A Cautionary Tale How Poor Assessment of Risk Cost a Claimant Dearly
An investment management company is now facing a significant costs bill after boldly rejecting a settlement offer of £1.5m, going on to win just £2 in damages.
In a recent case of Marathon Asset Management LLP & Anor v Seddon & Ors, the Claimant issued a claim for misuse of confidential information by departing employees Mr Seddon and Mr Bridgeman whom they claim copied files before leaving the company.
The key issue here is the policy underlying Part 36 that required that the cost consequences should be visited on Marathon rather than the Defendants who, instead of taking a realistic attitude “opened their mouths too wide” according to Barrister Gordon Exall, and left themselves open to significant risk failing to properly assess.
Another early miscalculation made by the Claimant was assuming that evidence of “significant misuse” of confidential information would undoubtedly arise from discovery during the course of proceedings when in fact there was a chance of its absence.
Mr Justice Leggatt, before whom the case was brought, highlighted that “A party which pursues a claim for damages for misuse of confidential information without evidence of any significant misuse… takes the risk that such evidence will not be uncovered because it does not in fact exist.”
The judge found that whilst confidential information had been taken by the defendants, there was no loss to the company, and whilst they could establish liability they failed in the quantum of the case. The Judge awarded just £2 nominal damages after a nine-day hearing.
The Claimant’s other blunder was to reject a settlement offer of £1.5m by Seddon and Bridgeman back in February 2016. This led the judge to rule that as the offer had not been beaten at trial and also not accepted then the continuation of proceedings was wholly unnecessary. Based on the principle that when a claimant is awarded nominal damages the defendant should be regarded as the winning party for the purposes of costs liability. The Defendants were then entitled to recover half of their costs of defending the initial misuse claim, and the entire sum from February 2016 onwards.
A spokesperson for City firm Withers, which represented Bridgeman, said: ‘This judgement serves as a warning to anyone attempting to assert significant losses for the removal of company documents. Marathon’s £15m claim and £2 payout show how widely the perception of value can differ from the actual amount that can be reasonably claimed in damages.”
As promising and financially rewarding as litigation can be, parties on both sides would do well to remind themselves of the high-risk sting that remains attached to this arena and that human error can be costly. Parties need to always be fully aware of and alive to the potential costs and costs recoverability involved.