Added: Quinette Karns - Date: 31.10.2021 20:07 - Views: 24727 - Clicks: 6442
An injunction is a form of relief that is highly typical in employment disputes in situations where, for example, a team of employees from X have improperly moved to Y in breach of enforceable post termination restrictive covenants. However such relief requires a degree of proactivity, knowledge and, in some instances, luck in order to obtain the assistance of the courts as to what those hypothetical employees can achieve at Y in the future.
So, what of the situation whereby our hypothetical client, X, is not concerned with forward looking loss and damage for whatever reason but instead is vexed by the past breaches that it can establish but where X likely cannot establish to the required standard of proof that it has caused X to sustain identifiable losses? Damages for breach of contract would be the ordinary relief granted by the courts against the group of aforementioned employees for proved breaches and whilst nominal damages and a position of possible strength in an argument over costs might be achievable even if no causal link is established; no sensible client is ever likely to incur five or six figures in legal fees if that is to be their only financial receipt at the end of it.
It is against that background that the Prayer of many a statement of case includes, without much in the way of particulars before it, a claim for Wrotham Park Damages. What I hope to achieve in this talk is to explain the proper basis for such a claim and how it might be most appropriately used in light of recent case law.
But beforehand; the all important background. We as lawyers are often accused of becoming terribly excited about minutiae and the pronunciation of Wrotham Park is absolutely no exception. So, important background matters which ensure your apparent standing and confidence on the topic in court now dealt with; what are Wrotham Park damages? Wrotham Park is a property law case decided in but in light of McGregor on Damages describing it as one of the three key cases of awards for guidance as to the scope and ambit contractual restitutionary damages, it is plainly relevant in an employment sense as well.
In Wrotham Park the Earl of Stafford sold part of the estate to a developer. The defendants, who were successors in title to the buyer, built houses on the purchased land in breach of this restrictive covenant. The claimants who were by that stage the owners of land retained by the seller for the benefit of which the restrictive covenant had been taken, sued for a mandatory injunction seeking demolition of the houses erected, and for damages.
Brightman J. Despite the claimant saying that no such agreement to relax the covenants would ever have been reached a recurring, but plainly surmountable, theme in this area you will all note — and indeed may have experienced in practice Brightman J. Given that this related to the construction of 14 detached houses that was a not inconsiderable sum albeit that it is important to remember that Brightman J. It seems then that two points probably arise from a consideration of this particular point:.
In the course of his speech Lord Nicholls referred to Wrotham Park with approval and said:. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. A further important case in which Wrotham Park was pertinently considered was that of Experience Hendrix LLC v PPX Enterprises Inc  EWCA Civ and in that case it was recognised that this entire area was a new doctrine of law that was still in development and, in some instances, inordinate uncertainty.
Indeed as Mance L. In Experience Hendrix the company which owned the rights to the recordings of Jimmy Hendrix reached an agreement, by way of settlement of a dispute, with PPX, a e, by which PPX agreed that it would not exploit certain master recordings of another musician where Hendrix, not yet a star, had then only been a sideman. In fact PPX, in breach of that agreement, then did so. Not only was this a case where there was no evidence as to the losses sustained by the Claimant but it was also a yet further case where it was averred by the claimant that it would not have entered into any bargain which would have relaxed the restrictions so as to permit the defendant to act in the manner that it in fact then did.
Lord Justice Gibson said that it was a case which was suitable to award damages measured by benefits gained by the wrongdoer because of the following three criteria:. Chadwick LJ rejected the contention that an award of Wrotham Park damages was a gains-based remedy and not an award of compensatory damages, holding that it was the latter. The two remedies should be seen as and I think this is a very useful phrase when challenged in pre-action correspondence about the threat that your client may seek such a remedy a flexible response to the need to compensate the claimant for the wrong that had been done to him.
It was for that reason that the remedies were considered by Chadwick LJ to be juridically highly similar. For my part I consider that the labelling exercise was clearly unhelpful and one which it would have been better to abandon at that stage. In striving to determine whether Wrotham Park damages were or were not juridically similar to an of profits the Court of Appeal found that it was a compensatory type of award but I cannot see and given that I have McGregor for support, I feel able to say so here that the relief of removing some of the benefits gained by the wrongdoer is anything other than a restitutionary approach.
Clearly this is something to be born in mind if the market has inordinately grown since the date of the breach and where the contract breakers would arguably have even secured a windfall if they had paid for a release from covenant at the proper time. Despite my observations as to the unnecessary concentration upon the classification of Wrotham Park damages in WWFthe principal reason why I consider this case to be so important is because it was here that Lord Justice Chadwick also held that the court could award damages on the Wrotham Park basis even if there was no claim for an injunction and where there could be none.
So in our case where the team of employees have left X to go Y and X belatedly instructs you to help them make an example of the team for acts which have already taken place but where no provable loss was suffered, this case is critical in that it permits such a claim for relief to be maintained where you are simply unable to plead injunctive relief in the first place. The claimant company One Step provided supported living services to vulnerable people. The first defendant was a former director and shareholder of One Step. Inthe working relationship between D1 and M broke down and in July the defendants secretly incorporated a new company.
In the Deed of Compromise, D1 gave month confidentiality, non-compete and non-solicitation covenants in favour of One Step, with D2 voluntarily entering into restrictions as well. The new company owned by D1 and D2 started marketing its new business in spring and started accepting supported living placements in August which was in competition with One Step.
In One Step brought proceedings against the defendants for alleged breaches of the restrictive covenants. Phillips J found that both defendants had breached their non-compete and non-solicitation covenants. The judge was satisfied that D1 took the information for subsequent wrongful use and that she had wrongfully used the material. However, the report did not cover ongoing loss, nor quantify loss of market share nor general reputational damage. One Step contended that damages would be very difficult to prove and would not, for that reason, be an adequate remedy.
One Step sought either an of profits or Wrotham Park damages. Phillips J did not regard the circumstances as sufficiently exceptional to warrant an of profits. However, he accepted that it would be difficult for One Step to identify its financial loss, bearing in mind the degree of secrecy in the establishment of the Newco. He therefore considered it just to give One Step the option to elect for Wrotham Park damages, not least because the covenants provided that the restraint was subject to consent, not to be unreasonably withheld.
The defendants appealed. Whether the judge was right to give One Step the option to elect as it did for Wrotham Park damages, and in particular, whether such damages could be awarded only where: a the injured party was unable to demonstrate identifiable financial loss.
He considered WWF and noted that Chadwick LJ had made reference to a need to compensate where a claimant cannot demonstrate identifiable financial loss as an underlying feature of the claim. However Christopher Clarke LJ noted that this was as a result of Chadwick LJ enquiring as to whether an of profits and Wrotham Park damages were juridicially similar. He went on to say that it was not necessary for Chadwick LJ to decide, nor should he be taken as having decided, that Wrotham Park damages should only be available where it was impossible for the claimant to identify any financial loss.
The questions are:.
There is a succinct and instructive summary of the approach to damages contained within Devenish Nutrition Ltd v Sanofi-Aventis SA  EWHC Ch which is encapsulated in One Step and which I commend to anyone in order to properly understand how courts are expected to approach an assessment of damages.
It was contended on behalf of the appellants that to permit an award of Wrotham Park damages would make them the norm rather than the exception because all defendants would they pray that damages which are difficult to assess should give rise to an award of Wrotham Park damages.
They submitted in short therefore that the broad-axe tool would do. One of the further grounds of objection to such relief by the appellants was that Wrotham Park damages may over-compensate. However whilst agreeing that this may well be correct in that the contract breaker may end up paying more than the true financial loss to the innocent party Christopher Clarke LJ was unpersuaded that this was a basis upon which such relief should be refused, instead deciding that the courts are well placed to achieved as just a result as might be required in any particular instance.
And Christopher Clarke LJ said:. When writing this essay I could find no reference to the pursuit of the appeal in this matter, permission for which was, perhaps unsurprisingly, granted on 2 nd August However I have spoken with the solicitor representing one of the parties who has confirmed that this is now listed in the Supreme Court for 11 th and 12 th October and that a resolution before that hearing is probably unlikely. In any event I am sure that we would all agree that an increase in the certainty of application of the doctrine would be of benefit for all concerned since One Step has done little to reduce it.
The last point that is worth mentioning here is the effect of this expansion on applications for interim injunctions. What of the position whereby an application for interim relief is predicated upon a seemingly common plea that the measure of loss would be impossible, or at least very difficult, to calculate?
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