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Are not your questions answered by Prof. Weinrib in his article "Restitutionary Damages as Corrective Justice"?

In fact, could not one say that there is only principle at play, i.e. corrective justice, in this situation. When you have had a violation of your right then you are entitled to either your loss or, provided the scope of the defendant's duty is wide enough, the defendant's gain.

Thus, in a property tort situation where you are entitled to the use, fruits and abuse of the thing owned, you can have disgorgement of any one of these from the defendant.

Just a thought.

Eoin O' Dell wrote:

Hello all;

Gordon Goldberg, in his reply to Lionel, asks

are not mesne profits measured according to the defendant's potential (rather than actual) gain? If yes, surely "disgorgement" is not an appropriate term? If no, please may I have another explanation of Inverugie Investments v. Hackett [1995] 1 W.L.R. 713?

This question is one of the many things that I have been trying to write something on, and the current version of a long rambling piece makes the following argument, which I hope (a) provides an answer to Gordon Goldberg, and (b) provokes a response from others which will help me to decide whether I actually agree with that answer:

... where, by the commission of a tort, a defendant has profited and thereby been enriched at the plaintiff's expense, the plaintiff has (at least) three possible claims:
(i) in tort, for damages in the compensation measure;
(ii) in tort, for damages in the restitution measure; and
(iii) in restitution, if a cause of action in restitution is also available on the facts.

... [As to damages in the restitution measure for torts (claim (ii)); there] are many examples of cases in which the courts have awarded damages in the restitution measure for the tort. A particularly strong line of authority is to be found in the context of the tort of trespass to land. As with any other tort, the victim, here the landowner, is entitled to damages from the tortfeasor. Where the trespasser is an overholding tenant, such damages are called mesne profits; as Lloyd LJ put it in Ministry of Defence v Ashman mesne profits are "simply damages for trespass recoverable against a tenant who holds over after the lawful termination of his tenancy". The phrase is, however, often used beyond this specific context, simply to refer to damages for any trespass to land. If the analysis above holds, then, for such trespass, the landowner is entitled to damages in the compensation measure in the ordinary way, and, in the alternative, to damages in the restitution measure (that is, claims (i) and (ii)). And, indeed, the mense profits cases reflect these alternative measures.

However, the determination of the plaintiff's loss and the consequent calculation of appropriate compensation is not always easy. For example, in Inverugie Investments v Hackett, ... Lord Lloyd ... [granted] the purely compensatory measure which the plaintiff had sought; in other words, the plaintiff had simply made a claim in tort for damages in the compensation measure (a claim (i) case). It is important to realise that the plaintiff did not make a claim in tort for damages in the restitution measure (a claim (ii) case); as Lord Lloyd put it, he "was not asking for an account of profits, perhaps because the hotel was running at a loss ".

As to the restitution measure (that is, claim (ii)), beyond damages in the compensation measure, there is a line of authority which awards damages in the restitution measure for such a trespass to land. ... [Whitwham v Westminster Brymbo Coal and Coke Co,; Penarth Dock Engineering v Pounds; Bracewell v Appleby; Swordheath Properties v Tabet; ] ... In Ministry of Defence v Ashman [and its companion case. In Ministry of Defence v Thompson] ... Hoffmann LJ treated the claim for mesne profits as a claim for restitution, even though "in the earlier cases it ha[d] not been expressly stated that a claim for mesne profit for trespass can be a claim for restitution. Nowadays I do not see why we should not call a spade a spade". Having sought mesne profits, he held that the had therefore "elected for a restitutionary remedy" in which all "that matters is the value of benefit which the defendant has received"...

Much of what Hoffmann LJ said in this case is questionable. ... First, it does not follow from claiming mense profits that the Ministry of Defence really elected for a restitutionary remedy. As Lloyd LJ pointed out mesne profits are "simply damages for trespass recoverable against a tenant who holds over after the lawful termination of his tenancy" and there is nothing in that to require that the remedy be restitutionary; indeed, the landowner is entitled to damages either in the compensation measure or in the restitution measure. Second, even if by seeking mesne profits the Ministry really had sought a restitutionary remedy, this should have been regarded as a claim in tort for damages in the restitution measure (claim (ii)), rather than, as Hoffmann LJ seems to have treated it, an independent claim in restitution (autonomous unjust enrichment; claim (iii)). Indeed, as Lloyd LJ pointed out, the Ministry never pleaded anything except tort, which ought to have precluded the third option. Nevertheless, and quite without warrant, Hoffmann LJ seems to have treated the Ministry's claim as one in autonomous unjust enrichment; certainly, in the later case of Inverugie v Hackett, Lord Lloyd of Berwick (as Lloyd LJ had by then become) characterised Hoffmann LJ's approach in Ashman as "a restitutionary claim as an independent cause of action".

... Whitwham , Penarth , Bracewell, Swordheath, Ashman and Thompson illustrate the availability of damages in the restitution measure for the tort of trespass to land as an alternative to damages in the compensation measure. ... [However] analysis is bedevilled by attempts to characterise mesne profits and similar cases as embodying one principle, whether that principle is a compensatory one in that the cases remedy the plaintiffs' losses, or a restitutionary one in that the cases reverse defendants' unjust enrichments. As a consequence of characterisation of cases as involving only compensation or only restitution, many cases on one are often characterised as cases on the other. For example, in Inverugie, the plaintiff sought damages in the compensation measure, and, in awarding the going rental rate for all 30 apartments for 151/2 years, Lord Lloyd gave him just that: he gave the plaintiff compensation for his losses. And yet it is easy to characterise the remedy as benefit-based. Mitchell ([1995] LMCLQ 343) does so, focussing on the fact that the defendant had the benefit of the use of the property. However, on the facts of Inverugie, this is a "strained" analysis (see Burrows and McKendrick); but on the facts of many other cases, such an analysis would be entirely appropriate. In such cases, there would be an identity between the plaintiff's gain and the defendant's loss. Strand Electric provides an excellent example, in which the loss-based approach of the majority and the benefit-based approach of Denning LJ arrived at the same result and awarded damages based upon the reasonable hire of the goods; it represented both the loss to the hirer plaintiff and the gain to the using defendant. Hence, in a future case, a judge could award damages based simply upon the reasonable hire of the goods, and credibly be cited thereafter as having taken both a compensatory and a restitutionary approach. With less justification, such a judge who expressly awards compensation might be treated subsequently as having awarded restitution, and vice versa. (Lloyd LJ in Ashman so mischaracterises the approach of the Court of Appeal in Swordheath Properties v Tabet and of Lord Denning in Penarth Dock Engineering v Pounds . ..., the best view of these cases is that they are examples of damages in the restitution measure for the respective torts). Furthermore, there are mesne profits cases in which the plaintiff has suffered no loss though the defendant has gained; Penarth Dock may be an example, and Swordheath Properties probably is. And there are mesne profits cases in which the plaintiff has suffered a small loss but the defendant has made a larger gain. Whitwham is an example. In all such cases, the remedy is expressly gain-based. To attempt to mischaracterise it as loss-based is disingenuous at best (see Nicholls LJ in Stoke on Trent CC v W&J Wass; and Lord Lloyd in Inverugie v Hackett); indeed, this ease of characterisation, recharacterisation and, perhaps, mischaracterisation, does not aid clarity of analysis.

Hence, though in some cases there might properly be an indentity between the plaintiff's loss and the defendant's gain, it is not a necessary identity, so that in many other cases the plaintiff's loss does not equal the defendant's gain. The appropriate conclusion to draw is that the cases illustrate that whilst in general a plaintiff is entitled to damages in the compensation measure, in an appropriate case, he is also entitled to damages in the restitution measure. The cases embody not one single principle but two alternative measures: the compensation measure and the restitution measure. When a case considers itself as an example of one measure, it should not be presented as an example of the other. To do so leads to the first problem which has bedevilled analysis of the mesne profits cases, which is, to miss that the cases provide examples of two measures (compensation and restitution) and instead to try to fit all of the cases into only one.

If you've got this far, thanks for reading this.

Best from Dublin

 

Eoin.

EOIN O'DELL BCL(NUI) BCL(Oxon)
Editor, Dublin University Law Journal.
Barrister, Lecturer in Law, Trinity College, Dublin 2, Ireland.
(353/0 1) 608 1178 (w) 677 0449 (fx); (353/0 86) 286 0739 (m)
(All opinions are personal. No legal responsibility whatsoever is accepted.)