is a leading

English contract law English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the Industrial Revolution, it shares a heritage with countries ...

case on damages for

breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other part ...

. It established that in some circumstances, where ordinary remedies are inadequate,

restitution Restitution and unjust enrichment is the field of law relating to gains-based recovery. In contrast with damages (the law of compensation), restitution is a claim or remedy requiring a defendant to give up benefits wrongfully obtained. Liability ...

ary damages may be awarded.

Facts

George Blake George Blake ( Behar; 11 November 1922 – 26 December 2020) was a Espionage, spy with Britain's Secret Intelligence Service (MI6) and worked as a double agent for the Soviet Union. He became a communist and decided to work for the Minist ...

was a member of the

Secret Intelligence Service The Secret Intelligence Service (SIS), commonly known as MI6 (MI numbers, Military Intelligence, Section 6), is the foreign intelligence service of the United Kingdom, tasked mainly with the covert overseas collection and analysis of Human i ...

. He signed an Official Secrets Act 1911 declaration in his employment contract not to disclose information about his work, even after his employment ceased. In 1951, he became a Soviet agent. He was discovered in 1961 and the British government imprisoned him in

Wormwood Scrubs Wormwood Scrubs, known locally as The Scrubs (or simply Scrubs), is an open space in Old Oak Common located in the north-eastern corner of the London Borough of Hammersmith and Fulham in west London. It is the largest open space in the borough ...

. He escaped in 1966 and fled to the

Soviet Union The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...

. He wrote a book about it and his secret services work called ''No Other Choice''. He received a publishing contract for its release in 1989, with

Jonathan Cape Jonathan Cape is a British publishing firm headquartered in London and founded in 1921 by Herbert Jonathan Cape, who was head of the firm until his death. Cape and his business partner Wren Howard (1893–1968) set up the publishing house in ...

Ltd. The information in the book was no longer confidential. Blake received advanced payments and was entitled to more.

The Crown The Crown is a political concept used in Commonwealth realms. Depending on the context used, it generally refers to the entirety of the State (polity), state (or in federal realms, the relevant level of government in that state), the executive ...

brought an action for all the profits he made on the book including those that he had not yet received. It argued a restitutionary principle should apply.

Judgment

Lord Nicholls Donald James Nicholls, Baron Nicholls of Birkenhead, (25 January 1933 – 25 September 2019) was a British barrister who became a Law Lord (Lord of Appeal in Ordinary). Biography Nicholls was educated at Birkenhead School, before readi ...

Lord Goff of Chieveley Robert Lionel Archibald Goff, Baron Goff of Chieveley, , QC (12 November 1926 – 14 August 2016) was an English barrister and judge who was Senior Lord of Appeal in Ordinary, the equivalent of today's President of the Supreme Court. Best kno ...

Lord Browne-Wilkinson Nicolas Christopher Henry Browne-Wilkinson, Baron Browne-Wilkinson (30 March 1930 – 25 July 2018) was a British judge who served as a Lord of Appeal in Ordinary from 1991 to 2000, and Senior Lord of Appeal in Ordinary from 1998 to 2000. Li ...

and

Lord Steyn Johan van Zyl Steyn, Baron Steyn, PC (15 August 1932 – 28 November 2017) was a South African-British judge, until September 2005 a Law Lord. He sat in the House of Lords as a crossbencher. Early life and education Steyn was born in Stelle ...

held that in exceptional cases, when the normal remedy is inadequate to compensate for breach of contract, the court can order the defendant to account for all profits. 0011 AC 268 This was an exceptional case in contract law, particularly because Blake had harmed the public interest. In addition to his double agency, publication was a further breach of the confidentiality clause, and disclosure of non-confidential information was a criminal offence under the Official Secrets Act 1911. An absolute rule against disclosure was necessary to ensure that the secret service was able to deal in complete confidence. It was in the Crown's legitimate interest to ensure Blake did not benefit from revealing state information. The

House of Lords The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...

ruled that normal contractual remedies of

damages At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognized at ...

specific performance Specific performance is an equitable remedy in the law of contract, in which a court issues an order requiring a party to perform a specific act, such as to complete performance of a contract. It is typically available in the sale of land law, b ...

injunction An injunction is an equitable remedy in the form of a special court order compelling a party to do or refrain from doing certain acts. It was developed by the English courts of equity but its origins go back to Roman law and the equitable rem ...

were not enough, and that the publishers should pay any money owing to Blake to the Crown.

Nicholls' judgment

In his judgment, Lord Nicholls states that a breach of contract allows for the award of damages "when no financial loss flows from the infringement", comparing the present case to that of a case concerning the duty owed by a trustee or fiduciary. Highlighting the fact that "trustees and fiduciaries are financially disinterested in carrying out their duties... to this end they must not make any unauthorised profit," and that trustees and fiduciaries are accountable for "unauthorised profits", regardless of whether the beneficiaries have made a loss, he compared the current case to Reading v. Attorney General

951 Year 951 (Roman numerals, CMLI) was a common year starting on Wednesday of the Julian calendar. Events By place Europe * King Berengar II of Italy seizes Liguria, with help from the feudal lord Oberto I. He reorganizes the territorie ...

AC 507, a case that involved a breach concerning another civil servant. Invoking the Chancery Amendment Act 1858, he stated that the court had a jurisdiction to "award damages when declining to grant equitable relief" in equity rather than in

common law Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...

. Whilst "the common law courts' jurisdiction to award damages was confined to loss of injury flowing from a cause of action which had accrued before the writ was issued", equity allowed for "damages for loss of a bargaining opportunity or... the price payable for the compulsory acquisition of a right." Outlining the law on remedies for breach, Nicholls states that damages are generally compensatory as per Robinson v Harman. However, damages awarded based on an innocent party's financial loss may not always be "adequate", recognising a party's interest in performance, as in the case of Wrotham Park damages. Whilst the Wrotham Park case concerned strictly property rights, the law had recently been extended to include personal rights in contract as well. Additionally, Nicholls diverged from some cases in allowing for plaintiffs, depending on the situation, to not only recoup profits already made from a breacher of contract but to claim all future profits as well. He states that a breach of confidence is an exceptional situation that allows for an injured party to claim "either compensatory damages or an account of the wrongdoer's profits", that only in similarly exceptional situations where ordinary remedies are inadequate "that any question of accounting for profits will arise", and that the allowing of such claims will require the court to regard: On policy reasons, Nicholls states that the present case is one where a claim for profits made can be allowed:

Steyn's judgment

Lord Goff and Lord Browne-Wilkinson agreed. Lord Steyn gave a concurring opinion:

Hobhouse's dissenting judgment

Lord Hobhouse dissented. He asserted that the Crown had no proprietary right to the money and as such had suffered no loss so as to receive restitutionary damages. Instead, he argued that compensatory damages, not a full account of profit, were appropriate:

Notes

References

*''World Wide Fund for Nature v World Wrestling Federation Entertainment Inc'' [2007
EWCA Civ 286
*''Nottingham University v Fischel'' [2000
EWHC 221 (QB)
[2000] IRLR 471, where an employee was held to be under no ''general'' fiduciary duty to refrain from undertaking outside private clinic work, but did breach a fiduciary duty where he had directed junior university staff to assist him in that outside work. The latter created a conflict of interest, whereas the former did not since patients would not have used the University's services. *{{Cite AustLII, HCA, 64, 1984, litigants= Hospital Products Ltd v United States Surgical Corporation , parallelcite=(1984) 156 CLR 41 , date=25 October 1984 , courtname=auto, a senior executive of an American company, Mr Blackman, was held liable to pay heavy compensation for breach of contract for copying the invention of the company when he found it was unpatented in Australia. But, the Australian High Court held Mr Blackman (and his company, Hospital Products Ltd) was not liable to disgorge profits unless some "fiduciary" relationship could be identified. Deane J dissented, holding there could be an account of profits. The dissent was approved by P Birks, 'The Content of Fiduciary Obligation' (2000) 34 Israel Law Review 3, 22 *''Adras Building Material Ltd v Harlow & Jones GmbH''

995 Year 995 (Roman numerals, CMXCV) was a common year starting on Tuesday of the Julian calendar. Events By place Japan * 17 May - Fujiwara no Michitaka (imperial regent) dies. * 3 June: Fujiwara no Michikane gains power and becomes Rege ...

RLR 235, Israel Supreme Court holds a person liable for account of profits after breach of an employment contract

External links

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English contract case law English remedy case law House of Lords cases 2000 in United Kingdom case law