County Council Of Surrey & Anor v Bredero Homes Ltd

The common law measure of damages for breach of contract is compensatory and aims to put the claimant in the position he would have been in had the contract been performed.

Absent loss, common law damages are normally nominal only; the court will not award restitutionary damages to strip a defendant of gain unless a clear legal basis permits such relief.

Equitable damages awarded under Lord Cairns' Act (as in Wrotham Park) do not establish a general common-law rule permitting awards of the defendant's profit where the claimant suffered no loss.

The appellants were two local authorities who transferred adjoining parcels of land subject to covenants requiring development in accordance with an initial planning permission.

The purchaser completed development under a later planning permission producing five additional houses on a 3.64 acre part of the site.

The councils sued for damages for breach of the positive covenants. They alleged that, although they suffered no actual loss, they were entitled to a share of the defendant's profit or a notional licence premium.

The Chancery Division (Ferris J) awarded nominal damages. The councils appealed to the Court of Appeal. The central issue was whether, at common law, a claimant with no compensable loss may recover damages measured by the defendant's gain.

1. Disposition: The Court of Appeal (Dillon LJ, Steyn LJ, Rose LJ) dismissed the appeal and ordered costs to the respondent.
2. Core rule: The compensatory principle governs common-law contract damages. Damages are assessed to compensate the claimant's loss and to place him, so far as money can, in the position had the contract been performed. Absent loss, damages are normally nominal. (See authority and exposition in the judgment).
3. Wrotham Park and restitutionary awards: The court treated Wrotham Park as a decision operating within an equitable Lord Cairns' Act context or as deploying a restitutionary rationale. It does not establish a general rule at common law that permits award of the defendant's gain where the claimant has no loss. Dillon LJ considered that Wrotham Park stands or falls by its Lord Cairns' Act footing; Steyn LJ accepted Wrotham Park as defensible but distinguished it on principle and fact from the present case.
4. Policy and limits: The court rejected a wide extension of restitutionary damages for breach of contract. Such an extension would introduce uncertainty into commercial relations, risk unfair windfalls, and lack doctrinal justification when compensatory principles produce nominal damages.
5. Application to facts: The councils suffered no compensable financial loss. The factual background did not involve a proprietary invasion analogous to Wrotham Park. The councils never sought an injunction in point of fact and did not consistently oppose the development. On these bases common-law damages must be nominal.
6. Practical consequence: The appeal was dismissed. Leave to appeal to the House of Lords was refused by the court.

• High Court (Chancery Division): Ferris J decided issues and awarded nominal damages (reported in the appeal record).
• Court of Appeal (Civil Division): Appeal heard before Dillon LJ, Steyn LJ and Rose LJ; appeal dismissed and costs awarded to respondent.