The Plaintiff is an investment management company and the Defendant is a consultancy company set up to provide fund management services to the Plaintiff. The compensation agreement between the two parties was based on a system of bonuses which would be subject to claw back in respect of losses attributable to the relevant portfolios, a system that was memorialized in a badly drafted claw back agreement prepared by a non-lawyer. After catastrophic losses in the financial crisis, the Plaintiff brought an action on the claw back agreement which required the Court to determine its true meaning and construction and in particular whether, as a matter of interpretation, claw back was based upon and limited to the amount of reduction in the overall performance fee or on the individual performance of the portfolios managed by the Defendant.

Further, the Court was required to determine the meaning of the words, “attributable to” in the context of the claw back agreement. The Court held that an agreement must be interpreted in light of all the background circumstances reasonably known by or available to the parties, which includes absolutely anything which would affect the way in which the language of the document would have been understood by the reasonable person having all such background knowledge.

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