Aggravated, Exemplary and Restitutionary ... - Law Commission

were alleged to be liable for passing off by using a name similar to the plaintiffs’ for
their own chain of restaurants, the profits to be accounted for were only those
additional profits caused by the public’s confusion in thinking the defendants’
restaurants were the plaintiffs’, and not all the profits made by the defendants from
those restaurants. Similarly in Colbeam Palmer Ltd v Stock Affiliates Pty Ltd, 276
an
infringement of trade mark case, the profits to be accounted for were not all those
gained from the sale of infringing goods but only those made because the goods
were sold under the trade mark.
1.60 In some cases the factual causation enquiry will indicate that the defendant could
have lawfully made the profits in question if it had paid for the property, or use of
the property, from which those profits have been derived. On such facts, the
measure of restitution (whether through an account of profits or restitutionary
damages) should be the expense saved by the defendant in not paying for the
property (or use of the property).
1.61 It is clear that in some cases the factual causation enquiry is an extremely difficult
one and may ultimately lead to the conclusion that none of the alleged wrongfully
acquired profits is attributable to the wrong. Take, for example, libel by a
newspaper. It will often be extremely difficult to establish that particular sales of
the newspaper are attributable to the particular libel.
1.62 Even if one has established that gains are factually attributable to the wrong, the
courts still have a discretion to award a part, rather than the whole, of those gains.
One may regard this as being analogous to the legal causation or remoteness
restriction in the realm of compensation for a factually caused loss. This is most
clearly illustrated by the allowance given in equity for the skill and effort expended
by the defendant to make the profit, at least where the wrong has not been
committed dishonestly. 277
1.63 We do not propose to make any changes to the principles used by courts to assess
the quantum of restitution. We therefore recommend that:
(10) our proposed legislation should not deal with how the quantum of
restitution is determined.
(2) Can one recover both restitution and compensation for a wrong?
1.64 If compensation can be claimed for losses caused by wrongdoing, and restitution
can be claimed of benefits gained as a result of wrongdoing, does this mean that
plaintiffs can claim both compensation and restitution for wrongs if defendants
have both caused losses and made gains by their wrongdoing?
1.65 This question has been most commonly discussed in relation to whether a plaintiff
can be awarded both an account of profits and (compensatory) damages for an
intellectual property tort. The law is clear: a plaintiff cannot be awarded both an
276 (1968) 122 CLR 25.
277 See, eg, Boardman v Phipps [1967] 2 AC 46; Redwood Music Ltd v Chappell & Co Ltd [1982]
RPC 109, 132. Cf Guinness plc v Saunders [1990] 2 AC 663.
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