In the recent case of Primary Group, Mr Justice Arnold considered the law relating to the assessment of damages for breaches of both contractual and equitable obligations of confidence.
Here, RBS disclosed copies of Primary Group's financial reports to Direct Line without the consent of Primary Group. RBS did not deny it had disclosed this report without consent, but argued that the applicable set of terms and conditions justified its disclosure. Arnold J found in Primary Group's favour, that RBS's actions constituted a breach of confidence.
The law for breaches of both contractual and equitable obligations of confidence were set out by Arnold J in the Force India case.
Here the judge focussed on the ability of the Court to award what had become known as "Wrotham Park damages", "gain-based damages" or "negotiating damages". These are damages assessed as the price which the defendant could reasonably have demanded to relax the contractual restriction in question. He summarised the principles to be applied as follows:-
- The overriding principle is that damages are compensatory.
- The primary basis for the assessment is based on a consideration of the sum that would have been arrived at had the parties been involved in negotiations.
- The fact that the deal would not have been reached in reality is irrelevant.
- The assessment as to damages is to be made as at the date of the breach.
- Where there has been nothing like an actual negotiation between the parties, it is reasonable for the Court to look at the eventual outcome and to consider whether or not that is a useful guide as to what the parties would have thought at the time of that hypothetical bargain.
- The Court can consider other relevant factors, in particular any delay by the claimant in asserting its rights.
Considering the above factors the judge awarded Primary Group £5,000. He considered this to be the amount that RBS would have been required to pay for the analytical work to be done if Direct Line had not been a group company. He also dismissed a request from Primary Group for an enquiry as to damages on the grounds that Primary Group suffered no direct loss resulting from the breach of contract. This followed the reasoning of Fox LJ in McDonald'scase that the Court must be able to refuse such an enquiry where such an enquiry would be 'fruitless'.