Following on from my comments in February (“Mum’s Liquidated Damages”), we are again dealing of with the issue of whether enforceable damages claims in English law can be somehow based on pre-estimated or “hypothetical” loss. In other words, can you claim for damages for breach of confidentiality even if there is no actual damage that can be established in a particular case?

The white knight of the High Court in London has come charging down into the valley of the law with a definitive response. In the recent case of Marathon Asset Management LLP and another v Seddon and another [2017] EWHC 300, the court had to consider whether two former employees of the claimant had a) breached their respective duties of confidentiality and, b) if so, the amount of damages that should be awarded for those breaches.

The answer to a) was a clear affirmative, but in setting the amount of damages for financial loss the court itself  (if you pardon the pun) was at a loss. The difficulty was the fact that the defendants did not appear to have used the information at all. Certainly they do not appear, from the evidence presented, to have derived any profit from using it or selling the data to any third party. Nor, was there any proof of an actual loss incurred by the plaintiff or claimant.

However, the claimant had been seeking “jackpot” damages of £ 15 million because of the defendants breaches of their obligations by copying and keeping confidential information. But there was no evidence presented in court of actual loss or damage to the claimant. Moreover, the court did not consider arguments that the information had a “commercial value” and that value had been wrongly taken from the claimant by the defendants.
 
What the court did do, however, was to confirm that its function is not to punish, but rather the law was there to recognise and compensate for actual loss suffered, or money illegitimately made. A “hypothetical value” could not be taken into account in such a situation.