Reader v SPIE Ltd & Anor

A Part 36 offer is assessed by reference to the circumstances existing when it is made. A later adjournment of the trial does not retrospectively change the applicable rule or the offer’s required content.

A fiduciary in a position of actual or potential conflict must disclose accurately and fully the terms requiring approval. The duty does not generally require additional commentary or express signposting where the relevant information has been objectively disclosed and the principal is left to decide whether to approve it. Fully informed consent avoids breach; the burden of proving it rests on the fiduciary.

The appeals arose from County Court proceedings concerning liability for the settlement of an employee’s enhanced bonus claim. SPIE Limited had succeeded against its former owner, Paul Garside, on a fiduciary-duty claim and had obtained judgment for two-thirds of the settlement sum and costs.

SPIE appealed the refusal to apply Part 36 consequences to a settlement offer made less than 21 days before the originally listed trial. Mr Garside appealed the finding that he had breached fiduciary duty by failing expressly to draw attention to an enhanced bonus term in documents sent to G&L’s director for approval. The central issues were the temporal operation of CPR Part 36 and the extent of disclosure required where a fiduciary negotiates terms while potentially conflicted.

1. SPIE’s appeal dismissed. The 2017 Offer was made less than 21 days before the trial as then listed. CPR 36.5(2) therefore applied when the offer was made, and the offer was not required to specify the period otherwise required by CPR 36.5(1)(c). The later adjournment did not recharacterise the offer as one made not less than 21 days before trial. The relevant period and the possible application of Part 36 consequences had to be capable of assessment when the offer was made.
2. Although the judge below had erred in concluding that CPR 36.5(2) did not apply, Part 36 consequences still did not apply. No application had been made to abridge the relevant period, and the court declined retrospectively to exercise that discretion or remit the matter for reconsideration.
3. Mr Garside’s appeal allowed. Equity imposes an inflexible rule against a fiduciary acting where duty and interest conflict or may conflict. Fully informed consent prevents breach, and the fiduciary bears the burden of proving it. The relevant question was whether Mr Garside had informed G&L, objectively and accurately, of the terms proposed for Mr Reader.
4. The enhanced bonus term was plainly included in the documents sent to Mr Young, together with the other decision-makers, for approval. The judge’s additional requirement that Mr Garside provide commentary or express signposting was an error of law. The fiduciary duty required disclosure of the relevant terms, not a further obligation to ensure that the principal read or noticed them.
5. The court did not need to decide the separately advanced argument that delegation of the task itself amounted to implied informed consent. That argument was unpleaded and, on the facts found, the delegation was consistent with an expectation that Mr Garside would report the proposed terms so that G&L could decide whether to approve them.
6. The judgment against Mr Garside was set aside and SPIE’s claims were dismissed, with consequential repayment and costs orders to follow.

• High Court (Queen’s Bench Division): allowed Mr Garside’s appeal against liability, dismissed SPIE’s appeal concerning Part 36 consequences, set aside the judgment against Mr Garside and substituted judgment dismissing SPIE’s claims.
• County Court at Central London: judgment handed down on 31 October 2019; substantive orders made on 31 January 2020. Judgment was entered for SPIE against Mr Garside for £38,577.64 plus interest, with costs on the standard basis.