The answer is that there are two types of damages that might be awarded. The first is for breach of covenant in common law, and these damages will be compensatory (ie the diminution in the value of the land by reason of the breach). However, the second and more significant basis of damages will be those for breach of covenant in equity - where damages are awarded in lieu of an injunction. In that situation, the court can take into account what the parties would have negotiated for the release of the covenant and the starting point for such damages will often be one-third of the profits derived from the breach (in practice, this may be a claim for one-third of the profit made on the development). This one-third rule derives from Stokes [1951], but in Amec [2001], the court said 'the deal has to feel right'. That case involved a trespass of about 11% of the area of a hotel in Manchester; the cost of the site was £2,650m, and the claimant sought £2,300m damages (with the defendant arguing for £281,000). The court awarded damages of £375,000, based on the profit that would be generated by the rooms that projected over the building line protected by the restrictive covenant. © Practical Lawyer