Aggravated, Exemplary and Restitutionary ... - Law Commission

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