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IS THERE A GENERAL PRINCIPLE IN FAVOUR OF THE AWARD OF GAIN-BASED REMEDIES FOR TORTS?

Analysis of the cases show that the possibility of a gain-based remedy being awarded for tort will generally only be seriously considered where the defendant’s wrongdoing involves interference with the claimant’s property in some way. Whilst it has sometimes been assumed that this is limited to misappropriation of property, it should certainly include interference with property rights, including the enjoyment of property. But if the focus is on wrongful proprietary interference, gain-based remedies will not be available where, for example, the defendant commits the torts of assault, battery, false imprisonment, malicious prosecution or defamation.1 6 In such circumstances the claimant will be confined to compensatory or perhaps exemplary damages, rather than a gain-based remedy. Usually where these torts have been committed the defendant will not have obtained a benefit, so the question of the availability of gain-based remedies does not arise.[1] But for some other non-proprietary torts the defendant may have obtained a benefit from the commission of the tort and so it might be appropriate to require the defendant to transfer this benefit to the claimant. This may sometimes be the case with the tort of negligence,[2] where, for example, the defendant negligently causes injury to the claimant as a result of economizing on safety precautions. It is also possible that the defendant might benefit from the commission of the tort of defamation where, for example, it can be shown that a newspaper’s circulation rose dramatically as a result of the publication of defamatory remarks about the claimant. Similarly, where the defendant commits the tort ofinducing a breach of contract, he or she may have obtained a benefit as a result of the wrongdoing, but this cannot usually be considered to involve interference with proprietary rights.[3]

It is consequently necessary to consider whether it is possible to justify confining gain- based relief to the proprietary torts. Is there a case for extending the law so that a gain- based remedy is potentially available for all torts? Although it is clear that this view does not yet represent English law,[4] it is a view which should be recognized by the courts.

Wherever the defendant has obtained a benefit as the result of the commission of a tort the claimant should be able to elect a gain-based remedy whereby the defendant is required to transfer to the claimant the value of any benefit obtained by the commission of the tort, although a full account of the defendant’s profits should be confined to the most serious forms of wrongdoing, which will typically be assessed with reference to the defendant’s culpability in seeking to profit from the commission of the wrong. Restitution is justified simply because no wrongdoer should be allowed to benefit from the commission of a wrong and the claimant is an appropriate recipient of the benefit because he or she is the victim of the wrong. This principle should be of general application regardless of the type of tort which the defendant has committed, since there is no policy reason why gain-based remedies should not be available in such circumstances.

The potential importance of recognizing that restitutionary relief should be available regardless of the tort committed by the defendant is illustrated by the remedies which are available for the tort of defamation. As the law stands, because defamation is concerned with hurt to feelings and injury to reputation[5] rather than injury to property, gain-based remedies are not available. Although exemplary damages can be awarded, they are a very blunt tool to deprive the defendant of benefits obtained from the tort, since their rationale is punishment rather than to ensure that the defendant does not profit from the commission of the tort,[6] [7] and, as the Law Commission has recognized, such damages should only be awarded in exceptional circumstances.1 3 It would be much more appropriate to recognize that a gain-based remedy is available, simply to ensure that the defendant is not allowed to profit from the commission of the tort.[8]

  • [1] Hambly v Trott (1776) 1 Cowp 371, 376; 98 ER 1136, 1139 (Lord Mansfield).
  • [2] Cf Jackman, ‘Restitution for Wrongs’, 311.
  • [3] That restitutionary remedies are available where the defendant has induced a breach of contract wasrecognized in the American case of Federal Sugar Refining Co v US Sugar Equalisation Board Inc (1920) 268F 575.
  • [4] Stoke-on-Trent CC v W and J Wass Ltd [1988] 1 WLR 1406, 1415 (Nourse LJ); Devenish Nutrition Ltd vSanofi-Aventis SA (France) [2008] EWCA Civ 1086, [2009] Ch 390, [39] (Arden LJ).
  • [5] See Cairns v Modi [2012] EWCA Civ 1382, [2013] 1 WLR 1015, [28] (Lord Judge CJ).
  • [6] Rookes v Barnard [1964] AC 1129, 1221 (Lord Devlin).
  • [7] Aggravated, Exemplary and Restitutionary Damages (Law Com No 247, 1997), 197.
  • [8] KH York, ‘The Extension of Restitutional Remedies in the Tort Field’ (1957) 4 UCLA Rev 499.A gain-based remedy for defamation was awarded in the American case of Ventura v Kyle 2014 WL6687499 (Minnesota).
 
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