Supreme Court decision clarifies basis for the award of Wrotham Park damages

We discussed aspects of "Wrotham Park damages" (also called "license fee damages" or "negotiating damages") in Herbert Smith Freehills Hong Kong office's recent Contract Disputes Seminar "Getting your just deserts: remedies for breach of contract".

To recap, in some cases where there has been a breach of contract, instead of awarding damages calculated on the conventional causation basis, the court may instead award negotiating damages. Such damages are calculated on a hypothetical basis, as the sum which might reasonably have been negotiated between the plaintiff and the defendant had the defendant sought the plaintiff's permission to do what it did (in breach of contract). The Wrotham Park principle has been applied by the Hong Kong courts.

In the recent decision of Morris-Garner and another v One Step (Support) Ltd [2018] UKSC 20, the UK Supreme Court considered the basis for awarding negotiating damages, and narrowed down the circumstances in which such damages may be claimed. In particular, the Supreme Court rejected the idea that negotiating damages would be available whenever the court considers them to be the “just” response to a contractual breach.

For more details, please see our blog post on the Supreme Court judgment here.