(A) THE GENERAL PRINCIPLE DENYING RESTITUTION FOR BREACH OF CONTRACT
A number of cases have recognized that gain-based remedies are not available where the defendant has breached a contract.[1] This was acknowledged most clearly by Megarry V-C in Tito v Waddell (No 2),8 where the defendant mining company had contracted with the claimants, the inhabitants of Ocean Island, to replant the island once the defendant had completed its mining operations there. The defendant failed to replant the island and the claimants sued for breach of contract. They were awarded only nominal damages since they had not suffered any loss as a result of the breach. This was because the claimants were no longer living on the island, and did not intend to return to it, so they would not have incurred expenditure themselves in replanting the island. Also, the difference between the value of the island with and without replanting was trivial. The claimants had claimed that the measure of damages should be the amount of money which the defendant had saved in failing to replant the island as it had promised, but Megarry V-C rejected this gain-based measure. He said:[2] [3] ‘If the defendant has saved himself money, as by not doing what he has contracted to do, that does not of itself entitle the plaintiff to recover the saving as damages: for it by no means necessarily follows that what the defendant has saved the plaintiff has lost.’
The judge assumed that damages for breach of contract could only be measured by reference to the claimant’s loss and he considered this to be an absolute rule without exceptions.
- [1] See, for example, Teacher v Calder [1899] AC 451, 467 (Lord Davey); The Siboen and the Sibotre [1976] 1Lloyd’s Rep 293, 337 (Kerr J); and Surrey CC v Bredero Homes Ltd [1993] 1 WLR 1361, 1364 (Dillon LJ).
- [2] [1977] Ch 106. 2 Ibid, 332. 10 [2001] 1 AC 268.
- [3] 11 [2003] EWCA Civ 323, [2003] 1 All ER (Comm) 830, 836. 12 See Chapter 13.
