“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
“on the facts as pleaded in the Particulars of Claim and as found in the Commission Decision of21st November 2001 (OJ 2003 L6, p.1) … whether the Claimants would be entitled to all or any of the following heads of relief as pleaded in the Particulars of Claim (including any subsequent amendments thereto): a) an account of profits b) restitution of unjust enrichment c) exemplary damages”
“(13) The total world bulk vitamins market (1999) is estimated at some EUR 3,25 billion. (14) In volume terms, worldwide production of vitamins for animal feed … is around 60000 tonnes per year; pharmaceutical/food tonnage totals around 65000 tonnes. (15) The EEA market for the products which are the subject of the present Decision was worth around ECU 800 million, at ex-producer prices, in 1998. (16) Vitamins A and E together comprise half the total market for vitamins. In 1998, the last full year of the cartel for these products, the vitamin E market in the Community was worth ECU 250 million; vitamin A sales aggregated some ECU 150 million. (17) Sales of bulk vitamin C, which in 1995 had accounted for ECU 250 million in the Community, came to ECU 120 million, the price having more than halved since the ending of cartel arrangements at the end of 1995.”
“(664) The arrangements affecting vitamins A, E, C, B2, B5, D3, beta-carotene and carotinoids constituted deliberate infringements of Articles 81(1) of the Treaty and 53(1) of the EEA Agreement. With full knowledge of the illegality of their actions, the leading producers combined to set up secret and institutionalised systems designed to restrict competition in a major industrial sector. (665) The cartel arrangements permeated the vitamins industry and were mostly conceived, directed and encouraged at the highest levels of the undertakings concerned. By their very nature, those agreements lead automatically to an important distortion of competition, which is of exclusive benefit to the participating producers and to the detriment of their customers and ultimately the general public.”
“(678) Within the category of very serious infringements, the proposed scale of likely fines makes it possible to apply differential treatment to undertakings in order to take account of the effective economic capacity of the offenders to cause significant damage to competition, as well as to set the fine at a level which ensures it has sufficient deterrent effect. The Commission notes that this exercise seems particularly necessary where, as in the present case, there is considerable disparity in the size of the undertakings participating in an infringement. (679) In the circumstances of this case, which involves several undertakings, it is necessary in setting the basic amount of the fines to take account of the specific weight and therefore the impact of each undertaking's offending conduct on competition. (680) For this purpose undertakings can be divided into groupings according to their relative importance in each of the relevant vitamin product markets concerned. The placement of an undertaking in a particular grouping is subject to adjustment, where appropriate, to take into account in particular the need to ensure effective deterrence. (681) The Commission considers it appropriate to appraise the relative importance of an undertaking in each of the vitamin product markets concerned on the basis of their respective worldwide product turnover. This is supported by the fact that each cartel was global in nature, the object of each was, inter alia, to allocate markets on a worldwide level, and thus to withhold competitive reserves from the EEA market. Moreover, the worldwide turnover of any given party to a particular cartel also gives an indication of its contribution to the effectiveness of that cartel as a whole or, conversely, of the instability which would have affected that cartel had it not participated. The comparison is made on the basis of the worldwide product turnover in the last complete calendar year of the infringement.”
“(697) In order to ensure that the fine has a sufficient deterrent effect the Commission will determine whether any further adjustment of the starting point is needed for any undertaking. (698) In the cases of BASF, Roche and Aventis, the Commission considers that the appropriate starting point for a fine resulting from the criterion of the relative importance in the market concerned requires further upward adjustment to take account of their size and their overall resources. (699) On the basis of the foregoing, the Commission considers that the need for deterrence requires that the starting point of their respective fines for each relevant vitamin market, as determined under recitals 683 to 696, should be increased…”
“(712) The Commission considers that Roche and BASF were joint leaders and instigators of the collusive arrangements affecting the common range of vitamin products they produced and therefore their role in the different cartels are considered an aggravating factor. (713) A key result of the anti-competitive agreements in each of the vitamin product markets was to combine the market power that the participants held in each of the individual markets. This was most effective for those companies which produced and sold the widest range of vitamin products, i.e. Roche and BASF. … (717) Both major European producers effectively formed a common front in conceiving and implementing the collusive arrangements with the Japanese and other European producers. Roche set out to implement a strategic plan to dominate and control the world market for all the vitamin products it produced, which constituted a very substantial part of all commercially available vitamins. Roche, in combination with BASF, set out to eliminate all effective competition between them in the Community and EEA across almost the whole range of important vitamins. Roche's particular role as prime mover and main beneficiary of these collusive arrangements is to be noted. (718) This aggravating circumstance justifies an increase of 50 % in the basic amount of the fines to be imposed on Roche and an increase of 35 % in the basic amount of the fines to be imposed on BASF for their infringements affecting the vitamin A, E, B2, B5, C, D3, beta-carotene and carotinoids markets.”
“1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.”
“The full effectiveness of article 85 of the Treaty and, in particular, the practical effect of the prohibition laid down in article 85(1) would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.”
“However, in the absence of Community rules governing the matter, it is for the domestic legal system of each member state to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness).”
“126. Typically the measure of loss which shall be compensated in an antitrust damages case is taken to be the difference between the claimant’s actual position and the situation he would have been in “but for” the illegal conduct (the counterfactual). The former encompasses actual losses as well as profits that have not been gained, while the latter refers to the hypothetical situation in which the claimant would be had no competition law infringement occurred. The loss is thus compensated if the claimant is put into the financial situation he would have been in “but for” the infringement. A number of methods are used to establish this “but for” scenario, e.g. the prices, profits, costs, and the market situation etc., that would have prevailed in the absence of the infringement, to allow a comparison between the hypothetical and the actual situation. 127. The most commonly claimed types of antitrust damages are likely to be overcharges (i.e. increased prices in case of cartels or excessive prices in case of a dominant position) and damages claimed for other anti-competitive conduct (i.e. predatory pricing or refusal to supply) which has led to lost net profits to a continuing business or even lost going concern value of a terminated business.”
“Of course the whole region of inquiry into damages is one of extreme difficulty. You very often cannot even lay down any principle upon which you can give damages; nevertheless it is remitted to the jury, or those who stand in place of the jury, to consider what compensation in money shall be given for what is a wrongful act. Take the most familiar and ordinary case: how is anybody to measure pain and suffering in moneys counted? Nobody can suggest that you can by any arithmetical calculation establish what is the exact amount of money which would represent such a thing as the pain and suffering which a person has undergone by reason of an accident. In truth, I think it would be very arguable to say that a person would be entitled to no damages for such things. What manly mind cares about pain and suffering that is past? But nevertheless the law recognises that as a topic upon which damages may be given. Now, in the particular case before us, apart from a circumstance which I will refer to immediately, the broad proposition seems to me to be that by a wrongful act of the defendants the plaintiffs were deprived of their vessel. When I say deprived of their vessel, I will not use the phrase "the use of the vessel." What right has a wrongdoer to consider what use you are going to make of your vessel? More than one case has been put to illustrate this: for example, the owner of a horse, or of a chair. Supposing a person took away a chair out of my room and kept it for twelve months, could anybody say you had a right to diminish the damages by shewing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? The proposition so nakedly stated appears to me to be absurd; but a jury have very often a very difficult task to perform in ascertaining what should be the amount of damages of that sort. I know very well that as a matter of common sense what an arbitrator or a jury very often do is to take a perfectly artificial hypothesis and say, "Well, if you wanted to hire a chair, what would you have to give for it for the period"; and in that way they come to a rough sort of conclusion as to what damages ought to be paid for the unjust and unlawful withdrawal of it from the owner. Here, as I say, the broad principle seems to me to be quite independent of the particular use the plaintiffs were going to make of the thing that was taken, except--and this I think has been the fallacy running through the arguments at the bar--when you are endeavouring to establish the specific loss of profit, or of something that you otherwise would have got which the law recognises as special damage. In that case you must shew it, and by precise evidence, so much so that in the old system of pleading you could not recover damages unless you had made a specific allegation in your pleading so as to give the persons responsible for making good the loss an opportunity of inquiring into it before they came into court. But when we are speaking of general damages no such principle applies at all, and the jury might give whatever they thought would be the proper equivalent for the unlawful withdrawal of the subject-matter then in question.”
“In the case of damages in general, there is one principle which does underlie the assessment. It is what may be called that of restoration. The idea is to restore the person who has sustained injury and loss to the condition in which he would have been had he not so sustained it. In the cases of financial loss, injury to trade, and the like, caused either by breach of contract or by tort, the loss is capable of correct appreciation in stated figures. In a second class of cases, restoration being in point of fact difficult--as in the case of loss of reputation--or impossible--as in the case of loss of life, faculty, or limb--the task of restoration under the name of compensation calls into play inference, conjecture, and the like. And this is necessarily accompanied with those deficiencies which attach to the conversion into money of certain elements which are very real, which go to make up the happiness and usefulness of life, but which were never so converted or measured. The restoration by way of compensation is therefore accomplished to a large extent by the exercise of a sound imagination and the practice of the broad axe. It is in such cases, whether the result has been attained by the verdict of a jury or the finding of a single judge, that the greatest weight attaches to the decision of the court of first instance. The reasons for this are not far to seek… In all these cases, however, the attempt which justice makes is to get back to the status quo ante in fact, or to reach imaginatively by the process of compensation a result in which the same principle is followed.”
“It is said in such a case: Where is the damage which the patentee has incurred? On the other heads of the case he has obtained his damages; but on this part, which covers a section of trade which in no circumstances he could have touched, he can have sustained no damage, because he would never have sold his patented articles within that section. The duty of an infringer is covered by the principle of restoration, and the patentee has surely been restored to as good a position as he was in before the infringement, or would have been in but for it, if he has been put into the same financial position as he would have occupied in that region of trade where alone he would have been operating. It is at this stage of the case, however, that a second principle comes into play. It is not exactly the principle of restoration, either directly or expressed through compensation, but it is the principle underlying price or hire. It plainly extends--and I am inclined to think not infrequently extends-- to patent cases. But, indeed, it is not confined to them. For wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle, as I say, either of price or of hire. If A., being a liveryman, keeps his horse standing idle in the stable, and B., against his wish or without his knowledge, rides or drives it out, it is no answer to A. for B. to say: "Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise." I confess to your Lordships that this seems to me to be precisely in principle the kind of question and retort which underlay the argument of the learned counsel for the appellants about the Java trade.”
“In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.”
“However, I must make clear that I do not believe it is a matter of inflicting some sort of penalty on the other party similar to the fine which the Commission can impose under Council Regulation No 17 of6 February 1962 (First Regulation implementing articles 85 and 86 of the Treaty) (OJ, English Special Edition 1959-62, p 87) in order to safeguard the effectiveness of Community law. It is simply a matter of accepting the implications of the direct effect of article 81 EC. I therefore agree with the United Kingdom Government when it states that it "does not advocate that the party to the unlawful agreement should obtain more than it has lost by reason of the unlawful agreement. In certain cases the claimant, even if in a weaker bargaining position, may have obtained benefits from the unlawful provisions of the agreement, and, to avoid unjust enrichment and the imposition of penal damages on the defendant, such benefits should in principle be taken into account in the assessment of damages. The precise quantification of the damages is, of course, a matter for national courts.”
“92 As to the award of damages and the possibility of an award of punitive damages, in the absence of Community rules governing the matter, it is for the domestic legal system of each member state to set the criteria for determining the extent of the damages, provided that the principles of equivalence and effectiveness are observed. 93 In that respect, in accordance with the principle of equivalence, it must be possible to award particular damages, such as exemplary or punitive damages, pursuant to actions founded on the Community competition rules, if such damages may be awarded pursuant to similar actions founded on domestic law.”
“the principle of ne bis in idem prohibits the same person from being sanctioned more than once for the same unlawful conduct in order to protect one and the same legal interest. The application of that principle is subject to three cumulative conditions: the identity of the facts, the unity of offender and the unity of legal interest protected.”
“The Claimant avers that the Defendants’ wrongful actions have been carried out in the knowledge of and in wilful disregard of the Claimant’s rights, in a calculating fashion and/or with the expectation of profiting therefrom by amounts exceeding the amounts payable by them to the Claimant as a result of such wrongful actions. Such wrongful actions are properly such as to evoke a sense of outrage. The Claimant will ask for exemplary damages accordingly.”
“It will also be necessary to take account of the effective economic capacity of offenders to cause significant damage to other operators, in particular consumers, and to set the fine at a level which ensures that it has a sufficiently deterrent effect.”
“Exemplary damages or punitive damages, the terms are synonymous, stand apart from awards of compensatory damages. They are additional to an award which is intended to compensate a plaintiff fully for the loss he has suffered, both pecuniary and non-pecuniary. They are intended to punish and deter.”
“Finally, the possibility that undertakings may have been required to pay damages in civil actions is of no relevance. Payments of damages in civil law actions which have the objective of compensating for the harm caused by cartels to individual companies or consumers cannot be compared with public law sanctions for illegal behaviour.” (Emphasis added)
“1. When national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. This obligation is without prejudice to the rights and obligations under Article 234 of the Treaty. 2. When competition authorities of the Member States rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions which would run counter to the decision adopted by the Commission.”
“But what seems to put the claim under this head out of court is the fact that exemplary damages are meant to punish and the defendant has been punished. Even if he wins his appeal he will have spent a considerable time in gaol. It is not surprising that there is no authority as to whether this provides a defence, since there is no direct authority as to whether exemplary damages can be given in deceit. I rest my decision on the basic principle that a man should not be punished twice for the same offence. Since he has undoubtedly been punished, I should not enrich the plaintiff by punishing the defendant again.”
“The argument from double jeopardy is not in my judgment a sound one. The convictions were a legitimate part of the evidence in support of the civil claim, but there is no duplication of penalty. If the£100,000 award of exemplary damages stands, the appellant's available assets will be depleted by that amount by the time the matter returns to the Crown Court for completion of the confiscation proceedings. If confiscation does not reach all his assets, while this court cannot dictate what is to happen, it can confidently anticipate that Mr Jordan will not be mulcted in the same sum twice.”
“It is arguable that the function of exemplary damages is nowadays better left to the confiscation regime, at any rate where there are parallel civil and criminal proceedings. However, the statutory regime has done nothing explicit to discourage the civil process, and I agree with what Sedley and May LJJ have said about the interrelationship of theCriminal Justice Act 1988 and Master Leslie's award in this case. In my judgment there is no danger in practice that Mr Jordan will be required to pay the£100,000 twice.”
“45. I was at first attracted by Mr Hellman's twin submissions, on behalf of Mr Jordan, (a) that the Master should not have awarded exemplary damages as a scarcely concealed substitute for additional compensatory damages which the claimants did not claim and did not attempt to quantify; and (b) that exemplary damages, being punitive, were quite inappropriate in this case, when Mr Jordan has been punished by imprisonment, and is very probably going to be punished further by a swingeing confiscation order under sections 71 and 72AA of theCriminal Justice Act 1988 . 46. I am, however, persuaded by Mr Convey to the contrary. First, in my judgment, Part VI of the 1988 Act was not intended to negate a proper claim for exemplary damages in civil proceedings. Section 71(1C) may not literally prohibit the Crown Court from making a confiscation order which overlaps a claim by the victim in civil proceedings. But it plainly contemplates that the victim's proper civil claims are to be preserved and is a strong indication that the Crown Court should usually avoid double counting -- see also the discretionary safeguards in section 72AA. In addition, at least in a case in which the defendant's benefit from criminal conduct exceeds his realisable assets, the amount of any judgment in civil proceedings will reduce the defendant's realisable assets, and thus reduce the amount of the confiscation order -- see section 71(6).”
“In the present case there is the further complication to which I have already referred of the conviction and fine of the defendants. These problems persuade me that there would be a serious risk of injustice to the defendants in this case if an award of exemplary damages were to be made against them. There is no injustice to the plaintiffs in refusing to permit such an award; they are not foregoing compensation to which they are entitled, but an additional windfall based solely on the defendants' alleged improper conduct.”
“There is however one aspect of the case which in my view makes it peculiarly unsuitable for an award of exemplary damages, even if the first two hoops are negotiated, and that is the number of plaintiffs. Unless all their claims are quantified by the court at the same time, how is the court to fix and apportion the punitive element of the damages? Should the court fix a global sum of £x and divide it by 180, equally among the plaintiffs? Or should it be divided according to the gravity of the personal injury suffered? Some plaintiffs may have been affected by the alleged oppressive, arbitrary, arrogant and high handed behaviour, others not. If the assessment is made separately at different times for different plaintiffs, how is the court to know that the overall punishment is appropriate?”
“For English law to give the remedy of penal damages for breaches of Community law would decrease the move towards uniformity, it would involve distinctions between the practice of national courts and the liabilities of different Member States and between the United Kingdom and the Community Institutions, and would accordingly in itself be potentially discriminatory since litigants in England would be treated differently from those elsewhere. The arguments of the applicants under this head need to be considered with great caution. Their acceptance would risk introducing into the law of Community obligations, anomalies and conflicts which do not at present exist and would not serve a useful purpose.”
“If this part of the claim had been framed as a further claim for compensatory damages, it is evident from the master's findings that it would have succeeded. Indeed it is evident that while Master Leslie had no difficulty in quantifying this element of the claim as part of the claimants' losses, he had rather more difficulty in characterising it as exemplary damages. But neither at the hearing, where the claimants were represented by counsel, nor before this court, was any application made to amend … the claim so as to make it a further head of compensatory damages. Nor, however, did Mr Hellman [counsel for Mr Jordan] at any stage demur to this part of the pleading as unsustainable in law. Mr Convey [counsel for the booksellers], consistently but hazardously, has stuck throughout to his argument that, albeit they were computed so as to reflect the claimants' losses, these were in law punitive damages.”
“Notwithstanding therefore that the second element could, and in my judgment should, have been pleaded before judgment as a second head of compensation, the fact that it bore a compensatory character did not prevent it from ranking within the second common law category of exemplary damages.” (Emphasis added)
“Further or alternatively, in the premises, the Defendants have been unjustly enriched by their implementation of and/or giving effect to the Vitamins Cartel as a consequence of the difference between the prices actually paid and the prices that would have been paid in the absence of the Vitamins Cartel. Accordingly, the Defendants are liable in restitution and/or for restitutionary damages to the Claimant for the unjust enrichment of the Defendants.”
“I note that the Claimant has also pleaded for exemplary and restitutionary damages. I offer no comments on these other than to note that in theory compensatory and restitutionary damages are likely to be identical based on the overcharge or price difference method.”
“It is of course the position that in cases of trespass of this kind there is no right to a share in, or account of, profits in any conventional sense. The only relevance of the defendant's profits is that they are likely to be a helpful reference point for the court when seeking to fix upon a fair price for a notional licence.”
“Damages are measured by the plaintiff's loss, not the defendant's gain. But the common law, pragmatic as ever, has long recognised that there are many commonplace situations where a strict application of this principle would not do justice between the parties. Then compensation for the wrong done to the plaintiff is measured by a different yardstick.”
“these awards cannot be regarded as conforming to the strictly compensatory measure of damage for the injured person's loss unless loss is given a strained and artificial meaning. The reality is that the injured person's rights were invaded but, in financial terms, he suffered no loss. Nevertheless the common law has found a means to award him a sensibly calculated amount of money. Such awards are probably best regarded as an exception to the general rule.”
“Considered as a matter of principle, it is difficult to see why equity required the wrongdoer to account for all his profits in these cases, whereas the common law's response was to require a wrongdoer merely to pay a reasonable fee for use of another's land or goods. In all these cases rights of property were infringed. This difference in remedial response appears to have arisen simply as an accident of history.”
“The measure of damages awarded in this type of case is often analysed as damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right. This analysis is correct.”
“In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained.”
“My conclusion is that there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract. ... Remedies are the law's response to a wrong (or, more precisely, to a cause of action). When, exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his breach of contract.”
“An account of profits will be appropriate only in exceptional circumstances. Normally the remedies of damages, specific performance and injunction, coupled with the characterisation of some contractual obligations as fiduciary, will provide an adequate response to a breach of contract. It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise. No fixed rules can be prescribed. The court will have regard to all the circumstances, including the subject matter of the contract, the purpose of the contractual provision which has been breached, the circumstances in which the breach occurred, the consequences of the breach and the circumstances in which relief is being sought. A useful general guide, although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant's profit-making activity and, hence, in depriving him of his profit.”
“First, damages is an inadequate remedy. It is almost impossible to attribute lost sales to a breach by one out of several hundred dealers who operated Pricewatch. Second, the obligation to implement and maintain the recommended pump prices was fundamental to Pricewatch. Failure to observe it gives the lie to the advertising campaign by which it was publicised and therefore undermines the effectiveness of Pricewatch in achieving the benefits intended for both Esso and all its dealers within Pricewatch. Third, complaint was made of Niad on four occasions. On all of them Niad appeared to comply without demur. It now appears that the breaches of its obligation were much more extensive than Esso at first thought. Fourth, Esso undoubtedly has a legitimate interest in preventing Niad from profiting from its breach of obligation.”
“It is undoubted that Niad obtained a benefit, in the form of the price support, to which it was only entitled if it complied with its obligation to implement and maintain the recommended pump prices to be supported. In these circumstances it can hardly be denied that Niad was enriched to the extent that it charged pump prices in excess of the recommended prices. The enrichment was unjust because it was obtained in breach of contract. It was obtained at the expense of Esso because Esso was providing price support for a lower price than that charged by Niad. I can see no reason why this remedy should be unavailable to Esso if it wishes to pursue it. Indeed it appears to me to be the most appropriate remedy in that it matches most closely the reality of the case, namely that Niad took an extra benefit to which it was not entitled. It is just that it should be made to restore it to its effective source.”
“whether the court can and should order the recovery of any damages or an account of profits in circumstances where the appellant has not proved that it has suffered any financial loss.”
“Whether the adoption of a standard measure of damages represents a departure from a compensatory approach depends upon what one understands by compensation and whether the term is only apt in circumstances where an injured party's financial position, viewed subjectively, is being precisely restored. The law frequently introduces objective measures (e.g. the available market rules in sale of goods) or limitations (e.g. remoteness). The former may increase or limit a claimant's ability to recover loss actually suffered. … In a case such as the Wrotham Park case the law gives effect to the instinctive reaction that, whether or not the appellant would have been better off if the wrong had not been committed, the wrongdoer ought not to gain an advantage for free, and should make some reasonable recompense. In such a context it is natural to pay regard to any profit made by the wrongdoer (although a wrongdoer surely cannot always rely on avoiding having to make reasonable recompense by showing that despite his wrong he failed, perhaps simply due to his own incompetence, to make any profit). The law can in such cases act either by ordering payment over of a percentage of any profit or, in some cases, by taking the cost which the wrongdoer would have had to incur to obtain (if feasible) equivalent benefit from another source.”
“In my judgment, because (1) there has been a deliberate breach by PPX of its contractual obligations for its own reward, (2) the claimant would have difficulty in establishing financial loss therefrom, and (3) the claimant has a legitimate interest in preventing PPX's profit-making activity carried out in breach of PPX's contractual obligations, the present case is a suitable one (as envisaged by Lord Nicholls …) in which damages for breach of contract may be measured by the benefits gained by the wrongdoer from the breach. To avoid injustice I would require PPX to make a reasonable payment in respect of the benefit it has gained. I agree with the guidance suggested by Mance LJ for the court assessing the damages.”
“When the court makes an award of damages on the Wrotham Park basis it does so because it is satisfied that that is a just response to circumstances in which the compensation which is the Claimant's due cannot be measured (or cannot be measured solely) by reference to identifiable financial loss. Lord Nicholls' analysis in A-G v Blake demonstrates that there are exceptional cases in which the just response to circumstances in which the compensation which is the Claimant's due cannot be measured by reference to identifiable financial loss is an order which deprives the wrongdoer of all the fruits of his wrong. The circumstances in which an award of damages on the Wrotham Park basis may be an appropriate response, and those in which the appropriate response is an account of profits, may differ in degree. But the underlying feature, in both cases, is that the court recognises the need to compensate the Claimant in circumstances where he cannot demonstrate identifiable financial loss. To label an award of damages on the Wrotham Park basis as a “compensatory” remedy and an order for an account of profits as a “gains-based” remedy does not assist an understanding of the principles on which the court acts. The two remedies should, I think, each be seen as a flexible response to the need to compensate the Claimant for the wrong which has been done to him.”
“The general rule is that a successful plaintiff in an action in tort recovers damages equivalent to the loss which he has suffered, no more and no less. If he has suffered no loss, the most he can recover are nominal damages. A second general rule is that where the plaintiff has suffered loss to his property or some proprietary right, he recovers damages equivalent to the diminution in value of the property or right. The authorities establish that both these rules are subject to exceptions. These must be closely examined, in order to see whether a further exception ought to be made in this case.”
“But it is only in the last-mentioned case [i.e. Wrotham Park] and in the trespass cases that damages have been awarded in accordance with either principle without proof of loss to the plaintiff. In all the other cases, the plaintiff having established his loss, the real question has not been whether substantial damages should be awarded at all, but whether they should be assessed in accordance with the user principle or by reference to the diminution in value of the property or right. In other words, those other cases are exceptions to the second, but not to the first, of the general rules stated above.”
“It is possible that the English law of tort, more especially of the so-called 'proprietary torts', will in due course make a more deliberate move towards recovery based not on loss suffered by the plaintiff but on the unjust enrichment of the defendant: see Goff and Jones The Law of Restitution(3rd edn, 1986) pp 612–614. But I do not think that that process can begin in this case and I doubt whether it can begin at all at this level of decision.”
“If, on the one hand, the unauthorised, other-day market has caused and is causing no loss, either of stallage or of tolls or under any of the other heads of loss which may affect the owner of a market right, there is no cause of action. There is, in that event, no question of applying the user principle. If, on the other hand, the owner of the market right does sustain loss under one or more of those heads, damages must surely be commensurate with the quantum of the loss so sustained. The damages will correspond, so far as the court can fairly assess them, to the amount of the loss flowing to the owner of the market right from the respects in which he has in fact been damnified in his enjoyment of that right by the holding of the unauthorised, other-day market. Again, there would be no place for awarding, by application of the user principle, damages in a sum greater than the amount of that loss.”
“For example, not all torts ground a restitutionary claim. Existing authority suggests that only tortious acts which infringe the claimant’s proprietary or possessory title can ground a restitutionary claim.”
“Further I am not satisfied that in the circumstances of the present case it would be right to treat the unjust enrichment of Mr. Thomas as having been gained "at the expense of" the society, even allowing for the possibility of an extended meaning for those words to apply to cases of non-subtractive restitution for a wrong. There is no decided authority that comes anywhere near to covering the present circumstances. I do not overlook the fact that the policy of law is to view with disfavour a wrongdoer benefiting from his wrong, the more so when the wrong amounts to fraud, but it cannot be suggested that there is a universally applicable principle that in every case there will be restitution of benefit from a wrong. As Professor Birks says (An Introduction to the Law of Restitution, p. 24): "there are some circumstances in which enrichment by wrongdoing has to be given up. That is, the wrong itself is not always in itself a sufficient factor to call for restitution." On the facts of the present case, in my judgment, the fraud is not in itself a sufficient factor to allow the society to require Mr. Thomas to account to it.”
“The proposition that a wrongdoer should not be allowed to profit from his wrongs has an obvious attraction. The further proposition, that the victim or intended victim of the wrongdoing, who has in the event suffered no loss, is entitled to retain or recover the amount of the profit is less obviously persuasive.”
“The difficulties confronting a court in measuring and valuing the benefit gained by the factory owner at the expense of the individual householder (possibly the value of an individual licence) in this example persuades us that, in some situations, where there may be multiple claimants who suffer loss from a tortious act, a restitutionary claim should be denied. Legal problems apart, any judicial enquiry, with the possibly complex attendant economic evidence which will have to be introduced, may well be inefficient in economic terms.”
“It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise.”