(C) TANG MAN SIT V CAPACIOUS INVESTMENTS LTD

The unusual facts of Tang Man Sit v Capacious Investments Ltd¹⁵³ provided the Privy Council with the opportunity to consider when the claimant can be considered to have elected between inconsistent remedies. In Tang Man Sit a landowner had agreed to assign some houses to the claimant, but the deed of assignment was never executed. The landowner then let the houses without the claimant’s approval. After the landowner’s death the claimant sued the landowner’s personal representatives for breach of trust and sought an account of the profits which the landowner had made from letting the houses in breach of trust. But the claimant also claimed compensation for the lost market rental on the houses, for the fall in the value of the properties resulting from the houses being encumbered by tenancies and for damage arising from their occupation. The trial judge found for the claimant and ordered the defendant both to account for the profits made and to compensate the claimant for the loss suffered, this loss to be assessed subsequently. The claimant recovered part of the profits and also proceeded with the assessment of the loss suffered. It discovered that the compensation for loss would be much greater than the profits which the defendant had made and so the claimant sought to recover the damages from the defendant, giving credit for the profits which it had already received. The issue for the Privy Council was whether the claimant had elected to receive the profits with the consequence that it was unable to recover damages for loss.

The Privy Council first recognized that the remedies of compensation and account of profits were inconsistent. This was because the account of profits represented the money which the defendant had received from the use of the properties in breach of trust, whereas compensation represented the financial return the claimant would have received for the same period had it been able to use the properties; the wrong which enabled the defendant to gain the profit also caused loss to the claimant. Because of the inconsistency between the remedies, the claimant was required to elect between them. The question then was at what point the claimant is required to make an election. Even though the trial judge had already entered judgment for the claimant, the Privy Council held that the claimant had not exercised the right of election until it claimed compensation rather than restitution. The delay in making the election was not considered to be unreasonable because the form of the trial judge’s order was for both an account of profits and compensation. This meant that the claimant’s acceptance of the profits from the defendant did not constitute an election, particularly because the claimant was proceeding with the necessary steps for the assessment of damages and the defendant had not paid the profits to the claimant under the misapprehension that the claimant had accepted profits rather than compensatory damages.