Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
Aggravated, Exemplary and Restitutionary ... - Law Commission
Create successful ePaper yourself
Turn your PDF publications into a flip-book with our unique Google optimized e-Paper software.
It may not be a case for injunction or even for an account, but only for<br />
damages, depending on the worth of the confidential information to<br />
him in saving him time <strong>and</strong> trouble. 239<br />
1.32 Restitution for breach of fiduciary duty <strong>and</strong> breach of confidence is so wellestablished<br />
that the area of debate focuses, not on whether restitution rather than<br />
compensation should be awarded, but rather on whether restitution should be<br />
effected by merely a personal remedy (account of profits) or by a proprietary<br />
remedy (constructive trust). Despite Lister v Stubbs, 240<br />
which denied that a<br />
proprietary remedy should be awarded in respect of a bribe <strong>and</strong> sought to<br />
maintain a clear divide between obligation <strong>and</strong> ownership, the law appears to be<br />
moving towards recognising that a proprietary restitutionary remedy (through a<br />
constructive trust) is appropriate for all instances of (at least dishonest) breach of a<br />
fiduciary duty <strong>and</strong> breach of confidence. Particularly important was the Privy<br />
Council’s decision in Attorney-General for Hong Kong v Reid 241<br />
in which it was<br />
decided that, contrary to Lister v Stubbs, 242<br />
a bribe was held on constructive trust.<br />
This had the result that the principal was entitled to trace through to l<strong>and</strong> bought<br />
with the bribe.<br />
(3) Enrichments gained by a breach of contract<br />
1.33 An innocent party who has rendered part-performance before the contract was<br />
discharged may claim a restitutionary award as an alternative to the normal<br />
compensatory remedies for breach of contract by seeking a quantum meruit or,<br />
where there has been a total failure of consideration, the recovery of money paid to<br />
the defendant. These, however, are not remedies awarded for a wrong, but rather<br />
are generated by independent restitutionary claims for failure of consideration that<br />
are consequent on the contract being discharged for breach. 243<br />
1.34 The gain to a defendant from a breach of contract is generally irrelevant to the<br />
quantification of damages for that breach. The defendant will be liable to<br />
compensate the plaintiff for his expectation (or reliance) interest, but not to<br />
disgorge any profit the defendant may have gained from his breach of contract, nor<br />
to account for any expense saved thereby. As Megarry V-C said in Tito v Waddell<br />
(No 2):<br />
... it is fundamental to all questions of damages that they are to<br />
compensate the plaintiff for his loss or injury by putting him as nearly<br />
as possible in the same position as he would have been in had he not<br />
suffered the wrong. The question is not one of making the defendant<br />
239 [1967] 1 WLR 923, 932A.<br />
240 [1890] 45 ChD 1.<br />
241 [1994] 1 AC 324. See also AG v Blake [1996] 3 WLR 741, 750C-G (breach of<br />
confidence); LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4th) 14<br />
(breach of confidence).<br />
242 [1890] 45 ChD 1.<br />
243 See A Burrows, The <strong>Law</strong> of Restitution (1993) pp 397-398; P Birks, An Introduction to the<br />
<strong>Law</strong> of Restitution (revised ed, 1989) p 334; P Birks, “Restitution <strong>and</strong> the Freedom of<br />
Contract” (1983) 36 CLP 141, 149-159.<br />
244 Tito v Waddell (No 2) [1977] Ch 106.<br />
38