Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
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PART III<br />
RESTITUTION FOR WRONGS<br />
1. THE LAW OF RESTITUTION<br />
1.1 In Lipkin Gorman v Karpnale Ltd, 183<br />
the House of Lords accepted for the first time<br />
that there is an English law of restitution based on the principle against unjust<br />
enrichment. There is now a wide measure of consensus among commentators<br />
that the law of restitution has two main divisions: unjust enrichment by subtraction<br />
(or autonomous unjust enrichment) <strong>and</strong> unjust enrichment by wrongdoing (or<br />
dependent unjust enrichment). 184<br />
The difference between those two divisions is<br />
that the latter depends on the commission of a wrong by the defendant to the<br />
plaintiff (whether that wrong is a tort or a breach of contract or an equitable<br />
wrong, such as breach of a fiduciary duty or breach of confidence). The<br />
enrichment is ‘at the expense’ of the plaintiff in the sense that the defendant has<br />
committed a wrong to the plaintiff. Restitution, concerned to strip away the gains<br />
made by the defendant by the wrong, is only one of several possible remedial<br />
responses, of which the most common is compensation. In contrast, in unjust<br />
enrichment by subtraction, no wrong needs to have been committed by the<br />
defendant <strong>and</strong> the enrichment is ‘at the expense’ of the plaintiff in the more<br />
obvious sense that the gain to the defendant represents a loss to, or a subtraction<br />
from the wealth of, the plaintiff. The grounds for restitution in unjust enrichment<br />
by subtraction tend to comprise factors vitiating or qualifying the plaintiff’s true<br />
consent to a transfer of his or her wealth to the defendant: for example, mistake,<br />
duress, undue influence, <strong>and</strong> failure of consideration.<br />
1.2 In this paper we are essentially concerned with unjust enrichment by wrongdoing<br />
(that is, restitution for wrongs). 185<br />
We are concerned to identify when a plaintiff is<br />
entitled, or ought to be entitled, to a stripping of the gains made by a civil wrong.<br />
183 [1991] 2 AC 548. For further acceptance <strong>and</strong> application of the principle against unjust<br />
enrichment by the House of Lords, see Woolwich Equitable Building Society v IRC [1993] AC<br />
70; Westdeutsche L<strong>and</strong>esbank Girozentrale v Islington LBC [1996] AC 669.<br />
184 See P Birks, An Introduction to the <strong>Law</strong> of Restitution (revised ed, 1989) pp 23-24, 40-44,<br />
313-315, 346-355; A Burrows, The <strong>Law</strong> of Restitution (1993) pp 16-21, 376. For judicial<br />
recognition of this division, see Halifax Building Society v Thomas [1996] 2 WLR 63 <strong>and</strong><br />
<strong>Commission</strong>er of State Revenue (Victoria) v Royal Insurance Australia Ltd (1994) 182 CLR 51,<br />
per Mason CJ. See also the central division in Lord Goff of Chieveley <strong>and</strong> G Jones, The<br />
<strong>Law</strong> of Restitution (4th ed, 1993) between “Section One: Where the Defendant has Acquired<br />
a Benefit from or by the Act of the Plaintiff” <strong>and</strong> “Section Three: Where the Defendant has<br />
Acquired a Benefit through his own Wrongful Act”. J Beatson, The Use <strong>and</strong> Abuse of Unjust<br />
Enrichment (1991) pp 206-243 is not convinced of the validity of the Birksian divide; nor is<br />
P Cane, “Exceptional Measures of Damages”, in P Birks (ed), Wrongs <strong>and</strong> Remedies in the<br />
Twenty-First Century (1996) pp 312-323.<br />
185 For discussions of this area see, eg, Lord Goff of Chieveley <strong>and</strong> G Jones, The <strong>Law</strong> of<br />
Restitution (4th ed, 1993) chs 33, 36, 38, <strong>and</strong> pp 414-417; P Birks, An Introduction to the<br />
<strong>Law</strong> of Restitution (revised ed, 1989) pp 39-44, ch 10; A Burrows, The <strong>Law</strong> of Restitution<br />
(1993) ch 14; A Burrows, Remedies for Torts <strong>and</strong> Breach of Contract (2nd ed, 1994) ch 6; J<br />
Beatson, The Use <strong>and</strong> Abuse of Unjust Enrichment (1991) pp 206-243; I Jackman,<br />
“Restitution for Wrongs” (1989) 48 CLJ 302; P Birks, Civil Wrongs: A New World<br />
(Butterworth Lectures 1990-91) pp 94-98.<br />
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