Mr Justice Stadlen in Giedo Van der Garde BV v Force India Formula One Team Ltd [2010] EWHC 2373 (QB), has found that Force India Formula One Team Ltd was in breach of its contract with Giedo Van der Garde by not providing him with the minimum number of driving kilometres for which Mr Van der Garde had paid US$3 million in the hope of gaining enough experience to win a Formula One driving seat. Undertaking a thorough review of the law of restitution and total failure of consideration, Stadlen J held that restitution did not apply as the failure of consideration had not been total.

BACKGROUND

In February 2007, Mr Van der Garde, an aspiring Formula One racing driver, entered into a service agreement with Spyker F1 Team Ltd (now Force India Formula One Team Ltd) under which it was agreed that, in respect of the 2007 Grand Prix season, Mr Van der Garde would be permitted to drive a Formula One racing car in testing and/or practising and/or racing for a minimum of 6,000 kilometres.

Following the end of the 2007 Grand Prix season Mr Van der Garde, having only been permitted to drive a total of 2,004 kilometres, issued proceedings against Force India for damages for breach of the service agreement.

DECISION ON LIABILITY

Force India was liable to Mr Van der Garde by not providing the minimum number of kilometres under the contract. In fact, Stadlen J reduced the 6,000 figure to 5,734 kilometres as a result of Mr Van der Garde refusing to take part in one of the races offered by Force India. This meant that Force India was in breach of its obligations by leaving a shortfall of 3,730 kilometres and Mr Van der Garde was entitled to relief.

REMEDIES

Mr Van der Garde argued four alternative claims in respect of the damages and remedies that he was entitled to: 1) restitution of the net amount paid attributable to the kilometres of which he had been wrongfully deprived on the basis of a total failure of consideration, 2) damages for breach of contract consisting of the value of the performance that Force India had failed to provide, 3) damages for breach to compensate Mr Van der Garde for loss of income, and 4) “Wrotham Park” type damages.

Restitution and Failure of Consideration

Two questions arose.

Did the fact that the Defendant permitted Mr Van der Garde to drive 2,004 kilometres mean that the failure of consideration was partial rather than total, such as to exclude the availability of restitution?

If and to the extent that other benefits were received by Mr Van der Garde, does that fact and/or the fact that the consideration payable under the Fee Agreement was intended to cover additional benefits to the Claimant preclude the availability of restitution?

Stadlen J provided a detailed review of the law of restitution encompassing several pages of what was a lengthy judgment. It was with regret however that he found he could not provide damages on this basis as the failure had not been total.

I am bound to say that I reach this conclusion with considerable regret, joining as I do the growing list of judges and academic writers who have expressed the view that the requirement of proof of total failure of consideration as a necessary condition for an award of restitution is unsatisfactory and liable in certain cases to work injustice.

Loss of the Value of the Performance Due

In the event of the claim for restitution failing, Mr Van der Garde claimed for the value of Force India’s promised performance that had been wrongfully denied. This was defined as the value of the right to test drive the outstanding kilometres as well as the value of the sponsorship rights and paddock passes to which Mr Van der Garde had been entitled. Here, it was the normal measure of damages that applied, i.e., the market value of the service not provided, less the market value of what had been received.

Stadlen J found that, although the negotiations showed that there was no standard or going rate, it did not follow that there was no market value or market rate for testing kilometres. It was a matter of evidence and here, on the strength of the expert evidence, Stadlen J decided that the correct value of a kilometre test was US$500. The expert evidence had also shown that extra benefits, such as paddock passes, were normally thrown in with the kilometres as part of a test driving package. Therefore, Stadlen J awarded US$1.865 million to compensate Mr Van der Garde for Force India’s failure to provide 3,730 kilometres of test driving and associated benefits.

Career Damages

Here, Mr Van der Garde claimed consequential losses arising from the loss of the opportunity to obtain a salary in remunerative Formula One testing and racing competitions, as well as the loss of opportunity of obtaining sponsorship and merchandising income.

The expert evidence had shown that competition to obtain a race seat in a Formula One team was intense. However, the experts differed as to Mr Van der Garde’s prospects. In the end, Stadlen J accepted the Claimant’s expert evidence that Mr Van der Garde’s chances of ultimately obtaining a paid Formula One race seat would have been doubled had he been able to complete the 6,000 kilometres to which he had been entitled. Therefore, Stadlen J said, Mr Van der Garde had been deprived of a real and substantial chance of obtaining financial benefit as a result of Force India’s breach. Further, although it was difficult to put a financial figure on this loss, it did not follow that only nominal damages applied. Having said that, however, due to the large number of imponderables, the court had to exercise caution and restraint in assessing an amount. In Stadlen J’s view, US$500,000, as contended by Mr Van der Garde, was too high and he awarded US$100,000.

Wrotham Park Damages

This claim was relied on only as an alternative to the primary claim for restitution and the secondary claim for loss of the value of the benefits said to be wrongly withheld by Force India.

Stadlen J observed that in Wrotham Park, damages had been awarded on the basis that awarding a nominal sum, or no sum, would have resulted in a manifest injustice. Instead, a sum, which could reasonably have been demanded in exchange for releasing the wrongdoer from the covenant under the contract, was awarded. Stadlen J referred also to Attorney General v Blake [2001] 1 AC 268, in which Wrotham Park damages had been awarded and measured as against the benefits gained by the wrongdoer from the breach, and held that, on these authorities, it was open to him to make a Wrotham Park damages award.

The question was, therefore, how much would Mr Van der Garde have obtained following a hypothetical negotiation in which he had made reasonable demands as a quid pro quo for releasing Force India from its obligation to provide 3,730 further kilometres and associated benefits?

In conclusion, Stadlen J found that Mr Van der Garde would have sought a sum of money that reflected the value of the outstanding kilometres and associated benefits. Expert evidence had shown this to be US$500 per kilometre. Therefore, the likely outcome of these hypothetical negotiations was US$500 multiplied by the 3,730 outstanding kilometres amounting to a total of US$1.865 million