Resumen de One Step Forwards: The Availability of Wrotham Park Damages for Breach of Contract One Step v Morris-Garner
In Wrotham Park Estate Co Ltd v Parkside Homes Ltd , 1 the defendant built houses in breach of a restrictive covenant with the claimant, and was ultimately ordered to pay 5 per cent of its anticipated profits to the claimant. Was that award compensatory, restitutionary or neither? 2 The answer to this question is unclear, which makes it difficult to answer two key questions of fundamental practical importance. First, when can Wrotham Park damages be awarded? Second, how should such damages be quantified? In One Step (Support) Ltd v Morris-Garner , 3 the Court of Appeal was forced to confront the first question in the context of breach of contract, and held that Wrotham Park damages are awarded not only in exceptional cases, but wherever required by the justice of the case. This has the potential to make this measure of damages available more widely, and affords a large degree of discretion to a trial judge to determine whether such an award should be made. The Supreme Court has given permission to appeal, and it is to be hoped that clearer guidance will be given to future courts and litigants. Karen Morris-Garner set up and ran her own business, One Step At A Time, which provided support for young people leaving care. Her partner, Andrea Morris-Garner, later joined the business as its Operations and Area Manager. In 2002, the business was sold to One Step Support Ltd (“One Step”), which was owned 50 per cent by Karen Morris-Garner and 50 per cent by Charmaine Costelloe. The working relationship between the parties soon broke down, and in 2006 the Morris-Garners incorporated Positive Living Ltd, without anyone else at One Step being aware of this. Later that year, Mrs Costelloe purchased Karen Morris-Garner’s shares in One Step for £3.15million. As part of the sale agreement, the Morris-Garners agreed, for a period of 36 months, not to engage in any business activity which would be in material competition with One Step, or to approach any clients of One Step. Karen Morris-Garner was also subject to provisions regarding the use of confidential information. However, in 2007 Positive Living began to offer similar services to One Step. Positive Living was very successful, and in 2010 the Morris-Garners sold their shares in the company for nearly £13 million. One Step, on the other hand, had experienced a significant downturn, and ultimately issued proceedings against the Morris-Garners. Both Phillips J at first instance 4 and the Court of Appeal held that the restrictive covenants were not an unreasonable restraint of trade, and that Positive Living was in material competition with One Step. Moreover, the Morris-Garners were found to have breached the non-solicitation covenants, and Karen Morris-Garner to have breached her obligations of confidence.
