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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Devenish Nutrition Ltd v Sanofi-Aventis SA (France) & Ors (Rev 1)  EWCA Civ 1086 (14 October 2008)
Cite as:  3 WLR 198,  UKCLR 783,  EWCA Civ 1086,  Ch 390,  3 All ER 27,  Bus LR 858
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE ARDEN
LORD JUSTICE LONGMORE
| DEVENISH NUTRITION LIMITED
|- and -
|SANOFI-AVENTIS SA (FRANCE) & ORS
Hearing dates : 17-18 June 2008
Crown Copyright ©
Lady Justice Arden :
Background to the present case
'on the facts as pleaded in the Particulars of Claim and as found in the Commission Decision of 21st November 2001 (OJ 2003 L6, p.1) . . . whether the Claimants would be entitled to all or any of the following heads of relief as pleaded in the Particulars of Claim (including any subsequent amendments thereto):
a) an account of profits
b) restitution of unjust enrichment
c) exemplary damages.'
" I am not therefore persuaded that evidential difficulties of exact proof are insuperable difficulties to effective compensation as a matter of domestic law. Nor am I persuaded that the usual techniques by which the courts award damages in domestic cases are inadequate to produce a fair result."
"In the price or hire cases, the damages have been assessed as user damages. This is an objective measure and is awarded where, in financial terms, the claimant has suffered no loss. It is not a case of a claimant having suffered financial loss but having evidential difficulties in proving it. It is precisely because he has suffered no loss that the law's response is to seek a different way to compensate him for the invasion of his rights." ()
"He then considered the cases in which damages had been awarded in lieu of an injunction, including the Wrotham Park case. He said of these cases that:
'The measure of damages awarded in this type of case is often analysed as damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right. This analysis is correct.' (See  AC 268 at 281.)
…If analysed in the way that Lord Nicholls approved, these cases can be seen as cases in which the claimant is compensated for what he has lost, rather than cases in which the defendant is stripped of his gains. However, Lord Nicholls also said of these cases that:
'In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained.' (See  AC 268 at 283–284.)" (-)
" Stoke-on-Trent City Council v W & J Wass Ltd and Halifax Building Society v Thomas do, in my judgment, show that a restitutionary award is not yet generally available in all cases of tort. Both these cases are decisions of the Court of Appeal and hence binding on me. Stoke-on-Trent City Council v W & J Wass Ltd was not cited or referred to in A-G v Blake but since Lord Nicholls participated in Stoke-on-Trent City Council v W & J Wass Ltd (as Nicholls LJ) and gave the leading speech in A-G v Blake it would be odd if he had undergone a Damascene conversion about the availability of restitutionary awards across the board in tort cases and yet had not referred to his earlier judgment.
 On the basis of the decisions of the Court of Appeal in Stoke-on-Trent City Council v W & J Wass Ltd and Halifax Building Society v Thomas I conclude that whatever the law ought to be, it is not (yet) the law that a restitutionary award is available in all cases of tort. In my judgment a restitutionary award is not an available remedy in an antitrust case. If the law is to be changed, it must be done by a higher court than this one. Moreover, even where a restitutionary award is available, it is generally awarded where an award of more traditionally-based compensatory damages would be inadequate to compensate the claimant for the invasion of his rights. Yet in the present case, Dr Veljanovski says that the measure of restitutionary damages is the same as the measure of compensatory damages. If that is so, then on the assumed facts compensatory damages would be an adequate remedy.
 I conclude therefore that, on the assumptions I am required to make, a restitutionary award is not available in the present case.
ACCOUNT OF PROFITS
 The defendants' primary position is that Stoke-on-Trent City Council v W & J Wass Ltd precludes an account of profits just as it precludes a restitutionary award. For the reasons I have given I consider that they are right."
" In addition there is (once again) the problem that there are multiple claimants and that the claimants before the court are only part of the class of persons injured by the tort. Goff & Jones, discussing the hypothetical case of a factory that creates a nuisance to a neighbourhood say (p 814 (para. 36-008)):
'The difficulties confronting a court in measuring and valuing the benefit gained by the factory owner at the expense of the individual householder (possibly the value of an individual licence) in this example persuade us that, in some situations, where there may well be multiple claimants who suffer loss from a tortious act, a restitutionary claim should be denied. Legal problems apart, any judicial inquiry, with the possibly complex attendant evidence which will have to be introduced, may well be inefficient in economic terms.'"
" Second, the representative claimants (Moy Park and Devenish) occupy different levels in the supply chain. Each of them has downstream customers, and in the case of Moy Park upstream suppliers as well. But unless all relevant claimants are before the court, how is the profit made by the defendants to be allocated? There is no clear answer to that question. If no account is taken of whether a particular claimant passed through price increases to a downstream customer, then that claimant might itself be unjustly enriched. An avoidance of unjust enrichment of a claimant is a factor to which the ECJ drew attention in Courage Ltd v Crehan  QB 507. But if account is taken of 'pass through', then an account of profits hardly differs from the measure of compensatory damages which the claimants advocate (and which I must assume will succeed). Moreover, if the two measures differ one cannot exclude the possibility that, if an account of profits were to be available, some claimants with better evidence might choose an award of compensatory damages, while other claimants with worse evidence might choose an account of profits. I do not think that it would be fair for remedies to be mixed and matched."
" Third, if an account of profits were available, the fact that all the defendants have been fined (even though the fine imposed upon Aventis has been commuted) would have to be taken into account. Mr Layton argues that part of the rationale for the award of an account of profits is deterrence. But as I see it the question of deterrence has already been dealt with by the imposition of fines and not to take those fines into account would be double punishment.
 Finally, the scale of the inquiry that would be required in the case of these defendants all of which are or are parts of multi-national groups must be taken into account. The evidence about this is contained in the witness statements of Mr McDougall, Mr Lawrence, Mr Brown and Dr Baechli. It is very likely that disclosure of documents would be both enormous and multi-lingual, would require consideration of taxation and accounting methods in differing jurisdictions and a difficult exercise in allocating profits as between vitamins that formed part of the cartels and other products. In addition in the case of the Roche defendants, the relevant vitamin businesses have been sold to a third party with the result that the Roche defendants no longer have access to the relevant documents. Mr Layton said that these concerns could be met by limiting the scope of the account, but no concrete suggestion was advanced."
i) Was the judge correct to hold that a restitutionary award cannot be made for a non-proprietary tort?
ii) Would a restitutionary remedy be available in the circumstances of this case? In particular, was the judge correct to hold that a restitutionary remedy would not be available because compensatory damages would have been adequate?
iii) Was the judge right to hold that a further difficulty, precluding the grant of a restitutionary award was that not all potential claimants were before the court?
"Usurping the Claims of Unjust Enrichment
Scott and Seavey, writing about Restatement in the 1930s, spoke of 'the tripartite division of the law into contracts, torts and restitution'. That is, by any standards, a horrible division. On the same level would be a division of animals between carnivores, herbivores and amphibians. The third term tells you the habitat, the first two the eating habit. It follows that the terms must cut across each other. Alligators are carnivorous and amphibious. In the same way restitution cuts across contracts and torts. If you promise to repay a sum which I gave you, I have a contractual right to restitution. Again, for many wrongs, be they torts or breaches of equitable duty or breaches of contract, I can get restitution (gain-based recovery)." (A Letter to America: The New Restatement of Restitution (2003) 3 GJF 1 at 13)"
"59….To label an award of damages on the Wrotham Park basis as a 'compensatory' remedy and an order for an account of profits as a 'gains-based' remedy does not assist an understanding of the principles on which the court acts. The two remedies should, I think, each be seen as a flexible response to the need to compensate the claimant for the wrong which has been done to him.
60. It follows therefore that, although I would reject the premise on which the contentions in para. 4 of the amended application notice are based—that an award of damages on the Wrotham Park basis is not an award of compensatory damages, but it is properly to be characterised as a gains-based award—I would accept that, on a true analysis, the allegation in sub-para. (d)—that the remedy now sought by the Fund (an award of damages on the Wrotham Park basis) is 'a juridically highly similar remedy to, the relief [an account of profits] previously sought'—is well-founded."
"where any injury is to be compensated by damages, in settling the sum of money to be given to reparation of damages you should as nearly as possible get at that sum of money which will put the party who has been injured or how has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation. That must be qualified by a great many things which may arise –such, for instance, as by the consideration, whether the damage has been maliciously done…"
"My Lords, George Blake is a notorious, self-confessed traitor."
"So I turn to established, basic principles. I shall first set the scene by noting how the court approaches the question of financial recompense for interference with rights of property. As with breaches of contract, so with tort, the general principle regarding assessment of damages is that they are compensatory for loss or injury. The general rule is that, in the oft quoted words of Lord Blackburn, the measure of damages is to be, as far as possible, that amount of money which will put the injured party in the same position he would have been in had he not sustained the wrong: Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39. Damages are measured by the plaintiff's loss, not the defendant's gain. But the common law, pragmatic as ever, has long recognised that there are many commonplace situations where a strict application of this principle would not do justice between the parties. Then compensation for the wrong done to the plaintiff is measured by a different yardstick. A trespasser who enters another's land may cause the landowner no financial loss. In such a case damages are measured by the benefit received by the trespasser, namely, by his use of the land. The same principle is applied where the wrong consists of use of another's land for depositing waste, or by using a path across the land or using passages in an underground mine. In this type of case the damages recoverable will be, in short, the price a reasonable person would pay for the right of user: see Whitwham v Westminster Brymbo Coal and Coke Co  2 Ch 528, and the "wayleave" cases such as Martin v Porter (1839) 5 M & W 351 and Jegon v Vivian (1871) 6 Ch App 742. A more recent example was the non-removal of a floating dock, in Penarth Dock Engineering Co Ltd v Pounds.  1 Lloyd's Rep 359.
The same principle is applied to the wrongful detention of goods. An instance is the much cited decision of the Court of Appeal in Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd  2 QB 246, concerning portable switchboards. But the principle has a distinguished ancestry. The Earl of Halsbury LC famously asked in The Mediana  AC 113, 117, that if a person took away a chair from his room and kept it for 12 months, could anybody say you had a right to diminish the damages by showing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? To the same effect was Lord Shaw's telling example in Watson, Laidlaw & Co Ltd v Pott, Cassels and Williamson (1914) 31 RPC 104, 119. It bears repetition:
"If A, being a liveryman, keeps his horse standing idle in the stable, and B, against his wish or without his knowledge, rides or drives it out, it is no answer to A for B to say: 'Against what loss do you want to be restored? I restore the horse. There is no loss. The horse is none the worse; it is the better for the exercise.'"
Lord Shaw prefaced this observation with a statement of general principle:
"wherever an abstraction or invasion of property has occurred, then, unless such abstraction or invasion were to be sanctioned by law, the law ought to yield a recompense under the category or principle … either of price or of hire."
That was a patent infringement case. The House of Lords held that damages should be assessed on the footing of a royalty for every infringing article.
This principle is established and not controversial. More difficult is the alignment of this measure of damages within the basic compensatory measure. Recently there has been a move towards applying the label of restitution to awards of this character: see, for instance, Ministry of Defence v Ashman,  2 EGLR 102105 and Ministry of Defence v Thompson  2 EGLR 107. However that may be, these awards cannot be regarded as conforming to the strictly compensatory measure of damage for the injured person's loss unless loss is given a strained and artificial meaning. The reality is that the injured person's rights were invaded but, in financial terms, he suffered no loss. Nevertheless the common law has found a means to award him a sensibly calculated amount of money. Such awards are probably best regarded as an exception to the general rule." (pages 278-9)
"Considered as a matter of principle, it is difficult to see why equity required the wrongdoer to account for all his profits in these cases, whereas the common law's response was to require a wrongdoer merely to pay a reasonable fee for use of another's land or goods. In all these cases rights of property were infringed. This difference in remedial response appears to have arisen simply as an accident of history." (page 280)
"The measure of damages awarded in this type of case is often analysed as damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right. This analysis is correct. The court's refusal to grant an injunction means that in practice the defendant is thereby permitted to perpetuate the wrongful state of affairs he has brought about. But this analysis takes the matter now under discussion no further forward. A property right has value to the extent only that the court will enforce it or award damages for its infringement. The question under discussion is whether the court will award substantial damages for an infringement when no financial loss flows from the infringement and, moreover, in a suitable case will assess the damages by reference to the defendant's profit obtained from the infringement. The cases mentioned above show that the courts habitually do that very thing." (page 281)
"In reaching his conclusion the judge applied by analogy the cases mentioned above concerning the assessment of damages when a defendant has invaded another's property rights but without diminishing the value of the property. I consider he was right to do so. Property rights are superior to contractual rights in that, unlike contractual rights, property rights may survive against an indefinite class of persons. However, it is not easy to see why, as between the parties to a contract, a violation of a party's contractual rights should attract a lesser degree of remedy than a violation of his property rights. As Lionel D Smith has pointed out in his article "Disgorgement of the profits of Breach of Contract: Property, Contract and 'Efficient Breach'" (1995) 24 Can BLJ 121, it is not clear why it should be any more permissible to expropriate personal rights than it is permissible to expropriate property rights.
The Wrotham Park case, therefore, still shines, rather as a solitary beacon, showing that in contract as well as tort damages are not always narrowly confined to recoupment of financial loss. In a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The defendant must make a reasonable payment in respect of the benefit he has gained. " (pages 283-4)
"My conclusion is that there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract. I prefer to avoid the unhappy expression "restitutionary damages". Remedies are the law's response to a wrong (or, more precisely, to a cause of action). When, exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his breach of contract. In the same way as a plaintiff's interest in performance of a contract may render it just and equitable for the court to make an order for specific performance or grant an injunction, so the plaintiff's interest in performance may make it just and equitable that the defendant should retain no benefit from his breach of contract.
The state of the authorities encourages me to reach this conclusion, rather than the reverse. The law recognises that damages are not always a sufficient remedy for breach of contract. This is the foundation of the court's jurisdiction to grant the remedies of specific performance and injunction. Even when awarding damages, the law does not adhere slavishly to the concept of compensation for financially measurable loss. When the circumstances require, damages are measured by reference to the benefit obtained by the wrongdoer. This applies to interference with property rights. Recently, the like approach has been adopted to breach of contract. Further, in certain circumstances an account of profits is ordered in preference to an award of damages. Sometimes the injured party is given the choice: either compensatory damages or an account of the wrongdoer's profits. Breach of confidence is an instance of this. If confidential information is wrongfully divulged in breach of a non-disclosure agreement, it would be nothing short of sophistry to say that an account of profits may be ordered in respect of the equitable wrong but not in respect of the breach of contract which governs the relationship between the parties. With the established authorities going thus far, I consider it would be only a modest step for the law to recognise openly that, exceptionally, an account of profits may be the most appropriate remedy for breach of contract. It is not as though this step would contradict some recognised principle applied consistently throughout the law to the grant or withholding of the remedy of an account of profits. No such principle is discernible.
The main argument against the availability of an account of profits as a remedy for breach of contract is that the circumstances where this remedy may be granted will be uncertain. This will have an unsettling effect on commercial contracts where certainty is important. I do not think these fears are well founded. I see no reason why, in practice, the availability of the remedy of an account of profits need disturb settled expectations in the commercial or consumer world. An account of profits will be appropriate only in exceptional circumstances. Normally the remedies of damages, specific performance and injunction, coupled with the characterisation of some contractual obligations as fiduciary, will provide an adequate response to a breach of contract. It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise. No fixed rules can be prescribed. The court will have regard to all the circumstances, including the subject matter of the contract, the purpose of the contractual provision which has been breached, the circumstances in which the breach occurred, the consequences of the breach and the circumstances in which relief is being sought. A useful general guide, although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant's profit-making activity and, hence, in depriving him of his profit." (page 284-5)
"The broad proposition that a wrongdoer should not be allowed to profit from his wrong has an obvious attraction. The corollary is that the person wronged may recover the amount of this profit when he has suffered no financially measurable loss. As Glidewell LJ observed in Halifax Building Society v Thomas  Ch 217, 229, the corollary is not so obviously persuasive." (page 278)
" The inspiration for the appellant's amendment of its case was the House of Lords decision in A-G v Blake (Jonathan Cape Ltd, third party)  1 AC 268. This marks a new start in this area of law. The exposition by counsel before us of prior authority threw light on considerations which may still be relevant to its future development. But, as I see the decision in Blake's case, it freed us from some constraints that prior authority in this court (particularly Surrey CC v Bredero Homes Ltd,  1 WLR 1361 and some of the reasoning in Jaggard v Sawyer  1 WLR 269) would have imposed. To apply Lord Steyn's words, Blake's case leaves future courts with the task of 'hammering out on the anvil of decided cases' when and how far remedies such as the appellant now seeks should be available. The original Nibelungen produced a powerful image of restitution. The appellant invites us to fashion a modern and more deliberate equivalent on Jimi Hendrix's legacy."
"As in Blake, we are concerned with a breach of a negative obligation, and PPX did do the very thing it had contracted not to do." (per Mance LJ at )
"…the breaches, though deliberate, took place in a commercial context. PPX, though knowingly and deliberately breaching its contract, acted as it did in the course of a business, to which it no doubt gave some expenditure of time and effort and probably the use of connections and some skill …An account of profits would involve a detailed assessment of such matters, which, as is very clear from Blake, should not lightly be ordered… I would confine any financial remedy to an order that [the defendant] pay a reasonable sum for its use of material in breach of the settlement agreement. That sum can properly be described as being "such some as might reasonably have been demanded" by [the appellant] as a quid pro quo for agreeing to permit the two licences into which [the defendant] entered in breach of the settlement agreement, which was the approach adopted by Brightman J. in the Wrotham Park case." (, )
"Although the Wrotham Park case related to an infringement of a property right, there having been a breach of a restrictive covenant imposed for the benefit of an estate, it is noticeable that Lord Nicholls did not treat the significance of the case as so limited. He discussed the case in the section of his judgment (commencing at  1 AC 268 at 282) dealing with breach of contract. It is apparent that he regarded the case as a guiding authority on compensation for breach of a contractual obligation. True it is that the action was brought against the successor in title of the original covenantor; but it could hardly be suggested that the result would have been different if the parties had been the original contracting parties."
" In my judgment the remedy of an account of profits should be available for breaches of contract such as these. First, damages is an inadequate remedy. It is almost impossible to attribute lost sales to a breach by one out of several hundred dealers who operated Pricewatch. Second, the obligation to implement and maintain the recommended pump prices was fundamental to Pricewatch. Failure to observe it gives the lie to the advertising campaign by which it was publicised and therefore undermines the effectiveness of Pricewatch in achieving the benefits intended for both Esso and all its dealers within Pricewatch. Third, complaint was made of Niad on four occasions. On all of them Niad appeared to comply without demur. It now appears that the breaches of its obligation were much more extensive than Esso at first thought. Fourth, Esso undoubtedly has a legitimate interest in preventing Niad from profiting from its breach of obligation.
 I turn then to the restitutionary remedy. It is undoubted that Niad obtained a benefit, in the form of the price support, to which it was only entitled if it complied with its obligation to implement and maintain the recommended pump prices to be supported. In these circumstances it can hardly be denied that Niad was enriched to the extent that it charged pump prices in excess of the recommended prices. The enrichment was unjust because it was obtained in breach of contract. It was obtained at the expense of Esso because Esso was providing price support for a lower price than that charged by Niad. I can see no reason why this remedy should be unavailable to Esso if it wishes to pursue it. Indeed it appears to me to be the most appropriate remedy in that it matches most closely the reality of the case, namely that Niad took an extra benefit to which it was not entitled. It is just that it should be made to restore it to its effective source."
"The general rule is that a successful plaintiff in an action in tort recovers damages equivalent to the loss which he has suffered, no more and no less. If he has suffered no loss, the most he can recover are nominal damages. A second general rule is that where the plaintiff has suffered loss to his property or some proprietary right, he recovers damages equivalent to the diminution in value of the property or right. The authorities establish that both these rules are subject to exceptions. These must be closely examined, in order to see whether a further exception ought to be made in this case.
The first and best-established exception is in trespass to land. It originated in the wayleave cases, where the defendant trespassed by carrying coals along an underground way through the plaintiff's mine. Although the value of his land had not been diminished by the trespass, the plaintiff recovered damages equivalent to what he would have received if he had been paid for a wayleave: see Martin v Porter (1839) 5 M & W 351, 151 ER 149; Jegon v Vivian (1871) LR 6 Ch App 742; and Phillips v Homfray Fothergill v Phillips (1871) LR 6 Ch App 770. ..
The second exception is in detinue….
The third exception is in infringement of patents: see Meters Ltd v Metropolitan Gas Meters Ltd (1911) 28 RPC 157; Watson Laidlaw & Co Ltd v Pott Cassels and Williamson (1914) 31 RPC 104 and General Tire and Rubber Co v Firestone Tyre and Rubber Co Ltd  1 WLR 819. ..To these exceptions to the general rules in tort must be added the decision of Brightman J in Wrotham Park Estate Co v Parkside Homes Ltd  1 WLR 798…
As I understand these authorities, their broad effect is this. In cases of trespass to land and patent infringement and in some cases of detinue and nuisance the court will award damages in accordance with what Nicholls LJ has aptly termed 'the user principle'. On an analogous principle, in a case where there was a breach of a restrictive covenant the court has, in lieu of a permanent mandatory injunction to restore the breach, awarded damages equivalent to the sum which the plaintiffs might reasonably have demanded for a relaxation of the covenant. But it is only in the last-mentioned case and in the trespass cases that damages have been awarded in accordance with either principle without proof of loss to the plaintiff. In all the other cases, the plaintiff having established his loss, the real question has not been whether substantial damages should be awarded at all, but whether they should be assessed in accordance with the user principle or by reference to the diminution in value of the property or right. In other words, those other cases are exceptions to the second, but not to the first, of the general rules stated above." (pages 1410-4)
"I think that if the user principle were to be applied here there would be an equal difficulty in distinguishing other cases of more common occurrence, particularly in nuisance. Suppose a case where a right to light or a right of way had been obstructed to the profit of the servient owner but at no loss to the dominant owner. It would be difficult, in the application of the user principle, to make a logical distinction between such an obstruction and the infringement of a right to hold a market. And yet the application of that principle to such cases would not only give a right to substantial damages where no loss had been suffered but would revolutionise the tort of nuisance by making it unnecessary to prove loss. Moreover, if the principle were to be applied in nuisance, why not in other torts where the defendant's wrong can work to his own profit, for example in defamation? As progenitors of the rule in trespass and some other areas, the wayleave cases have done good service. But just as their genus is peculiar, so ought their procreative powers to be exhausted.
These considerations have led me to conclude that the user principle ought not to be applied to the infringement of a right to hold a market where no loss has been suffered by the market owner. If loss caused by the diversion of custom from one market to the other had been proved, I would have agreed with Nicholls LJ that the general rule ought to apply, so that the council would have recovered damages equivalent to the diminution in value of its right through the loss of stallage, tolls and so forth. But I rest my decision in this case on the simple ground that where no loss has been suffered no substantial damages of any kind can be recovered. Otherwise we would have to allow that the right to recover nominal damages for disturbance of a same-day market without proof of loss had become one to receive substantial damages on top. If we had to allow that, why not also in the case of another-day market where no loss had been proved? It is possible that the English law of tort, more especially of the so-called 'proprietary torts', will in due course make a more deliberate move towards recovery based not on loss suffered by the plaintiff but on the unjust enrichment of the defendant: see Goff and Jones The Law of Restitution (3rd edn, 1986) pp 612–614. But I do not think that that process can begin in this case and I doubt whether it can begin at all at this level of decision." (page 1415)
"It is true that in the earlier cases it has 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. In this case the Ministry of Defence elected for the restitutionary remedy."
"It is an established principle concerning the assessment of damages that a person who has wrongfully used another's property without causing the latter any pecuniary loss may still be liable to that other for more than nominal damages. In general, he is liable to pay, as damages, a reasonable sum for the wrongful use he has made of the other's property. The law has reached this conclusion by giving to the concept of loss or damage in such a case a wider meaning than merely financial loss calculated by comparing the property owner's financial position after the wrongdoing with what it would have been had the wrongdoing never occurred. Furthermore, in such a case it is no answer for the wrongdoer to show that the property owner would probably not have used the property himself had the wrongdoer not done so. In Mediana (owners) v Comet (owners), The Mediana [1900 AC 110 at 117, [1900–3] All ER Rep 126 at 129 the Earl of Halsbury LC made the famous observation that a defendant who had deprived the plaintiff of one of the chairs in his room for 12 months could not diminish the damages by showing that the plaintiff did not usually sit on that chair or that there were plenty of other chairs in the room."
"The common law, however, is constantly being developed and adapted as social conditions change, and novelty by itself is not an answer to the present claim. Indeed, for some time I was attracted by the analogy between infringement of a patent and infringement of a market right. The argument is to the following effect. The owner of a market right has a legal monopoly in respect of the holding of a market within a certain area. If, for the purpose of assessment of damages on the user principle, infringement of a patent is to be regarded as the invasion and abstraction by the infringer of the property which consists of the monopoly of the patented articles granted to the patentee, as Lord Shaw observed in the passage I have cited from the Watson Laidlaw case, so also is the disturbance of a market right to be regarded as the invasion and abstraction of the property which consists of the monopoly of the holding of a market in the place in question. In other words, if the infringement of a patent is to be regarded as the wrongful user of the property comprised in the patent, then by parity of reasoning the disturbance of a market right may properly be regarded as the wrongful user of the property comprised in the market right. If, in the one instance, damages may be awarded on the user principle in a suitable case, so may they be in the other instance.
I have, however, concluded that the analogy is unsound and that the application of the user principle in the case of the disturbance of a market right would not accord with the basic principles applicable to that cause of action. A market right confers a monopoly, as does a patent, but the protection which the law affords to the owner of a market right is limited to protecting him against being disturbed in the enjoyment of his right. If an unauthorised market is held without disturbing the lawful market, the owner of the lawful market has no remedy, either for damages or otherwise. In such an event there is no place for an award of damages to be assessed on the user principle. Thus, for example, if and so long as the owner of the market right is currently not exercising or seeking to exercise his right, and is not holding a market at all, he has no cause of action against a person holding an unauthorised market, for in such a case he is not being disturbed in the enjoyment of his market right (cf Channell B in Dorchester Corp v Ensor (1869) LR 4 Exch 335 at 339, where a market was not being held on one of the material days)."
"32. An actionable nuisance does not involve the misappropriation of the claimant's rights in the same way, even as in a case of trespass, let alone as in a case of conversion or copyright or trademark infringement. The essence of the tort is that the claimant's rights to the reasonable enjoyment of her property have been infringed by the use which the defendant makes of his own land. On the face of it, this should not entitle the claimant, in my judgment, to more than compensation for the loss which she has actually suffered; but the highest that it could be put on the authorities is that the claimant can, in appropriate cases, obtain an award calculated by reference to the price, which the defendant might reasonably be required to pay for a relaxation of the claimant's rights so as to avoid an injunction. This, as already explained, falls a long way short of being awarded the whole profit for the development, which is far in excess and completely unrelated to the measure of loss suffered by the claimant.
33. Mr Ley referred us to a passage in Lord Keith's speech in A-G v Guardian Newspapers Ltd  1 AC 109,  3 WLR 776, but that was also an action for breach of confidence where equity has always asserted a jurisdiction to order an account of profits; it is not authority for the making of such an order in a case of nuisance. It seems to me that the judge would have been entitled to reject the claim for an account of profits outright, simply on the basis that it was not an available remedy in an action for nuisance; but even if that is wrong, his acceptance that one needs to show exceptional circumstances is not, in my judgment, open to criticism."
"Attractively though Mr. Waters has argued the point, I remain wholly unpersuaded that in the circumstances of the present case the law should accord a restitutionary remedy to a secured creditor who has elected not to avoid the mortgage but to affirm it and has received full satisfaction thereunder. To my mind there is an inconsistency between a person being such a creditor and yet claiming more than that to which he is contractually entitled and which he has already fully recovered. Once the creditor has so elected and recovered in full, I do not see why the law should come to his aid to allow him to make a further claim. In re Simms; Ex parte Trustee  Ch. 1 this court refused to allow a trustee in bankruptcy, who had elected to treat a receiver as a tortfeasor for converting to his own use the chattels of a bankrupt, to recover the profits made by the receiver as money had and received. The authority of that case is weakened by the reliance by this court on the now exploded implied promise theory, but I note that it is still cited in textbooks: see, for example, Chitty on Contracts, 27th ed. (1994), vol. 1, p. 1437, para. 29-052) and it serves to illustrate that not every action for an account of profits from a wrongdoer, even where there has been use of the plaintiff's property, will be allowed, and that it may be barred when there has been an election for another remedy.
Further I am not satisfied that in the circumstances of the present case it would be right to treat the unjust enrichment of Mr. Thomas as having been gained "at the expense of" the society, even allowing for the possibility of an extended meaning for those words to apply to cases of non-subtractive restitution for a wrong. There is no decided authority that comes anywhere near to covering the present circumstances. I do not overlook the fact that the policy of law is to view with disfavour a wrongdoer benefiting from his wrong, the more so when the wrong amounts to fraud, but it cannot be suggested that there is a universally applicable principle that in every case there will be restitution of benefit from a wrong. As Professor Birks says (An Introduction to the Law of Restitution, p. 24): "there are some circumstances in which enrichment by wrongdoing has to be given up. That is, the wrong itself is not always in itself a sufficient factor to call for restitution." On the facts of the present case, in my judgment, the fraud is not in itself a sufficient factor to allow the society to require Mr. Thomas to account to it." (pages 227-8)
"In order to succeed in this appeal, Mr. Waters is required to establish that the second proposition is correct, and that English law provides a mechanism by which it can be given effect. Despite his able argument, I cannot discern that there is any such general established principle. Indeed, Mr. Waters has to concede that there is no English authority upon which he can rely to establish his right to succeed either in the law of restitution, under the head of unjust enrichment, or in the law of constructive trusts. The sole American decision which appears to be directly in point, that of the U.S. District Court for the Southern District of New York in Federal Sugar Refining Co. v. United States Sugar Equalization Board (1920) 268 F. 575, is not sufficiently persuasive to secure a visa for admission into English jurisprudence. Like Judge Maddocks, in the passage from his judgment quoted by Peter Gibson L.J., I cannot conclude that the principle for which Mr. Waters contends is at present established as part of our law." (pages 229-30)
"717. Both major European producers effectively formed a common front in conceiving and implementing the collusive arrangements with the Japanese and other European producers. Roche set out to implement a strategic plan to dominate and control the world market for all the vitamin products it produced, which constituted a very substantial part of all commercially available vitamins. Roche, in combination with BASF, set out to eliminate all effective competition between them in the Community and EEA across almost the whole range of important vitamins(81). Roche's particular role as prime mover and main beneficiary of these collusive arrangements is to be noted.
718. This aggravating circumstance justifies an increase of 50 % in the basic amount of the fines to be imposed on Roche and an increase of 35 % in the basic amount of the fines to be imposed on BASF for their infringements affecting the vitamin A, E, B2, B5, C, D3, beta-carotene and carotinoids markets"
"2.10 A system which incorporates effective public enforcement and a real possibility of private actions will increase the likelihood that anti-competitive behaviour is detected and addressed (whether by way of a complaint to the competition authorities, an approach to the infringing undertaking(s), or through the issuing of legal proceedings). A more effective private actions system would increase the incentives of businesses to comply with competition law, since the potential incidence and magnitude of any financial liability to a competition authority and/or a claimant will increase. As these financial risks increase, so does (or should) the interest of those ultimately responsible for the governance of the business (especially supervisory boards and non-executive directors) or for supporting the business (including, for example, financiers and investor groups). In this way public enforcement and private actions are complementary."
"2.11 In terms of the type of damages that may be recoverable, it is well established that private actions involve claims for damages that are compensatory in nature. In certain circumstances, the courts may award restitutionary damages, which aim to strip away some or all of the gains made by a defendant which arise from a civil wrong. Furthermore, exemplary damages might be available in certain circumstances in England and Wales. Other forms of relief, such as the equitable remedy of accounting for profits, may also need to be considered in some cases. It will be for the courts to determine how the general principles for determining loss or damage in various types of case apply to actions for infringement of competition law."
"Interaction with the substantive law. The paucity of follow-on actions for anti-competitive infringements in England, when compared with the number of infringement decisions given by the OFT and by the EC, is noteworthy.
However, one substantive law reason for the difficulty in bringing such actions, which must be remarked upon in the context of this Section, is the potential availability of the passing-on defence. This defence, where available, is a significant substantive law barrier to any party in the supply chain from bringing a follow-on action"
"Given the passage of time and difficulties of proof which Devenish faces in relation to the sales and purchases which it has made, it is faced with a real prospect that it may not be able to prove its losses in the face of an attack by the defendant to the effect that it must have passed on its losses to its customers, or failed, as a matter of law, to prove that it has mitigated its losses by passing them on." (para. 95).
"Any individual can rely on a breach of Article 85(1) of the Treaty before a national court even where he is a party to a contract that is liable to restrict or distort competition within the meaning of that provision." ()
"The full effectiveness of Article 85 of the Treaty and, in particular, the practical effect of the prohibition laid down in Article 85(1) would be put at risk if it were not open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition." ()
"…such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness) (see Case C-261/95 Palmisani  ECR I-4025, paragraph 27)." ().
"In that regard, the Court has held that Community law does not prevent national courts from taking steps to ensure that the protection of the rights guaranteed by Community law does not entail the unjust enrichment of those who enjoy them… Similarly, provided that the principles of equivalence and effectiveness respected… Community law does not preclude national law from denying a party, who is found to bear significant responsibility for the distortion of competition the right to obtain damages from the other contracting party. Under a principle which is recognized in most of the legal systems of the member states and which the court has applied in the past… a litigant should not profit from his own unlawful conduct, where this is proven." (-)
"where national courts rule on agreements… under article 81… they cannot take decisions running counter to the decision adopted by the Commission. "
"52. It is even more important that when national courts rule on agreements or practices which are already the subject of a Commission decision they cannot take decisions running counter to that of the Commission, even if the latter's decision conflicts with a decision given by a national court of first instance."
"70. Ensuring the useful effect of article 81(1) EC does not, to my mind, necessitate the award of compensation greater than the harm suffered. On the other hand, where special forms of damages can be awarded under national competition law, they must also be available if the claims concerned are based on an infringement of Community competition law."
"89. In accordance with settled case-law, the national courts whose task it is to apply the provisions of Community law in areas within their jurisdiction must ensure that those rules take full effect and must protect the rights which they confer on individuals…
91. Indeed, the existence of such a right strengthens the working of the Community competition rules and discourages agreements or practices, frequently covert, which are liable to restrict or distort competition. From that point of view, actions the damages before the national courts can make a significant contribution to the maintenance of effective competition in the Community…
92. As to the award of damages and the possibility of an award of punitive damages, in the absence of Community rules governing the matter, it is for the domestic legal system of each Member State to set the criteria for determining the extent of the damages, provided that the principles of equivalence and effectiveness are observed.
93. In that respect, first, in accordance with the principle of equivalence, it must be possible to award particular damages, such as exemplary or punitive damages, pursuant to actions founded on the Community competition rules, if such damages may be awarded pursuant to similar actions founded on domestic law (see, to that effect, Brasserie du pêcheur and Factortame, cited above, paragraph 90).
94. However, it is settled case-law that Community law does not prevent national courts from taking steps to ensure that the protection of the rights guaranteed by Community law does not entail the unjust enrichment of those who enjoy them (see, in particular, Case 238/78 Ireks-Arkady v Council and Commission  ECR 2955, paragraph 14, Joined Cases C-441/98 and C-442/98 Michaïlidis  ECR I-7145, paragraph 31, and Courage v Crehan, cited above, paragraph 30).
95. Secondly, it follows from the principle of effectiveness and the right of any individual to seek compensation for loss caused by a contract or by conduct liable to restrict or distort competition that injured persons must be able to seek compensation not only for actual loss (damnum emergens) but also for loss of profit (lucrum cessans) plus interest."
Lord Justice Longmore:
"Supposing a person took away a chair out of my room and kept it for twelve months, could anybody say you had a right to diminish the damages by showing that I did not usually sit in that chair or that there were plenty of other chairs in the room?"
With a little elaboration Lord Halsbury answered that question in the negative because one could always assess damages by reference to the amount it would cost to hire a chair for the length of time for which the claimant had been deprived of its use. In AG v Blake at 279E Lord Nicholls preferred to regard these cases as "an exception to the rule" but as Mance LJ pointed out in Experience Hendrix LLC v PPX Enterprises Inc  All ER Comm 830 standard measures of assessing loss (e.g. by reference to an available market in case of sale or hire of goods) are not necessarily to be regarded as other than compensatory:-
"Whether the adoption of a standard measure of damages represents a departure from a compensatory approach depends upon what one understands by compensation and whether the term is only apt in circumstances where an injured party's financial position, viewed subjectively, is being precisely restored."
This group of "loss of use" cases can, however, be safely put to one side on this appeal because the claimants have made clear that their claim is confined to an account of the profits made by the defendants and an order that all (or some) of them be paid over to themselves.
i) difficulty of proof does not necessarily mean that no damages will be awarded;
ii) if no or few damages are awarded, that does not mean that such damages are inadequate; loss of a possible sale is less serious than actual out-of-pocket loss;
iii) the concept of damages being an inadequate remedy is a useful concept in the field of interlocutory injunctions but is a treacherous one if it is used as a supposedly principled reason for the disgorgement of profits made by somebody else;
iv) it is clear on the authorities that apart from cases of the misuse of the claimant's own property, an account of profits outside the established categories is only to be made in "exceptional" cases per Lord Nicholls in AG v Blake (no less than 3 times) at 284H, 285D and F). A traitor, seeking to profit from his treachery by making a self-justificatory book about it, is indeed "exceptional". Cartels are not "exceptional" in that sense. It is difficult to see how one cartel could be more "exceptional" than another. If the claim were allowed in the present case, it would quickly become the norm in all cartel cases that restitutionary awards should be made;
v) the claim as originally formulated is an all or nothing claim. It is thus different from the sort of award that is sometimes made in the form of the price that the defendant would have had to pay to obtain a claimant's consent to do what he has done. That was possible in Wrotham Park Estates Co v Parkside Homes Ltd  1 WLR 798 and in the Experience Hendrix case. Here that is not an available option. To the extent that it may be said that the claimant should be content with a proportion of the defendants' profits rather than all of it, it is not possible to see a principled way in which that could be done since there is no obvious way in which the claimant's loss can be related to the defendants' gain.
"… if some more extensive principle of awarding non-compensatory damages for breach of contract is to be introduced into our commercial law the consequences will be very far-reaching and disruptive. I do not believe that such is the intention of your Lordships but if others are tempted to try to extend the decision of the present exceptional case to commercial situations so as to introduce restitutionary rights beyond those presently recognised by the law of restitution, such a step will require very careful consideration before it is acceded to."
Lord Justice Tuckey:
For the avoidance of doubt the wrongful net profits are the cartel-induced overcharges in selling vitamins to the Claimant. So, for example, if a unit of vitamins would have cost the Claimant £60 (on which the defendants lawful net profit was £15) and, as a result of the cartel, the unit of vitamins actually cost the claimant £100, the claimant seeks £40 (not £55). The £40 is the "overcharge/wrongful net profit".
In other words Devenish is claiming the overcharge as if it were the defendants' net profit so as to avoid having to take into account the fact (if true) that it passed on the whole of the overcharge to its customers. I can see no way in which it could avoid taking this "pass on" into account in any compensatory claim for damages.
1) Does community law compel an answer one way or another?
2) Are we bound by Wass to hold that an account of profits cannot be awarded on a claim for a non-proprietary tort?
3) Are damages an adequate remedy and is this an exceptional case?