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Attorney General v Blake, [2001] 1 A.C. 268 (2000)
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developer would have to apply and pay for a relaxation
of the covenant if it wanted to build more houses.
In breach of covenant the developer completed the
development in accordance with the later planning
permission, and the local authority brought a claim for
damages. The erection of the larger number of houses
had not caused any financial loss to the local authority.
The judge awarded nominal damages of £2, and the
Court of Appeal dismissed the local authority's appeal.
This is a difficult decision. It has attracted criticism
from academic commentators and also in judgments of
Sir Thomas Bingham MR and Millett LJ in Jaggard
v Sawyer [1995] 1 WLR 269 . I need not pursue
the detailed criticisms. In the Bredero case Dillon LJ
himself noted, at p 1364, that had the covenant been
worded differently, there could have been provision
for payment of an increased price if a further planning
permission were forthcoming. That would have been
enforceable. But, according to the Bredero decision,
a covenant not to erect any further houses without
permission, intended to achieve the same result, may
be breached with impunity. That would be a sorry
reflection on the law. Suffice to say, in so far as the
Bredero decision is inconsistent with the approach
adopted in the Wrotham Park case, the latter approach
is to be preferred.
The Wrotham Park case, therefore, still shines, rather
as a solitary beacon, showing that in contract as well
as tort damages are not always narrowly confined
to recoupment of financial loss. In a suitable case
damages for breach of contract may be measured
by the benefit gained by the
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wrongdoer from
the breach. The defendant must make a reasonable
payment in respect of the benefit he has gained. In the
present case the Crown seeks to go further. The claim
is for all the profits of Blake's book which the publisher
has not yet paid him. This raises the question whether
an account of profits can ever be given as a remedy
for breach of contract. The researches of counsel have
been unable to discover any case where the court has
made such an order on a claim for breach of contract. In
Tito v Waddell (No 2) [1977] Ch 106 , 332, a decision
which has proved controversial, Sir Robert Megarry
V-C said that, as a matter of fundamental principle,
the question of damages was "not one of making
the defendant disgorge" his gains, in that case what
he had saved by committing the wrong, but "one of
compensating the plaintiff". In Occidental Worldwide
Investment Corporation v Skibs A/S Avanti [1976]
1 Lloyd's Rep 293 , 337, Kerr J summarily rejected
a claim for an account of profits when ship owners
withdrew ships on a rising market.
There is a light sprinkling of cases where courts have
made orders having the same effect as an order for
an account of profits, but the courts seem always
to have attached a different label. A person who, in
breach of contract, sells land twice over must surrender
his profits on the second sale to the original buyer.
Since courts regularly make orders for the specific
performance of contracts for the sale of land, a seller
of land is, to an extent, regarded as holding the land
on trust for the buyer: Lake v Bayliss [1974] 1 WLR
1073 . In Reid-Newfoundland Co v Anglo-American
Telegraph Co Ltd [1912] AC 555 a railway company
agreed not to transmit any commercial messages over
a particular telegraph wire except for the benefit and
account of the telegraph company. The Privy Council
held that the railway company was liable to account
as a trustee for the profits it wrongfully made from
its use of the wire for commercial purposes. In British
Motor Trade Association v Gilbert [1951] 2 All ER 641
the plaintiff suffered no financial loss but the award of
damages for breach of contract effectively stripped the
wrongdoer of the profit he had made from his wrongful
venture into the black market for new cars.
These cases illustrate that circumstances do arise
when the just response to a breach of contract is
that the wrongdoer should not be permitted to retain
any profit from the breach. In these cases the courts
have reached the desired result by straining existing
concepts. Professor Peter Birks has deplored the
"failure of jurisprudence when the law is forced into
this kind of abusive instrumentalism"; see "Profits
of Breach of Contract" (1993) 109 LQR 518 , 520.
Some years ago Professor Dawson suggested there
is no inherent reason why the technique of equity
courts in land contracts should not be more widely
employed, not by granting remedies as the by-product
of a phantom "trust" created by the contract, but as
an alternative form of money judgment remedy. That
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