Gap Group North East Limited v Paul Palmer

Damages for breach of contract and confidence require proof that the breach caused the claimed loss. A claim for lost profits from a prospective contract fails where the evidence does not establish that the claimant had submitted a relevant bid or that the breach prevented the contract being awarded.

Wasted management time may be recoverable as damages where the diversion of staff time and significant business disruption are properly established. The court may infer that, absent the diversion, staff would have undertaken revenue-generating work. Management time spent dealing with legal issues is not necessarily confined to recoverable costs. An appropriate discount may be made for estimation and uncertainty.

The claimant sought damages and injunctive relief following the defendant’s admitted breaches of contract and confidence. The remaining issues concerned causation and remedy.

The claimant claimed lost profits said to arise from the loss of prospective Scottish fridge-processing work for Valpak, together with wasted senior-management time. The central questions were whether the breaches caused the loss of the prospective contract and whether the evidence established recoverable management-time loss.

1. Scottish fridge-processing work. The claim for £465,894 in lost profits was rejected. The documentation did not show that the claimant had submitted a bid or provided pricing for the contract due to begin on 1 April 2022 before the defendant’s disclosures on 25 January 2022. Later correspondence showed that Valpak postponed further consideration for internal reasons, without linking that decision to the defendant’s breaches. The claimant later secured the work for the following year, which did not establish that the earlier contract had been lost because of the breaches.
2. Wasted management time. The court applied the principles stated in Aerospace Publishing v Thames Water Utilities [2007] Bus LR 726. The claimant had to establish the fact and extent of the diversion of staff time and significant disruption to its business. Where those matters were established, it was open to the court to infer that the diverted staff would otherwise have undertaken revenue-generating activities producing value at least equal to their employment costs, unless the contrary was shown.
3. The evidence provided sufficient detail of the time spent by the claimant’s senior managers. Time spent dealing with legal issues was not irrecoverable merely because similar expenditure might otherwise be claimed as costs. The court adopted the approach and reasoning in Bridge UK v Abbey Pynford [2007] EWHC 728 (TCC), including the principle that wasted executive time may be recovered where it is sufficiently certain and directly attributable to the breach.
4. After allowing for concessions and applying a discount for estimation and uncertainty, damages of £18,000 were awarded for wasted management time. Interest was awarded at 4% from 25 January 2022 to 31 July 2022 and at 8% from 1 August 2022 to judgment. A permanent injunction was also granted in agreed terms.