In the case of Marathon Asset Management and Seddon and Bridgeman the claimant adopted a very different approach to computing the quantum of damages that should be paid.
The written judgement gives a compact summary of the main points at issue:
“The claimants ("Marathon") carry on an investment management business. A long-running dispute between the firm's three founders led to one of them leaving, followed by employees who worked with him. They have since set up a competing business. Protracted arbitration proceedings and this litigation have ensued. The arbitration claims have all now been resolved and some of the claims made in this action have been settled. But there remain claims against the first defendant ("Mr Seddon") and the third defendant ("Mr Bridgeman") for taking confidential documents. Those claims have been the subject of this trial.”
The core of this dispute was that Mr Bridgeman, when a Marathon employee, copied some 40,000 Marathon documents onto USB drives (including some 37,000 emails), in the period before he left that employment.
The main question which the Court had to address was the appropriate means of providing recompense to Marathon for this breach by Mr Bridgeman of his employment contract. A very major circumstance in this case was that Mr Bridgeman then only later accessed an extremely small proportion of these files. They were then all returned to Marathon under threat of legal action.
Marathon's case was that it did not matter what use was actually made of any of the files or that no loss had been shown: the defendants unlawfully took its confidential information and had an obligation pay for the value of what they took – which Marathon estimated at £15m.
Marathon were able to cite case precedent in support of their position: certain damages are often referred to as "Wrotham Park damages" after the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798.
The case of Wrotham Park Estate can be briefly summarised: the owners of the Estate sold some land to a third party with a restrictive covenant which restricted development. Some years later a small part of that land was developed, without seeking the consent of the Estate, and 14 houses were built and sold.
What is of critical importance in the Wrotham Park case was that the owners of the Estate accepted that the value of their property had not been reduced by one farthing. (For those brought up in the era of decimal currency, I should explain that there were 960 farthings in £1.) However, the Judge awarded the Estate 5% of the profit of £50,000 which had been made on the development. This was based on a simple rule that had been well expressed by Lord Denning in another case:
"The wrongdoer cannot be better off because he did not ask permission. He cannot be better off by doing wrong than he would be by doing right."
The question at issue for the Judge in the Marathon case was whether the claim should be based on an extension of the above principle.
Two valuation experts were given the perhaps unenviable task of assessing the value of the documents which had been copied onto the USB drives by Mr Bridgeman. This task inevitably required various assumptions to be made: these were in respect of the timing of the launch of a new business, the probability of Marathon losing clients to the competing business as a result of the use of the information, the possible assets under management that would be lost, and the time period over which losses were to be assessed.
The work of one of the experts was explained in some detail: the expert performed calculations on three bases which assumed, respectively, that the loss would amount to (i) 5% (ii) 10% or (iii) 20% of the assets under management of the relevant Marathon Fund as at 29 August 2012. He also made alternative assumptions that the loss would endure for (a) a minimum of three years or (b) a maximum of six years. On these six permutations, the expert calculated a range of values between £2.5m and £39.4m.
The difficulty of the task is expressed in the wide range of values; the other expert calculated a range from $200,000 to $13.8 million.
The difficulties were then compounded by the compromise decision of the parties that the experts’ reports should be given as evidence but the experts would not be called to support their reports with oral evidence.
The Court made an interesting comment relating to the quantum of losses in challenging circumstances such as these:
“There are legal principles which may assist a claimant who has difficulty in proving loss. One such principle is that difficulty of estimation should not be allowed to deprive the claimant of a remedy, particularly where that difficulty is itself a result of the defendant's wrongdoing. Accordingly, the court will attempt as best it can to quantify the claimant's loss even where precise calculation is impossible.”
One of the interesting legal points that arose in considering damages was the question of hindsight: we all generally accept the axiom that events after a valuation point cannot be known at that point and must be disregarded. However this was not the approach of the Judge who cited a number of cases, including the case of The Golden Victory:
"you need not gaze into the crystal ball when you can read the book"His approach was therefore to allow the actual sequence of subsequent events to trump those based on reasonable assumptions.
The Judge made the point that Marathon may have had a claim which could have been computed by reference to the actual documents used by Mr Bridgeman: as he had copied and used research reports into various companies, the opportunity cost of this information could have been calculated. However Marathon did not claim on that basis, but rather on the basis known as “jackpot damages”. The Judge described the situation:
“I have concluded that, in these circumstances, it would be wrong for me to award damages assessed on a basis which Marathon has expressly disavowed.”
The net result was that the copying of files onto USB drives, but without then using them, did not crystallise a material claim for damages. Marathon did not hit the jackpot and were awarded damages of £1 each against Mr Seddon and Mr Bridgeman.
