(i) Interference with Property Rights

Where the wrong involves the defendant obtaining a benefit by using or interfering with the claimant’s asset, gain-based relief is likely to be available. The award of restitution in such circumstances is consistent with the two principles which underlie restitution for wrongs. First, the defendant will have obtained a benefit as a result of the commission of a wrong which involves interference with somebody else’s property rights, and it is not appropriate that the defendant should retain that benefit. Secondly, since the profits derived from the use of the claimant’s asset, it is appropriate that the defendant makes restitution of the value of that benefit to the claimant. So, for example, where the defendant takes the claimant’s car and hires it out without permission, it is appropriate that the money received by the defendant should be paid to the claimant since it constitutes the fruits of the claimant’s asset.

The award of gain-based remedies where the defendant obtains a benefit as the result of wrongful interference with the claimant’s asset is justified by the fact that English law considers property rights to be deserving of particular protection from interference; the so-called right to exclusive enjoyment of an asset. This was recognized by Lord Shaw in Watson, Laidlaw and Co Ltd v Pott, Cassels and Williamson[1] who said that ‘wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle . . . either of price or of hire’.

In a very important analysis of the principles which underlie restitution for wrongs, Jackman[2] has also identified the principle of interference with property rights as being of prime importance in explaining many of the cases where a gain-based remedy has been awarded for wrongs. He justifies the award of gain-based remedies for such wrongdoing as a means of protecting what he calls ‘facilitative institutions’. He considers property to be an institution which needs to be protected by the law and the award of gain-based remedies ensures proper respect for the institution since it is a mechanism for deterring harm to it, by ensuring that all benefits which the defendant derives from the property should be disgorged to the claimant.

The problem with this proprietary principle relates to the determination of what constitutes property rights. This is the weakness of Friedmann’s analysis of the award of gain-based remedies for wrongs.[3] He accepts that such remedies are particularly appropriate where the effect of the wrong is interference with the claimant’s property rights. But, to explain many of the cases where gain-based relief has been awarded, he adopts a very wide interpretation of property to include ‘quasi-property’, a phrase which covers ‘interests in ideas, information, trade secrets and opportunity’. [4] But, if the notion of property is extended in this artificial way, it is unclear when this extension should end. Whilst interference with property rights is a useful principle for determining when gain-based relief is available, it is not the only principle and the notion of property rights must not be extended artificially.[5]

  • [1] (1914) 31 RPC 104, 119. See also Surrey CC v Bredero Homes Ltd [1993] 1 WLR 1361, 1369 (Steyn LJ).
  • [2] Jackman, ‘Restitution for Wrongs’, 305-11.
  • [3] D Friedmann, ‘Restitution of Benefits Obtained Through the Appropriation of Property or the Commission of a Wrong’ (1980) 80 Columbia Law Review 504.
  • [4] Ibid, 512. 47 Friedmann, ‘Restitution for Wrongs: The Basis of Liability’.
  • [5] 48 Friedmann, ‘Restitution of Benefits Obtained Through the Appropriation of Property or the Commission
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