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Punishing the wrong doer?

The general rule of law in England and Wales relating to the assessment of damages for breach of contract or tort is that the injured party should be compensated for its proven loss.  It is not the purpose of an award for damages to punish the wrong doer.

However, in the 1974 case Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798 the court, faced with a defendant developer who had built in breach of a restictive covenant and a claimant who had suffered not ‘one farthing’s worth’ of damages, refused an injunction to pull down constructed housing but awarded damages in lieu at a figure which one might reasonably expect to be demanded of the developer for relaxing the covenant.  The sum was assessed as a percentage of the developer’s profit.  The principle became known as ‘Wrotham Park damages’ and has been applied where a defendant is in deliberate breach of a covenant or tort but the claimant cannot identify actual financial loss.

In the recent case Morris-Garner v One Stop (Support) Limited [2016] EWCA Civ 180, the Court of Appeal upheld the first instance decision that the absence of identifiable financial loss as an absolute requirement for an award of ‘Wrotham Park damages’ was in error and upheld an award of damages in order to avoid an obvious injustice.  In that case, a breach of contract concerned the conducting of a competitive business.  The court analysed the Wrotham Park principle which analysis is now to go to the Supreme Court (on a date to be announced).

The courts have long expressed their opposition to a party which deliberately breaches a contract or tort but have applied the Wrotham Park damages principle sparingly.  The Supreme Court judgement is much awaited by many including Hatherleigh Training.

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