Negotiating damages: what are Wrotham Park damages?

There has to be a relationship between the parties, which creates a duty to one another and, at least one of them, must have breached that duty. 

For example, they may not have fulfilled their part of a contract or complied with a restrictive covenant.

From this breach, there must flow a loss. A loss may only be recoverable if said loss was caused by a breach of duty. If the loss was going to happen even without the breach of duty, then the breach cannot be said to have caused the loss, and therefore the party that breached is off the hook.

Where the loss is found to stem from the breach, damages may be awarded to compensate for the harm done. Damages are generally calculated by working out what is needed to put the claimant in the position that they would have been in had the breach and loss not occurred. 

Accordingly, they’re generally equal to the loss: a court isn’t in the business of making people better off than they would have been if no breach had occurred.

This has been the precedent for almost 140 years.

It, therefore, follows that if there isn’t a loss, damages can’t be awarded – which makes sense because if there was no loss, then nobody has a right to complain, right? Wrong.

Wrotham Park damages

In the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd (1974), the claimant, Wrotham Park, sold an area of freehold land at auction. The land was bought by Parkside Homes, who built 14 houses on it, in breach of a negative covenant on the land prohibiting such building. 

However, despite the breach, it could not be established that Wrotham Park Estate Co Ltd had suffered a loss as they received the money for the land.

As Parkside Homes violated the covenant, the court could have granted an injunction and had them demolish the houses that had already been built. The judge decided against this in light of its ‘questionable fairness’ and instead decided to award damages.

He awarded £2,500 to Wrotham Park (about £30,000 in today’s money) as this was the figure he thought could have reasonably been negotiated had the parties agreed prior to the construction to relax the covenant.

Since its inception, Wrotham Park damages, as they have come to be known, have popped up in other areas of law – not just in land law or when dealing with restrictive covenants. 

Most commonly, they were awarded when a court found a situation where one party could have charged a hypothetical fee for releasing the other party from an obligation that they had – no matter how that obligation was formed.

More recently, though, the scope of these damages has been reduced. In 2018, Lord Reed stated that Wrotham Park damages had been used ‘rather loosely’ of late as it was being employed by courts whenever they thought such an application was just.

Reed’s judgement restricted this to cases where a defendant has obtained something from a claimant for which the claimant had a right to require payment for. By not paying for it, the defendant was removing that right to be paid from the claimant.

Moving forward, we are probably going to see a lot fewer Wrotham Park style damage awards because of this judgment. As a result, if you are looking to make a successful claim when negotiating damages, it is essential that you obtain sound advice and choose a team you can trust to take your claim forward. 

Expert advice on litigation matters

SO Legal has litigation solicitors in London, Brighton and East Sussex, and we work with clients across the UK. 

If you need support with negotiating damages or want an informal no-obligation discussion, contact our team.