Breach of Contract, Restitution, and Corrective Justice

The Syllabus

Restitution is the law’s remedial answer to circumstances in which a benefit moves from the plaintiff to the defendant, and the defendant is compelled to restore that benefit. Further, restitution stands in contrast to another measure of relief, disgorgement, which refers to awards that are calculated exclusively by reference to the defendant’s wrongful gain, irrespective of whether it corresponds to damage suffered by the plaintiff and, indeed, irrespective of whether the plaintiff suffered damage at all.

The modern law of unjust enrichment originated in the writ of assumpsit (Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at pp. 786‑88). The ordinary form of monetary relief for breach of contract is an award of damages, measured according to the position which the plaintiff would have occupied had the contract been performed. Correspondingly, the orthodox position maintained that disgorgement of the defendant’s profits was not an available remedy for breach of contract. Disgorgement may be available for breach of contract in certain exceptional circumstances (Attorney General v. Blake, [2001] 1 A.C. 268 (H.L.); Bank of America, at paras. 25 and 30-31). In Blake, the defendant was a former member of the British secret intelligence service who had defected to become an agent for the Soviet Union. He was discovered and sentenced to 42 years’ imprisonment, but escaped prison and fled the country. Blake later entered into a contract to publish his memoirs, in contravention of the confidentiality undertaking in his employment agreement with the intelligence service. The information in his memoirs was, however, “no longer confidential, nor was its disclosure damaging to the public interest” (p. 275). Further, Blake’s fiduciary obligations ceased to exist when he was dismissed from his post. The sole question was, therefore, whether the Crown could pursue disgorgement for his breach of contract.

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