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It is necessary to separate two different issues. The first is a semantic one. If 'compensation' is used to mean 'loss' then what the Court of Appeal is saying about the account of profits makes no sense. An account of profits focuses upon the profit made by the defendant. This could coincide with the loss suffered by the claimant but it will rarely do so. Nor could it be said that the account of profits is a 'proxy' for loss in cases where loss is difficult to measure, because even where loss is simple to measure the account of profits ignores the loss suffered by the claimant.

The semantic alternative is that 'compensation' is not being used in the sense of loss. I don't know what 'cancel the violation of a right' means but it seems that the way Jason is using this expression it could describe all awards calculated by reference to (1) actual profits of the defendant, (2) actual losses of the claimant, (3) the value of rights held by the claimant (however they are to be calculated), (4) the value of the benefit derived by the defendant directly from the claimant.

If we try to make sense of the Chadwick LJ's decision and assume he is using 'compensatory' in this broader sense (such as 'a money award which is not punitive') we run into a second problem because he recognises that Wrotham Park damages are distinct from an account of profits. So why, and when, are each of these distinct types awarded? And if the Wrotham Park damages are not 'gain-based', why are they similar to the account of profits?

From: Jason Neyers
Subject: [RDG]
Date: Mon, 2 Apr 2007 12:46:42 -0400

One view of the passage you quoted is that the judge is using compensatory in the manner "necessary to undo the violation of the plaintiff's right" (i.e. all damages that are not designed to punish but cancel the violation are compensatory). In this sense, expectation damages, Blake damages and Boardman v Phipps damages are all compensatory since the aim is not to punish but to do corrective justice between the parties. In each of the situations, the remedy differs because the content of the right can be said to differ. This usage only seems strange because the Birks scientific view (compensation = factual loss, restitution = factual gain) has such cache, especially in the UK.