Significance: Singapore Court of Appeal clarifies the applicability and basis of Wrotham Park damages.
The Court of Appeal confirmed that Wrotham Park damages (based on the decision in Wrotham Park Estate Co Ltd v Parkside Homes Ltd and Others  1 WLR 798) are a recognised head of damages under Singapore contract law.
Wrotham Park damages is meant to protect the claimant’s performance interest, i.e., the primary right to the other party’s performance of its obligations.
Wrotham Park damages is compensatory in nature. It is meant to compensate the claimant for his loss of the other party’s performance of obligations. However, Wrotham Park damages may be described in restitutionary terms, that is with reference to some or all of the other party’s gain. The reference to the other party’s gain is only to quantify the damages. Restitution is not the basis of the award.
Wrotham Park damages fulfil their compensatory purpose only in a specific and limited category of cases: where there is a remedial lacuna arising from the unavailability of orthodox compensatory damages (measured by reference to the plaintiff’s expectation or reliance loss) or specific relief, but where there is still a need to provide the plaintiff with a remedy to protect his performance interest, and where the lacuna can be rationally and sensibly filled by reference to the hypothetical bargain measure.
There are 3 legal requirements for a court to award Wrotham Park damages.
First, the court must be satisfied that orthodox compensatory remedies are unavailable. So the plaintiff would otherwise be entitled to no, or only nominal, damages. This is usually when the plaintiff has not suffered any financial loss at all arising from the defendant’s breach, and specific relief is not available because the court cannot or will not grant such relief. Or the plaintiff has suffered some financial loss, but it is practically impossible to assess compensatory damages based on orthodox measures.
Second, generally there has been a breach of a negative covenant. The obligation breached must be a negative covenant in substance, and not merely a positive obligation labelled as a negative covenant in form.
Third, the case must not be one where it would be irrational or totally unrealistic to expect the parties to bargain for the release of the relevant covenant, even on a hypothetical basis. A clear situation where the hypothetical measure would not apply is where the agreement to release the covenant would be legally impermissible.
Wrotham Park damages are to be measured by such a sum of money as might reasonably have been demanded by the plaintiff from the defendant as a quid pro quo for releasing the negative covenant between them. This is an objective assessment as at the date of the breach and by reference to a hypothetical bargain, rather than the actual conduct and position of the parties. The actual (or subjective) loss suffered by the plaintiff or gain made by the defendant are irrelevant.