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Sender:
Simon Macdonald
Date:
Mon, 24 Mar 2003 13:19:10
Re:
New Case

 

I am very interested by this sliding scale of gain-based damages, and the rationale therefor. Based solely on Andrew Burrows' summary, it looks to me that the CA are trying to compensate the claimant for some fictional loss (the "reasonable sum for the use of that material" would logically equate to some licence fee which the claimant could reasonably have expected to be paid for the use of the master tapes) by partially reversing the unjust enrichment of the defendant. This would seem to muddy the water. The defendant's breach of contract (unjust factor) produced profits (enrichment). Why should only some of this enrichment be reversed? The CA accepts that there is no loss, but a partial reversal of the enrichment must, it seems to me, be designed to provide the claimant with what the CA considers to be appropriate compensation, rather than to reward the wrongdoing defendant for its endeavours. Is the CA therefore providing a restitutionary remedy to compensate the claimant for what they calculate would have been his expectation interest had circumstances been different?

As to the distinction drawn between this case and Blake based on the relationship between the parties, this seems weak - it was surely the contractual rather than any fiduciary duty between Blake and his employer which rendered his enrichment unjust and required an account thereof? The distinction arguably adds a new tier to the unjust factor requirement, unless the suggestion is that for the wrongdoer, not having quasi-fiduciary obligations provides a defence to a claim for restitution.

There seem to be two results of all of this: 1. depending on the nature of fiduciary relations, a party may breach a contract safe in the knowledge that they will be entitled to keep the resulting profits, bar the proportion of which that the other party might have expected under some fictional contract permitting the breach. 2. it will be difficult to advise on quantum in relation to such a breach, as judges will have to be hypothetical rather than simply looking to profits made.

I look forward to learning that I have fundamentally misunderstood the issues!

 

Simon MacDonald

-----Original Message-----

From: Andrew Burrows
Sent: 24 March 2003 11:09
Subject: [RDG:] New Case

Dear all,

The new case referred to by Christopher Kirkbride, Experience Hendrix LLC v PPX Enterprises Inc is at [2003] EWCA 323. The main question at issue was what monetary remedy was the claimant company (constituting the estate of Jimi Hendrix) entitled to for breach of a 1973 settlement agreement with a record company (PPX). The breach of the settlement agreement constituted the use by PPX of certain master tapes. The CA held that an award of damages comprising a reasonable sum for use of that material (based on a proportion of the advances and royalties received by PPX) should be awarded but that a full account of all profits made from the breach should not be ordered. Wrotham Park Estates was therefore applied and AttGen V Blake was distinguished. The CA accepted that it was not awarding damages to compensate for any financial loss to the claimant: indeed counsel for the claimant accepted that he could not offer any evidence as to there being any loss. It seems to me that the reasoning shows that there is a sliding scale of gain-based damages through from awarding a proportion of the profits made (as here) to a full account of all profits made. Careful justifications were given by Mance LJ for why, in contrast to Blake, a full account of all profits was not here appropriate (eg in contrast to Blake there was no relationship between the parties that came close to being fiduciary).

 


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