Pell Frischmann Engineering Ltd v Bow Valley Iran Ltd and Others: PC 26 Nov 2009

(From the Court of Appeal of Jersey) Lord Walker reviewed the principles in awarding damages under Lord Cairns Act, setting out five general principles established by the authorities. They included: ‘1. Damages (often termed ‘user damage’) are readily awarded at common law for the invasion of rights to tangible moveable or immoveable property (by detinue, conversion or trespass).
2 . .
3. Damages under Lord Cairns’s Act are intended to provide compensation for the court’s decision not to grant equitable relief in the form of an order for specific performance or an injunction in cases where the court has jurisdiction to entertain an application for such relief. Most of the recent cases are concerned with the invasion of property rights such as excessive user of a right of way. The breach of a restrictive covenant is also generally regarded as the invasion of a property right . . since a restrictive covenant is akin to a negative easement . . the decision of the House of Lords in Blake decisively covers what their Lordships have referred to as a non-proprietary breach of contract.
4. Damages under this head (termed ‘negotiating damages’ by Neuberger LJ in Lunn Poly) represent ‘such a sum of money as might reasonably have been demanded by [the claimant] from [the defendant] as a quid pro quo for [permitting the continuation of the breach of covenant or other invasion of right].
5. Although damages under Lord Cairns’s Act are awarded in lieu of an injunction it is not necessary that an injunction should actually have been claimed in the proceedings, or that there should have been any prospect, on the facts, of it being granted.’
Lord Walker added: ‘ Several of the recent cases have explored the nature of the hypothetical negotiation called for in the assessment of Wrotham Park damages. It is a negotiation between a willing buyer (the contract-breaker) and a willing seller (the party claiming damages) in which the subject-matter of the negotiation is the release of the relevant contractual obligation. Both parties are to be assumed to act reasonably. The fact that one or both parties would in practice have refused to make a deal is therefore to be ignored.’
Lord Phillips, Lord Rodger, Lord Walker, Lord Mance, Lord Clarke
[2009] UKPC 45, [2010] Bus LR 73, [2011] 1 WLR 2370, [2011] Bus LR D1
Bailii
England and Wales
Cited by:
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CitedMorris-Garner and Another v One Step (Support) Ltd SC 18-Apr-2018
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These lists may be incomplete.
Updated: 02 April 2021; Ref: scu.381559