Weigh up risks before suing for damages – a cautionary tale

In the recent case of Marathon Asset Management LLP v Seddon, Marathon brought a claim against Mr Seddon and Mr Bridgeman after they left the business, claiming damages estimated at £15 million for alleged misuse of confidential information.

However, despite the court accepting that there had been misuse of information, Marathon were not able to establish that they had suffered any loss. The court commented: “In circumstances where the misuse of confidential information by the defendants has neither caused Marathon to suffer any financial loss nor resulted in the defendants making any financial gain, it is hard to see how Marathon could be entitled to any remedy other than an award of nominal damages.”

The court went on to make an award that each defendant pay just £1 to Marathon as nominal damages. In the costs ruling that followed, Marathon were heavily penalised and had to pay a considerable percentage of the defendant’s costs in the case.

The court specifically said that a party pursuing a claim for damages for misuse of confidential information without evidence of any significant misuse, but in the expectation that such evidence will or may be uncovered through the litigation process, takes the risk that it will not be uncovered, and in doing so faces a significant costs risk.

The lesson from this case is to consider the risk of potential costs before embarking on litigation. One could, as was the case with Marathon, end up with end up with egg on one’s face after over-egging the pudding!

Partner Paul Gordon joined Willans from a City law firm in 2005. Specialising in dispute resolution, he has experience in handling a broad range of commercial matters, including intellectual property, director and shareholder disputes, and engineering and construction cases.