Wrotham Park Damages: The Turn of the Singapore Court of Appeal

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Following hard on the heels of the UK Supreme Court’s decision in Morris-Garner and Anor v One Step (Support) Ltd [2018] UKSC 20, [2018] 2 WLR 1353, the Singapore Court of Appeal has now issued a judgment which contains an equally comprehensive analysis of Wrotham Park damages.

Turf Club Auto Emporium Pte Ltd & Ors v Yeo Boong Hua & Ors [2018] SGCA 44 concerned the appropriate remedy for breach of a contract arising from settlement of a dispute between joint venturers.

The parties were in a joint venture to develop land.  They each held shares in certain JV Companies. The land in question was leased by one of the parties (SAA) who in turn granted sub-tenancies to the JV Companies. A dispute developed but this was ultimately settled and the terms of the settlement were set out in a Consent Order.

The Consent Order required valuations to be conducted and for each party to bid for remaining shares in the JV Companies.  The valuation process was delayed and in the meantime SAA renewed the head lease but did not grant sub-tenancies to the JV Companies. The Court found that SAA had breached the terms of the Consent Order, and then turned to consider the question of damages.

After an extensive review of the authorities, the Court held that Wrotham Park damages should, as a matter of principle, be recognised as a head of contractual damages under Singapore law. The Court also concluded that Wrotham Park damages are compensatory, rather than restitutionary, in nature.  However, they play a limited role and apply only in a specific type of case. Wrotham Park damages can be awarded when three requirements are satisfied:

  • First, as a threshold requirement, the court must be satisfied that orthodox compensatory damages (measured by reference to the plaintiff’s expectation or reliance loss) and specific relief are unavailable.

  • Second, it must, as a general rule, be established that there has been (in substance, and not merely in form) a breach of a negative covenant.

  • 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. In other words, it must be possible for the court to construct a hypothetical bargain between the parties in a rational and sensible manner.

Wrotham Park damages are to be measured by such a sum of money as might reasonably have been demanded as a quid pro quo for relaxing the negative covenant. The assessment is objective and by reference to a hypothetical bargain rather than the actual conduct and position of the parties. It is assessed by reference to the information available at the time, and the commercial context. The relevant date is the date of breach: post-breach events are generally irrelevant.  Tentatively, in the Court’s view, causation and remoteness of damage are not relevant. Given the hypothetical nature of the assessment, a “rough and ready” approach as opposed to a precise one is acceptable.  

The UK Supreme Court decision in Morris-Garner was handed down after the hearing in Turf Club but before the Singapore Court had handed down its own judgment. The Singapore Court saw many similarities between its own decision and that in Morris-Garner.  However, to the extent that Morris-Garner must be read as limiting the availability of Wrotham Park damages (termed by the UK court, “negotiating damages”) to cases involving the infringement of property rights or analogous interests, the Singapore Court did not agree. It considered that such a limitation would unduly narrow the scope of the Wrotham Park doctrine, and should be rejected as a matter of principle. But it left open the possibility of further argument.

Plainly, cases which meet the criteria for an award of damages of this kind are rare – and we in New Zealand may need to wait for some time before such a case comes in front of the courts. But the fact that Wrotham Park damages have now been recognised by two overseas appellate courts suggests that our courts may do so as well. In appropriate cases, this is a potentially powerful avenue for plaintiffs to claim relief.