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(C) ACCOUNT OF PROFITS

Where the defendant has committed a wrong against the claimant, such as a breach of fiduciary duty, and the defendant makes a profit as a result, one of the restitutionary remedies which may be awarded is that of an account of profits.[1] This involves an account being taken to ascertain the profit made by the defendant as a result of the wrongdoing, which the defendant is then liable to pay to the claimant. This is a personal remedy, since the defendant is only required to transfer the value of the profit made.[2] [3] [4]

(D) RESTITUTIONARY DAMAGES

Whereas an account of profits can only be awarded where the defendant has profited from the commission of a wrong, there may be circumstances where the defendant has benefited from wrongdoing by saving expenditure and it is appropriate to deprive him or her of this benefit by means of a restitutionary remedy. An appropriate name for this remedy is ‘restitutionary damages’.1 0 In Attorney-General v Blake,1 1 however, Lord Nicholls rejected this name in favour of ‘account of profits’. It appears that this was due to a sense that the word ‘damages’ only relates to a compensatory remedy which arises where the claimant has suffered a loss as a result of the commission of a wrong. Whilst it is true that ‘damages’ usually does have a compensatory connotation, if the prefix ‘restitutionary’ is used there is no obvious objection to the name of this remedy. Further, it is clear that this type of remedy does need to be recognized to deal with the situation where the benefit obtained by the defendant involves money saved rather than profit gained. Consequently, the term ‘restitutionary damages’ will be used in this book, but only to name the remedy concerned with restitution of a negative benefit, whereas account of profits will be used where the defendant has obtained a positive benefit as a result of the commission of a wrong.

  • [1] 99 The profit may, however, be held on constructive trust so that the claimant has an equitable proprietary
  • [2] interest in the profit. See Chapter 19.
  • [3] See Chapter 16 and Aggravated, Exemplary and Restitutionary Damages (Law Com No 247, 1997), 51.
  • [4] [2001] 1 AC 268. 102 See Chapter 22.
 
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