One Step (Support) Limited v Morris-Garner [2016] EWCA Civ 180

The Court of Appeal has provided some clarity as to when a “Wrotham Park” damages award may be made. Wrotham Park damages are often called “hypothetical bargain damages” or “negotiating damages”. The underlying principle is that a claimant can recover whatever sum the defendant would have paid to negotiate a release from a restriction rather than breach the restriction. The awards classically arise in restrictive covenant cases.

Unusually for property law, Jimi Hendrix also has a part to play in Wrotham Park damages awards. The Court of Appeal in the One Step case expressly approved the three aspects identified in Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323 as justifying Wrotham Park damages ;

  1. The Defendant’s deliberate breach of its contractual obligation for its own gain
  2. The Claimant’s problem in establishing any financial loss
  3. The Claimant’s legitimate interest in preventing the Defendant’s breach (and profit)

The Court went further to add that the overall test is whether the Wrotham Park damages would be “the just response”. There is no requirement for it to be an “exceptional” situation. Therefore, Wrotham Park damages awards can be made where it is difficult to identify actual loss suffered by a Claimant.

Key points

  • The One Step case signals the Courts are willing to entertain claims for Wrotham Park damages on a wider and more liberal basis than previously thought
  • If a party deliberately breaches a property right it should be eyes wide open to the risk the Courts look more willing to award negotiating damages, rather than simply putting the burden upon a Claimant to prove it has suffered actual loss
  • The Courts may consider the wider availability of Wrotham Park damages is a good reason for declining an injunction trying to prevent breach of a property right. This supports the Courts’ gradual shift towards awarding damages in lieu of an injunction.