CHAPTER 2—Awards measured by Benefit to Defendant

• Equitable remedy and common law remedy permit P to recover on basis of gain accruing to D
rather than actual damage sustained

*Harry Street, Principles of the Law of Damages

Grounds for seeking • Making a purely equitable demand, such as rescission for fraud, setting
equitable relief up constructive trust
• Already be in equity as he seeks equitable relief such as injunction, and
equity will administer complete relief
• Legal remedies inadequate (accounts so complicated that a bill of
discovery would have been granted under old rules)
• Proceedings may be of a character entrusted to Chancery jurisdiction in
order to strike balance between parties (guardians, receivers, joint
tenants and partnership)
Procedure • Action must be brought within one of these four heads because he can
justify a claim for account
o Not enough for him to prove a tort
• Quasi-contract—when the remedy is ordered, P not limited to his own
loss but his damages are measured instead by profit which the
wrongdoer has made
• Two different heads of damages (provided always that they do not
overlap) are recoverable in one proceeding
Precedent • 1843 Wigram VC: “the court takes from the wrongdoer all his profits
and gives them to the person who is wronged, though the court in doing
so may give a party more than he is entitled to, for non constat that a
single copy more would have been sold by the P if the injury had not
been committed”
o In infringement of trademarks/injurious falsehood, P will
sometimes be able to claim an account. He will ordinary get into
equity by seeking an injunction
o In D passes off P’s product as his own, whether or not his
conduct was innocent, P can claim account of D’s profits
• Phillips v Edwards v Lee’s Administrator (1936): D conducted
sightseeing tours of P’s cave upon payment, trespassing P’s land. P
granted injunction and account of profits. Given one-third of profits
based on relative area of his part of the cave and attractions therein
• Can account and damages both be claimed in trade torts? Neilson v Betts
(1871): claim was for infringement of patent. Lord Westbury said “if
you take an account of profits you condone the infringement”, told P that
he must make his election of damages or account of profits (no longer
applicable)
o Act of 1858 did not authorize court of Chancery to award at one
and the same time damages for industrial torts in addition to
existing power to award account for profits
§ Repealed in s24 of Judicature Act of 1873
§ No force of binding precedent
o Caxton Publishing Co v Sutherland Publishing Co 1939: also
possible for P to lose remedy in conversion by electing to sue for
money had and received and so waiting the tort
§ United Australia Ltd v Barclays Bank held this was
wrongly decided, there are merely different remedies for
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the same wrong

§ No binding authority for not being able to seek both,
reasons denying it is fallacious
o Circumstances in economic torts where P suffers damage other
than loss of profits on sales: loss of goodwill, business rep. In
US P can recover these damages in addition to account of
profits, English is the same United Australia Ltd V Barclays
Bank Ltd
Copyright Act, RSC • 35(1) Where a person infringes copyright, the person is liable to pay
1985, c C-42: such damages to the owner of the copyright as the owner has suffered
due to the infringement and, in addition to those damages, such part of
the profits that the infringer has made from the infringement and that
were not taken into account in calculating the damages as the court
considers just.
• (2) In proving profits,
o (a) the plaintiff shall be required to prove only receipts or
revenues derived from the infringement; and
o (b) the defendant shall be required to prove every element of
cost that the defendant claims.

Discussing the nature of waiver of tort

*United Australia Ltd v Barclays Bank Ltd (1941) (HL) ENG

Facts • Person whose goods (cheque) were wrongfully converted by
another
• Lower courts: whether proceedings that had been commenced
against MFG Trust constituted defence for Barclays Bank and
relieved it of liability, held in favour of Barclays because United
Australia by framing cause of action as one sounding as loan,
amounted to ratification of actions by Emons (secretary) and
constituted waiver of tort of conversion and negligence actions
• United Australia Ltd appealed to HL
Issue at trial • Did P waive conversion by MFG Trust by suing them and proving
in their liquidation for money lent or money had and received?
• If they did waive conversion by MFG was that a waiver by them of
the conversion by D bank?
Finding • Ps were at no stage in proceedings against MFG called to make an
election
o Even if tort was waived, and P had election against MFG,
fails to see why there should have any effect on claims
against the bank
• Defence of bank fails on all grounds, no kind of injustice in present
result which enables P to recover sum of money which, but for want
of ordinary care on part of bank, they would never have lost
• Appeal allowed, judgment entered for P with costs
Ratio • In the ordinary case the P has never slightest intention of waiving,
excusing or in any kind of way palliating the tort. When you find
thief stolen securities and is in possession of proceeds, sueing for
them I am not excusing him for I am protesting violently that he is a
thief and because of his theft I am suing
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• Distinction between choosing one of two alternative remedies, and

choosing one of two inconsistent rights
o There is no compulsion now to choose between alternative
remedies
§ No question of election arises until one or other
claim has been brought to judgment. Up to that
stage P may pursue both remedies together, or
pursuing one may amend and pursue the other, but
he can take judgment only for the one, and his
cause of action on both will then be merged into
one
o On the other hand if a man is entitled to one of two
inconsistent rights it is fitting that when with full
knowledge he has done an unequivocal act showing he has
chosen the one he cannot afterwards pursue the other, after
first choice is by reason of the inconsistency no longer his
to choose
§ Scarf v Jardine (1882) where a man has an option
to choose one or other of two inconsistent things
when once he has made his election it cannot be
retracted

Phillips v Homfray (1883) (CA)

Facts • P sought declaration that D liable for minerals extracted from under
P’s farm, account of minerals transported from D’s own mines
through roads and passages under P’s farm
• Sought order that D be required to pay for minerals illegally
extracted from P’s farm, way leave (right of use) rent or
compensation, compensation done to surface of P’s farm
Issue at trial • What is true limit and meaning of rule that a personal action dies
upon D’s death, whether there is a circumstance raised by case a
profit receive by his assets which P can follow
Finding • Damages weren’t for injury to P but for return of goods, and
because D’s estate benefited from extraction of coal, estate itself
became beneficiary and liable for return of profits
Ratio • Hambly v Trott (1776): so far as the act of the offender had been
beneficial to himself, his assets ought to be answerable
• The deceased, by carrying coal in secret over P’s road took nothing
from P, assets of D have no been necessarily swollen by what he
has done, didn’t bring any additional property or value belonging to
another person
• Remedy for wrongful act can be pursued against estate of deceased
person by whom the act has been committed when property or
proceeds belonging to another have been appropriated by deceased
person (when proceeds arising out of wrongful act does not die with
a person)
o But limited to cases where property have been appropriated
by dead, does not apply to case where dead person derived
any other benefit from his wrongdoing than property or
proceeds of property (doesn’t apply where benefit derived
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not in form of actual acquisition of property but a saving of

expenditure like in this case where he saved from using
secret passageway)
• Only where P has been deprived of some property that can be
followed into D’s hands that waiver of tort will lie

Whitwham v Westminster Brymbo Coal and Coke Company (1896) (CA)

Facts • Trespass to land by tipping colliery waste into P’s land
• Trial judge held damages measured not merely by diminution in
value to P’s land, but value derived from wrongdoer from tort
Ratio • Common law damages for the misuse of property involved an
award of a sum equivalent to the price or hire that a reasonable
person would pay for such use, even if the owner would not himself
actually have been using the property
• Lindley LJ: if one man runs tracks on rails over another man’s land
it does not do any harm whatever, and there is no pecuniary
damage, but that the law was now settled
o If one person has without leave of another been using that
other’s land for his own purposes, he ought to pay for such
use
Finding • Appeal dismissed with costs
• Jegon v Vivian (1871): unauthorized mining of land—measure of
damages
o Although the value of his land may not have been
diminished by the trespass, P recovered damages equivalent
to what he would have received if he had paid for a
wayleave
o Approved in Livingstone v Rawyards Coal Co (1880)

Wrotham Park Estate Co Ltd v Parkside Homes Ltd (1974) (CH)

Facts • D built on land (14 owners) in breach of restrictive covenant that
was imposed for the benefit of an estate
• Brightman J refused mandatory injunction that would have required
the house to be demolished
• Restrictive covenant not to develop other than in accordance with
agreed lay-out plan was valid, remained capable of being a benefit
to dominant estate, but court refused injunctions against developers
for breach of injunction and against house-purchasers because it
would be an unpardonable waste of much needed houses to pull
them down
Finding • Court awarded damages as substitute for injunction
• Damages measured as amount that might reasonably have been
demanded by P as payment for relaxing the covenant (5% of
developer’s anticipated profit)
• No damage done to P by breach of lay-out stipulation
o Absence of financially measurable loss from breach of
contract was not necessarily fatal to claimant’s claim for
compensation
Ratio • It would be unjust that D should be left in undisturbed possession of
fruits of their wrongdoing merely because the court considered it
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wasteful to issue an injunction ordering demolition

Measuring damages • Brightman J: in the present case I am faced with problem what
damages ought to be awarded to P in place of mandatory
injunctions which would have restored P’s rights. If the P is merely
given nominal sum in substitution for injunctions, justice will not
have been done
• General rule is to measure damages by reference to that sum which
would place P in the same position as if the covenant had not been
broken
o A just substitute for a mandatory injunction would such a
sum of money as might reasonably have been demanded by
P from Parkside as a quid pro quo for relaxing the covenant
Precedent • Whitwham v Westminster Brymbo Coal: value of P’s land to D in
1888 for tipping purposes for 6 years, proper scale of damages is
higher sum
• Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914):
patentee elected to sue infringer for damages rather than account for
profits, correct and full measure is reached by adding that patentee
is entitled on principle of price or hire, to royalty for unauthorized
sale or use of every one of infringing machines that infringer
reached
• Strand Electric and Engingeering Co Ltd v Brisford Entertainments
Ltd (1952): CA held that P was entitled to recover damages the full
market rate of hire for the whole period of detention (for portable
switchboards)

Surrey County Council v Bredero Homes Ltd (1993) (CA)

Facts • D built 77 houses in housing development in breach of restrictive
covenant instead of 72 permitted
• Breach caused no diminution in value of P’s property
Finding • P entitled to nominal damages only
• Wrotham was based on restitutionary principle and this cannot
extend to this case because this was a case characterized as a case of
breach of contract
o Further considered that Wrotham is compensatory not
restitutionary

Attorney General v Blake (2000) (HL)

Facts • Blake escaped prison and wrote a book about his secret services
work, received publishing contract and payments, Crown brought
action for profits he made on book including those he had not yet
received
• Claimant entitled to claim compensatory damages but suffered little
loss, looked for restitution for wrong of breach of contract
Finding • Court brought restitution and D to pay profits to P, but normal legal
response to a breach of contract is to award compensation
o However, no reason in principle why court must in all
circumstances rule out an account of profits as a remedy for
breach of contract
o When exceptionally, a just response to a breach of contract
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so requires, the court should be able to grant the

discretionary remedy of requiring D to account for P for
benefits he has received from his breach of contract
Ratio • If normal remedy is inadequate and the circumstances of case are
exceptional, then court can order D to account for all profits
• Exceptional case because it is in the public interest to protect secrets
of the secret service
• Lord Nicholls: restitution for breach of contract must be accepted in
some situations. These situations may never be as exceptional as
that which we are passing judgment on today but notwithstanding
this is there is no other conclusion the court can make
• British Motor Trade Association v Gilbert (1951): P suffered no
financial loss but award of damages for breach of contract
effectively stripped wrongdoer of profit he had made from his
wrongful venture in the black market for new cars

Strand Electric Engineering Co Ltd v Brisford Entertainments Ltd (1952) (CA)

Facts • D refused to retail equipment of switchboards for 43 weeks
• P issued writ claiming return of their equipment or its value and
damages for period of detention
Ratio • P to get full hiring charge for full period of 43 weeks, no deductions
from judge, appeal allowed
• Court assessed amount of damages for wrongful refusal to deliver
up portable switchboards which the owner would not have used
anyway
• Measure was sum equivalent to the price or hire that a reasonable
person would pay for such use
Finding • General rule for breach of contract or for tort, P recovers loss for
what he has suffered, no more and no less
o If damage claimed is too remote in law then P recovers less
than real loss Liesbosch Dredger v Edison S S (1933)
o P may also get more than real loss, if damage suffered by P
is recouped with which D not concerned, P gets full
damages without deduction Slater v Hoyle & Smith Ld
(1920)
o Also in cases where D obtained benefit from wrongdoing
he is made liable to account for it even if P has lost nothing
Reading v Attorney-General (1951)
• Wrongdoer who uses land for his own purposes without owner’s
consent also must pay reasonable hire for it Whitwham v
Westminster Brymbo Coal Company (1896) and the principle
should apply to detention of goods
• It may be that he couldn’t have rented them out and he suffered no
loss, but owner entitled to reasonable hire because if D had asked
the owner for permission the price would have been the same

Peter Pan Manufacturing Corporation v Corsets Silhouette Ltd (1964) (CH)

Facts • P and D enter into agreement for licensing agreement, D
manufactured sold and distributed U25 and U15 designs
Ratio • D was successful at trial and elected to take an account of profits
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Finding • Lever v Goodwin (1887): D’s soap resembled P’s and calculated to
deceive purchasers. Injunction was granted and account directed of
profits made by D in selling soap they weren’t entitled to selling,
account not limited to those who knew they were buying D’s soap
• Cotton LJ: well now that in trademark cases and patent cases that if
P succeeds in getting injunction, he can either claim the damage
sustained or the profit which D has made from wrongful act (profit
which they have made by sale of soap)

Seager v Copydex Ltd (No 2) (1969) (CA)

Facts • P invented patented carpet grip which he manufactured and

marketed under trademark Klent, information given in confidence
to D and they made own carpet grip under Invisigrip
• P alleging D acted in breach of confidence, P sought injunction to
restrain D from making use of info and inquiry as to damages or
account of profits for breach of confidence
• No 1 found in favour of P
Ratio • Damages to be assessed on a restitutionary basis, confidential info
belongs to D company now
Finding • Court cannot give royalty by way of damages but can give
equivalent by calculation based on capitalization of a royalty and
arrive at a lump sum
• Once lump sum is assessed and paid then confidential info would
belong to D company in the same way as if they had bought and
paid for it by an agreement of sale

Townsview Properties Ltd v Sun Construction & Equipment Co Ltd (1973) (HC)
Facts • P claiming trespass and damages to their property including
exemplary and punitive damages
• Townsview excavated upon P’s property of 20 ft and depth of 20 ft
for foundation walls
Ratio • D gained substantial saving in construction, general damages for P
of 5.5k and 479 for special damages, P receives costs
Finding • D’s action is inexcusable and unwarranted trespass upon P’s
property without justification
• Case for inclusion of punitive and exemplary damages in award
• Award of exemplary damages upheld in CA as justified on basis of
arrogant conduct on part of D

Broome v Cassell & Co Ltd (1972) (HL)

Facts • P sued D for defamation for publishing book alleging that
destruction of the convoy was in large due to P’s conduct
o Awarded 40k damages (25k in exemplary damages)
• D appealed for size of jury’s award
Ratio • Exemplary damages and jury’s award of damages (though large)
not unreasonable
• To bring a case within this category it must be proved that D (at the
time of committing tortious act) knew that it was unlawful or
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suspecting it to be unlawful deliberately refrained from taking

obvious steps which would have turned suspicion into certainty
o It must be reasonable inference from evidence that he did
direct his mind to material advantages to be gained by
committing tort and came to conclusion it was worth the
risk of having to compensate P if he should bring action
Finding • D having calculated that they would receive more from extra sales
than they might have to pay in damages was open to the court to
award exemplary damages
o Knowledge that what is proposed t be done is against the
law or reckless disregard
o Decision to carry on doing it because prospects of material
advantage outweigh prospects of material loss (such as
calculate that P will not sue at all because he has no money)
• If and only if, sum awarded by way of compensation was
inadequate the punish the D, jury might mark their disapproval of
conduct by awarding a larger sum
Rookes v Barnard (1964) • Lord Devlin: one category of case appropriate for exemplary
damages
o Those in which D’s conduct has been calculated by him to
make a profit for himself which may well exceed the
compensation payable to P

3.1 Interest protected and purposes pursued

LL Fuller & William R Perdue Jr

Assessment of damages • We measure the extent of injury, we determine whether it
was caused by D’s act, we ascertain whether P has included
same item of damage twice in complaint
Purposes pursued in 1. P has reliance on promise of D conferred some value on D,
awarding contract damages D fails to perform, court may force D to disgorge value
(3) received from P (prevention of unjust enrichment,
restitution interest)
a. Reliance by promise
and/or
b. Resultant gain to promisor
2. P has reliance on promise of D changed his position, buyer
under contract incurred expense in investigation of seller’s
title, award damages to P for purpose of undoing harm
which is reliance on D’s promise caused him (reliance
interest)
3. No reliance by promise or enrichment of promisor, but give
promise value of expectancy which the promise created,
specific performance to compel D or make D pay money
value of performance, put P in as good as position as he
would have occupied had D performed promise
(expectation interest)
Why the law should protect • Breach of promise arouses in the promisee a sense of injury
CHAPTER 2—Awards measured by Benefit to Defendant

expectation interest • Contracting parties exercising legislative power, legal

enforcement of contract
• Avoidable harms: rule that P must after the D’s breach take
steps to mitigate damages
General rule in court • General rule in contract damages: compensate P for loss of
value of bargain, award of damages seeks (in money terms)
to put the P in the position they would have reached had
contract been performed
o Includes both prediction and evaluation
o Court must predict where it is that P would have
reached had contract been performed, working
within limits prescribed by doctrines of remoteness
and certainty
o How to measure + how to apply selected measures