Date: Sun, 25 Nov 2007 22:48

From: Peter Jaffey

Subject: Deceit: damages and account

As I recall the Weinrib article mentioned by Jason, it doesn't offer a corrective justice account of disgorgement. To me there is a case of disgorgement where the reason why the defendant's profit is removed is the principle that a wrongdoer should not be allowed to profit through his wrongs. This is presumably the principle at stake in Andrew's case. In Weinrib's article if I remember rightly his view is that disgorgement in this sense should never be available. He was offering a defence of a different type of case. The main example was where the owner of property claims against an unauthorised user of his property for "licence fee" damages, normally some fraction of the benefit made. I agree with Weinrib that this is quite different from disgorgement, because here, as I would put it, the rationale is to secure to the owner the right to the use value of his property, not to prevent the defendant from profiting from a wrong. My understanding is that these two types of claim were always regarded as quite distinct until they were brought together as cases of "restitution for wrongs", and now in the line of cases following Blake. If I could be permitted a plug, I offer an analysis of these issues in Private Law and Property Claims (Hart, 2007).

But I agree with Jason that in waiver of tort cases the alternative to compensation for the tort is not disgorgement but restitution of the transfer. The cases of waiver discussed in United Australia are all concerned with wrongs that cause transfers, and why should this be on the disgorgement approach? Also surely if disgorgement was in issue one would expect some reference to the principle against profiting by a wrongdoer. This is always prominent in the true disgorgement cases in equity.

Peter.

________________________________
From: Duncan Sheehan
Sent: Sun 25/11/2007 14:39
Subject: Re: [RDG] ODG RE: deceit: damages and account

Well essentially it comes down to this. Bear in mind that my target here is the new Birksian model in particular - I can go after Garland and Pacific National Investments with equal gusto though. The Supreme Court of Canada hasn't, I think, fully thought this one through.

The scheme treats unlike cases alike - which is much more obvious when you look at how other jurisdictions deal with the cases. So in all systems which seem to have a condictio-style system (in Scotland and South Africa the actions attract that label, but I'd also include the German Leistungskondiktion under this) the transfer requires a putative purpose. This means that when Peter said cases of total ignorance where there is no purpose at all were a fortiori, he's simply not talking about the same type of case. There are no cases of which I'm aware where a Civilian system deals with "takings" in the same way as transfers with a putative purpose. This gets Peter into all sorts of trouble with cases like Edinburgh Tramways v Courtenay. It is counter-intuitive to say the least to say that the downstairs flat owner gifts rising heat to his upstairs neighbour. The only sensible answer is the one the Scots gave which is that there is no enrichment at the expense of the downstairs person. Similarly cases of improvements to property believing you own it are not transfer cases - Scots law, I think, relies directly on the mistake. If we resort to mistake here - why not always ...

That I accept does not mean that the whole system cannot be made to work, but the following objection does. Contracts terminable for breach get sucked into the Birksian scheme. Whether you think (like Gerard) that treating terminable contracts like voidable ones is iffy, or that the argument is circular, it is not true to the internal logic of the system. So in German law the unwinding is done via contract law. In Scotland and South Africa there are strong arguments likewise. When I pay money under a terminable contract, I do so to discharge a debt. That debt is discharged. My purpose is fulfilled. Unjust enrichment doesn't get a look in. Now that doesn't mean you can't have restitution, you can, but it has to be within contract. In Scotland the argument goes (as a critique of Connelly v Simpson) that the mutuality principle demands restitution. That, as I understand it, is essentially a principle of bilateral conditionality - your retention of my money is conditional on performance; after termination that is no longer forthcoming. It's a reciprocity principle; however, so is consideration. I wonder whether properly reconfigured, the model doesn't require the introduction of a new contract principle, which is only going to get confused with consideration as a condition for validity.

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