Apart from the exceptional case where the claimant has truly ratified the defendant’s wrongdoing, the doctrine ofwaiver oftort should be rejected. Where the claimant chooses to base the restitutionary claim on the unjust enrichment principle rather than the tort, references to the doctrine of waiver can only cause confusion. The alternative analysis principle is a perfectly acceptable way of explaining what has happened. Where the claimant chooses to claim a restitutionary remedy rather than compensation for the tort, any reference to waiver of tort is misleading, since it suggests that the claimant’s cause of action is not founded on the tort where he or she seeks a restitutionary remedy. This is patently untrue. The doctrine should be confined to the agency context and it should otherwise be removed from the law of restitution.


(i) General Principles

Once it is accepted that restitutionary remedies are potentially available for the victim of a tort, it is still necessary to determine in what circumstances the commission of a tort may trigger the award of such remedies. When considering this question a number of key principles can be identified.

(1) The Compensation Principle

The general principle underlying the award of remedies for the commission of a tort is that the claimant who establishes that a tort has been committed will recover damages which are equivalent to the loss which he or she has suffered.[1] This is the compensation principle. It is a principle of fundamental importance to the law of restitution for torts since, if compensatory damages are considered to be an adequate remedy, the claimant will not be able to seek a gain-based-remedy for the tort.[2]

The notion of adequacy of compensatory damages is open to manipulation. It has even been held that, if the claimant has suffered no loss, gain-based remedies might not be available because compensatory damages remain an adequate remedy. This was recognized by the Court of Appeal in Devenish Nutrition Ltd v Sanofi-Aventis SA (France).[3] The dispute in Devenish arose from cartel agreements amongst competing suppliers of vitamins to increase their prices, which contravened EU competition law and constituted the tort of breach of statutory duty. The claimant had purchased vitamins from one of the suppliers to the prohibited agreements and then resold them for a profit. The claimant then sued the defendant for the tort of breach of statutory duty and sought an account of the defendant’s profits rather than compensatory damages, because it had mitigated its loss by passing the overcharge on to its customers. The Court of Appeal held that a gain-based remedy was precluded where compensatory damages were an adequate remedy. In determining whether compensatory damages are adequate, the court identified two principles:

  • (i) Difficulties in proving loss do not automatically render damages inadequate,[4] save where the evidential difficulties are not the responsibility of the claimant.[5]
  • (ii) Where no loss is suffered, as distinct from not being proven, compensatory damages may be regarded as an inadequate remedy,23 but where loss was not suffered because it had been passed on to customers, compensatory damages are not necessarily rendered inadequate,24 since allowing the claimant to obtain an account of profits in such circumstances would result in a windfall,25 which is unacceptable because the law should not transfer monetary gains from one underserving recipient to another.26

As a result of this second principle it was held that an account of profits was not available. This was described as embodying the ‘passing-on defence’. But whether the fact of passing-on really can negate loss suffered is a matter of significant evidential difficulty, which was ignored by the court. The claimant had argued at a late stage that the effect of the cartel agreements was to squeeze its margin so that it did suffer a loss despite the fact that the increase in prices had been passed on to customers. The fact that it is virtually impossible to prove that loss really had been passed on is a significant reason why a passing-on defence has not been recognized in the law of unjust enrichment.27 A more serious problem with the decision in Devenish relates to confining the claimant to nominal damages rather than awarding a gain-based remedy. Surely, if the claimant has not suffered loss, because it has been passed on, compensatory damages are no longer an adequate remedy and a gain-based remedy should have been available.

(2) Negotiation Damages

Sometimes damages will be awarded for tortious interference by the defendant with the claimant’s property or proprietary right even though the claimant has not suffered any pecuniary loss as a result of the interference. In these circumstances the damages which are awarded to the claimant are assessed by reference to what the defendant would have paid for the use of the property if he or she had negotiated with the claimant for its use. This is the so-called ‘user principle’,28 which is increasingly being called ‘negotiation damages’.29 It is a matter of some controversy whether the damages which are awarded by reference to this principle should be characterized as compensatory or restitutionary.

In a number of cases in which such a remedy has been awarded the remedy could be characterized either as compensating the claimant for the loss arising from the defendant’s use of the property without paying for it, or as depriving the defendant of a benefit, namely what the defendant saved by not paying the claimant for the use of the property. Indeed, in Inverugie Investments Ltd v Hackett31 the Privy Council said that this remedy ‘need not be characterised as exclusively compensatory, or exclusively restitutionary: it combines elements of both’. Despite this, there is a tendency in the cases to characterize negotiation damages as essentially compensatory.32

This is well illustrated by the decision of the Court of Appeal in Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd,33 where the defendant had hired switchboards from the claimant for use in the defendant’s theatre. After the contract of hire had come to an end the defendant retained the equipment and the claimant sued for the tort of detinue.34 It was accepted that the defendant was liable and the court held that the measure of damages should be assessed by reference to what the defendant would have had to pay to hire the equipment for the period during which the tort was being committed. For Somervell and Romer LJJ these damages were intended to compensate the claimant for the loss it had suffered by virtue of the fact that the defendant’s detention of the equipment had meant that the claimant was unable to make a profit from hiring the equipment to somebody else. But this identification of loss was highly artificial since it appeared that the claimant would not have been willing to hire out the equipment for the period during which the defendant had possession of it.35 Consequently, Denning LJ said that the damages were restitutionary36 and were assessed by reference to the benefit which the defendant had received by detaining the property without having to pay for its hire. But it is more appropriate to characterize the remedy as hybrid, since it embodies elements of compensation for the loss suffered by the claimant had it negotiated with the defendant, since the court is to assume that the claimant would have done so,37 and the gain made by the defendant in not having to pay for the use of the property.

(3) Identification of Loss to Establish the Tort

Sometimes, whether the claimant has suffered loss as a result of the defendant’s actions will be of crucial importance in determining whether the claimant can sue the defendant for a tort, since the identification of loss suffered by the claimant is a crucial element in establishing the cause of action. In such situations the question of loss suffered is an issue of substance rather than remedy. This was recognized by the Court of Appeal in Stoke-on-

  • 28 Stoke-on-Trent City Council v W and J Wass Ltd [1988] 1 WLR 1406, 1416 (Nicholls LJ).
  • 29 See p 429, above. 30 See further p 430, above.
  • 31 [1995] 1 WLR 713, 718.
  • 32 See Severn Trent Water Ltd v Barnes [2004] EWCA Civ 570, where damages for trespass to land were awarded to compensate the claimant for the loss of the opportunity to bargain with the defendant for the price of interfering with the claimant’s land rather than to deprive the defendant of any gain made by committing the tort. See also Harris v Williams-Wynne [2006] EWCA Civ 104, [2006] P and CR 27.
  • 33 [1952] 2 QB 246. 34 Today, this would be the tort of conversion.
  • 35 It is for this reason that Sharpe and Waddam’s analysis of such cases as involving the award of compensatory damages for the lost opportunity to bargain cannot be defended: RS Sharpe and SM Waddam, ‘Damages for Lost Opportunity to Bargain’ (1982) 2 OJLS 290. See p 428, above.
  • 36 See also ACES System Development Pte Ltd v Yenty Lily [2013] SGCA 53. 37 See p 431, above.

Trent City Council v W and J Wass Ltd,38 concerning the tort of nuisance which the claimant local authority alleged the defendant had committed by holding a market in close proximity to a market held by the claimant. Whereas the claimant had statutory authority to hold a market, the defendant lacked any authority to do so. Since the markets were held on the same day the defendant was held to be liable even though it could not be shown that the claimant had suffered any loss; such loss was presumed. But it was accepted that, if the markets had not been held on the same day, the defendant would only be liable to the claimant if it could be shown that the claimant had suffered loss as a result. If no loss had been suffered then ‘there is no cause of action’39 and without a cause of action there can be no question of remedies being awarded, whether compensatory or restitutionary, since no tort could be established.

  • [1] Stoke-on-Trent City Council v W and J WassLtd [1988] 1 WLR 1406,1410 (Nourse LJ). See also Ministryof Defence v Ashman [1993] 2 EGLR 102, 105 (Hoffmann LJ).
  • [2] Devenish Nutrition Ltd v Sanofi-Aventis SA (France) [2008] EWCA Civ 1086, [2009] Ch 390.
  • [3] Ibid. 3 Ibid, [146] (Longmore LJ); [157] (TuckeyLJ). 4 Ibid, [105] (Arden LJ).
  • [4] 23 Ibid. 24 Ibid, [110] (Arden LJ). 25 Ibid, [146] (Longmore LJ).
  • [5] 26 Ibid, [157] (TuckeyLJ). 27 See p 118, below.
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