On appeal from: [2016] EWCA CIV 180

This appeal considered the circumstances in which it is permissible to award damages measured as a percentage of the defendant’s profits resulting from the breach where a defendant is found to have breached a restrictive covenant.

The Supreme Court allowed the appeal on the basis that the courts below erred in their approach to the assessment of damages, remitting the case to the High Court for a hearing on quantum to measure the claimant’s actual financial loss.

Considering the case law, the Court concluded that negotiating damages can be awarded for breach of contract where the loss suffered by the claimant is appropriately measured by reference to the economic value of the right which has been breached, considered as an asset. As the claimant has in substance been deprived of a valuable asset, his loss can therefore be measured by determining the economic value of the right in question. Applying these conclusions to the present case, the Supreme Court held that both the trial judge and the Court of Appeal had adopted a mistaken approach. The substance of the claimant’s case was that it suffered financial loss in the form of lost profits and goodwill, and though  difficult to quantify, this is a familiar type of loss, which can be quantified in a conventional manner.

For judgment, please download: [2018] UKSC 20
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (11 Oct 2017 morning session) (11 Oct 2017 afternoon session) (12 Oct 2017 morning session)