Damages for Breach of Contract Oxford

Oxford Journal of Legal Studies, Vol. 28, No. 1 (2008), pp. 73–98doi:10.1093/ojls/gqm023Published Advance Access January 17, 2008

Damages for Breach of Contract:

Compensation, Restitution

and Vindication

DAVID PEARCE AND ROGER HALSON*

Abstract—In this article we examine the role which vindication plays in contractdamages. Vindication describes the making good of a right by the award of anadequate remedy. We argue that, while the primary purpose of compensation is toprovide an indemnity for loss, an award of compensatory damages will neverthelessgenerally vindicate the right to performance of the contract. We go on to consider adistinct measure of damages, vindicatory damages. These, we argue, are neithercompensatory nor restitutionary, neither loss-based nor gain-based: they are arights-based remedy. We then identify various situations in which the courts may beseen to have awarded what are, in substance, vindicatory damages. We conclude byconsidering the benefits which may follow from recognition of the availability ofvindicatory damages as a contract remedy.

1. Introduction

‘The function of the law is to enable rights to be vindicated and to provide

remedies when duties have been breached.’1 Vindication describes the making

good of the claimant’s legal right by the grant of an adequate remedy. Unless

an infringed right is met with an adequate remedy, the right is ‘a hollow one,

stripped of all practical force and devoid of all content’.2 As society becomes

more rights-focused and English law more rights-based,3 the vindicatory

function is set to become increasingly relevant. The broad purpose of this

article is to explore the extent to which the English courts pursue a vindicatory

function when awarding damages for breach of contract. We begin by

* Lecturer and Professor of Law, respectively, at the University of Leeds. Email: [email protected] would like to thank Professor Andrew Burrows, Horton Rogers and our two anonymous referees for theirhelpful comments and suggestions on an earlier draft of this article. The usual disclaimer applies.

1 Chester v Afshar [2004] UKHL 41, [2005] 1 AC 134 at [87] (Lord Hope of Craighead).2 Ibid.3 The obvious example is the Human Rights Act 1998.

� The Author 2008. Published by Oxford University Press. All rights reserved. For permissions,please e-mail: [email protected]

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distinguishing the primary right to performance from the secondary right to

compensation, and then show that nominal damages are an ineffective means of

vindicating the performance right. We go on to argue, however, that while an

award of substantial damages for breach of contract represents the enforcement

of the defendant’s duty to compensate, the remedy nevertheless provides an

effective means of making good the claimant’s performance right. This is

because of the way in which the courts measure loss. The second argument we

put forward is that, in certain situations, the vindicatory impulse exerts a more

radical influence on the availability of contractual remedies. In these cases, the

courts conclude that the application of orthodox compensatory principles

would yield an inadequate response to the defendant’s breach of contract.

In order to ensure that the claimant’s right to performance is made good, the

court awards substantial damages4 notwithstanding that on conventional

principles the claimant can only claim nominal damages. An important char-

acteristic of these awards is that, while exceptional, they are nevertheless

intended to be compensatory.5 Our third argument is that in some situations,

a remedial response to a breach of contract may take the form of an award of

vindicatory, as distinct from compensatory,6 damages. Vindicatory damages are

neither loss-based nor gain-based: they are a rights-based remedy. As such,

vindicatory damages are not measured by the claimant’s loss or the defendant’s

gain. Instead they comprise a fair and reasonable or, in some cases, conven-

tional sum which is intended to provide a ‘measure of recognition’7 of the

violation of the claimant’s performance right. Vindicatory damages are a gap-

filling remedy. In most cases, the claimant’s performance right will be made

good by an award of compensatory damages or by specific relief. It is only

where these orthodox remedies would constitute an inadequate curial response

to a breach of contract that vindicatory damages will become relevant. In our

conclusion we argue that a broader recognition of vindicatory damages may

ensure fairer outcomes for both claimants and defendants. As well as providing

a just remedy in suitable cases, vindicatory damages offer a further benefit, as

at present the concept of loss in English contract law is at risk of being over-

stretched. Extending the availability of vindicatory damages to contractual

actions would provide a more accurate explanation of the remedy awarded in

certain cases and would help to preserve the coherence of the conventional

remedies of compensation and restitution.

4 Or an account of profits: see Attorney-General v Blake [2001] 1 AC 268, below.5 Some argue that these awards are restitutionary on the ground that they are gain-based, while others

maintain that gain-based awards remain compensatory. Our concern here is not so much to distinguishcompensatory from restitutionary damages, it is more to distinguish rights-based damages from both loss-basedand gain-based damages.

6 Or restitutionary: see n 5 above.7 See Rees v Darlington Memorial Hospital NHS Trust [2003] UKHL 52, [2004] 1 AC 309 at [8] (Lord

Bingham of Cornhill).

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2. Compensation and Vindication

A. The Right to Performance

To understand the vindicatory function in contract, it is important to recognize

that each party to a bilateral, or synallagmatic, contract acquires ‘a legal right to

the performance of the contract’8 and, at the same time, ‘assumes a legally

recognized and enforceable obligation to perform’ it.9 For ‘the purpose of

contract is performance’.10 Pacta sunt servanda. Liability in contract may be

contrasted with that imposed in the tort of negligence. The obligation in negli-

gence is ‘an obligation to compensate the claimant against loss which was a

reasonably foreseeable consequence of [the defendant’s] carelessness’.11 Liability

in negligence is founded ‘not on the act but on the consequences’ of the act.12

‘There is no free standing obligation or duty of care.’13 Liability in contract, by

contrast, is founded on the act of agreement.14 The most obvious means of

vindicating the claimant’s right to performance of the contract is to order the

defendant to perform. Where the relevant obligation is to convey an interest in

land, refrain from doing something, or pay a sum of money, the English courts will

generally vindicate the claimant’s corresponding right by specific performance,

prohibitory injunction, or judgment for the fixed sum. But specific relief,

particularly in the form of specific performance or mandatory injunction,

nevertheless remains the exception rather than the rule in contract. While the

vindicatory function may be becoming increasingly evident, the decision of the

House of Lords in Co-operative Insurance Society Ltd v Argyll Stores (Holdings)

Ltd15 suggests a reluctance to expand the availability of specific relief in contract

generally. In English law the ‘presumption’ remains that any breach of contract

will result in an obligation on the defaulting party to pay damages.16

B. The Demise of Nominal Damages

It might be thought that in nominal damages the court already has at

its disposal a tailor-made remedy for vindicating the performance right

8 Alley v Deschamps (1806) 13 Ves Jun 25 at 27–28 (Lord Erskine).9 In Re T & N Ltd [2006] 1 WLR 1728 at [26] (David Richards J).10 George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] QB 284 at 304 (Oliver LJ). Friedmann

describes the claimant’s interest in performance as constituting ‘the very core of contract law’: D. Friedmann‘The Performance Interest in Contract Damages’ (1995) 111 LQR 628–654 at 654.

11 In Re T & N Ltd [2006] 1 WLR 1728 at [25] (David Richards J).12 Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd (The Wagon Mound) [1961] AC 388 at 425

(Viscount Simonds).13 In Re T & N Ltd [2006] 1 WLR 1728 at [25] (David Richards J).14 This distinction has been acted upon by the House of Lords in the context of an award of interest on

damages (Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627) and, morerecently, with regard to the date of accrual of a cause of action for limitation purposes (Law Society v Sephton &Co [2006] UKHL 22, [2006] 2 AC 543).

15 [1998] AC 1.16 George Mitchell (Chesterhall) Ltd v Finney Lock Seeds Ltd [1983] QB 284 at 304 (Oliver LJ).

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in contract.17 For nominal damages are ‘not intended to compensate for

anything at all’ but are awarded simply ‘to mark the fact that there has been a

breach of contract’.18 But it soon becomes apparent that nominal damages

offer little hope of making good the claimant’s performance right. First,

nominal damages have limited relevance in contractual claims in practice.19

While nominal damages may be used as a means of establishing a legal right,

they will generally be so used in the context of proprietary, and not personal,

rights.20 In any event, the availability of the declaration has rendered this aspect

of nominal damages increasingly redundant.21 Furthermore, there are signs

that the ‘main purpose’22 of nominal damages, that of acting as a peg on which

to hang costs, has been undermined by the courts’ reluctance to adopt in

mechanical fashion the principle that costs follow the event where that event is

no more than the award of nominal damages. In Anglo-Cyprian Trade Agencies

Ltd v Paphos Wine Industries Ltd23 Devlin J, having noted the general rule that a

successful claimant will recover his costs from the defendant, nevertheless

ordered the claimant to pay the defendant’s costs: ‘I do not think that a plaintiff

who recovers nominal damages ought necessarily to be regarded in the ordinary

sense of the word as a ‘‘successful’’ plaintiff.’24

Nominal damages may be seen to lack a vindicatory element in another way.

An award of a pound or two25 is unlikely in itself to provide adequate

satisfaction for the fact that a wrong has been committed.26 An award of

nominal damages differs little, if at all, from an award of derisory, or

contemptuous, damages. Derisory damages serve to indicate that, while the

17 Thus Lord Scott, speaking extra-judicially, describes the purpose of nominal damages as ‘vindicatory’: LordScott of Foscote, ‘Damages’ [2007] LMCLQ 465–473, 469.

18 Mappouras v Waldrons [2002] EWCA Civ 842 at [15] (Kay LJ).19 See, e.g. Treitel where nominal damages merit treatment of less than half-a-dozen lines in the main text:

E. Peel, Treitel on the Law of Contract (London: Sweet & Maxwell, 12th edn, 2007) at para 20-002. Chittydiscusses nominal damages in a single paragraph: H. Beale (gen ed), Chitty on Contracts (London: Sweet &Maxwell, 29th edn, 2004) at para 26-008.

20 H. McGregor, McGregor on Damages (London: Sweet & Maxwell, 17th edn, 2003) at para 10-009.21 Thus, Burrows who, having noted the function of the declaration, concludes that nominal damages ‘are

superfluous and could happily be abolished’: A. Burrows, Remedies for Torts and Breach of Contract (Oxford:Oxford University Press, 3rd edn, 2004) at 589.

22 See McGregor, above n 20 at para 10-009.23 [1951] 1 All ER 873.24 Ibid at 874 (Devlin J). See also Mappouras v Waldrons [2002] EWCA Civ 842, Excelsior Commercial &

Industrial Holdings Ltd v Salisbury Hamer Aspden and Johnson [2002] EWCA Civ 879 and Clarke v Buckle Mellows[2005] EWCA Civ 1611.

25 There seems to be little consistency in the amount of an award of nominal damages: awards of £1, £2, £5,£10 and £15 can all be found in the cases. In Liverpool City Council v Irwin [1977] AC 239 at 264 and 270, theHouse of Lords reduced the nominal damages awarded by the County Court judge from £10 to £5. In the Courtof Appeal, Roskill LJ had thought that the proper figure was £2 ([1976] QB 319 at 333). In Radford vDe Froberville [1977] 1 WLR 1262 at 1268 Oliver J assumed nominal damages to be the decimal equivalent of40 shillings. This figure may have its origins in the practice of the royal courts in the thirteenth century to excludeclaims for less than that amount: see J. H. Baker, An Introduction to English Legal History (London: Butterworths,4th edn, 2002) at 22.

26 In Attorney-General v Blake [2001] 1 AC 268 at 283, Lord Nicholls of Birkenhead commented that ifthe claimants in Wrotham Park had only been awarded nominal damages, justice would manifestly not havebeen done.




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claimant’s right has been infringed, the court has a very low opinion of the

claim, or takes the view that the claimant ‘deserved, at any rate morally, what

the defendant did to him.’27 In theory, then, nominal and derisory damages

serve different purposes. In practice, it can be hard to distinguish between the

two. For example, in Grobbelaar v News Group Newspapers Ltd,28 the House of

Lords unanimously substituted an award of £1 damages in place of the jury’s

award of £85,000. This was explicitly labelled an award of nominal damages,29

yet there can be little doubt as to their Lordships’ views as to the merits of the

case. Lord Bingham said it would be an ‘affront to justice . . . to award sub-

stantial damages to a man shown to have acted in such flagrant breach of his

legal and moral obligations’.30 Both Lord Steyn and Lord Millett described the

award as ‘derisory’.31

Far from fulfilling a vindicatory function, nominal damages today may

indicate a lack of any substantive merit in the claimant’s case. ‘A plaintiff who

recovers only nominal damages has in reality lost and in reality the defendant

has established a complete defence.’32 Such an approach calls into question

the continuing presence of nominal damages in the courts’ remedial armoury,

a fact explicitly envisaged in Ibekwe v TGWU.33 In that case, Peter Gibson

LJ thought it might be ‘well within’ the court’s discretion under the

Civil Procedure Rules to stop a case where it became clear that the claimant

would only recover nominal damages.34 The court had to ‘avoid incurring

unnecessary costs and taking up a disproportionate amount of’ its own time.35

C. The Different Functions of Compensatory Damages

The principal aim of an award of compensatory damages is, of course, to

compensate the claimant for loss suffered,36 but the objective has never been to

provide a precise indemnity. This indicates that compensation is not the sole

function of damages in contract. So, for example, the rules on remoteness and

mitigation may result in a claimant recovering less in damages than the amount of

‘loss’ suffered. On the other hand, an award of damages may exceed this amount.

Thus the factory-owner in Harbutt’s ‘Plasticine’ Ltd v Wayne Tank and Pump Co

Ltd37 was awarded damages sufficient to enable him to build a new factory

27 W. V. H. Rogers, Winfield & Jolowicz on Tort (London: Sweet & Maxwell, 17th edn, 2006) at para 22–6.28 [2002] UKHL 40, [2002] 1 WLR 3024.29 Ibid at [27] (Lord Bingham), [61] (Lord Hobhouse of Woodborough) and [87] (Lord Scott).30 Ibid at [24].31 Ibid at [36] and [69], respectively.32 Hyde Park Residence Ltd v Yelland [1999] RPC 655 at [36]–[37].33 [2001] EWCA Civ 432.34 Ibid at [26].35 Ibid.36 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 at 580 (Lord Millett). See generally

E. McKendrick ‘Breach of Contract and the Meaning of Loss’ [1999] Current Legal Problems 37.37 [1970] 1 QB 447.




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superior to that destroyed by the defendant’s breach. In yet other cases the

damages awarded may bear no relation to the actual loss suffered. In Cory v

Thames Ironworks and Shipbuilding Co Ltd38 the claimant recovered damages

for profits lost by not being able to use the subject matter of the contract,

a boom derrick, as a coal store. However, the claimant had never intended to

use the derrick in that way: his intended use gave rise to much higher losses,

but losses which were too remote to be recoverable.39 Where a contract contains

a liquidated damages clause, it is perhaps inevitable, given the limited foresight

of contractors, that the stipulated sum will either under-compensate or

over-compensate the innocent party.40 There are also instances where the

court’s desire to vindicate the performance right means that general damages

are awarded for pecuniary loss.41

A further limit upon the recovery of full compensation may be seen to arise

from the decision in South Australia Asset Management Corp v York Montague

Ltd.42 There, surveyors employed by mortgagees had negligently overvalued

commercial property to the extent that when, following the mortgagor’s

default, the security was realized, the proceeds of sale were insufficient to

discharge the outstanding debt. The House of Lords held that the negligent

surveyors were not automatically liable for the entire shortfall. Rather, they

were only liable in respect of the extent to which they had overvalued

the premises; in so far as the mortgagees’ losses exceeded this ‘initial security

shortfall’ the losses were irrecoverable. The SAAMCO principle, that

‘a defendant is not liable in damages in respect of losses of a kind that fall

outside the scope of his duty of care’,43 has subsequently been applied

widely to contractual and tortious duties of care owed by valuers and other

professionals.44

That compensation serves other ends is, in fact, widely accepted. Lord

Wilberforce asked of a man bringing an action for damages in tort:

Is he suing for compensation, for injury to his feelings, to teach his opponent a lesson,

to vindicate his rights, or ‘the strength of the law’, or for a mixture of these

things? . . .The fact is that the plaintiff sues for damages, inviting the court to take all

the facts into consideration, and, if he wins, he may ascribe his victory to all or any of

the ingredients.45

38 (1868) LR 3 QB 181.39 Ibid at 189–92.40 For an example of under-compensation, see, eg, Diestal v Stevenson [1906] 2 KB 345.41 See, e.g. Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] 2 All ER 788.42 [1997] AC 191.43 Aneco Reinsurance Underwriting Ltd (in liquidation) v Johnson and Higgins Ltd [2001] UKHL 51, [2002]

1 Lloyd’s Rep 157 at [10] (Lord Lloyd of Berwick).44 See, e.g. HOK Sport Ltd v Aintree Racecourse Co Ltd [2002] EWHC 3094 (TCC), [2003] Lloyd’s Rep PN

148. Cf Aneco Reinsurance Underwriting Ltd (in liquidation) v Johnson and Higgins Ltd [2001] UKHL 51, [2002]1 Lloyd’s Rep 157.

45 Cassell & Co Ltd v Broome [1972] AC 1027 at 1115.




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Compensatory damages, it is suggested, serve various secondary functions such

as punishment, deterrence and appeasement.46 Of more immediate relevance

is their capacity to fulfil a vindicatory role. Such a role is well established in

the context of libel damages. As well as compensating the claimant for his

pecuniary and non-pecuniary losses, libel damages must be sufficient to

vindicate the claimant’s reputation.47 As Windeyer J observed:

It seems to me that, properly speaking, a man defamed does not get compensation for

his damaged reputation. He gets damages because he was injured in his reputation,

that is simply because he was publicly defamed. For this reason, compensation by

damages operates in two ways – as a vindication of the plaintiff to the public and as

consolation to him for a wrong done.48

There is no reason in principle why compensatory damages in contract should

not likewise fulfil a vindicatory purpose.

D. The Vindicatory Function of Compensatory Damages

Indeed the practice of the courts demonstrates that an award of compensation

for breach of contract does serve this very purpose. Contractual damages are

generally awarded so as to protect the claimant’s expectation interest, to give

him the benefit of the bargain: the claimant ‘is, so far as money can do it, to be

placed in the same situation with respect to damages as if the contract had been

performed.’49 The primacy of this measure of damages for breach of contract is

reflected by its description as the ‘contract measure’.50 This may be contrasted

with the objective in tort, where the court awards damages so as to put the

claimant ‘in the same position as he would have been in if he had not sustained

the wrong’.51 Contractual damages vindicate the performance right: they

put the claimant in the same position as if the defendant had performed

46 See the dissenting judgment of Thomas J in Daniels v Thompson [1998] 3 NZLR 22. In The Gleaner Co Ltd vAbrahams [2003] UKPC 55, [2004] 1 AC 628 at [41] Lord Hoffmann noted that ever since Rookes v Barnard[1964] AC 1129 ‘it has been recognised that compensatory damages may also have a punitive, deterrent orexemplary function’. In Merest v Harvey (1814) 5 Taunt 442 at 444, Heath J thought that an award of exemplarydamages ‘goes to prevent the practice of duelling’.

47 See The Gleaner Co Ltd v Abrahams [2003] UKPC 55, [2004] 1 AC 628 at [55] (Lord Hoffmann).Vindication of the claimant’s reputation does not always call for an award of damages: a ‘reasoned judgment’ maysuffice: see Rackham v Sandy [2005] EWHC 482 (QB) at [124] (Gray J).

48 Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118 at 150.49 Robinson v Harman (1848) 1 Exch 850 at 855 (Parke B). Thus Street comments: ‘the law is not content

to indemnify the plaintiff for losses suffered; it gives him what he would have had if the defendant had notwrongfully broken his contract’: H. Street, Principles of the Law of Damages (London: Sweet & Maxwell, 1962)at 240.

50 Nykredit Mortgage Bank plc v Edward Erdman Group Ltd (No 2) [1997] 1 WLR 1627 at 1634 (LordNicholls). In Wertheim v Chicoutimi Pulp Co [1911] AC 301 at 307 this measure was described by Lord Atkinsonas the ‘ruling principle’ of contract damages.

51 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 at 39 (Lord Blackburn).




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his promise. Fuller and Perdue famously described damages based on the

expectation interest as a ‘queer kind’ of compensation.52 For, they argued,

the loss which the plaintiff suffers (deprivation of the expectancy) is not a datum of

nature but the reflection of a normative order. It appears as a ‘loss’ only by reference

to an unstated ought. Consequently, when the law gauges damages by the value of the

promised performance it is not merely measuring a quantum, but is seeking an end,

however vaguely conceived this end may be.53

The end that the law seeks is the fulfilment of promises:54 damages based on

the expectation interest seek to vindicate the claimant’s performance right.

This vindicatory element shaping the duty to compensate is evident not just

in the law’s recognition and enforcement of the expectation interest itself, but

also in the way the expectation interest is measured. Where the defendant’s

performance of the contract is defective but the claimant is not entitled to, or

does not, reject that performance, there are two principal methods of assessing

the claimant’s damages.55 The first is the difference in value between the

performance for which the claimant contracted and the performance received.

The second is the cost of curing the defective performance, so that the claimant

may obtain the performance for which he contracted. Where the claimant’s

interest in performance is financial, the difference in value measure will

generally be adopted by the court. Where his interest lies in ‘performance of

the quality, type or standard promised by the defendant’,56 the court is more

likely to adopt the cost of cure measure. The cost of cure measure is widely

seen as more consistent with enforcement of the performance right,57 and

the courts’ reliance on the difference in value measure has been said to

demonstrate a ‘less than whole-hearted’ commitment to the protection of the

performance interest.58 McKendrick argues that ‘there is more to the law of

contract than the protection of financial interests’ and that damages

should no longer be tied to putting the claimant into the financial position which he

would have been in had the contract been performed, but instead should aim to give

the claimant an appropriate substitute for the performance to which she was entitled.59

52 L. Fuller and W. Perdue ‘The Reliance Interest in Contract Damages’ (1936) 46 Yale LJ 52–96 at 53.53 Ibid.54 In Farley v Skinner [2001] UKHL 49, [2002] 2 AC 732 at [25], Lord Steyn described contract law’s

central purpose as ‘promoting the observance of contractual promises’.55 E. McKendrick, Contract Law: Text, Cases, and Materials (Oxford: Oxford University Press, 2nd edn, 2005)

at 1017.56 Ibid at 1050.57 See, e.g. B. Coote ‘Contract Damages, Ruxley, and the Performance Interest’ (1997) 56 CLJ 537–570;

Friedmann, above n 10; E. McKendrick ‘The Common Law at Work: the Saga of Alfred McAlpine ConstructionLtd v Panatown Ltd’ (2003) 3 OUCLJ 145–180; and C. Webb ‘Performance and Compensation: An Analysis ofContract Damages and Contractual Obligation’ (2006) 26 OJLS 41–71.

58 McKendrick, above n 55 at 1017.59 McKendrick, above n 57 at 168 and 172.




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Nevertheless, it is important to emphasize that contract damages do generally

serve a vindicatory role. Often, the claimant’s interest in performance will be

financial, so difference in value damages will be adequate to make good his

performance right.60 In other cases, difference in value may be the only means

of measuring damages as it may not be possible or practical for the defective

performance to be remedied.61 Furthermore, it is clear that the court will not

always apply the difference in value measure where the claimant’s interest in

performance may be seen as financial. Take, as an example, Radford v De

Froberville62 where the claimant sought damages for the defendant’s failure to

build a wall along the boundary dividing their respective properties. The

claimant’s property was let to tenants and Oliver J accepted that the claimant

was ‘realistically, merely a landlord with an investment property’.63 While this

would point to difference in value as being the appropriate measure of loss,

Oliver J preferred cost of cure, invoking the general principle that pacta sunt

servanda.64 The claimant ‘had a contractual right to have the work done’ and

wanted the wall built.65 Where a claimant contracts for something and the

defendant fails in breach of contract to supply that thing, Oliver J did ‘not see

why, in principle, [the claimant] should not be compensated by being provided

with the cost of supplying it through someone else or in a different way’.66

Radford demonstrates that, when awarding compensation, the court is doing

more than simply making good a loss. Where awarding the difference in value

will make good the performance right, that measure will be adopted. But where

that right will only be satisfied by getting the very thing contracted for, the

court will award cost of cure damages.67

3. The Reach of the Vindicatory Impulse

Thus far, the role of the vindicatory function has been secondary to the

primary compensatory objective. Yet in some exceptional cases the vindicatory

function is more prominent and has a more radical effect. The desire to award

damages which make good the claimant’s performance right may justify a

60 For example, where the claimant intends to dispose of the subject-matter of the contract to a sub-buyer at aprofit, damages assessed by the difference in value measure should generally vindicate the claimant’s performanceright. In fact, such damages might give the claimant a ‘windfall’ gain: see Slater vHoyle & Smith Ltd [1920] 2 KB 11.Cf Bence Graphics International Ltd v Fasson UK Ltd [1988] QB 87 at 102 where Auld LJ thought that the time hadcome for Slater’s case to be reconsidered. See also the discussion in Transfield Shipping Inc v Mercator Shipping Inc,The Achilleas [2006] EWHC 3030 (Comm), [2007] 1 Lloyd’s Rep 19 at [82]–[89] (Christopher Clarke J).

61 See A. I. Ogus, The Law of Damages (London, Butterworths, 1973) at 336.62 [1977] 1 WLR 1262.63 Ibid at 1285.64 Ibid at 1270.65 Ibid at 1285.66 Ibid at 1270. This was, however, ‘subject to the proviso, of course, that he is seeking compensation for

a genuine loss and not merely using a technical breach to secure an uncovenanted profit’ (ibid).67 Unless cost of cure damages would be unreasonable or oppressive: see Ruxley Electronics and Construction Ltd

v Forsyth [1996] 1 AC 344, below.




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departure from conventional compensatory principles. Take the extension of

the Dunlop v Lambert68 principle to building contracts. Dunlop has been

described as probably the only true exception to the general rule of English law

that in an action for breach of contract a claimant may only recover substantial

damages for loss which he himself has suffered.69 The rule in Dunlop, as

interpreted by Lord Diplock in The Albazero,70 ‘allows a consignor of goods to

recover from the carrier in full in respect of loss or damage to the goods in

transit even though he has parted with all property in the goods before they are

lost or damaged and thus suffers no loss’.71 In St Martins Property Corporation

Ltd v Sir Robert McAlpine Ltd, this principle was applied so as to allow a

developer to recover substantial damages, representing repair costs, for breach

of a building contract, in circumstances where the developer had, before the

breach of contract occurred, transferred its interest in the land being developed

to a third party.72

The approach in St Martin’s, and in the subsequent case of Darlington

Borough Council v Wiltshier Northern Ltd,73 represents a significant extension of

the Dunlop principle, an extension which demonstrates the increasing will-

ingness of the courts to assert the law’s vindicatory function. In the carriage of

goods scenario, from which the Dunlop principle arises, ‘it is the loss to the

proprietary or possessory interest that is compensated, not some other or

different economic loss’.74 The essence of the Dunlop principle is compensation

for the diminution in value of an asset. It involves the enforcement of the

claimant’s contractual rights so as to compensate a third party for a diminution

in the value of the third party’s assets brought about by the defendant’s wrong.

The object, therefore, of the Dunlop principle is the vindication of the third

party’s property rights.75 In contrast, in St Martin’s, the damages did not relate

to loss to the proprietary or possessory interest, that is, to any diminution in the

value of the third party’s assets. The damages related to the expectation interest

created by the contract. They represented compensation for the failure to

enhance the value of certain assets in the manner bargained for by the

claimant. The damages in St Martin’s cannot be said to represent the

68 (1839) 6 Cl & F 600. This case itself provides evidence of the vindicatory function in contract: the claimantrecovers substantial damages for a loss which he had not suffered.

69 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 at 582 (Lord Millett).70 [1977] AC 774 at 847.71 Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 at 582 (Lord Millett). The consignor

must account to the consignee for the damages recovered (ibid).72 [1994] 1 AC 85 (heard with Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd).73 [1995] 1 WLR 68.74 Obestain Inc v National Mineral Development Corporation Ltd, The Sanix Ace [1987] 1 Lloyd’s Rep 465 at 469

(Hobhouse J).75 That the complaint in a contract of carriage case where goods are delivered in a damaged condition or are

delivered late, relates to the underlying property interest in the cargo is demonstrated by the fact that freightremains payable: no right to an abatement arises. See Colonial Bank v European Grain and Shipping Ltd,The Dominique [1989] AC 1056 and Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 at111–112 (Lord Browne-Wilkinson).




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vindication of the third party’s property rights. The essence of the St Martin’s

principle is the non-enhancement of the value of an asset: that is an economic

interest protected by the law of contract, not a proprietary interest protected

by the law of tort. St Martin’s involves the enforcement by the claimant of his

contractual rights against the defendant so as to compensate, indirectly, a third

party for the non-enhancement of the value of the third party’s assets brought

about by the defendant’s breach of contract.76 In St Martin’s, the court is

vindicating contractual rights.77

In the St Martin’s and Darlington cases, the claimant was in effect able to

recover substantial damages in respect of loss suffered by a third party. The

broad ground adopted by Lord Griffiths in the former case78 and the approach

of the minority in Alfred McAlpine Construction Ltd v Panatown Ltd79 treat

the loss as being that of the claimant, rather than of the third party. One

consequence of this distinction is that the claimant would be entitled to

substantial damages, even though the third party itself has a direct cause of

action. But in practice this broader approach may not differ greatly. In

St Martin’s, Lord Griffiths clearly envisaged a situation where the claimant

himself had already incurred the cost of repairs to the third party’s property.80

In Panatown, Lord Goff of Chieveley thought that any damages recovered by

the claimant from the defendant would ‘no doubt’ be applied ‘directly or

indirectly’ to making good the defects in the building.81 In the same case, Lord

Millett thought that the claimant would hold the damages on trust to be

applied at the direction of the group company which had provided the finance

for the construction work.82

The most striking example of the development of the vindicatory function

in contract is the decision of the majority of the House of Lords in Attorney-

General v Blake83 to award an account of profits as a remedy for Blake’s 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 of specific performance or grant

76 Thus in a building contract, a right to an abatement of the price will arise whether or not the claimant hasretained ownership of the development: see Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974]AC 689. The breach ‘involves a failure to provide the very goods or services which the defendant had contractedto supply’: Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 at 111–112 (Lord Browne-Wilkinson).

77 In Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518, a bare majority of the House of Lordsheld that the St Martin’s principle did not apply to the situation where the third party had its own cause of actionagainst the defendant. It followed that the claimant was not entitled to substantial damages for the defendant’sbreach of contract.

78 [1994] 1 AC 85 at 96–8.79 [2001] 1 AC 518.80 [1994] 1 AC 85 at 96.81 [2001] 1 AC 518 at 560.82 Ibid at 592–3.83 [2001] 1 AC 268.




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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.84

Here the Crown could demonstrate a ‘legitimate interest’ in preventing

Blake’s profit-making activity and depriving him of his profit.85 Blake was an

exceptional case because of the gravity of the breach itself. The content of the

remedial duty, that Blake account for all his profits, was dictated by the value

which the Crown attached to the non-violation of its right to performance

of the confidentiality clause, rather than by reference to the consequences of

the violation of that right. As such it is an outstanding example of the impact of

the vindicatory function.86

4. Vindicatory Damages

A. Infringement of Constitutional Rights

Having sought to establish the vindicatory role of compensatory damages, we

now turn to our second argument: that a distinct measure of damages is being

developed by the courts. Exceptionally, a court may award damages which

are best viewed as neither compensatory nor restitutionary, neither loss-based

nor gain-based. Such damages, vindicatory damages, are rights-based

damages.87 Vindicatory damages have to date only been explicitly recognized

in the field of constitutional rights.88 The Privy Council has acknowledged

that, where a constitutional right has been violated, an award of compensatory

damages may not suffice as the fact that the infringed right is a constitu-

tional right adds an extra dimension.89 In such a case, damages ‘may be

84 Ibid at 285 (Lord Nicholls).85 Ibid.86 Albeit one that resulted in an account of profits rather than damages.87 See Dunlea v Attorney-General [2000] 3 NZLR 136 at [68] where Thomas J speaks of damages under the

New Zealand Bill of Rights Act necessitating a ‘rights-centred approach’.88 See Attorney-General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 and Merson

v Cartwright [2005] UKPC 38, [2006] 3 LRC 264. The recognition by the English courts of vindicatory damageswould raise an interesting issue as to their compatibility with damages under the Human Rights Act 1998. Therefusal by the House of Lords in R (on the application of Greenfield) v Secretary of State for the Home Department[2005] UKHL 14, [2005] 1 WLR 673 to award damages for violation of Article 6 of the Convention for theProtection of Human Rights and Fundamental Freedoms may indicate that awards under the Human Rights Actmight be less common and less generous than awards of vindicatory damages. See also A v Head Teacher andGovernors of Lord Grey School [2006] UKHL 14, [2006] 2 AC 363 at [83] (Baroness Hale of Richmond) and thecomments of Lord Millett in Cullen v Chief Constable of the RUC [2003] UKHL 39, [2004] 2 All ER 237 at [82]:

The practice of the European Court is therefore inconsistent with an award of either modest or nominaldamages in a case where neither pecuniary nor non-pecuniary damage is established. It follows that such anaward cannot be justified by a supposed need to deter the authorities of the state or to vindicate a conventionright.

89 Attorney-General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 at [19].




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compensatory but should always be vindicatory’.90 For, as Thomas J observed

in Daniels v Thompson:

Compensation recognises the value attaching to the plaintiff ’s interest or right which

is infringed, but it does not place a value on the fact the interest or right ought not to

have been infringed at all.91

In Merson v Cartwright the trial judge, Sawyer J, had awarded the claimant

$100,000 as damages for infringement of her constitutional rights on top of

general damages of $180,000 for assault, battery, false imprisonment and

malicious prosecution. The Privy Council upheld the award of the constitu-

tional damages. The purpose of these damages ‘is to vindicate the right of the

complainant, whether a citizen or a visitor, to carry on his or her life in

the Bahamas free from unjustified executive interference, mistreatment or

oppression.’92 In the earlier case of Attorney-General of Trinidad and Tobago

v Ramanoop,93 the Privy Council likewise upheld an award of vindicatory

damages made by the Court of Appeal of Trinidad and Tobago in respect of

appalling misbehaviour by a police officer towards the claimant. In reaching its

conclusion in Ramanoop, the Privy Council derived ‘particular assistance’94

from the dissenting judgment of Thomas J in Dunlea v Attorney-General.95 In

Dunlea, Thomas J concluded that damages under the New Zealand Bill of

Rights Act 1990 should not be calculated on the same basis as ordinary

tortious damages. In reaching that view, Thomas J drew a distinction between

loss-centred damages and damages which are rights-centred. Generally

damages awarded in tort are loss-centred: the court, Thomas J said, awards

a figure to compensate the claimant for physical damage and mental distress.

But damages under the Bill of Rights Act necessitate ‘a rights-centred approach

based on an understanding of the importance of vindicating the right now

vested in the plaintiff as a citizen’.96 As such, damages under the Act should

include an amount representing the value to the claimant of the non-violation

of the right.97 Vindicatory damages reflect the ‘intrinsic value’ of the infringed

right to the claimant.98

In Ramanoop, Lord Nicholls stated that two aims, among others, of

vindicatory damages are ‘to reflect the sense of public outrage . . . and deter

90 Merson v Cartwright [2005] UKPC 38, [2006] 3 LRC 264 at [18].91 [1998] 3 NZLR 22 at 70.92 [2005] UKPC 38, [2006] 3 LRC 264 at [18].93 [2005] UKPC 15, [2006] 1 AC 328.94 Ibid at [16].95 [2000] 3 NZLR 136.96 Ibid at [68].97 Ibid at [70]. Thomas J saw vindicatory damages as compensatory (see ibid at [66] and [67]). The better

view, it is respectfully suggested, is that vindicatory damages should be treated as distinct from an awardof compensation: see below.

98 Ibid at [60].




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further breaches’.99 As such, Lord Nicholls conceded that an award of vindi-

catory damages ‘is likely in most cases to cover much the same ground in

financial terms as would an award by way of punishment in the strict sense of

retribution’.100 But punishment in this sense, he continued, is not the object of

vindicatory damages and the expressions punitive and exemplary are ‘better

avoided’ in this context.101 This view was echoed by Lord Scott in Merson.102

The overlap between vindicatory and punitive damages is evident in the context

of tort law where infringement of what may be termed constitutional rights is

one of the two common law categories where punitive damages are available.103

Vindicatory damages may arguably offer a more palatable means of achieving at

least some of the aims of punitive damages and the recognition of vindicatory

damages may raise the prospect of the elimination from English civil law of this

‘anomalous’ remedy.104

B. Vindicatory Damages Outside Constitutional Law

As Ramanoop and Merson represent the only instances of a court awarding

vindicatory damages, it must be asked whether such damages may be awarded

for the infringement of rights other than constitutional rights. The obvious

argument against their wider availability would appear to be that constitutional

rights are uniquely important rights: it is the constitutional nature of the right

which adds an ‘extra dimension’ to the claim.105 But to so confine vindicatory

damages would be a mistake. First, all legal rights are important: that is why

they are legal rights and not mere social norms or conventions. The fact that

the right which has been violated is a constitutional right may, depending on

the circumstances, call for a larger award of vindicatory damages than that

justified in an action between two private parties. But the fact that the infringed

right was not explicitly constitutional ought not, of itself, to preclude an award

of vindicatory damages. Second, distinguishing constitutional from other legal

99 [2005] UKPC 15, [2006] 1 AC 328 at [19]. Speaking extra-judicially, Lord Scott expressed the view that‘a deterrent element in an award of vindicatory damages should be limited to an amount calculated to deter thewrongdoer from further infringements of the victim’s rights’. An award intended to act as a general deterrent forthe benefit of the wider public would, Lord Scott said, tend to blur the distinction between public and privatelaw. See Lord Scott, above n 17 at 471.

100 [2005] UKPC 15, [2006] 1 AC 328 at [19].101 Ibid.102 ‘The purpose of a vindicatory award is not a punitive purpose. It is not to teach the executive not to

misbehave.’ [2005] UKPC 38, [2006] 3 LRC 264 at [18]. Cf. the Shorter Oxford English Dictionary (5th edn,2003) which gives ‘punitive’ as one meaning of vindicatory.

103 See Rookes v Barnard [1964] AC 1129 at 1220–1231. Note that Lord Devlin thought that in the twocategories he outlined, exemplary damages could ‘serve a useful purpose in vindicating the strength of the law’:ibid at 1226.

104 See Cassell & Co Ltd v Broome [1972] AC 1027 at 1091 (Lord Reid). See also Lord Scott’s speech inKuddus v Chief Constable of Leicestershire [2001] UKHL 29, [2002] 2 AC 122.

105 See Attorney-General of Trinidad and Tobago v Ramanoop [2005] UKPC 15, [2006] 1 AC 328 at [19] (LordNicholls).




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rights is not straightforward. Thus Lord Rodger of Earlsferry, speaking in the

context of identifying those torts which are actionable per se, said:

The term ‘constitutional right’ works well enough, alongside equivalent terms, in the

field of statutory interpretation. But, even if it were otherwise suitable, it is not

sufficiently precise to define a class of rights whose abuse should give rise to a right of

action in tort without proof of damage.106

Third, English law has in any event historically relied upon the law of torts to

vindicate constitutional rights,107 the ‘flagship of the fleet’ in this context being

the tort of trespass.108 Indeed, the courts continue today to use private law as

the primary means of vindicating some fundamental rights.109

It should be recognized that vindicatory damages may be less prevalent in the

contractual context because breach of contract, unlike infringement of constitu-

tional rights, is an ‘incident of commercial life’.110 In practice, as discussed

above, the performance right will generally be vindicated by compensatory

damages. Vindicatory damages will be an exceptional, gap-filling remedy for

breach of contract claims. As will be shown below, vindicatory damages are

likely to be relevant in contract where the breach causes no loss within the

conventional meaning of loss,111 where an award of compensatory damages

would be oppressive as regards the defendant,112 and where an award of

compensatory damages will not be an adequate remedy because all or part of

the loss caused by the breach is not loss for which the defendant is liable to the

claimant.113

Entick v Carrington114 and Ashby v White115 may be seen as early examples of

vindicatory damages being awarded in tort. A more recent instance, and one

unrelated to constitutional rights, is provided by the decision of the majority of

the House of Lords in Rees v Darlington Memorial Hospital NHS Trust.116 The

claimant, who was severely visually impaired, wished to be sterilised as she felt

that she would not be able to cope with bringing up a child. Her sterilization

106 Watkins v Secretary of State for the Home Department [2006] UKHL 17, [2006] 2 AC 395 at [62].107 See, e.g. in the context of claims against the Crown, Davidson v Scottish Ministers [2005] UKHL 74, 2006

SCLR 249 at [73] (Lord Rodger):

By concentrating on judicial review, lawyers and judges today may tend to forget the historical importance ofthe law of tort or delict as a way of vindicating the subject’s rights and freedoms.

108 T. Weir, A Casebook on Tort (London: Sweet & Maxwell, 10th edn, 2004) at 18. Entick v Carrington (1765)2 Wils KB 275 is probably the leading example.

109 See, e.g. the way the courts have developed the equitable wrong of breach of confidence as a means ofprotecting privacy following the enactment of the Human Rights Act 1998.

110 ‘Contract-breaking is treated as an incident of commercial life which players in the game are expected tomeet with mental fortitude’: Johnson v Gore Wood & Co [2002] 2 AC 1 at 49 (Lord Cooke of Thorndon).

111 See, e.g. Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, below.112 See, e.g. Ruxley Electronics and Construction Ltd v Forsyth [1996] 1 AC 344, below.113 See, e.g. Jackson v Horizon Holidays Ltd [1975] 1 WLR 1468, below.114 (1765) 2 Wils KB 275.115 (1703) 2 Ld Raym 938.116 [2003] UKHL 52, [2004] 1 AC 309.




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was performed negligently by the hospital operated by the defendants.

The claimant subsequently gave birth to a healthy son. A bare majority of a

seven-member panel of the House of Lords held that the defendant was not

liable to pay for the additional cost of bringing up the child brought about by

the claimant’s disability. However, the majority also held that compensation

in respect of the stress, trauma and cost associated with the pregnancy and

birth, which was recoverable, would, on its own, not give ‘adequate recogni-

tion’ to the reality that the claimant had lost ‘the opportunity to live her life in

the way that she wished and planned’.117 Accordingly, the claimant was awarded

an additional, conventional sum of £15,000. The damages awarded in Rees are,

it is suggested, rights-based, or vindicatory, in nature.118 Such an analysis

is consistent with the approach of Lord Bingham who said that the award was

not intended to be compensatory, and was neither nominal nor derisory; rather,

it ‘would afford some measure of recognition of the wrong done.’119

What, in substance, amount to vindicatory damages may be found elsewhere

in private law. One example is an award of damages based on the so-called

‘user-principle’.120 The nature of user damages has proved controversial. Some

see them as loss-based and compensatory,121 others as gain-based and restitu-

tionary.122 In Attorney-General v Blake, Lord Nicholls appears to have adopted

a middle course, the damages being gain-based and compensatory.123 The

better approach, it is respectfully suggested, is to view these damages as rights-

based. It is worth noting that these claims arise from the defendant’s infringe-

ment of the claimant’s property rights: by wrongfully occupying or using the

claimant’s land or chattels, the defendant has interfered with the claimant’s

right to possession. The wrong is the violation itself. The defendant owes a

duty not to interfere, not merely to compensate for loss caused. That user

117 Ibid at [8] (Lord Bingham).118 According to Weir, the award may be viewed as ‘a token of the court’s perception that the parents’

rights . . . have been infringed’. He finds a precedent for the conventional award in Rees in Benham v Gambling[1941] AC 157 where the House of Lords awarded damages of £200 for loss of expectation of life, and identifiesthis as the predecessor of bereavement damages under the Fatal Accidents Act 1976. Weir thinks it ‘perfectly idle’to view bereavement damages as ‘compensation for grief’. See Weir, above n 108 at 17 and 124.

119 [2003] UKHL 52, [2004] 1 AC 309 at [8] (Lord Bingham). Nolan concedes that a ‘rights-vindication’analysis of the award is consistent with aspects of the reasoning of Lord Bingham and Lord Millett. Nolan’s view,however, is that such an analysis ‘represents a fundamental challenge to negligence principles’ as the law ofnegligence will unduly restrict people’s freedom of action if the requirement of harm is relaxed. The ‘rights-vindication’ analysis poses a challenge which, he says, ‘must be rebuffed’: D. Nolan ‘New Forms of Damage inNegligence’ (2007) 70 MLR 59–88 at 79.

120 The source of the description was attributed to Nicholls LJ (in Stoke-on-Trent City Council v W & J WassLtd [1988] 1 WLR 1406) by Lord Lloyd in Inverugie Investments Ltd v Hackett [1995] 1 WLR 713 at 718. In thecontext of trespass to land, the claims are for ‘mesne profits’: see, e.g. McGregor, above n 20 at para 34-039.

121 See, e.g. Whitwham v Westminster Brymbo Coal and Coke Co [1896] 2 Ch 538 at 541 (Lindley LJ),542 (Lopes LJ), and 543 (Rigby LJ) and Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd[1952] 2 QB 246 at 252 (Somervell LJ) and 256 (Romer LJ).

122 See, e.g. Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 at 255–256(Denning LJ), Penarth Dock Engineering Co Ltd v Pounds [1963] 1 Lloyd’s Rep 359 at 362 (Lord Denning MR)and Ministry of Defence v Ashman (1993) 66P & CR 195 at 200 (Kennedy LJ) and 201 (Hoffmann LJ).

123 [2001] 1 AC 268 at 278. As no financial loss has been suffered the award represents ‘compensa-tion . . .measured by a different yardstick’, that yardstick apparently being gain rather than loss (see ibid).




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damages are not loss-based is supported by a comparison of the approaches

adopted by Pilcher J and the Court of Appeal in Strand Electric and Engineering

Co Ltd v Brisford Entertainments Ltd.124

Pilcher J followed the approach of the House of Lords in The SS Valeria,125

where the claimant’s vessel had been damaged in a collision. In that case, Lord

Buckmaster said the damages were to be measured by what the vessel would

have earned during the period of its incapacity due to the accident. That

amount, he continued, could only be ascertained by considering what the vessel

had actually earned under similar conditions.126 Applying this in the Strand

case, Pilcher J deducted from the total weekly hire for the period of wrongful

detention of the claimants’ property sums to reflect the likelihood that the

claimants would have been unable to hire out the switchboards for the whole

of the relevant period and the likelihood that, had the defendants returned the

switchboards in a timely fashion, some may have been damaged and so have

been incapable of being hired out. In effect, he awarded damages representing

the actual loss likely to have been suffered by the claimants.

The Court of Appeal rejected this approach: the claimants were entitled to

the full market rate of hire for the entire period of detention without any

deductions.127 But, as Lord Nicholls appreciated in Blake, damages not based

on actual loss cannot sensibly be described as loss-based unless loss is given a

‘strained and artificial meaning’.128 On this analysis, Pilcher J’s award was loss-

based, while the Court of Appeal’s award was rights-based. Similarly, the

approach adopted byMegaw LJ in Swordheath Properties Ltd v Tabet,129 was rights-

based. Megaw LJ thought it clear ‘as a matter of principle and of authority’ that

the claimant there was entitled to substantial damages without adducing evidence

of loss.130 But once the court dispenses with the requirement of proof of loss,

it becomes hard to classify the award as loss-based. Some other principle would

seem to be at work. Indeed, McGregor describes the awards in these cases as

‘moving away from damages’.131

If user damages are not compensatory, might they be viewed as

restitutionary? It is helpful at the outset to identify two uses of the term

‘restitutionary’. The first describes a remedy which requires the defendant to

restore to the claimant what belongs to the claimant. Restitution, in this sense,

effects the reversal of a subtraction by the defendant from the claimant’s

property.132 Lord Hobhouse adopted this meaning in his dissenting speech

124 [1952] 2 QB 246.125 [1922] 2 AC 242.126 Ibid at 247–8.127 [1952] 2 QB 246 at 252 (Somervell LJ), 255 (Denning LJ), and 257 (Romer LJ).128 See Attorney-General v Blake [2001] 1 AC 268 at 279 (Lord Nicholls).129 [1979] 1 WLR 285.130 Ibid at 288.131 See McGregor, above n 20 at para 34-045.132 Thus the Shorter Oxford English Dictionary (5th edn, 2003) gives as the primary meaning of restitution:

‘The action or an act of restoring or giving back something to its proper owner’.




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in Blake, saying that restitution ‘is analogous to property: it concerns wealth or

advantage which ought to be returned or transferred by the defendant to

the plaintiff ’.133 The essence of restitutionary relief, according to Lord

Hobhouse, is ‘the performance by the defendant of his obligations’: the

claimant ‘recovers what he is actually entitled to not some monetary substitute

for it’.134 Damages, on the other hand, are a ‘substitute for performance’.135

Lord Hobhouse thought that the remedy in Blake could not properly be

described as restitutionary. In this respect Blake can usefully be contrasted with

Reading v Attorney-General.136 Like Blake, Reading made financial gains from

his wrongdoing. But the remedy in Reading may properly be characterized as

restitutionary since, due to Reading’s position as a fiduciary, the monetary

gains he made could be treated as belonging to the Crown. But Blake was not

a fiduciary and the Crown had no interest in the money due from Jonathan

Cape. In none of the user cases can the damages be properly described

as restitutionary in this sense: in each case the remedy was substitutionary and

the claimant had no pre-existing entitlement to the sum awarded.

The second meaning of restitution is broader and refers simply to a gain-

based remedy or to the disgorgement of a gain.137 But damages based on the

user principle are not restitutionary in this sense either: for they are not

measured by the gain made by the defendant. This is evident from Inverugie

Investments Ltd v Hackett.138 Lord Lloyd, delivering the judgment of the Privy

Council, applied the user principle and concluded that the claimant was

entitled to recover a reasonable rent whether or not he had ‘suffered any actual

loss’.139 Likewise, the defendant was liable to pay a reasonable rent even

though he ‘may not have derived any actual benefit’.140 In the same way that it

is difficult to regard as loss-based those awards not based on actual loss, so too

with supposedly gain-based damages which are awarded irrespective of any

gain. Lord Lloyd thought that an award based on the user principle ‘need not

be characterized as exclusively compensatory, or exclusively restitutionary; it

combines elements of both’.141 In other words, arguably, user damages seek

neither to compensate the claimant for the consequences of the wrong nor

deprive the defendant of the fruits of that wrong. Their aim is to vindicate

133 [2001] 1 AC 268 at 296.134 Ibid 297 (emphasis in the original).135 Ibid (emphasis in the original).136 [1951] AC 507.137 See, e.g. G. Virgo, The Principles of the Law of Restitution (Oxford: Oxford University Press, 2nd edn, 2006)

at 3: ‘The law of restitution is concerned with the award of a generic group of remedies which . . . have onecommon function, namely to deprive the defendant of a gain rather than to compensate the plaintiff for losssuffered.’

138 [1995] 1 WLR 713.139 Ibid at 718 (emphasis in the original).140 Ibid (emphasis in the original).141 Ibid. Lord Lloyd himself seems to have viewed the damages as compensatory: see ibid at 717.




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the claimant’s right to possession: the damages represent the intrinsic value of

this right, rather than the amount of any loss or gain arising out of its

infringement. The defendant has violated the claimant’s right to exclusive

possession and he must pay for the privilege.

C. Vindicatory Damages for Breach of Contract

(i) Compulsory acquisition of a right and loss of a bargaining opportunityUser damages seek to make good the claimant’s right to possession of his

property. More recently the same principle has been applied to personal rights

and, in particular, contractual rights.

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 . . . it is not clear why it should be any more permissible to expropriate

personal rights than it is permissible to expropriate property rights.142

The leading case remains Wrotham Park Estate Co Ltd v Parkside Homes Ltd.143

The defendant put up houses on the Wrotham Park Estate in breach of a

covenant against development. Brightman J refused to grant a mandatory

injunction and went on to consider what damages, if any, ought to be awarded to

the claimant. The claimant had conceded that the value of the Estate had

not been reduced at all by the development. But Brightman J rejected the

defendant’s argument that the claimant was only entitled to nominal damages and

awarded the sum which the claimant might reasonably have demanded ‘as a

quid pro quo for relaxing the covenant’.144 As with damages based on the user

principle, disagreement dogs the proper characterization of the award inWrotham

Park. The judicial consensus appears to favour a compensatory analysis.145

142 Attorney-General v Blake [2001] 1 AC 268 at 283 (Lord Nicholls). See also the comments of Laws LJ inManchester Airport plc v Dutton [2000] 1 QB 133 at 149.

143 [1974] 1 WLR 798. For more recent examples see: World Wide Fund for Nature v World Wrestling FederationEntertainment Inc [2006] EWHC 184 (Ch) (reversed on other grounds at [2007] EWCA Civ 286); Horsford v Bird[2006] UKPC 3, [2006] 1 EGLR 75; Severn Trent Water Ltd v Barnes [2004] EWCA Civ 570, [2004] 2 EGLR95; Lane v O’Brien Homes [2004] EWHC 303 (QB); Amec Developments Ltd v Jury’s Hotel Management (UK) Ltd(2000) 82P & CR 286.

144 [1974] 1 WLR 798 at 815. As to amount, Brightman J thought that the damages had to be calculated on a‘fair’ basis, and he assessed this as a sum equal to 5% of the developer’s anticipated profits (ibid at 816).

145 See, e.g. Tito v Waddell (No 2) [1977] Ch 106 at 335 (Megarry V-C); Jaggard v Sawyer [1995] 1 WLR 269at 281 (Bingham MR) and 291 (Millett LJ); and World Wide Fund for Nature v World Wrestling FederationEntertainment Inc [2006] EWHC 184 (Ch) at [137] (Peter Smith J); [2007] EWCA Civ 286 at [29] (ChadwickLJ). In Attorney-General v Blake [2001] 1 AC 268 at 282, Lord Nicholls appears to have viewed the damages inWrotham Park as gain-based compensation, on the basis that it is ‘axiomatic’ that damages for breach of contractare compensatory. See also Lord Scott, above n 17. But, cf, Surrey County Council v Bredero Homes Ltd [1993]1 WLR 1361 at 1369 (Steyn LJ).




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Academics seem, on the whole, to prefer a restitutionary interpretation.146

We suggest that the award in Wrotham Park is better viewed as an award of

vindicatory damages. The claimant there was worse off not because its enjoyment

of the Estate was adversely affected but because the defendant had acted in

flagrant disregard of the covenant and the court, for wider policy reasons,147

refused to restore the benefit of the covenant by means of a mandatory injunction.

The damages were thus awarded as a matter of ‘fairness’148 so as to ensure a

‘just’149 outcome; they were not intended to act as an indemnity for loss.

In any event, it is respectfully suggested that a compensatory analysis of

Wrotham Park is misconceived. The difficulty with characterizing the award as

compensatory arises, not because the loss cannot be expressed in financial terms,

but because there was no loss at all. The breach did not cause any diminution in

the value of the Estate,150 nor was there any loss of amenity. Did the claimant

nevertheless ‘lose’ the release fee it could have secured from the defendant for

relaxing the covenant? Brightman J characterized the award in this way.151 It was,

however, accepted that the claimant would never have agreed to relax the

covenant.152 The position of the claimant in Wrotham Park is thus analogous to

that of the claimant in Ford vWhite & Co.153 There, the claimant bought property

which he intended to develop. His solicitor failed, in breach of contract, to bring

to his attention a covenant against development. The evidence showed that

the property would have been worth an additional £1,250 had it not been for the

covenant. The court held that the claimant could not recover this sum as damages

as it did not represent his loss of bargain: the award would not have had the

effect of putting the claimant in the position he would have been in had the

contract been performed. For, if the solicitor had performed the contract,

the claimant would not have proceeded with the purchase. In the same way, had

the contract inWrotham Park been performed, that is, had the defendant sought a

release from the covenant before developing, no release would have been

forthcoming, and the claimant would not have received a release fee. It follows

that it was not open to the court to award damages on the basis of a loss of an

146 See, e.g. P. Birks ‘Restitutionary Damages for Breach of Contract: Snepp and the Fusion of Law andEquity’ [1987] LMCLQ 421–442 at 428; A. Burrows, The Law of Restitution (London: Butterworths, 2nd edn,2002) at 483; J. Edelman, Gain-Based Damages: Contract, Tort, Equity and Intellectual Property (Oxford: Hart,2002) at 179; McGregor, above n 20 at para 12-023; and Virgo, above n 137 at 482. Other writers are moreequivocal: Tettenborn describes Wrotham Park as adopting ‘partly restitutionary reasoning’ (A. Tettenborn, TheLaw of Restitution in England and Ireland (London: Cavendish, 3rd edn, 2002) at 249 (emphasis added)).Similarly, Smith concludes that Wrotham Park ‘seems to mix compensatory and restitutionary aims’ (S.A. Smith,Atiyah’s Introduction to the Law of Contract (Oxford: Oxford University Press, 6th edn, 2005) at 413).

147 Brightman J thought that to order the demolition of the newly-constructed houses would constitute an‘unpardonable waste of much needed houses’: [1974] 1 WLR 798 at 811.

148 Ibid at 812.149 Ibid at 815.150 Ibid at 812.151 Ibid at 815.152 ‘[T]he plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have

granted any relaxation.’ (Ibid).153 [1964] 1 WLR 885.




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opportunity to bargain as it was clear that the claimant would not have availed

himself of that opportunity.

Nor, it is respectfully suggested, should the damages in Wrotham Park be

viewed as restitutionary. First, they did not restore to the claimant something to

which the claimant had a pre-existing entitlement. A restitutionary remedy in

this sense would have been a mandatory injunction. Second, if the remedy is

gain-based, it is difficult to understand why the claimant should only receive

5 per cent of the defendant’s anticipated profit. Such a modest figure indicates

that the award was intended more as recognition of the breach of covenant than

as a means of depriving the defendant of his gain.154

(ii) Deprivation of a benefitIn Blake, Lord Nicholls thought that damages for the loss of a bargaining

opportunity and the price payable for the compulsory acquisition of a right

amounted to the same thing.155 On this basis, the award in Wrotham Park

represented the reasonable value of the claimant’s right to prevent develop-

ment on the defendant’s land, the benefit of which the defendant had in

effect compulsorily acquired. The same principle may be identified in what,

at first sight, appears to be a different kind of case. In Ruxley Electronics

and Construction Ltd v Forsyth156 the House of Lords held that Mr Forsyth

was not entitled to damages representing the cost of curing the defendant’s breach

of contract and re-instated the judge’s award of £2,500 for loss of amenity.

Lord Mustill rejected the argument that diminution in value and cost of cure

were the only measures of loss, ‘for the law must cater for those occasions

where the value of the promise to the promisee exceeds the financial

enhancement of his position which full performance will secure’.157 This

excess, the so-called consumer surplus, represents ‘a personal, subjective and

non-monetary gain’.158 The law, Lord Mustill said, should recognize this gain

154 That the damages in Wrotham Park are neither loss-based nor gain-based gains further support from theiranalysis by Nourse LJ in Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 at 1414. Whiledescribing the result in Wrotham Park as ‘entirely appropriate’, Nourse LJ viewed the decision as being‘something akin to an award of exemplary damages for breach of contract’. While, as has been noted above, it isimportant to distinguish vindicatory damages from punitive, or exemplary, damages, Nourse LJ’s approach isarguably more consistent with a vindicatory analysis than a compensatory or restitutionary one.

155 [2001] 1 AC 268 at 282. It is respectfully suggested that this may not be the case. Damages for loss of abargaining opportunity depend upon there being a bargaining opportunity in the first place. As Megarry V-Cpointed out in Tito v Waddell (No 2) [1977] Ch 106 at 335, the bargaining opportunity arises from the defendantbeing faced with either an injunction restraining breach or liability for substantial damages for breach. On thisbasis the claimant in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 had no bargainingopportunity to lose. Dillon LJ said that there had never been any possibility of an injunction being granted torestrain the breach of covenant; nor did the breach cause any diminution in value of any adjoining propertyowned or occupied by the claimant (ibid at 1364). Yet Lord Nicholls appears to have thought that there ought tohave been an award of substantial damages in the Surrey case (see [2001] 1 AC 268 at 283).

156 [1996] AC 344.157 Ibid at 360.158 Ibid at 360–361. For the idea of consumer surplus, see D. Harris, A. Ogus and J. Philips ‘Contract

Remedies and the Consumer Surplus’ (1979) 95 LQR 581–610. Cf. Webb who cautions that ‘the vindication ofthe performance interest and the proper recognition of the consumer surplus are distinct issues, the latter going tothe compensation interest’. See Webb, above n 57 at 55.




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and ‘compensate the promisee if the misperformance takes it away’.159 Lord

Mustill’s account, however, is problematic in its reference to a subjective gain by

the claimant. Diminution in value and cost of cure, the general measures of

normal loss,160 incorporate an important safeguard so far as the defendant is

concerned. His liability under the contract as regards normal loss is limited by

the objective standard provided by market value. Diminution in value and cost

of cure provide an equitable balance between the competing interests of

claimant and defendant: they provide a reliable means of placing the claimant

in the same position as if the contract had been performed, while ensuring that

the defendant’s duty to compensate is not rendered unduly onerous by the

claimant’s subjective expectations. Given that normal loss is ‘that loss which

every claimant in a like situation will suffer’,161 it is logical to use an objective

means of measurement, namely, the market. Subjective loss is recoverable in

contract as well as tort, but it is recoverable as consequential loss.162 The

defendant is protected from too onerous a liability for such loss by the relevant

remoteness rule.

In any event, the concepts of normal and consequential loss as conventionally

measured are capable of recognizing the intangible, non-pecuniary benefit

which the consumer surplus represents. This is shown by the ‘ruined holiday’ case

of Jarvis v Swans Tours Ltd.163 The judge’s award of £31.72 seems to have been

based on the lack of facilities actually available to Mr Jarvis.164 The Court of

Appeal increased the award to £125 on the basis that Mr Jarvis was ‘entitled

to damages for the lack of those facilities, and for his loss of enjoyment.’165 Loss of

enjoyment in the context of a contract for a holiday corresponds to loss of

profit in the context of an ordinary commercial contract, and loss of profit

will generally comprise consequential loss. The Court of Appeal in effect

awarded damages for normal and consequential loss. Returning to the Ruxley

case, it seems clear that Mr Forsyth suffered no loss of amenity as conventionally

measured.166 The evidence indicated that the reasonable man would have

attached equal value to, and derived equal enjoyment from, a pool of the

contractual depth and the pool as built. As Lord Scott observed in Farley v

Skinner, the builder’s breach of contract in Ruxley did not cause any consequential

loss consisting of vexation, anxiety or other species of mental distress.167

159 [1996] AC 344 at 361.160 Employing McGregor’s distinction between normal and consequential loss: see McGregor, above n 20 at

para 1-036.161 Ibid.162 McGregor describes consequential losses as losses which are ‘special to the circumstances of the claimant’;

they will include lost profits: ibid.163 [1973] 1 QB 233.164 Ibid at 237.165 Ibid at 238 (emphasis added).166 See Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 at 588 (Lord Millett).167 [2001] UKHL 49, [2002] 2 AC 732 at [80].




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Loss of amenity is not the sole ground of the decision in Ruxley. Having

expressed agreement with the trial judge’s award of damages for loss of

amenity, Lord Lloyd observed that such an approach would not be available in

most cases.168 His Lordship gave the example of the construction of a new

house with minor defects, where there was no difference in value and the cost

of cure would be prohibitive.

Is there any reason why the court should not award by way of damages for breach of

contract some modest sum, not based on difference in value, but solely to compensate

the buyer for his disappointed expectations? Is the law of damages so inflexible . . . that

it cannot find some middle ground in such a case?169

Lord Lloyd’s approach was adopted by Lord Scott in Farley v Skinner.170

According to Lord Scott, Ruxley establishes that where the defendant fails in

breach of contract to supply something which, if supplied, would have been of

value to the claimant, the claimant should be ‘compensated in damages to the

extent of that value’ if there is no other way of compensating him.171 The

Ruxley principle

should be used to provide damages for deprivation of a contractual benefit where it is

apparent that the injured party has been deprived of something of value but the

ordinary means of measuring the recoverable damages are inapplicable.172

The deprivation of a benefit approach differs from the account of vindicatory

damages put forward here in that Lord Lloyd and Lord Scott view the damages

as compensatory. But a compensatory approach, it is respectfully suggested,

creates difficulties. The ‘loss’ caused by the breach in Ruxley did not extend to

the need to re-instate;173 nor was there any difference in the value between the

pool contracted for and the pool as built; nor was there any loss of amenity. To

insist that the award nevertheless remains compensatory strains the orthodox

meaning of loss. It is better to accept that, on conventional principles, the

breach in Ruxley caused no loss. Nevertheless, to have left Mr Forsyth empty-

handed would have meant that his right to demand a pool of a certain depth

lacked any substance. The damages in Ruxley seek to give content to that right:

they are thus rights-based not loss-based. There can be no question here of

treating the damages as restitutionary or gain-based: there was no evidence that

Ruxley derived any benefit from the skimped performance.

168 [1996] AC 344 at 374.169 Ibid. McKendrick points out that the claimant has more than an ‘expectation’ of performance: he has a

right to it. See McKendrick, above n 57 at 170.170 [2001] UKHL 49, [2002] 2 AC 732.171 Ibid at [79].172 Ibid at [86]. In Farley itself, Lord Scott thought it ‘open to the court to adopt a [Ruxley] approach and

place a value on the contractual benefit of which Mr Farley has been deprived’ (ibid at [107]).173 [1996] AC 344 at 357 (Lord Jauncey of Tullichettle).




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(iii) Third party lossA further situation where compensatory damages may not be an adequate

remedy occurs where all or part of the benefit of performance is to be conferred

on a third party. As St Martins Property Corporation Ltd v Sir Robert

McAlpine Ltd174 and Darlington Borough Council v Wiltshier Northern Ltd175

demonstrate, it may be possible to vindicate the claimant’s performance right

by allowing him to recover, and then account for, what is viewed as the third

party’s loss. Where this occurs, the court is awarding compensatory damages

for tangible losses such as repair costs. These are not vindicatory damages in

the sense in which we use the term here. Nor, it seems, would the damages

which the minority would have awarded in Alfred McAlpine Construction Ltd v

Panatown Ltd176 have been vindicatory. Lord Millett made clear that the

claimant would be recovering for ‘defective or incomplete work or delay in

completing it’.177 These are conventional damages which compensate for a

loss: they are not rights-based.178

An alternative to recovery by the claimant on behalf of a third party is for the

claimant to recover vindicatory damages. Take, as an example, Jackson v Horizon

Holidays Ltd,179 another ‘ruined holiday’ case, this time involving a family holiday

costing £1,200. The trial judge’s award of £1,100 was upheld by the Court of

Appeal. Lord Denning MR thought that the difference in value between the

holiday contracted for and the holiday received was about £600. TheMaster of the

Rolls, with whom Orr LJ agreed, held that the balance of the damages awarded

represented the disappointment experienced by the whole family and that

Mr Jackson could recover for this.180 James LJ appears to have upheld the judge’s

award on the basis that it comprised simply the difference in value between the

holiday paid for and received.181 Given that the holiday cost £1,200, and given

Lord Denning MR’s view that the family had had about half its value,

this approach seems questionable.182 A better basis for the decision in Jackson,

it is suggested, is that part of the award comprised vindicatory damages.

Mr Jackson could recover compensatory damages for the difference in value and

for his own disappointment. The balance of the £1,100 award would comprise

174 [1994] 1 AC 85.175 [1995] 1 WLR 68.176 [2001] 1 AC 518.177 Ibid at 591.178 Thus Lord Millett comments: ‘Even though the plaintiff recovers for his own loss, this obviously reflects

the loss sustained by the third party’ (ibid at 595).179 [1975] 1 WLR 1468.180 The House of Lords in Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR

277 agreed with the outcome in Jackson but disapproved of Lord Denning MR’s reasoning on this point: see ibidat 283–284 (Lord Wilberforce), 293–294 (Lord Russell of Killowen), and 297 (Lord Keith of Kinkel).

181 [1975] 1 WLR 1468 at 1474.182 Nevertheless James LJ’s approach was approved by Lord Wilberforce in Woodar v Wimpey: see [1980]

1 WLR 277 at 283. Lord Russell said (ibid at 293) that he would have adopted the same approach, on the basisthat the claimant ‘paid for a high class family holiday; he did not get it, and therefore he was entitled tosubstantial damages for the failure to supply him with one’.




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a fair and reasonable sum giving content to Mr Jackson’s performance right.

The overall award would then be part loss-based and part rights-based.183

5. Concluding Remarks

Speaking extra-judicially, Lord Scott recently lamented the incoherence of the

current law of damages.184 In the context of contractual damages, any

incoherence would seem to arise from those cases where substantial damages

are awarded but where the claimant has not suffered any loss within the

conventional meaning of the term. While some maintain that such awards

comprise restitutionary damages, it has been argued that such an explanation is

unsatisfactory. Restitution is better confined to a remedy whereby the

defendant is ordered to restore to the claimant property or value belonging

to the claimant, that is, where the defendant’s gain corresponds to the

claimant’s loss. While Reading v Attorney-General provides an example of a

restitutionary remedy, awards of mesne profits and user damages fall outside

the ambit of restitution. Even if restitution is used in a looser sense, to refer to

a gain-based remedy, restitutionary awards ought logically to equate to the gain

actually realized by the defendant. Just as actual loss forms the basis of

compensatory damages, so too should actual gain form the basis of gain-based

damages. As has been shown, awards of mesne profits and user damages are

not based on any actual gain. The alternative explanation offered for these

cases, that the remedy is compensatory, involves straining the conventional

meaning of loss. The better approach, it has been argued, is to extend the

availability of vindicatory damages to these cases. Awards of vindicatory

damages seek to make good the claimant’s performance right, and give

substance to the principle that a claimant has a legally enforceable right to the

performance of the contract. Vindicatory damages enable the courts to grant an

adequate remedy. Our approach draws some support from Webb’s examination

of contractual rights.185 Webb distinguishes between the performance and

compensation interests and argues that ‘it is only the compensatory interest

that should properly be regarded as being concerned with the issue of loss’.186

Where the court makes a monetary award to give effect to the claimant’s

performance interest, ‘the notion of loss is superfluous’.187 Webb’s analysis is

relevant because he advocates a measure of damages which is not based on loss

183 Where applicable, the Contracts (Rights of Third Parties) Act 1999 allows, in effect, for the vindication ofthe performance right by an award of damages to the third party himself.

184 ‘Damages and Incoherence’, University of Liverpool Law School Annual Public Law Lecture, 23 February2007. See also Lord Scott, above n 17.

185 Webb, above n 57.186 Webb, above n 57 at 53.187 Webb, above n 57 at 54. Webb goes on to argue for the wider availability of cost of cure damages as these

give greater effect to the claimant’s right to receive performance. That, of course, is not our argument here.




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and which seeks to make good the claimant’s right to performance of the

contract.

Vindication should be recognized as an important principle driving

development of the law, and vindicatory damages as a significant means of

giving effect to that principle. But the importance of vindicatory damages lies

not just in ensuring a just outcome for a claimant where no other remedy is

available. Vindicatory damages may be also used to ensure that the remedy

awarded to a claimant does not impose undue liability on the defendant.

Chester v Afshar188 is a case where an award of vindicatory damages would have

been preferable to an award of compensation for that very reason. In Chester,

the defendant, a neurosurgeon, had advised the claimant to undergo surgery on

her spine but negligently failed to warn the claimant of a small risk that the

surgery, even if performed with due care and skill, might lead to her developing

a particular adverse condition. The claimant underwent the surgery, which was

performed by the defendant with due care and skill, but later developed the

condition. She sued the defendant in negligence. The judge found that if

the claimant had been warned by the defendant of the risk of developing the

condition, she would not have had the surgery on that particular day but would

have sought further advice elsewhere. The judge made no finding that the

claimant, if duly warned, would not have undergone surgery at a later date.

The risk of developing the condition would have been the same whenever the

surgery took place. The House of Lords unanimously held that on conventional

principles the claim failed: the defendant’s breach had not been the effective

cause of the injury, nor had it increased the risk of the injury.189 But the

majority clearly believed that the claimant ought to have had a remedy, and

they held that the defendant was liable in damages: the defendant had been

under a duty to warn of the risk of injury and the injury resulted from the risk.

While an outright refusal of damages would have failed to vindicate the right to

be warned,190 the imposition of liability to compensate for loss arising from the

outcome of the surgery was unduly onerous.191 The better solution would have

been to have awarded vindicatory damages, a fair and reasonable sum to

recognize the wrong. This would have better reflected the reality of the

situation: that the heart of the claim was that the defendant had infringed

the claimant’s right to be warned of the risks of the proposed operation but the

infringement had not brought about the loss of which complaint was made.

188 [2004] UKHL 41, [2005] 1 AC 134.189 Ibid at [8] (Lord Bingham), [22] (Lord Steyn), [32] (Lord Hoffmann), [84] (Lord Hope) and [90] (Lord

Walker of Gestingthorpe).190 As the claim arose in negligence, it would seem that the remedy of nominal damages would not have been

available: in any event, this would not have vindicated the right to be warned.191 This assumes that the damages were to be assessed in the ordinary way: the verdict at trial was as to

liability only.




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Damages for Breach of Contract Oxford

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