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(i) Proof of a Cause of Action Involving Wrongdoing

The claimant must be the victim of a wrong which was committed by the defendant. It is not necessary to show that any enrichment was obtained by the defendant at the claimant’s expense or that the claimant can found his or her claim on a recognized ground of restitution. It is sufficient that the claimant can sue the defendant for the commission of a wrong.

(ii) The Wrong Triggers Gain-Based Remedies

The wrong must have been of a type which has been recognized as triggering gain-based remedies. Questions of policy need to be examined carefully to determine whether the award of a gain-based remedy is appropriate as a response to the commission of that type of wrong.

(iii) The Defendant Obtained a Benefit

The defendant must have obtained a benefit as a result of the commission of the wrong, for without proof of such a benefit it will not be possible to award the claimant any gain-based remedy.[1] To determine whether the defendant has been benefited for the purposes of a restitutionary claim founded on wrongdoing, the definition of enrichment which is applicable to an action founded on the reversal of unjust enrichment should apply.[2] This means that the defendant must have received an objective benefit which it is not possible to devalue subjectively, for example because the enrichment is incontrovertibly beneficial, requested or freely accepted. That the principle of subjective devaluation is applicable where a restitutionary claim is founded on the commission of a wrong was recognized by the Court of Appeal in Ministry of Defence v Ashman.8 Usually, however, where the defendant has committed a wrong the defendant will have obtained money, which is incontrovertibly beneficial. One issue of particular controversy concerns whether gain-based remedies for wrongs are confined to where the defendant obtains a positive benefit from the commission of a wrong or whether it can encompass a negative benefit, such as money saved. The House of Lords in Attorney-General v Blake[3] [4] appeared to assume that gain-based remedies are confined to depriving the defendant of benefits actually received, by focusing on the recovery of profits. But there is no reason why the defendant should not be required to make restitution of money saved by the commission of a wrong, and a number of cases have awarded a gain-based remedy in such circumstances.[5]

It follows from this analysis that the underlying cause of action for a claim of restitution for wrongs is the wrong itself and is not founded on the unjust enrichment of the defendant. In other words, the defendant’s liability to make restitution to the claimant is a secondary liability which is parasitic on the primary obligation not to commit the wrong.[6]

  • [1] Hambly v Trott (1776) 1 Cowp 371, 376; 98 ER 1136, 1139 (Lord Mansfield).
  • [2] See Chapter 4 above. 8 [1993] 2 EGLR 102.
  • [3] [2001] 1 AC 268, 284 (Lord Nicholls).
  • [4] See further pp 448 and 480, below, concerning restitution for torts and restitution for breach of contractrespectively.
  • [5] See, in particular, Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323, [2003] 1 All ER(Comm) 830, 840 (Mance LJ). See p 478, below.
  • [6] D Friedmann, ‘Restitution for Wrongs: The Basis of Liability’ in W Cornish, R Nolan, J O’Sullivan, andG Virgo (eds), Restitution: Past, Present and Future (Oxford: Hart Publishing, 1998), 133.
 
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