Aggravated, Exemplary and Restitutionary ... - Law Commission

disgorge what he has saved by committing the wrong, but one of
compensating the plaintiff. 245
1.35 Similarly, in the leading case of Surrey County Council v Bredero Homes Ltd 246
the
Court of Appeal declined to award restitutionary damages for a breach of contract
where the defendant, to whom the plaintiff had sold land for a housing estate, had
built more houses on the site than they had covenanted to build, thereby making a
greater profit. Nominal damages were awarded on the ground that the plaintiff
had suffered no loss. Restitutionary damages were held to be inappropriate
because this was an action for ordinary common law damages for breach of
contract: it involved neither a tort nor an infringement of proprietary rights nor
equitable damages.
1.36 One exception to the rule denying restitution for breach of contract is Wrotham
Park Estate Co Ltd v Parkside Homes Ltd, 247
where the defendants had built houses
on their land in breach of a restrictive covenant in favour of the plaintiffs’
neighbouring land. A mandatory injunction was refused, since it would cause
economic waste. At the trial of the action, Brightman J said:
If, for social and economic reasons, the court does not see fit in the
exercise of its discretion, to order demolition of the 14 houses, is it just
that the plaintiffs should receive no compensation and that the
defendants should be left in undisturbed possession of the fruits of
their wrongdoing? Common sense would seem to demand a negative
answer to this question. 248
Brightman J concluded that “a just substitute for a mandatory injunction would be
such a sum of money as might reasonably have been demanded by the plaintiffs
from [the defendants] as a quid pro quo for relaxing the covenant”. 249
The plaintiffs
would clearly never have granted such a relaxation. 250
Moreover, in deciding what
was a reasonable price, substantial weight was given to the fact that the defendants
had made £50,000 profit from the development, and damages were assessed at 5%
of that profit. It would seem, therefore, that the damages were not compensating
any losses suffered by the plaintiffs and are more appropriately viewed as
restitutionary damages reversing the defendants’ unjust enrichment. The quantum
is explicable as representing a fair proportion of the profits made by the
defendants. Reference to what the parties would themselves have agreed was
subsequently dismissed as “a fiction” by Steyn LJ in Surrey County Council v
Bredero Homes, 251
although Steyn LJ’s comments were in turn criticised, and a
245 Tito v Waddell (No 2) [1977] Ch 106, 332E.
246 [1993] 1 WLR 1361. For notes or articles on this case see, eg, O’Dair [1993] RLR 31;
Birks (1993) 109 LQR 518; Burrows [1993] LMCLQ 453; Smith (1994) JCL 164.
247 [1974] 1 WLR 798.
248 [1974] 1 WLR 798, 812H.
249 [1974] 1 WLR 798, 815D.
250 [1971] 1 WLR 798, 815.
251 [1993] 1 WLR 1361, 1369G.
39