Aggravated, Exemplary and Restitutionary ... - Law Commission

defendant should both disgorge his own gains and make good the
plaintiff’s loss ... The premiss of election is inconsistency. If there is
no inconsistency, there need be no election, though care must
necessarily be taken against the danger of double recovery. 285
1.68 We consider that the law reaches the right result, in that it ensures that a plaintiff
cannot recover both full restitution and full compensation for a wrong. This seems
the right result because to award full restitution and full compensation for a wrong
would be to award a sum in excess of the minimum necessary to achieve either of
the aims of compensating loss or disgorging gain. A full award of either changes
the position of both defendant and plaintiff, and makes it impossible just to reverse
the defendant’s (D’s) unjust enrichment or just to compensate the plaintiff’s (P’s)
losses. So, for example, if D has received a bribe of £1000 and has caused loss to
P of £2,000, the effect of requiring D to pay P £3000 would be that P is neither
just compensated for its loss (but instead receives a windfall of £1000) and nor is
D just stripped of its unjust enrichment (but rather has an extra £2000 stripped
away).
1.69 This is not to deny that a combination of compensation and restitution might be
justified as a punitive measure. However, if punishment is required, that should be
addressed openly and directly by considering whether the criteria for exemplary
damages are satisfied, and what the appropriate quantum of exemplary damages
should be. 286
1.70 But while we consider that the present law reaches the right result, in avoiding an
award of both full restitution and full compensation, we are far from convinced
that the means currently chosen to achieve this - the ‘election’ requirement - is
satisfactory. Provided that the one takes account of the other, we agree with
Professor Birks that there is no ‘inconsistency’ or ‘double recovery’ in allowing
both restitution and compensation to be awarded. In the example above, the
correct result should be that D is required to pay P £2,000. This might be
justified as full compensation alone, but it could also be justified as full restitution
(£1,000) plus partial compensation (£1,000).
1.71 The best that can be said of a requirement of election is that it conveniently saves
the courts from having to get embroiled in the issue, to what extent would an
award of restitution and an award of compensation entail ‘double-recovery’? And
justice will normally be done because a plaintiff will almost inevitably elect to
claim the remedy with the higher measure of recovery on the facts. But ultimately
the law is requiring an ‘election’ where it is not really necesary; the two remedies
are not inevitably inconsistent. The ‘principled’ approach would be to recognise
this, to remove any mandatory requirement of election, to allow a plaintiff to claim
compensation and restitution, and for the court to resolve the problem of double
recovery at the stage of assessing quantum.
1.72 But notwithstanding our reservations about the current law on this point, we do
not feel it appropriate in this project to recommend any legislative changes in this
285 (1996) 112 LQR 375, 378.
286 These are matters which we discuss at length in Part V.
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