LAW AND COMMERCE
decision One Step.28 In this case, the Courts first reaffirmed that the general rule for contract damages is to put the injured party in a position as if the contract had been carried out, synonymous with the Robinson principle. It concluded, as a general rule, that damages based on a breach of contract needs to be based on legal right and not based on the Courts’ discretion. On the specific issue of Wrotham-Park damages, Lord Reed reasoned that the Courts’ jurisprudence on the issue has been on a wider and less certain basis than the original intent of the Courts in Wrotham Park.29 He also analysed two cases that were pertinent to WrothamPark damages, questioning the judgment in Experience Hendrix and discussing the uncertainty that was seeded prior to and cemented in Blake, and seemingly agreed with the nuances that Lord Hobhouse was trying to highlight in his dissenting judgment in Blake.30 Dealing with the compensatory argument, Lord Reed reasoned that whilst damages based on an imaginary negotiation may give the impression that it is incompatible with the principle of compensation—as discussed above— he argued that the loss suffered by injured party is the deprivation of an asset.31 He asserted that the contractual agreement between the parties was this asset as it created a right that the injured party was benefitting from, such as an intellectual property or restrictive covenant.32 By acting in breach of its contractual obligations, the breaching party essentially took an asset from the injured party – therefore, the injured party is “entitled to require payment”.33 However, Lord Reed acknowledged that the limiting factor of using Wrotham-Park damages is the fact that there is a proprietary factor in which if the obligation is just a contractual obligation, it would not make the loss an asset to the injured party. In such cases, the Courts cannot award Wrotham-Park damages.34 Looking at the Supreme Court’s decision in One Step, a few points could be concluded about the applicability of the Wrotham-Park damages model. Firstly, the UK Courts have acknowledged that Wrotham-Park damages is to be considered as part of the compensatory model for damages and not a separate justification for awarding damages. Secondly, it pertains to contractual obligations where the breaching party takes a right away from the injured party. In this aspect, although is not fully clear from the UK courts jurisprudence, it could be argued that application of Wrotham-Park damages in cases where 28 Morris-Garner and another (Appellants) v One Step (Support) Ltd (Respondent) [2018] UKSC 20. 29
ibid at [83]-[90].
30
ibid at [64] – [82].
31
ibid at [91].
32
One Step (SC) (op cit n 28) at [92].
33
ibid.
34
ibid at [93]-[94].
there is a contractual obligation for the provision of goods or services would hardly be applicable unless the breach essentially takes away an asset from the injured party. Another salient aspect that could be concluded is that the UK courts are still unable to reason away from the proprietary aspect of the Wrotham Park reasoning where the damages can only be awarded when the injured party has a proprietary right in the manner, or as Lord Reed reasoned as an asset. Therefore, even though the breach takes away a right from the injured party, the Courts still seem to require some form of proprietary right, either a legal right over the subject matter or a breach of fiduciary duty that would also entitle the injured party to proprietary remedies. These points greatly limit the applicability of Wrotham-Park damages as it takes a specific circumstance for the Courts to be able to apply it to a breach of contract. B. Loss of Amenities Model Another possible methodology the Courts have created is the use of a loss of amenities damage model, where the focus is on the intangible loss suffered by the injured party. The authority on non-pecuniary damages is Ruxley v Forsyth,35 where the court reasoned for damages based on a “loss of amenities”. However, the quantification in that case was done arbitrarily. In his iconic judgment, Lord Mustill reasoned that although the loss of consumer surplus is unquantifiable, it has not and should not hinder the courts from awarding and quantifying damages based on what it deems as the best methodology for reversing the injustice.36 He concluded that the plaintiff in Ruxley was not entitled to the purest protection of its expectation interest, which would necessitate the cost of cure, but the cost of difference was not enough. The conclusion was that the courts should award the plaintiff damages for his “loss of amenities” from the breach of contract. This formulation has been the standard methodology for quantification of damages for breaches of contract where the terms have a subjective and unquantifiable consumer value to the injured party.37 The first major issue with Ruxley is the fact that the reasoning had used incorrect premises. In Ruxley, Lord Mustill reasoned that the unquantifiability of damages that come up due to non-pecuniary loss should not stop the Courts from quantifying it themselves and reversing the injustice. However, the biggest problem with allowing the Courts free-reign based on this reasoning is that the
35
Ruxley v Forsyth [1996] 1 AC 344.
36
ibid at 361.
37 Freeman v Niroomand (1997) 52 Con LR 116; Farley v Skinner (No 2) [2002] 2 AC 732.
35