A foundational principle at common law is that the aim of an award of damages for breach of contract is to compensate the plaintiff for the loss which he has suffered as a result of the defendant's failure to perform. Damages are compensatory, not punitive, in nature. The focus is on the plaintiff's loss, not the gain obtained by the defendant.
In Wrotham Pork Estate Co Ltd v Porkside Homes Ltd (1974] 1 WLR 798, the defendant-developer breached its promise not to build more than an agreed number of houses on the land sold; damages were assessed at 5% of the defendant's anticipated profit. Such Wrotham Park damages have been controversial first, because they seem to be assessed by reference to the defendant's gain rather than the plaintiff's loss. The theoretical basis needs to be satisfactorily explained. Second, it is unclear in what circumstances Wrotham Park damages are available; in other words, there is debate surrounding the scope of Wrotham Pork damages.
The breach of contract and the impact of Wrotham Park Estate Co Ltd v Parkside Homes Ltd case
This assessment shall take into consideration the study of mainly the Wrotham Park Estate Co Ltd v Parkside Homes Ltd. case and the other three cases related to it. The various impacts of the case on the other three and what additions have been made on the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd. shall also be pointed out in this whole study.
In this case, The One Step company had strict rules that none of its employees can leave the job and join another organization or succumb to stop providing solicitation to the company. It can be said that in this case, two of the directors of the company left their respective positions and formed another concern giving competition to the company and providing solicitation covenants against the company. There have been terms in the contract between the parties that the directors have to stay in the organization for three years and have to serve their terms dutifully. However, before the end of the term, they left their positions and brought disgrace upon the company . On basis of this breach of contract, the claimant filed a case against the directors in the court. In this case, the line of legal proceeding was taken in correspondence to the Wrotham Park Estate Co Ltd v Parkside Homes Ltd. case. The judgement of the case was taken into consideration for proceeding with the former case. The application of the judgment of Wrotham Park case is not restricted to only the case where the identifiable loss cannot be found due to any kind of breach of rights or terms. In this case, it was found that the claimant had claimed to get justice and compensation under any recognized profit or under the Wrotham Park case . However, in the case it was found that not such identifiable amount of financial loss could be found due to breach of the contract by the directors. The court also said that no compensation clauses or non-solicitation clauses could not lead to usual payment of compensation in financial terms. The court demanded the claimant to show the loss in conventional terms or just forget the demand of compensation. The party failed to present any kind of loss in financial terms due to competition and solicitation provided by the directors to the One Step Ltd. Thus, the defendants were found not to be guilty and not held responsible for causing any kind of loss or damage to the former company . It can be said that this case provided a better understanding of the Wrotham Park case. In the Wrotham Park case, there was the clause of payment of compensation in such case where identifiable loss cannot be found after the breach. However, the case has some different terms and reasons. In this current case, the breach of terms due to solicitation and competing came up and till then, there was no rule how to determine compensation have to be paid or not in these kind of cases. Thus, it can be clearly said that this case provided an insight into different kind of case and circumstances of breach and where the identifiable loss could not be determined. Thus, this case widened the overall scope of the Wrotham Park case and brought an overall development on the law.
Determining compensation when the correct loss amount cannot be decided
In this case, the two hearing parties were the SAA company and the respondents. The two of the parties were a part of a venture in order to build some structure or building on a site. The SAA company further inverted two companies and asked for their participation in this project. The two companies in the name of JV companies started to operate as sub tenants. The JV companies also provided subtenant to the final tenants on the land (2004 Head Lease). However, soon a dispute struck the whole project and in a Consent order from the court, it was decided that either the respondents of the SAA company had to be turned out from the JV companies. A bidding programme was decided to be arranged. The part losing the bid would leave their shares and vacate their positions as directors of the JV companies. The whole responsibility of bidding valuation of shares and renewal of the lease from 2004 to 2007 was given to KPMG entities . However, there has been a delay in issuing of the valuation reports. In the meantime, SAA renewed their 2004 ‘Head lease’ from 2004 to 2007 with the help of SLA without the consent and knowledge of either the respondents of the KPMG entity. They further took a step of denying sub tenancy rights to the JV company. The respondent filed case against A company for breach of the Consent Order. In this case, the court of Appeal declared it to be under damage caused to the plaintiff. The defendant had to pay some compensation and the valuation of the amount was sought for from the Wrotham Park case. However, before awarding some compensation, the court reached up to some decisions where more clause shave to checked in such kind of cases. The court laid down the clause that if orthodox compensation measures are not available, then it has to be seen whether the plaintiff has suffered any loss in financial terms due to contractual breach. If the loss is financial but cannot be measured by orthodox means, then compensation shall be provided on basis of Wrotham Park case (that is considering the payment of a negotiable hypothetical fee as form of compensation). The court also said that there should be evidences of a negative covenant. Further, the court said that such kind of clauses shall apply only when the covenant can be released on bargaining of the parties. It was later seen that the first and the third clause did not apply properly primarily because they could not determine loss in any financial terms for the respondents (SGCA 44, paras 168–177, 179–209; 215; 217–237; 244–247; 290–295; 297–301) . Thus compensation was not provided on terms of Wrotham Park case. Thus, this case can also be said to be a further development and elaboration of the Wrotham Park case.
The role of different cases on Wrotham Park Estate Co Ltd v Parkside Homes Ltd case
The case, Million-add development Ltd. v. Nok wah logistic has similarities with that of the case of Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua. Both these cases had some context in common related to sub-letting ad sub-tenancy. In this present case, the application was made under Hong Kong Civil Procedure 2016, Vol 1, para 14/4/1 to 14/4/16 . On 23 November, 2010, the plaintiff had let out the place (warehouse) a second part and the agreement was to extend up to November 2016. During mid of 2013, the tenant let out the property to a third part known as Manfred Ltd. (subletting). Terms of subletting was strictly prohibited in the agreement signed between the plaintiff and the defendant as per the claims of the defendant. However, the defendant claimed that it was a license agreement. The defendant said that there had been no breach of the agreement between them. The plaintiff filed a case against the defendant where, plaintiff needed to show solid evidence of the breach (para 14/4/2). Further, it was also seen that the defendant concern was paying all the expenses related to maintenance and other things and made the place suitable for use of Manfred Ltd. The defendant took subletting rent from Manfred and with that money, did all the maintenance and installation of different things. Thus, the using rights were constricted to only Manfred and defendant did not have rights to use the properties. This raised another issue for their show cause. They further had concealed the subletting of suit property to Manfred . A case was filed and on basis of the previous cases, the court to0ok a historic decision in this case. The developments of the case of Wrotham Park Estate Co Ltd v Parkside Homes Ltd. had its effects on decision and legitimacy of letting out of land rights and other things. The decisions in the current case was based upon the terms of the Wrotham Park Estate Co Ltd v Parkside Homes Ltd. case. The determination of compensation in terms of negotiable hypothetical fee was also applied in this case. In this case also, the financial loss could be found but the sum could not be determined in exact figures. Thus, the costs of the events were decided upon to be acting as part of the hypothetical fee. The defendant needed to pay the whole sum to the plaintiff as form of the damage caused by it to the rights of owning and letting out the property.
It can be finally concluded that the Wrotham Park Estate Co Ltd v Parkside Homes Ltd. case has led various impacts on different cases that have come up in the decades that have come up. The case has laid down historic decisions related to determination of what compensation have to paid in cases where the correct amount of loss cannot be determined. The other cases in this study have been linked to this case and it has been showed that how the Wrotham Park Estate Co Ltd v Parkside Homes Ltd. case has inspired the judges and guided them to take the right kind of decisions. The further development and additions on the case have also been shown in this study.
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