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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 >> Experience Hendrix Llc v PPX Enterprises Inc. & Anor [2003] EWCA Civ 323 (20 March 2003)
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Cite as: [2003] 1 All ER (Comm) 830, [2003] FSR 46, [2003] EMLR 25, [2003] EWCA Civ 323

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Neutral Citation Number: [2003] EWCA Civ 323
Case No: A2/2002/1645

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION (BUCKLEY J)
Neutral Citation No. [2002] EWHC 1353 (QB)

Royal Courts of Justice
Strand, London, WC2A 2LL
20th March 2003

B e f o r e :

LORD JUSTICE PETER GIBSON
LORD JUSTICE MANCE
and
MR JUSTICE HOOPER

____________________

Between:
EXPERIENCE HENDRIX LLC
Appellant
- and -

PPX ENTERPRISES INC. AND ANR
Respondent

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Robert Englehart QC, Andrew Green & Victoria Windle (instructed by Harbottle & Lewis) for the Respondent
Michael Briggs QC, Philip Jones & Jennifer Haywood (instructed by Eversheds) for the Appellant

____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Crown Copyright ©

    Lord Justice Mance:

    Introduction

  1. When announcing the settlement on 7th March 1973 of action 1967 P No. 3007 between the appellant's predecessor in title and the present first defendant ("PPX"), counsel told Mars-Jones J that PPX's "moving force", the present second defendant Mr Chalpin, hoped devoutly never again to be engaged in litigation in England, but that should he become so he hoped to have the advantage of having that litigation tried by Mars-Jones J. PPX's own breaches of the settlement agreement in 1995 and 1999 have undone both hopes.
  2. This is an appeal from a judgment and order of Buckley J dated 5th July 2002 in proceedings [2002] EWHC 1353 (QB). The only issues live in the Court are (1) whether the appellant is entitled in principle to an account of profit or more than nominal damages in respect of PPX's breaches, and (2) whether the Judge was right to accept an undertaking, rather than to make an order, in relation to an account of sales on which PPX accepts in principle that it would be liable to pay royalties, and whether the terms of the undertaking were appropriate.
  3. The legend behind the 1973 and present proceedings is Jimi Hendrix. He died in 1970 aged 27. In action 1967 P No. 3007, PPX sued him and after his death his estate for breach of an agreement made on 15th October 1965. The agreement committed him to "produce and play and/or sing exclusively" for PPX for three years from that date. He was to make his services available at PPX's request with a minimum of 10 days notice to produce no more than 4 titles per session, with a minimum of 3 sessions per year. He was to receive in return the nominal sum of US$1 dollar plus "one (1) percent of the retail selling price of all records sold for his production efforts". PPX had the right to reimburse itself from first profits for "all cost of studio, musicians, etc."
  4. Jimi Hendrix's defence in action 1967 P No. 3007 was that the agreement was invalid, being harsh and unconscionable and/or in unreasonable restraint of trade. His case was that he was to be no more than a "session" or "sideman" and/or "arranger" and/or producer. PPX had a further agreement with another performer, Curtis Knight. So far as recordings took place under the agreement of 15th October 1965, Curtis Knight took the lead role while Jimi Hendrix performed a supporting role.
  5. The trial of action 1967 P No. 3007 had extended over more than 20 days, when on 6/7th March 1973 counsel advised PPX to settle. Subsequently, Mr Chalpin was to complain that he was not fully or properly advised about the terms of settlement, but there is now no issue about them. The costs of the proceedings had been funded on PPX's side by London Records Inc. ("LRI"), an associated company of The Decca Record Company Limited ("Decca"). Decca was threatening to withdraw further funding. The background to the funding was that PPX had on or about 1st June 1967 given LRI a licence (with a final expiry date of 1972) for certain recordings for exploitation worldwide excluding the United States, Canada, Germany, Austria, Switzerland and Sweden. Decca was concerned to protect its licence rights.
  6. The settlement reached and incorporated in an order of the court on 7th March 1973 provided as follows:
  7. "AND UPON
    1. The Plaintiff and Edward Chalpin undertaking through their Counsel to the Court that no action upon the Contract between the Plaintiff and the original 1st Defendant dated 15th October 1965 shall be brought against anyone anywhere EXCEPT
    (a) actions against any licensee of the Plaintiff relating to the masters specified in Schedule A hereto in respect of any breach or threatened breach of the terms of the relevant licence (a list of the licences now subsisting in respect of such masters to be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof)
    OR
    (b) . . . . . . . . . .
    2. . . . . . . . . .
    3. (a) Defendants agree that the Plaintiff is entitled to the masters of the titles listed in Schedule A hereto being masters now in the possession of the Plaintiff and all rights of all kinds in respect of those masters and the copyright therein and the performances recorded thereon PROVIDED THAT in respect of any new licence or any extension or variation of any existing licence relating thereto
    (i) the estate of Jimi Hendrix shall be entitled to a royalty of 2% of the retail selling price of records sold based upon the same formula as applies to the royalty rate payable to the Plaintiff but
    (ii) should the Plaintiff receive thereunder a royalty of 6% or less then the estate shall be paid only 1% and
    (iii) there shall be an account of all such royalties and payment of what is due on the last day of March June September and December in each year.
    (b) Defendants further agree that the Plaintiff is entitled to honour, carry out and comply with any existing contract or licence relating to titles not listed in Schedule A full particulars of which and of the contracts and licences relating thereto shall be supplied by Mr. Chalpin to the 1st Defendant within 10 days hereof
    PROVIDED
    (a) No extension or renewal of such contracts or licences shall be granted without the consent of the 1st Defendant
    (b) No further or other records tapes or cassettes or other form of recording shall be issued or released except those specifically covered by such contracts or licences.
    4. The Plaintiff and Edward Chalpin and Studio 76 Inc will deliver up to the 1st Defendant all masters of recordings (not hereinbefore referred to) on which Hendrix performed in any capacity whatsoever now in the possession of any of them or to which any of them is entitled and the same shall thereupon be destroyed."

    The settlement agreement provided for PPX to pay 50,000 costs to Jimi Hendrix's administrator and other defendants. This sum was funded by LRI or Decca.

  8. The masters to which the settlement agreement referred in clauses 1(a) (Schedule A), 3(b) and 4 were and remain all recordings in which PPX as producer held and holds the copyright. Schedule A (in the form annexed to the order which PPX no longer challenges) consisted of 33 masters (being, it seems, masters that had been licensed to LRI, although Schedule A's relevance outlasts any such licence). Clause 3(b) enabled PPX to perform existing contractual commitments relating to a total of 63 masters under various other licences almost all extending for 2 or 3 years (and none longer than 5 years) at royalty rates ranging from 6% to 12%. These royalty rates compare with the 1% figure (payable only after PPX had reimbursed itself from first profits for "all cost of studio, musicians, etc.") provided under the original agreement. They were such as to give Jimi Hendrix's estate not less than about one-sixth of PPX's share in the retail selling price of records sold (i.e. 2% against PPX's share of up to 12% or 1% of PPX's share of 6% or less). Although no extension or renewal of such licences was to be granted without the consent of the administrator of Jimi Hendrix's estate, the settlement agreement made no provision for the delivery up or destruction of these recordings after the expiry of such licences. Clause 4 contained an agreement for delivery up and destruction of a total of 19 masters of recordings which PPX possessed or to which PPX was entitled, not falling within Schedule A or clause 3(b). But Buckley J found that PPX retained some 5 of these masters and, as to the rest, delivered up virtually useless copies or masters, retaining better versions for itself.
  9. By deed dated 13th November 2000 the English administrator of Jimi Hendrix's estate assigned the benefit of the settlement agreed on 7th March 1973 to the present appellant, a company effectively owned by Jimi Hendrix's father, who is the sole beneficiary of Jimi Hendrix's estate.
  10. The present proceedings

  11. The present proceedings were begun on 14th May 2001 against both PPX and Mr Chalpin. The primary issues at trial before Buckley J were whether the settlement agreement had been varied in 1973 and whether, subsequently, the appellant had waived or was estopped from enforcing its terms or had granted an implied licence. Acquiescence or laches were also relied upon as barring any claim to injunctive relief. Buckley J rejected PPX's case on all these points.
  12. PPX's defence of waiver, estoppel, implied licence, acquiescence or laches was based on events subsequent to 1973, primarily in the period up to 1983. Starting in November 1973, PPX granted numerous new licences of non-Schedule A recordings. Copies of at least some of these licences were posted by PPX to Mr Branton, the then administrator in the United States of Jimi Hendrix's estate. He acknowledged that he became aware, at least in general terms, of what was happening, but took no action, because in his view "the cost of litigating with PPX over these marginal albums would exceed any possible financial benefit to be derived from removing them from the market". Buckley J observed that it was clear that Mr Chalpin is not shy of litigation, and accepted Mr Branton's explanation. However, in a letter dated 5th March 1983 Mr Branton wrote that a dispute with Mr Chalpin as to whether or not PPX had any remaining rights whatsoever was "a matter that we will have to settle some time in the near future" and Mr Chalpin accepted in his witness statement that Mr Branton had in 1993 been "bad-mouthing me for years and had alleged that I had no rights to any Jimi Hendrix recordings". From 1983 onwards, according to Mr Chalpin's account and on the evidence before Buckley J, there was a gap in PPX's exploitation activities. As to the activities up to that date, Buckley J found that Mr Chalpin had exploited the numerous masters which he had retained for commercial reasons, knowing that his actions were contrary to the 1973 settlement and knowing that the estate did not agree or approve, but believing that it would probably not litigate. Mr Chalpin felt strongly that he had, in a sense, discovered Jimi Hendrix, he was determined to exploit recordings in which he held the copyright and he felt aggrieved that attempts on his part in 1995 and 1996 to become more involved with the estate were rebuffed.
  13. From about 1993 to 1995, those administering Jimi Hendrix's estate in the United States were engaged in steps to regain control of various parts of Jimi Hendrix's estate (particularly in litigation in Seattle against former companies involved in its administration and against Mr Branton) and thereafter to establish the appellant. From 1996 onwards they set about restoring the quality and accuracy of Hendrix's albums, which were then reissued progressively, evidently with considerable success, over the ensuing five or so years.
  14. PPX was in breach of the settlement agreement in 1995 and 1999 as follows. On 29th December 1995 PPX granted to CBH Records GmbH ("CBH") for Europe a licence in respect of 63 named master recordings. Some 24 of these were from Schedule A, but the remaining 39 were within clause 3(b) (although the licences referred to therein had long since expired). An advance of $350,000 was payable on royalties, although it is PPX's case that only $250,000 was ever paid before PPX terminated the licence for breach in August 1996. Then, on or about 1st July 1999 PPX granted a three year licence in respect of the same recordings to Nippon Crown Co., Ltd. ("Crown"), providing for an advance against royalties of $35,000. The licence expired by effluxion of time on 30th June 2002. There is presently no indication as to what retail sales these licences led, or what royalties were ever earned by PPX under them.
  15. Buckley J granted injunctions providing in terms that PPX and Mr Chalpin must not issue or release or cause or permit the issue or release of recordings originally made by or on behalf of PPX or Mr Chalpin on which Jimi Hendrix performed in any capacity whatsoever, other than those set out in Schedule A. However, he dismissed the appellant's claims for damages and an account of profits. He also accepted an undertaking from PPX that it would account to the appellant in accordance with clause 3(a) of the settlement agreement in respect of sales by CBH and Crown (i.e. in respect of sales relating to Schedule A masters). However, such undertaking was limited in the case of CBH so as to apply only in the event that any account of sales was received from CBH. It is against the dismissal of the claims for damages and/or an account and against the acceptance and terms of this undertaking that the appeal before us now lies.
  16. Claims for damages and/or an account

  17. At the outset of the trial before Buckley J, Mr Jones representing the appellant made clear that he had no evidence, and he said that he did not imagine that he could ever possibly get any evidence, to show or quantify any financial loss suffered by the appellant as a result of PPX's breaches. So it was accepted that, if this was the only available measure, then no (or perhaps strictly only a nominal) award of damages could be made. However, Mr Jones obtained leave to amend to introduce claims for (i) damages consisting of such sums as could reasonably have been demanded by the appellant for relaxing the prohibitions contained in clause 3(b) of the settlement agreement or, alternatively, (ii) the entire profit attributable to PPX's exploitation of the non-Schedule A material. It was agreed that the trial should concern itself with the points of principle raised by this claim, and that the quantification of any such claims for damages and/or profit should be stood over, together with the taking of any account for use of masters within Schedule A. Further, during the trial Mr Jones adduced without objection evidence from Mr McDermott, who had written a book on Jimi Hendrix before joining the appellant as its full-time "catalog manager" in 1995. Mr McDermott referred to an affidavit sworn in 1968 in which Jimi Hendrix voiced frustration at the misleading impression given by artwork used on the recordings of his activity as a sideman, when his involvement was in reality "completely subordinated and accommodated to Knight's musical personality and ability". Mr McDermott went on to affirm his belief that the way in which PPX recordings had been brought onto the market had confused and alienated potential buyers:
  18. "Such buyers may mistakenly purchase sideman recordings instead of Experience Hendrix's featured recordings, and then become disappointed and frustrated, avoiding further purchases of Jimi Hendrix music. The space available for Jimi Hendrix albums in retail record stores is generally limited, and the presence of numerous sideman recordings poses the risk of displacing featured recordings. Thus the sideman recordings both divert and discourage potential purchasers of featured recordings."

    Mr Englehart QC for PPX and Mr Chaplin commented on this that a risk of displacing featured recordings could justify the injunction which has been granted for the future, but it did not follow that the risk had materialised as a result of the two breaches which occurred in 1995 and 1999.

  19. This appeal raises as a matter of principle whether the Court can and should order the recovery of any damages or an account of profits in circumstances where the appellant has not proved that it has suffered any financial loss. Before Buckley J, the appellant argued for damages or an account of profits, in that order. Before us, the order of submissions was reversed.
  20. The law

  21. The inspiration for the appellant's amendment of its case was the House of Lords decision in Attorney General v. Blake [2001] 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, it freed us from some constraints that prior authority in this court (particularly Surrey County Council v. Bredero Homes Ltd. [1993] 1 WLR 1361 and some of the reasoning in Jaggard v. Sawyer [1995] 1 WLR 269) would have imposed. To apply Lord Steyn's words, Blake 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.
  22. In Blake, the House of Lords held that Blake must account for profits earned under a publishing contract for a book about his traitorous activities. The publication was in breach of Blake's contract with the Government, whereby he had undertaken not, either during or after his period of service, to divulge any official information gained as a result of his employment. Lord Nicholls' speech, with which Lords Goff, Browne-Wilkinson and Steyn all agreed, examines and contrasts cases where an appellant has recovered damages in such sums as could reasonably have been demanded and cases of recovery of the profits realised.
  23. Lord Nicholls started with a review of cases of interference with rights of property at common law and equity (pp.278-280). He observed that the general common law approach to misuse of property involved an award of a sum equivalent to the price or hire that a reasonable person would pay for such use, even if the owner would not himself actually have been using the property. Among the examples he took were trespass by tipping (cf Whitwham v. Westminster Brymbo Coal and Coke Co. [1896] 2 Ch 538); or by failing to remove a floating dock (cf Penarth Dock Engineering Co. Ltd. v. Pounds [1963] 1 Ll.R. 359); or wrongful refusal to deliver up portable switchboards (cf Strand Electric and Engineering Co. Ltd. v. Berisford Entertainments Ltd. [1952] 2 QB 246). This measure is applied even if the owner cannot show that he would himself have made any use of the property (cf The Mediana [1900] AC 113, 117 per the Earl of Halsbury LC, giving the example of use of a chair that the plaintiff would not have used; and Watson, Laidlaw & Co. Ltd. v. Pott, Cassels and Williamson (1914) 31 RPC 104, 119, per Lord Shaw, giving the example of riding a horse that the owner would not have ridden and that is in fact the better for the exercise). Lord Nicholls then observed that courts of equity had gone further and in some cases required the wrongdoer to yield up all his gains, citing infringements of property rights such as passing off, infringement of trade marks, copyrights and patents and breach of confidence. He identified the difficulty of assessing the extent of the loss as the reason why courts of equity "appear to have regarded an injunction and account of profits as more appropriate remedies than damages". He concluded that:
  24. "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 as an accident of history."

    In the same vein, he drew attention to the common right to waive a tort (e.g. a conversion) and to recover any proceeds of the conversion obtained by the defendant, based on the legal fiction that the defendant acted as the claimant's agent.

  25. After noting the accountability for profits of trustees and fiduciaries, Lord Nicholls addressed the jurisdiction under Lord Cairns's Act (the Chancery Amendment Act 1858) to award damages in addition to or in substitution for an injunction or specific performance. He said that it was correct to analyse the damages awarded in cases where an injunction was refused as "damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right" (p.281). However, he observed that this carried matters no further forward, essentially because it begs the question: what value do the courts put on a right in respect of which it will not, or cannot, order injunctive relief or specific performance? The answer provided by the cases was, Lord Nicholls said, that they will award substantial damages even though no financial loss flows from the infringement and will, moreover, in a suitable case assess such damages by reference to the defendant's profit obtained from the infringement.
  26. There follows in Lord Nicholls' speech the passage headed Breach of Contract which was critical in Blake and is important in this case (pp.282-286). Lord Nicholls states that it is axiomatic that damages are compensatory, but that it is equally well-established that a party may have an interest in performance which is not readily measurable in terms of money. The primary response of the law is in the latter case to ensure, if possible, that the contract is performed in accordance with its terms. But the remedies of specific performance or injunction are not always available. Lord Nicholls instanced confidential information published before the innocent party has time to apply to the court for urgent relief; and went on to point out that specific remedies are discretionary, while contractual obligations and the circumstances in which breaches occur and remedies are sought vary infinitely; the courts may, for instance, decline to grant specific relief on the ground that this would be oppressive.
  27. Against this background, Lord Nicholls turned to Wrotham Park Co. Ltd .v Parkside Homes Ltd. and Others [1974] 1 WLR 798. In that case Brightman J upheld the validity of a restrictive covenant (not to develop other than in accordance with an agreed lay-out plan), on the ground that it remained, or had not been shown not to remain, capable of being of benefit to the dominant estate. But Brightman J refused injunctions against developers who had breached the injunction (and retained ownership of the roads) and against house-purchasers who had bought from such developers with full knowledge of the risk, on the grounds that "It would . be an unpardonable waste of much needed houses to direct that they now be pulled down .. No damage of a financial nature has been done to the plaintiffs by breach of the lay-out stipulation" (p.811).
  28. In Wrotham Park the plaintiffs conceded that the value of their estate had not been "diminished by one farthing" (p.812), and Brightman J accepted that the plaintiffs, conscious of their (moral) obligations to existing residents, would not have agreed to relax the covenant on any terms, if they had been asked for consent prior to the development. Nevertheless, Brightman J considered as the "just substitute for a mandatory injunction such sum as might reasonably have been demanded by the plaintiffs from Parkside as a quid pro quo for relaxing the covenant". However, because the small area developed contrary to the plan was an asset which the plaintiffs would never have had the opportunity or desire to turn to account, because the particular breach had had insignificant impact on the dominant tenement and because the plaintiffs had had opportunities to put off Parkside from even acquiring the property for development, he only awarded a total of 2,500, equal to 5% of Parkside's anticipated profit.
  29. Lord Nicholls in Blake approved the analogy which Brightman J drew in Wrotham Estate with cases where a defendant had invaded a property right without diminishing the value of the property. He viewed Wrotham Park as "a solitary beacon". It showed that "in contract as well as tort damages are not always narrowly confined to recoupment of financial loss" and that in "a suitable case damages for breach of contract may be measured by the benefit gained by the wrongdoer from the breach. The wrongdoer must make a reasonable payment in respect of the benefit he has gained" (pp.283-284).
  30. Lord Nicholls then pointed out that in Blake itself the Crown was seeking "to go further", since the claim was "for all the profits of Blake's book which the publisher has not yet paid him" and this raised "the question whether an account of profits can ever be given as a remedy for breach of contract" (p.284). In declaring that the Crown was entitled to be paid whatever was due and owing to Blake from the publishers, Lord Nicholls emphasised that such an award was only appropriate in exceptional circumstances: pp. 285D-E and F-G and 286F-G; cf also p. 292E per Lord Steyn. He did not, however, apply the same epithet or qualification to an award of damages of the nature ordered in Wrotham Park. This difference is made explicit in the following passages at p.285B-C and F-G:
  31. "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.
    ..
    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."
  32. Lord Hobhouse's dissent rested on a similar distinction. He saw no need to extend the boundaries of remedies for breach of contract to include the exceptional remedy of an account of profits which the majority had endorsed. But he agreed with the decision in Wrotham Park, and that it was to be preferred to the decision in Bredero. Wrotham Park was in his view a case of compensatory damages, the plaintiff's loss being the sum which they could have extracted from the defendant as the price of their consent to the development (p.298F-G). Confusion with the concept of restitution only arose, because of an erroneous assumption that the only loss that the plaintiff could have suffered was a reduction in the value of the dominant tenement. It is apparent that Lord Hobhouse's first and foremost objection to the decision of the majority was that it went beyond this measure, to award the whole amount owed to Blake by his publishers (pp. 298H-299C). As to his analysis of the damages awarded in Wrotham Park as compensatory, that designation does not avoid the fact that the damages awarded there (and in other cases, such as Lord Shaw's horse that is the better for being ridden) cannot be related or limited to any actual financial loss caused by the breach. In Wrotham Park the estate owners would never have agreed to any relaxation on any terms of the restrictive covenant.
  33. 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. The law frequently introduces objective measures (e.g. the available market rules in sale of goods) or limitations (e.g. remoteness). The former may increase or limit a claimant's ability to recover loss actually suffered. Another situation where damages do not necessarily depend upon precisely what would have occurred but for the wrong is where there has been a conversion: cf Kuwait Airways Corpn v. Iraqi Airways Co. [2002] UKHL 19; 2 AC 883, especially at paras. 82-83. In a case such as Wrotham Park the law gives effect to the instinctive reaction that, whether or not the appellant would have been better off if the wrong had not been committed, the wrongdoer ought not to gain an advantage for free, and should make some reasonable recompense. In such a context it is natural to pay regard to any profit made by the wrongdoer (although a wrongdoer surely cannot always rely on avoiding having to make reasonable recompense by showing that despite his wrong he failed, perhaps simply due to his own incompetence, to make any profit). The law can in such cases act either by ordering payment over of a percentage of any profit or, in some cases, by taking the cost which the wrongdoer would have had to incur to obtain (if feasible) equivalent benefit from another source.
  34. Turning to consider what can amount to exceptional circumstances, Lord Nicholls said in Blake (at p.285G-H) that:
  35. "No fixed rules can be prescribed. The courts will have regard to all the circumstances, including the subject matter of the contract, the purpose of the contractual provision that 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."
  36. More specifically, Lord Nicholls rejected suggestions made obiter in the Court of Appeal that two examples would be cases of "skimped" performance and cases where the profit derived from the defendant doing the very thing he had contracted not to do. The first category of case was appropriately dealt with by a reduction in the sum payable for the work, while the second was defined too widely to assist (p.286B-D). He also agreed with the Court of Appeal that neither the fact that the breach was cynical or deliberate, nor the fact that it enabled the defendant to enter into a more profitable contract elsewhere, nor the fact that by entering into such a contract the defendant put it out of his power to perform his contract with the plaintiff "would be, by itself, a good reason for ordering an account of profits" (p.286E-F).
  37. The exceptional nature of Blake's case lay, first of all, in its context employment in the security and intelligence service, of which secret information was the lifeblood, its disclosure being a criminal offence (p.286G-H). Blake had furthermore committed deliberate and repeated breaches causing untold damage, from which breaches most of the profits indirectly derived in the sense that his notoriety as a spy explained his ability to command the sums for publication which he had done (p.286G and 287G-H). Thirdly, although the argument that Blake was a fiduciary was not pursued beyond first instance, the contractual undertaking he had given was "closely akin to a fiduciary obligation, where an account of profits is a standard remedy in the event of breach" (p.287F-G).
  38. Lord Steyn at p.291F-H accepted the Crown's submissions that there had been a breach of a negative obligation, that Blake had done the very thing he had contracted not to do, that the Crown had a special interest over and above the hope of a benefit to be assessed in monetary terms and that specific performance or an injunction was an ineffective or virtually ineffective remedy. Starting from that point, he considered that there was a principled basis for developing the law to allow recovery of profits, because (a) Blake was in a position closely analogous to that of, and within the reason of the rule governing, a fiduciary, and (b) practical justice, to be applied on a case-by-case basis, strongly militated in favour of granting an order for disgorgement of profits against Blake (in which connection he cited a similar decision in the United States Supreme Court, imposing a constructive trust on an intelligence officer's profits: Snepp v. United States 444 US 507).
  39. As to subsequent authority, we were referred to Esso Petroleum Co. Ltd. v. Niad Ltd. [2001] AER (D) 324, where the Vice-Chancellor ordered an account of profits as a remedy for breach of a contractual scheme called "Pricewatch" operated by Esso with its dealers. Dealers agreed to report competitors' prices and to abide by prices set daily by Esso which were intended to match the competition. Dealers received financial support by Esso to assist them to do this. The defendant failed to maintain prices as agreed on four occasions, despite giving repeated assurances that he would do so. Damages were an inadequate remedy, since it was impossible for Esso to attribute lost sales to breach by one dealer. Yet the obligation to observe Pricewatch was fundamental to its operation, and failure to do so gave the lie to Esso's advertising campaign to support it. Account was also taken of the defendant's repetition of its breaches, and of Esso's legitimate interest in preventing the defendant profiting. Sir Andrew Morritt V-C regarded an account of profits as particularly appropriate when the defendant had been receiving financial support from Esso to maintain Pricewatch.
  40. We were also referred to two first instance cases where an account of profits was refused. In WWF - World Wide Fund for Nature v. World Wrestling Federation [2002] FSR 32, Jacob J refused such an account in circumstances where the defendant had, in breach of a negative covenant in an agreement, used the initials WWF otherwise than as permitted under the agreement. Jacob J did not consider that it assisted the claim that the covenant related to use of initials and so was, in his words, "a bit "trademarkish" or "IPish". He thought that it would be odd if breach of an ordinary restraint of trade covenant (e.g. not to work in a defined area at a defined job for a defined time) did not attract an account, whereas breach of a lesser restraint (not to use a trademark in a trade otherwise permitted) did. I do not find it necessary to consider this decision further, beyond observing that the only claim appears to have been for the full profits attributable to the misuse (a difficult enough matter to know how to assess, as Jacob J noted), but that Jacob J's terse dismissal both of the relevance of analogy and of any possibility of an account of profits in any restraint of trade case may require reconsideration in a future case. Lords Nicholls and Steyn in Blake attached considerable significance to the analogy between Blake's position and that of a fiduciary.
  41. Another decision, published as AB Corporation v. CD Company (The "Sine Nomine") [2002] 1 Lloyd's Rep. 805 but reached by an arbitration tribunal of well-known names headed by Sir Christopher Staughton, refused an account of profits to charterers in circumstances where owners had wrongfully withdrawn the vessel from a charter after the market had risen. The tribunal's understandable conclusion was that an award of wrongful profits was inappropriate where both parties were dealing with a marketable commodity (the services of a ship in that case) for which a substitute can be found on the market.
  42. It was argued before us by Mr Englehart that any order for the payment of damages or a fortiori an account of profits must in a case such as the present be precluded by the Judge's grant of an injunction. The argument is that the award in Wrotham Park was only possible because the Court was refusing an injunction, in which connection it was entitled under Lord Cairns's Act to assess damages to compensate the plaintiffs for the continuing invasion of their right in the future. That, it is submitted, is not an order that a common law court could or would have made. Common law courts could only grant relief for losses crystallised prior to the issue of a writ. We were referred to the statements on these points in Bredero and in Jaggard. The decision in Blake in my view avoids the need to consider Mr Englehart's submissions on these points at length. The remedies for breach of contract have a flexibility which they fail to recognise. Since Blake I see no reason why, if the beneficiary of a restrictive covenant is unaware of its infringement in time to obtain an injunction immediately, but is able to obtain an injunction for the future after the defendant by the infringement has obtained some benefit, the appellant should be precluded from obtaining an injunction and, if justice requires, a reasonable sum to compensate for the past infringement, even though he may not be able to show any financial loss to himself. If compensation on this basis is available in respect of the permanent deprivation of a right because the law does not consider that injunctive relief is appropriate, there seems no justification for refusing it in respect of a temporary deprivation arising because the infringement has been committed too quickly for the law to be able to intervene. In either case, though for different reasons, the compensation awarded would be in substitution for an injunction.
  43. I can take the example put in argument of breach of a restrictive covenant not to use land for a pop concert, committed in circumstances where the beneficiary was out of the country and suffered no discomfort at all. Why should he not obtain an injunction to restrain repetition and a reasonable sum having regard to the financial benefit obtained by the neighbouring landowner from the infringement? Likewise, if a breach of contract occurs in such circumstances that there is no possibility at all of obtaining an injunction (e.g. because the interests of a third party have intervened), I see no reason why that should, since Blake, present any insuperable bar, in appropriate circumstances, to an order for payment of a reasonable sum having regard to any benefit made by the infringement, even though the appellant cannot prove any financial loss (cf Jaggard, at p.291, per Millett L.J.). Lord Nicholls in Blake took as "a useful general guide, although not exhaustive" of circumstances in which an account of profit might be appropriate, "whether the plaintiff had a legitimate interest in preventing the defendant's profit-making activity". Those are precisely the circumstances in which an injunction for the future is likely to be granted. It would be paradoxical if its granting in the light of a continuing future risk were at the same time to deprive the appellant of any claim to strip, or seek a reasonable sum taking account of, the defendant's profit from past infringement. And if Lord Nicholls' general guide is a useful starting point in respect of an account of profits, it must be all the more so in respect of the lesser claim to a reasonable sum taking account of the defendant's profitable infringement.
  44. The present case

  45. I turn to apply these principles to the present facts. 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. Further, as in Blake so here on the Judge's findings, PPX through Mr Chalpin knew that it was doing something which it had contracted not to do, and in 1995 and 1999 well knew that the appellant would not consent thereto. Further, as in Wrotham Park it can be said that the restriction against use of PPX's property of which PPX was in breach was imposed to protect the appellant's property, although there is the distinction that PPX's property did not ever belong to the appellant or appellant's predecessor. Finally, the grant of an injunction for the future shows that the appellants had a legitimate interest in preventing PPX's profit-making activity (cf Lord Nicholls in Blake at p.285H). But, since we are concerned with past profits, it is too late for either specific performance or an injunction to offer any effective remedy, and it is not suggested that this was or is the appellant's fault.
  46. On the other hand, there are also obvious distinctions from Blake's case. First, we are not concerned with a subject anything like as special or sensitive as national security. The State's special interest in preventing a spy benefiting by breaches of his contractual duty of secrecy, and so removing at least part of the financial attraction of such breaches, has no parallel in this case. Second, the notoriety which accounted for the magnitude of Blake's royalty earning capacity derived from his prior breaches of secrecy, and that too has no present parallel. Third, there is no direct analogy between PPX's position and that of a fiduciary.
  47. The case of Niad presents a similar feature to the present, in so far as damages may be said to be an inadequate remedy, because of the practical impossibility in each case of demonstrating the effect of a defendant's undoubted breaches on the appellant's general programme of promoting their product. But, despite Mr McDermott's evidence, it is not shown that the present defendant's breaches went to the root of the appellant's programme or gave the lie to its integrity. Nor is the present a case where the defendant can be said to have profited directly, by receipt under the agreement which it broke of monies that it ought in fairness to restore.
  48. The present case does however arise out of a particular background, which has no direct parallel in these prior cases. I turn therefore to consider in greater depth the circumstances, nature and object of the settlement agreement of 7th March 1973. It seems clear that it was entered into in circumstances where the litigation about the validity of the agreement dated 15th October 1965 was not going well for PPX and its financial backer, LRI/Decca. In the proceedings begun in 1967 and tried in 1973, it was not suggested that the setting aside of the agreement would or should lead to Jimi Hendrix or his estate acquiring any proprietary interest in the masters which PPX made and of which it held and still holds the copyright. Without the consent of Jimi Hendrix in writing, it would have been a criminal offence for PPX to make any record from or by means of any performance involving Jimi Hendrix, or to sell or let for hire, or distribute for the purposes of trade, or use for the purpose of any public performance, any record made without such consent: see Dramatic and Musical Performers' Protection Act 1958, s. 1. The setting aside of PPX's agreement with Jimi Hendrix, although it could not impose retroactive criminal liability, could have precluded PPX from asserting that it possessed consent in writing such as to enable it to enter into future sales, licences, etc.
  49. Further, in Rickless v, United Artists Corp.[1988] QB 40, this Court held that the intention of the 1958 Act was to give a private right to performers; that, although it might appear to provide criminal sanctions only, performers had the right to give or withhold consent to the use of their performances and to enforce that right by action in the civil courts; and that this statutory right was not purely personal, but survived the death of the performer and vested in his or her personal representatives, so that in the absence of consent of a performer or his or her personal representatives, there was an actionable breach. In Rickless a feature film (Trail of the Pink Panther "Trail") starring the late Peter Sellers had been made by use of cutting floor clips from previous films made with his consent. In the case of two of such films, The Pink Panther Strikes Again ("Strikes") and Revenge of the Pink Panther ("Revenge" the reference in the report at p.42D-E to Return (of the Pink Panther) is an error: see pp.49G and 58A), it was held that his consent extended to the use in this way of the cutting floor clips. Hobhouse J therefore ordered the producer companies to account for percentages of the gross receipts of Trail as sums derived from Strikes and Revenge. In the case of the other three films (The Pink Panther, Shot in the Dark and Return of the Pink Panther), where there had been no such consent, Hobhouse J ordered damages for breach, or inducing breach, of contract in the sum of $1,000,000. The appeal against his decision failed. For completeness, I note that since 1988 the rights conferred under the 1958 Act have been reformulated and expanded within the new statutory framework of the Copyright, Designs and Patents Act 1988, especially ss.180-188.
  50. Here, therefore, PPX was in 1973 at risk of a situation where it would have had no continuing right to market any of the recordings it had made and in which it held the copyright, and where, although it could not incur retroactive criminal liability, it would have been vulnerable to a claim that it should pay enhanced royalties in respect of the past. Its position would have been largely undermined. Any consent of the administrator of Jimi Hendrix's estate for the future, would, if forthcoming at all, clearly only have been forthcoming on payment of enhanced royalties. Further, it could have been a criminal offence to act without such consent. As it is, the settlement agreement dated 7th March 1973 preserved and preserves PPX's right to perform existing licences in respect of Schedule A masters (including LRI's licence), and its right to exploit such masters (after the expiry of current licences) on payment of royalties at a rate of 2% (or, in those cases where it received or receives royalties at a rate of 6% or less, only 1%) of the retail selling price of records sold. The settlement agreement further preserved, but only for their current periods, PPX's right to honour carry out and comply with other licences relating to titles not listed in Schedule A. But under the agreement PPX abandoned any right to extend or renew such other licences without the consent of the administrator of Jimi Hendrix's estate, and it also agreed absolutely to deliver up for destruction all masters neither listed in Schedule A nor the subject of any existing licences.
  51. In the light of this background and in the light of the terms of the settlement agreement itself, I consider that any reasonable observer of the situation would conclude that, as a matter of practical justice, PPX should make (at the least) reasonable payment for its use of masters in breach of the settlement agreement. The intention of the agreement is clear. Consent to extensions or renewals was only contemplated in the case of existing licences. Even then, if it was given at all, it would no doubt only be given on terms requiring payment of a royalty. In relation to masters not on Schedule A and not subject to any existing licences, the appellant's dominant interest was to remove them from the market. Mr McDermott's evidence indicates at least some of the reasons and risks why this is likely to have been so.
  52. Conclusions

  53. It would in these circumstances be anomalous and unjust, if PPX could, by simply breaching the agreement, avoid paying royalties or any sum, when they have to pay royalties in respect of Schedule A masters and they would have expected that, even if consent to the extension or renewal of existing licences of non-Schedule A masters was forthcoming at all, it would only be on terms as to payment of further royalties. As it is, this case is concerned with fresh licences of non-Schedule A masters to different licensees, so that the incongruity of allowing PPX free user to its own profit is yet more obvious.
  54. However, I do not regard this case as exceptional to the point where the Court should order a full account of all profits which have been or may be made by PPX by its breaches. I have already drawn attention to significant features of Blake which have no counterpart in this case: cf paragraph 37 above. Here, 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 (although how much is evidently in issue, and is not a matter on which we can at this stage reach any view). An account of profits would involve a detailed assessment of such matters, which, as is very clear from Blake, should not lightly be ordered.
  55. We are furthermore concerned with material falling within clause 3(b) of the agreement. Although the 1995 and 1999 licences were not by way of extension or renewal of licences existing in 1973, the reference to consent in clause 3(b) Proviso (A) of the settlement agreement is some indication that the parties contemplated that commercial considerations might make the appellant willing to contemplate further utilisation of material within that clause on suitable terms. The appellant now of course resists any utilisation or marketing of material outside Schedule A. The injunction that it has obtained will protect it for the future. For the past, in the absence of any proven loss, I would confine any financial remedy to an order that PPX pay a reasonable sum for its use of material in breach of the settlement agreement. That sum can properly be described as being "such sum as might reasonably have been demanded" by Jimi Hendrix's estate "as a quid pro quo for agreeing to permit the two licences into which PPX entered in breach of the settlement agreement", which was the approach adopted by Brightman J in Wrotham Park (cf paragraph 22 above). This involves an element of artificiality, if, as in Wrotham Park, no permission would ever have been given on any terms. And, where no injunction is possible, even the value of a bargaining opportunity depends on the value which the court puts on the right infringed (cf paragraph 19 above, citing Lord Nicholls in Blake). That said, the approach adopted by Brightman J has the merit of directing the court's attention to the commercial value of the right infringed and of enabling it to assess the sum payable by reference to the fees that might in other contexts be demanded and paid between willing parties. It points in the present case towards orders that PPX pay over, by way of damages, a proportion of each of the advances received to date and (subject to deduction of such proportion) an appropriate royalty rate on retail selling prices. I would therefore allow the appeal against the judge's decision on the first point and declare accordingly.
  56. Counsel were also agreed that we should in that event go as far as we could to give guidance to the parties regarding the appropriate proportion. I do not consider that it is possible on the present state of information to reach any final conclusions as the appropriate sum(s) or the appropriate royalty rate(s) on retail selling prices which might be used to arrive at such sums. However, whatever retail sales may or may not have been made, I consider, as I have said, that PPX should pay to the appellant a proportion of the advances that it has received from CBH and Crown. That proportion can only be assessed after excluding such proportions of such advances as must be taken to have been attributable to Schedule A masters, since they attract a royalty of 2% (or 1%) on retail sales. Further, since the breaches related to masters which PPX was under an absolute commitment not to use, I consider that any royalty rate used as the basis for calculating any further sums due to the appellant should be significantly in excess of 2% (or of 1% if PPX's own entitlement was to a royalty of 6% or less). The settlement agreement was, as I have said in paragraph 7 above, designed to give Jimi Hendrix's estate not less than about one-sixth of PPX's royalties in respect of Schedule A masters, itself a considerable improvement on the original agreement. In respect of non-Schedule A masters, in respect of which PPX was not intended to have any marketing rights at all as matters stood in the 1990s, any rate must be significantly higher. I do not wish to fetter any future court in any way. But it may assist if I express my present view (albeit one reached without the benefit of any expert evidence that might be available hereafter) that I would be surprised if the appropriate rate in respect of non-Schedule A masters was less than twice that agreed in respect of Schedule A masters, or was in other words less than one-third of PPX's royalties on the retail selling price of records.
  57. The undertaking to account

  58. The undertaking given has been set out in paragraph 13 above. It relates to PPX's undoubted duty to pay royalties on the retail selling price of records falling within Schedule A. The appellant raises two objections. First, the undertaking applies to sales by CBH and Crown, and in the case of CBH only to accounts of sales received from them. Under the settlement agreement, PPX's obligation is to pay royalties on "the retail selling price of records sold". So it is irrelevant for what CBH has accounted. The Judge was, it seems, influenced by the fact that PPX and CBH have fallen out and are it seems in litigation, so that unless CBH accounts PPX will not know what retail sales there have been. The appellant responds that there are other sources of information about retail sales, and that it would be open to it on an account to adduce any evidence it could itself obtain on the subject.
  59. Second, the appellant points out that, although an undertaking is enforceable, as is an order, with contempt proceedings, in practical terms such proceedings are unlikely to assist in the case of defendants based in the United States. By contrast, an order may lead to an account being taken by the court, when the appellant could put in evidence and, if necessary, also seek judicial assistance abroad.
  60. There is in my opinion no answer to the appellant's submissions on these points. Mr Englehart submits that it was a matter for the Judge in his discretion whether to accept an undertaking. However, the Judge gave no real reasons, and seems indeed (from paragraphs 86-90 of Mr Jones's skeleton dated 19th August 2002 before us) to have been under an impression (which Mr Englehart has not suggested was correct) that the appropriateness of an undertaking had been effectively conceded. I consider that there should have been an order along the lines sought by the appellant and that the Judge was clearly wrong in exercising his discretion to accept the undertaking given.
  61. Summary

  62. For these reasons, I would allow this appeal on both points. I would make orders on the first point as indicated in paragraphs 45 and 46, and on the second point as indicated in paragraph 49 above.
  63. Mr Justice Hooper:

  64. I agree with the judgments of both Mance and Peter Gibson LJJ.
  65. Lord Justice Peter Gibson:

  66. The Law Commission in its 1997 report on Aggravated, Exemplary and Restititutionary Damages (Law Com. No. 247) considered, among other topics, whether the law on what it called restititutionary damages (a term which subsequently Lord Nicholls in A.-G. v Blake [2001] 1 AC 268 at p. 284H preferred to avoid) needed legislative amendment. In considering that topic it looked at restitution of enrichments gained by a breach of contract. On that it recommended no legislation: the development of the law of restitution for breach of contract should be left to common law development (para. 3.47).
  67. Development has not taken long to occur. The Blake case builds on the recognition in one case on compensation for a breach of a contractual obligation as well as on authorities in other areas of the law that financial loss to the claimant is not always the appropriate or just measure of damages to compensate the claimant for the wrong done to him. A claimant's interest in the performance of a contract may render it just and equitable that the defendant should not benefit from his breach but should account for the profits made by that breach. But it is made abundantly clear in Blake that this is a remedy to be granted only in exceptional circumstances.
  68. There are some features of the instant case which go a long way towards the presence of such circumstances, as Mr. Briggs Q.C. in his lucid submissions pointed out. Here what Lord Nicholls (at p. 285H) called "a useful general guide, although not exhaustive" is satisfied: the claimant does have a legitimate interest in preventing PPX's profit-making activity carried out in breach of PPX's obligations under the settlement agreement. I infer that the intention underlying the restrictions in the proviso to clause 3 (b) relating to 63 non-Schedule A masters and the requirement in clause 4 of delivering up of 19 other non-Schedule A masters for destruction was to protect the claimant's interests in recordings by Jimi Hendrix which were not subject to the settlement agreement. Further, the licences granted by PPX to CBH and Crown constituted a flagrant contravention of PPX's obligations with a view to its own financial gain. It seems clear that whilst a royalty was the agreed proper fee for the use made by PPX of the Schedule A masters, the claimant would not have been content with a royalty for any use made of the other masters the subject of the settlement agreement.
  69. However, like Mance L.J., I do not think the present case an appropriate one for ordering an account of profits. He has drawn attention in para. 37 above to the features of the present case which distinguish it from the circumstances in Blake. No doubt deliberate breaches of contract occur frequently in the commercial world; yet something more is needed to make the circumstances exceptional enough to justify ordering an account of profits, particularly when another remedy is available.
  70. It is apparent from Lord Nicholls' speech that he regarded the decision of Brightman J. in Wrotham Park Estate Ltd. v Parkside Homes Ltd. [1974] 1 WLR 798 as a crucial stepping stone in his reasoning as to why the absence of financially measurable loss flowing from a breach of contract was not necessarily fatal to a claimant's claim for compensation. I do not accept Buckley J.'s attempted distinction, supported by Mr. Englehart Q.C., of that case from the present case. True it is that in that case, unlike the present case, no injunction was awarded; it was by the time of the hearing before Brightman J. too late to restrain future breaches, because the houses, the building of which breached the restrictive covenant, had already been built. Brightman J. awarded damages under the jurisdiction originating with Lord Cairns's Act in lieu of an injunction. But that Act specifically permitted the award of damages in addition to or in substitution for an injunction or specific performance (see now s. 50 Supreme Court Act 1981) and the fact that an injunction was awarded by Buckley J. to restrain future breaches does not detract from the availability of damages as a remedy for past breaches. 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 p. 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.
  71. Lord Nicholls was clearly of the view that Brightman J. was right not to decide the case on the basis that the breach of covenant did not diminish the value of the houses in the estate at all. As Lord Nicholls said (at p. 283A), if the estate company was given a nominal or no sum by way of compensation, justice would manifestly not have been done. The same in my judgment applies to the present case. Buckley J. thought it relevant that the claimant would never have agreed to PPX's exploitation of the non-Schedule A masters, and he rejected a wholly fictional approach. But Wrotham Park itself demonstrated that it is irrelevant, in assessing compensation on the basis adopted by Brightman J., that in reality there would have been no relaxation of the relevant obligation because of the opposition of the person entitled to the benefit of that obligation. As Brightman J. said at p. 815C:
  72. "On the facts of this particular case the plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have granted any relaxation, but for present purposes I must assume that it could have been induced to do so."
  73. In my judgment, because (1) there has been a deliberate breach by PPX of its contractual obligations for its own reward, (2) the claimant would have difficulty in establishing financial loss therefrom, and (3) the claimant has a legitimate interest in preventing PPX's profit-making activity carried out in breach of PPX's contractual obligations, the present case is a suitable one (as envisaged by Lord Nicholls ([2001] 1 AC at pp. 283H 284A) in which damages for breach of contract may be measured by the benefits gained by the wrongdoer from the breach. To avoid injustice I would require PPX to make a reasonable payment in respect of the benefit it has gained. I agree with the guidance suggested by Mance L.J. for the court assessing the damages.
  74. I also agree with Mance L.J. that Buckley J. was wrong to accept the limited undertaking offered by PPX and that it is appropriate that there should be an order requiring PPX to account to the claimant in accordance with the proviso to clause 3(a) of the settlement agreement.
  75. For these as well as the reasons given by Mance L.J. I too would allow the appeal.
  76. Order: Appeal allowed and orders made in the terms of the agreed paragraphs of the draft order. Permission to appeal to the House of Lords refused.
    (Order not part of the approved Judgment)


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