Facts
- Wrotham Park Estate sold land to a developer with a restrictive covenant requiring estate consent for any building, registered as a Class D charge under the Land Charges Act 1925.
- The land changed hands multiple times and was acquired by Parkside Homes in 1971.
- Parkside Homes constructed buildings on the land after obtaining planning permission but without the required consent from Wrotham Park Estate.
- Wrotham Park Estate sought an injunction to halt the development and to demolish existing structures, arguing breach of the restrictive covenant.
- The court needed to decide if the covenant was enforceable against Parkside Homes and what remedy, if any, was proper.
Issues
- Whether the restrictive covenant was enforceable against the subsequent purchaser, Parkside Homes.
- What remedy, if any, should be awarded for breach of the covenant where the claimant suffered no direct financial loss.
- Whether the court should grant an injunction or award damages, and on what basis those damages should be calculated.
Decision
- The court held that the restrictive covenant was enforceable against Parkside Homes because it was properly registered.
- An injunction to require demolition of the buildings was refused, as demolition would constitute waste and there was no tangible damage to Wrotham Park Estate’s land.
- Damages were awarded based on the sum that could reasonably have been demanded for releasing the covenant, not on direct financial loss.
- This assessment established the approach of awarding negotiating damages where actual loss is difficult to quantify but a right has been violated.
Legal Principles
- Negotiating damages (Wrotham Park damages) are available where a breached right constitutes an asset and direct loss is not readily quantifiable.
- The basis for such damages is the notional amount the claimant could have reasonably demanded to release or waive the right infringed.
- The principle aims to prevent unjust enrichment by requiring the party benefiting from the breach to pay for the value of the right taken.
- Registration of restrictive covenants is essential to ensure enforceability against successors in title.
- These damages are compensatory—not restitutionary—and are based on a hypothetical negotiation rather than actual loss or gains made by the defendant.
Conclusion
Wrotham Park Estate Co Ltd v Parkside Homes Ltd established the principle of negotiating damages, enabling claimants to recover a reasonable sum for the breach of valuable rights even in the absence of provable financial loss, thereby ensuring fairness and preventing unjust enrichment.