Marathon Asset Management LLP v Seddon & Ors

A Part 36 offer is interpreted by the ordinary contractual principles, having regard to its language and context. Settlement of one claim does not ordinarily prevent reliance on factual allegations forming part of that claim in support of another claim; the effect depends on the settlement terms. A reference to relief naturally concerns a remedy formally claimed, not merely a denial of liability to a counterclaim. Where an offer expressly excludes a counterclaim, the settlement does not extinguish a distinct defence to that counterclaim, although a settled monetary claim may no longer be available by way of set-off.

The claimants brought proceedings alleging that the defendants had acted pursuant to a common design to injure their investment-management business. The sixth defendant, Global Investment Mandate, brought a counterclaim for success fees under a consulting agreement.

The defendants made a Part 36 offer confined to the Common Design Claim and expressly excluding the counterclaim and a separate misuse-of-confidential-information claim. The claimants accepted the offer. Global Investment Mandate applied for summary judgment on the counterclaim, arguing that the settlement removed the factual and legal bases of the defence.

The issue was whether, on the proper interpretation of the offer, the settlement prevented the claimants from relying on the alleged wrongdoing in defending the counterclaim.

1. Interpretation. A Part 36 offer is construed using the ordinary principles applicable to contractual documents. The relevant question is what the language, read in context, would reasonably be understood to mean. Part 36 supplies context but no special rules of interpretation.
2. Factual allegations. Settlement of a claim does not necessarily prevent a party from relying on facts alleged in that claim for another purpose. The effect depends on the precise terms and context of the settlement. Here, the offer distinguished the Common Design Claim from the Misuse Claim and expressly excluded the counterclaim. Acceptance therefore did not prevent reliance on relevant factual allegations in defending the counterclaim.
3. Relief. In context, “relief” referred to a remedy formally claimed in the prayer of the amended particulars of claim. A denial that success fees were payable was not a claim for relief. Even on a broader construction, the defence related to the counterclaim, not to relief claimed in the Common Design Claim.
4. Defences. The settlement removed Marathon’s pleaded set-off defence because the underlying monetary claim against GIM had been settled. It did not remove the separate defence that GIM’s breach of a fiduciary duty of loyalty caused it to forfeit any entitlement to post-termination remuneration. That issue had to proceed to trial.
5. The third contractual defence raised by Marathon required fuller consideration and was not finally determined. The application for summary judgment was refused.

Not stated in the judgment. This was a first-instance decision of the High Court (Commercial Court).