textbooks on Admiralty practice........

Counsel for the plaintiffs tells me that the usual figure is taken as 1% of the collision damage because any exact computation of the expense due to the ‘disturbance and extra work which a collision causes in the shipowner’s office’ is almost impossible..

Counsel for both the GLC and the PLA suggest that an item of damages under this head and calculated in this way is unknown in a Queen’s Bench action; in addition, counsel for the GLC maintains that managerial expenses could only be recovered as loss of profit, and counsel for the PLA that they might be recovered if quantified by acceptable evidence, but that there is no such evidence here."

The problem, it seems to me, resolves itself into two constituents. (a) Is there any warrant for suggesting that managerial time, which otherwise might have been engaged on the trading activities of the company, had to be deployed on the initiation and supervision of remedial work (excluding anything which might properly be regarded as preparation for litigation)? (b) If so, could this reasonably have been the subject of evidence, or is it so difficult to quantify that the application of some suitable rule of thumb is justified? [Note: Where liability is established the court has a duty to assess damages. The court could have made a best estimate in the light of the evidence of injury, alternatively it could have ordered an enquiry as to damages: see article on "Missing Evidence."]

I think there is evidence that managerial time was in fact expended on dealing with remedial measures. There were a whole series of meetings, in which the first plaintiff’s top managerial people took a leading role, the object of which was to find out what could be done to remedy the situation and to persuade the defendants to do something about it. In addition, while there is no evidence about the extent of the disruption caused, it is 720 clear that there must have been a great deal of managerial time involved in dealing with the dredging required and in rearranging berthing schedules and so on at the Raw Sugar Jetty to enable the delivery of material to the refinery to proceed without interruption. I have no doubt that the expenditure of managerial time in remedying an actionable wrong done to a trading concern can properly form the subject matter of a head of special damage. In a case such as this it would be wholly unrealistic to assume that no such additional managerial time was in fact expended. I would also accept that it must be extremely difficult to quantify. But modern office arrangements permit of the recording of the time spent by managerial staff on particular projects. I do not believe that it would have been impossible for the plaintiffs in this case to have kept some record to show the extent to which their trading routine was disturbed by the necessity for continual dredging sessions. [best evidence rule rather than best estimate rule applied/error of law] In the absence of any evidence about the extent to which this occurred the only suggestion counsel for the plaintiffs can make is that I should follow Admiralty practice and award a percentage on the total damages. But what percentage? Counsel for the plaintiffs claims 2·5% but tells me that the usual Admiralty figure is 1%, and this appears to cover the work of port agents as well as that in the shipowner’s office.

While I am satisfied that this head of damage can properly be claimed, I am not prepared to advance into an area of pure speculation when it comes to quantum. I feel bound to hold that the plaintiffs have failed to prove that any sum is due under this head."

Noter Up
  1. This case was overruled by the Court of Appeal in Alger, Brownless & Court Copyservices Limited v Jitesh Thakrar Trading as Thakrar and Co (a firm) [1999] EWCA Civ 574

  2. Sabemo (Sa) Pty Ltd V. AIW Engineering Pty Ltd File No. SCGRG 92/36 Judgment No. 3630 Number of pages - 15 Arbitration (1992) 9 BCL 280; [1992] SASC 3630 (24 September 1992), Supreme Court of South Australia - assessment of value (variations/changes in works) Tate & Lyle applied/case wrongly decided

NB figures in brackets are a reference to paragraph numbers in The Law of Damages
  1. The options to the court where evidence is missing or unreliable are considered in the article "Missing Evidence"

  2. One option would have been to make a best estimate by way of a lump sum: eg Dame Shirley Porter; David Weeks; Peter John Hartley; Graham England and Ronald William Phillips V. John Magill [1997] EWHC Admin 1170: "Expenditure or loss incurred in the Preparation of Papers for the Purpose of Discussing the Promotion of the Electoral Advantage of the Majority Party... 174. The auditor made a broad estimate under this heading of £5,000, which, when interest was added, became £10,126. This sum related to a group of such papers and did not distinguish between the individual components of that group. There is nothing objectionable about the use of a broad estimate of that kind."

  3. A further option would have been to order an enquiry as to damages, eg expert opinion as to the appropriate % allowance to be made in a construction and engineering contract of this nature.

Copyright Stewart Dunn except:
Extracts from All England Law Reports are reproduced by permission of the Butterworths Division of Reed Elsevier (UK) Limited.