WWF- World Wide Fund for Nature & Anor v World Wrestling Federation Entertainment Inc

Judgment

Lord Justice Chadwick :

The background

“[19] By that clause the Federation undertook forthwith to cease and thereafter to refrain from using or causing to be used the Initials whether in printed or written or other visual form in any country of the world in or for the purpose or in connection with its business. It also agreed immediately to cease and thereafter refrain from using or causing to be used the Initials orally in any language in any country of the world in or for the purpose or in connection with the promotional sale or in any other connection with any goods whatsoever; to cease and thereafter to refrain from the encouragement directly or indirectly of support including donations or otherwise for charitable or similar purposes: and to cease and thereafter to refrain from the promotion or sale of or in any other connection with services other than those permitted.”

The permitted use of the initials was in respect of the Federation's logo, occasional use during sports events, use in printed material approved for production or distribution prior to 15 November 1993 (but not distributed after 31 March 1994), and use in visual presentations published or recorded prior to 15 November 1993. The 1994 agreement applied to the United States of America in relation to printed, written, visual or other uses; but not as to the oral use of the initials in relation to goods.

“11. Further the claimants seek an order that the defendant account to the claimants for all profits that the defendant has made by its use of the initials WWF in breach of the Agreement. The claimants contend that an account of profits is an available remedy for breach of contract in the circumstances of the present case. The circumstances are:

11.1 the defendant has done the very acts that it expressly agreed that it would not do;

11.2 the defendant’s breach of the Agreement have been deliberate, widespread and repeated;

11.3 an account of profits is an available remedy for trade mark infringement and should therefore as a matter of principle be available for breach of a trade mark delimitation agreement;

11.4 the purport of the defendant’s defence (for example at paragraph 23 of the Defence and Counterclaim) is that the defendant intended or considered it likely that when it signed the Agreement it would disregard its obligations under the Agreement;

11.5 the difficulty of obtaining full compensatory damages not only for the claimants but also for the National Affiliates who operate worldwide;

11.6 the inadequacy of protecting the claimants from past breaches by way of injunction.”

Mr Justice Jacob refused the application to amend. There was no appeal from that part of his order.

The damages claim

“6 The claim for damages falls under two main heads:

(a) Firstly, the Claimants seek damages based on what the Defendant would reasonably have had to pay as ‘quid pro quo’, in effect a licence fee, for the Claimants to relax their rights under the Agreement;

(b) Secondly, the Claimants seek special damages in respect of professional fees and other expenses incurred as a result of the defendant’s breaches of the Agreement (not being fees and expenses incurred in the present proceedings). . . . .”

Paragraphs 7 and 8 set out the Fund’s case as to the “Legal basis for claiming a reasonable payment”. It was said that the Federation had agreed (under article 2 of the 1994 agreement) to very substantial restrictions on its use of the initials WWF; and that, from at least February 1997, the Federation had ignored those restrictions and had “used the initials WWF in respect of its activities on a worldwide basis”. Accordingly the Fund was entitled to “a reasonable payment from the Defendant in respect of its use of the initials WWF in breach of the Agreement”. The Fund indicated that it would rely on the decisions in Wrotham Park Estate Company Limited v Parkside Homes Limited [1974] 1 WLR 798, Attorney General v Blake [2000] 4 All ER 385 and Experience Hendrix LLC v PPX Enterprises Inc [2003] EWCA Civ 323.

“8a The Claimants’ primary contention is that the principles contained in these judgments [Wrotham Park, Blake and Experience Hendrix] establish that where a covenantor breaches a restrictive covenant, the covenantee is entitled to claim as damages a reasonable payment in respect of the hypothetical release of the covenant.

8b Alternatively the Claimants contend that they are entitled to such a payment in circumstances where the Defendant deliberately breached the Agreement and where the Claimants have an interest in preventing the Defendant’s use of the initials and/or an interest in preventing the Defendant making a profit from the use of the initials.

8c As to the deliberate nature of the breach, the Defendant at least from January 1997 intentionally disregarded the restrictions contained in the Agreement relating to the use of the initials. As pleaded in paragraph 7 above the Defendant ignored the restrictions and used the initials on a worldwide basis. It will rely on the Judgment of Mr Justice Jacob . . . and the Judgment of the Court of Appeal . . .

8d As to the interest in preventing the Defendant using the initials and/or profiting from using them the Claimants will claim an interest in (a) preventing the Defendant from doing the very thing that it had contracted not to and (b) preventing the Defendant from diluting and damaging the Claimants’ reputation and brand represented by the initials WWF. It will rely on the Judgment of Mr Justice Jacob (in particular paragraphs 34-42) and the Judgment of the Court of Appeal (in particular paragraphs 50-59).”

It can be seen that the allegations made by amendment in March 2005 are similar (in material respects) to those in the proposed new paragraph 11 to the particulars of claim; in respect of which permission to amend had been refused in October 2001.

“In the inquiry as to damages ordered by Jacob J on 1^st October 2001 are the Claimants entitled to claim damages in the form of a reasonable payment as a quid pro quo for the Claimants relaxing their rights under the Agreement as alleged in paragraphs 6-8 of the amended Claim For Damages?”

It was that issue that came before Mr Justice Peter Smith for trial in January 2006.

The order of 16 February 2006

“[7]. Preliminary issues have to be considered very carefully. Too often they are ‘treacherous shortcuts’ and ought to be confined to cases where the facts are complicated and the legal issue short and easily decided with cases outside this guiding principle being exceptional see Tilling v Whiteman [1980] AC 1 per Lord Scarman (page 25) and Lord Wilberforce (page 18) respectively.

[8] That warning is well demonstrated in my view by the present case. First, the preliminary issue was not confined to the identified preliminary issue in the order of Patten J. Second, evidence was led by both parties but both parties in an exchange of correspondence believed they had an understanding which would shorten the preliminary issue and led both sides not to seek to cross examine the other. This led to a difficulty which only really appeared on day 3 of the Preliminary Issue.

[9] The Federation by its evidence (of Mr Kaufman in his sixth witness statement and Ms McMahon in her second witness statement) adduced evidence on behalf of the Federation to show the following:-

1 That the Federation had never deliberately broken the agreement.

2 That its profits were derived from their efforts and have nothing to do with acting in breach of the Agreement.

3 That the Fund had adduced no evidence to show any dilution of its reputation by being directly or indirectly associated with the Federation.

4 That the Fund ought to be barred from bringing the present claim because of its delay.

[10] None of these matters of evidence was expressly challenged by the Fund. Nevertheless its case is that it disputes all of these matters. Faced with this I as a trial judge of the Preliminary Issue was faced with a conflict of testimony which neither side sought to resolve by cross examination (which is the traditional way of enabling the court to determine conflicts of testimony). I did not see how I could do that unless the hearing was substantially lengthened and the parties presented their witnesses for cross examination so that I could then evaluate the evidence. That would have meant in my view that the Preliminary Issue would have virtually become the trial to a substantial extent. I therefore indicated at the third day that I would not resolve any factual matters which were in dispute and all of the above were in dispute.”

At paragraphs [178] and [179] – under the heading “Answers to the Preliminary Issue” – the judge said this:

“[178] The Preliminary Issue question cannot in my view be answered at this stage. I can and do determine that the Fund are entitled to seek in the inquiry damages in the form of a reasonable payment as a quid pro quo on the basis of their claim as presently formulated.

[179] However they have not established an entitlement to such a claim; that should be determined at the inquiry in accordance with the principles I have set out above and the court hearing the inquiry determining that it ought to exercise its discretion to grant such relief.

“1. The Claimants are entitled in point of law to seek damages in the form of a reasonable payment as a quid pro quo for the Claimants relaxing their rights under the Agreement as alleged in paragraphs 6-8 of the amended Claim For Damages.

“1. The primary basis of assessment is in my view that identified by [Mr Mann QC] in the Amex case [Amec Development v Jury’s Hotel [2001] 1 EGLR 81] at page 83 namely ‘is to consider the sum that would have been arrived at in negotiations between the parties had each been making reasonable use of their respective bargaining positions without holding out for unreasonable amounts’. [the judge’s emphasis]

2. The outcome of that hypothetical negotiation, must be determined by reference to the parties’ actual knowledge at the time that negotiations would have taken place. This would normally be on the date of the breach.

3. The fact that the innocent party would never have agreed to any such sale or relaxation is irrelevant.

4 The conduct of the wrongdoer is also irrelevant as to the breach of contract.

5 The decision to award damages under this head is discretionary according to the circumstances of the case but the decision should be taken when damages would be an inadequate remedy and without an award under this basis the innocent party would obtain no just recompense for the breach by the wrongdoer in doing what he agreed not to do.

6 The decision whether or not to award damages on this basis can take into account factors such as delay in intimating the claim and prosecuting the action, if appropriate. Those factors also could be taken into account at a later stage in quantifying the claim. Thus it may be possible to argue that where a wrongdoer was led to believe that no claim would be forthcoming on this head and acted to its detriment in reliance upon that that may bar the claim completely. Equally part of a claim may be disallowed by reason of delay if the delay caused prejudice: see the Shaw v Applegate[[1977] 1 WLR 970] and Gafford cases referred to above.”

He went on to say that the assessment of damages in accordance with those principles involved a number of possibilities, which he described:

“7 As one is assessing the amount by reference to hypothetical negotiations, each party is entitled as part of that exercise to adduce evidence that it would have deployed in such hypothetical negotiations. Those can include (but this is not exhaustive as it is fact based):-

7.1 Evidence that it (in this case the Fund) had a reputation which it would have tarnished or diminished by association with the Federation and what would consequentially be a reasonable payment for compensating it for that tarnishment.

7.2 Evidence from the Federation to show that they would have persuaded the Fund by reference to material available to it at the time that its profits would be to some degree attributable to its efforts as opposed to the use of the Initials and that that should be taken into account in assessing the price.

7.3 Evidence from the Federation would be able to show that their costings and assumptions would have involved them in expenditure in incurring the profits that they have made (irrespective of the breach of contract).”

“[175] The damages that can be awarded are to reflect the case. It is possible that the damages could reflect a diminishment or tarnishment of the Claimant's reputation and a reasonable price representing that, or a reasonable sum for the relaxation of the covenant or a negotiation of a reasonable sum that the parties would have agreed as being payable for the breach of the covenant by reference to the subsequent profits in percentage terms (or a combination of all three).

[176] In considering all of those the court can take into account the factors relating to the potential for earning profits without committing a breach of contract and the cost of making such profits.

[177] The overriding principle is that the damages are compensatory and not to be punitive. That should reflect the nature of the negotiations that take place hypothetically. Ordinarily where a claim is based on subsequent profits the Claimant must show there was a reasonable prospect of connection between the breach of contract and the subsequent profits.”

The Appellant’s Notice

The further grounds of appeal

“4. [The Federation’s] primary contention is that the Fund’s disentitlement to claim the remedy it now seeks has already been determined against it.

a. The Fund was refused permission to amend its claim to include a claim for a gains-based award, referred to as an account of profits in its draft amended pleading, and it did not appeal that decision.

b. The matters relied upon at the time in support of the Fund’s purported entitlement to such relief were similar or identical to those relied upon in support of its purported entitlement to the relief now sought, as set forth in paragraphs 8b to 8d of its Amended Claim for Damages.

c. No new factual matters have arisen since the Fund applied to amend its claim, and none are relied upon by the Fund.

d. The remedy now sought by the Fund is the same as, or a juridically highly similar remedy to, the relief previously sought.

e. In the premises, the Fund’s disentitlement to claim such gain-based relief is a matter which has been finally determined by a court of competent jurisdiction, between the same parties, and accordingly the Fund is not now entitled to raise the matter again, since it is res judicata.

5. Alternatively, the Fund is estopped from claiming the relief it now seeks and/or it would be an abuse of process to allow it to claim such relief now.

a. The Fund’s original claim as pleaded in its Particulars of Claim sought only ‘damages’. Such claim did not include a claim for relief on the basis now sought, alternatively it did not expressly include such a claim.

b. When the Fund applied to amend its claim to include an account of profits, it could and should have also applied at the same time to amend its claim to include the relief now sought, alternatively it could and should have made plain that it was already seeking, as ‘damages’ within the scope of its existing claim, relief on the basis now sought.

c. The Fund was aware of the Wrotham Park case now relied upon, and the availability of the relief it now seeks in certain circumstances.

d. In the premises, it is to be inferred that the Fund deliberately elected not to claim such relief at that time.

e. That this was a deliberate decision is supported by the fact that the Fund strongly implied to the Court of Appeal in the THQ application that it was not claiming the relief now sought.

f. By virtue of its failure to do so when it could and should have done, the Fund is estopped from claiming the relief now sought.

g. Alternatively, having regard to the public interest in the finality of litigation, and [the Federation’s] interest in not being vexed in the same matter twice, it would be an abuse of process to allow the Fund to claim the relief it now seeks at this late stage in the proceedings, when it could and should have done so previously as aforesaid.

h. [The Federation] relies upon the principle in Henderson v Henderson [1843] 3 Hare 100 in support of the foregoing.”

“[36] It is plain in my view that at that time the Fund had no intention of seeking to claim damages based upon the principle that they now wish to rely upon. The amendment sought was not to raise this method of claiming damages and in a later hearing in a separate action to which I shall make reference below it is clear that counsel then representing the Fund (Mr Christopher Morcom QC) indicated that no such claim was being contemplated. ”

At paragraph [81] the judge said this:

“[81] . . . I reject the Federation's submission that it is not open to the Fund to raise on the inquiry as to damages for breach of contract the present claim because it has not raised it before it served its claim as to damages. It is not in my view a case of a party failing to litigate all claims in one go. The Fund has issued one set of proceedings and in those proceedings it claims an injunction (which it obtained summarily) and damages (in respect to which it obtained a judgment to be assessed). The two are entirely different but it is not an abuse within the principle of Henderson for it to proceed to raise a contractual based measure of damages claim in the way in which it does. ”

And, at paragraph [89], the judge noted that the claim for an account had already been refused by Mr Justice Jacob; but he indicated that that, in his view, would have been no bar to permission for an amendment to raise the claim for an assessment of damages on the Wrotham Park basis, had permission been necessary: which, in the light of the Claim for Damages and the amendments to that pleading permitted by Mr Justice Patten, it was not.

Paragraph 4 of the amended application notice

The juridical basis for the claim under paragraph 6(a) of the Claim to Damages

“I turn to the consideration of the quantum of damages. I was asked by the parties to assess the damages myself, should the question arise, rather than to direct an inquiry. The basic rule in contract is to measure damages by that sum of money which will put the plaintiff in the same position as he would have been in if the contract had not been broken. From that basis, the defendants argue that the damages are nil or purely nominal, because the value of the Wrotham Park Estate as the plaintiffs concede is not diminished by one farthing in consequence of the construction of a road and the erection of 14 houses on the allotment site. If, therefore, the defendants submit, I refuse an injunction I ought to award no damages in lieu. That would seem, on the face of it, a result of questionable fairness on the facts of this case. Had the offending development been the erection of an advertisement hoarding in defiance of protest and writ, I apprehend (assuming my conclusions on other points to be correct) that the court would not have hesitated to grant a mandatory injunction for its removal. If, for social and economic reasons, the court does not see fit in the exercise of its discretion, to order demolition of the 14 houses, is it just that the plaintiffs should receive no compensation and that the defendants should be left in undisturbed possession of the fruits of their wrongdoing? Common sense would seem to demand a negative answer to this question”.

And he went on (ibid, 815B-D):

“In the present case I am faced with the problem what damages ought to be awarded to the plaintiffs in the place of mandatory injunctions which would have restored the plaintiffs’ rights. If the plaintiffs are merely given a nominal sum, or no sum, in substitution for injunctions, it seems to me that justice will manifestly not have been done.

As I have said, the general rule would be to measure damages by reference to that sum which would place the plaintiffs in the same position as if the covenant had not been broken. Parkside and the individual purchasers could have avoided breaking the covenant in two ways. One course would have been not to develop the allotment site. The other course would have been for Parkside to have sought from the plaintiffs a relaxation of the covenant. On the facts of this particular case the plaintiffs, rightly conscious of their obligations towards existing residents, would clearly not have granted any relaxation, but for present purposes I must assume that it could have been induced to do so. In my judgment a just substitute for a mandatory injunction would be such a sum of money as might reasonably have been demanded by the plaintiffs from Parkside as a quid pro quo for relaxing the covenant.. . . ”

“I think that in a case such as the present a landowner faced with a request from a developer which, it must be assumed, he feels reluctantly obliged to grant, would have first asked the developer what profit he expected to make from his operations. With the benefit of foresight the developer would, in the present case, have said about £50,000 for that is the profit which Parkside concedes it made from the development. I think that the landowner would then reasonably have required a certain percentage of that anticipated profit as a price for the relaxation of the covenant, assuming, as I must, that he feels obliged to relax it. In assessing what would be a fair percentage I think that the court ought, on the particular facts of this case, to act with great moderation. . . . [In] all the circumstances, in my judgment a sum equal to five per cent of Parkside's anticipated profit is the most that is fair. I accordingly award the sum of £2,500 in substitution for mandatory injunctions.”

It can be seen that Mr Justice Brightman felt able to equate anticipated profit with actual profit. That appears from the sentence: “With the benefit of foresight the developer would, in the present case, have said about £50,000 for that is the profit which Parkside concedes it made from the development”. So, in the result, the sum awarded was a percentage of actual profit. In that sense the award was “gains-based”: that is to say, based on the actual gain to the developer as a result of his breach. But there is little or no support in the reasoning for the view that Mr Justice Brightman saw himself as making a gains-based award.

“. . . I think that for the purposes of estimating damages [the plaintiffs] and the other servient owners in Hill Road, albeit reluctant, must be treated as being willing to accept a fair price for the right of way in question and must not be treated as if they were in the extremely powerful bargaining position which an interlocutory injunction would have given them if it had been obtained before the defendant started operations and incurred expense. Such is to my mind the penalty of standing by until the house is built.

On the evidence here the probable figure of notional profit which the defendant has made, being the difference between the overall cost of the new house and its present-day value seems to be somewhere between £4,000 and £6,000 and I think it is fair to take £5,000 as about as accurate a figure as one can get. The circumstances here are very different from those in the Wrotham Park case and I think that the proper approach is to endeavour to arrive at a fair figure which, on the assumption made, the parties would have arrived at as one which the plaintiffs would accept as compensating them for loss of amenity and increased user [of the private road], and which at the same time, whilst making the blue land a viable building plot, would not be so high as to deter the defendant from building at all. . . . I think he would have been prepared to pay what is relatively to his notional profit quite a large sum for the right of way in question and to achieve the building of his new home. This was a time of rising property values and I think he would have been prepared to pay £2,000 to get his right of way and if he had made such an offer, I think the other five owners in Hill Road ought also to have been prepared to accept it.. . . ”

There is nothing there, as it seems to me, to support the view that Mr Justice Graham thought that he was making a gains-based award.

“I find great difficulty in seeing how these cases help [the plaintiffs]. If the plaintiff has the right to prevent some act being done without his consent, and the defendant does the act without seeking that consent, the plaintiff has suffered a loss in that the defendant has taken without paying for it something for which the plaintiff could have required payment, namely, the right to do the act. The court therefore makes the defendant pay what he ought to have paid the plaintiff, for that is what the plaintiff has lost. The basis of computation is not, it will be observed, in any way directly related to wasted expenditure or other loss that the defendant is escaping by reason of an injunction being refused: it is the loss that the plaintiff has suffered by the defendant not having observed the obligation to obtain the plaintiff’s consent. Where the obligation is contractual, that loss is the loss caused to the plaintiff by the breach of contract.”

“As I read his judgment Mr. Justice Brightman was not seeking to analyse the scope or basis of the court's jurisdiction under Lord Cairns' Act. He merely concluded that, as Parliament had expressly empowered the Court to grant damages in lieu of an injunction, Parliament must have intended that in every case the Court must be able to award such damages as would achieve a fair result between the parties and would not be limited to awarding nominal damages only. He sought to apply that conclusion. That involves a conclusion by the judge that Lord Cairns’ Act effected a substantive change in the law of damages and was not a merely procedural statute as Johnson -v- Agnew ([1980] AC 367) has held. It is unnecessary to refer further in this judgment to the Wrotham Park case since that was under Lord Cairns' Act and stands or falls by that; whereas, the present case is not, and makes no pretence of being, under that Act”

. . .

“As I see it, therefore, there never was in the present case, even before the writ was issued, any possibility of the Court granting an injunction to restrain the defendant from implementing the later planning permission. The plaintiffs’ only possible claim from the outset was for damages only, damages at common law. The plaintiffs have suffered no damage. Therefore on basic principles, as damages are awarded to compensate loss, the damages must be merely nominal.”

“An award of compensation for breach of contract serves to protect three separate interests. The starting principle is that the aggrieved party ought to be compensated for loss of his positive or expectation interests. In other words, the object is to put the aggrieved party in the same financial position as if the contract had been fully performed. But the law also protects the negative interest of the aggrieved party. If the aggrieved party is unable to establish the value of a loss of bargain he may seek compensation in respect of his reliance losses. The object of such an award is to compensate the aggrieved party for expenses incurred and losses suffered in reliance on the contract. These two complementary principles share one feature. Both are pure compensatory principles. If the aggrieved party has suffered no loss he is not entitled to be compensated by invoking these principles. The application of these principles to the present case would result in an award of nominal damages only.

There is, however, a third principle which protects the aggrieved party's restitutionary interest. The object of such an award is not to compensate the plaintiff for a loss, but to deprive the defendant of the benefit he gained by the breach of contract. The classic illustration is a claim for the return of goods sold and delivered where the buyer has repudiated his obligation to pay the price. It is not traditional to describe a claim for restitution following a breach of contract as damages. What matters is that a coherent law of obligations must inevitably extend its protection to cover certain restitutionary interests. How far that protection should extend is the essence of the problem before us. In my view Wrotham Park v Parkside Homes [1974] 1 W.L.R. is only defensible on the basis of the third or restitutionary principle: see MacGregor on Damages, 15th Edition (1988), paragraph 18, and Professor P.B.H. Birks, “Civil Wrongs: A New World”, Butterworth Lectures, (1990-1991), pp 55, 71.

The plaintiffs’ argument that Wrotham Park can be justified on the basis of a loss of bargaining opportunity is a fiction. The object of the award in Wrotham Park was not to compensate the plaintiffs for financial injury, but to deprive the defendants of an unjustly acquired gain. Whilst it must be acknowledged that Wrotham Park represented a new development, it seems to me that it is based on a principled legal theory, justice and sound policy. . . . The Wrotham Park case is analogous to cases where a defendant has made use of the aggrieved party's property and thereby saved expense: see Penarth Dock Engineering Co. Ltd. v Pounds [1963] 1 Lloyd’s Rep 359. I readily accept that the word ‘property’ in this context must be interpreted in a wide sense. I would also not suggest that there is no scope for further development in this branch of the law.”

Lord Justice Rose agreed with that analysis (ibid, 1371C).

“. . . I cannot, however, accept that Brightman J's assessment of damages in Wrotham Park was based on other than compensatory principles. The defendants had committed a breach of covenant, the effects of which continued. The judge was not willing to order the defendants to undo the continuing effects of that breach. He had therefore to assess the damages necessary to compensate the plaintiffs for this continuing invasion of their right. He paid attention to the profits earned by the defendants, as it seems to me, not in order to strip the defendants of their unjust gains, but because of the obvious relationship between the profits earned by the defendants and the sum which the defendants would reasonably have been willing to pay to secure release from the covenant. I am reassured to find that this is the view taken of Wrotham Park by Megarry V-C in Tito v Waddell (No 2) [1977] Ch 106 at p335D . . . [citing the passage which I have set out earlier in this judgment] . . . I can see no reason why a judge should not assess damages on the Wrotham Park basis when he declines to prevent commission of a future wrong.”

And, he added (ibid, 283G):

“The only argument pressed on damages was that the only damages properly awardable on compensatory principles would have been nominal and that therefore an injunction should have been granted. As already indicated, I think that the Wrotham Park approach was appropriate even on pure compensatory principles and the judge followed it correctly. ”

“Having decided to refuse an injunction and to award the plaintiff damages instead, the judge had to consider the measure of damages. He based them on her share of the amount which, in his opinion, the plaintiff and the other residents of Ashleigh Avenue could reasonably have demanded as the price of waiving their rights. In this he applied the measure of damages which had been adopted by Brightman J in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, a case which has frequently been followed. It would not be necessary to consider this matter further but for the fact that in the recent case in this court of Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361 doubts were expressed as to the basis on which this measure of damages could be justified and whether it was consistent with the reasoning of Lord Wilberforce in Johnson v Agnew [1980] AC 367. It is, therefore, necessary to examine those cases further.”

After an analysis of the reasoning in Johnson v Agnew – a decision on Lord Cairns’s Act - Lord Justice Millett reached the conclusion (ibid, 291B-C) that the trial judge (and/or, perhaps, Mr Justice Brightman) had not been precluded by that reasoning from adopting the measure of damage which he did. He went on (ibid, 291C-E) to say this:

“ . . . It is, however, necessary to notice the observations of Steyn LJ in Surrey County Council v Bredero Homes Ltd [1993] 1 WLR 1361, 1369:

‘In my view Wrotham Park Estate Co Ltd v Parkside Homes Ltd …is only defensible on the basis of the third or restitutionary principle … The plaintiffs' argument that the Wrotham Park case can be justified on the basis of a loss of bargaining opportunity is a fiction.’

I find these remarks puzzling. It is plain from his judgment in the Wrotham Park case that Brightman J's approach was compensatory, not restitutionary. He sought to measure the damages by reference to what the plaintiff had lost, not by reference to what the defendant had gained. He did not award the plaintiff the profit which the defendant had made by the breach, but the amount which he judged the plaintiff might have obtained as the price of giving its consent. The amount of the profit which the defendant expected to make was a relevant factor in that assessment, but that was all.”

He concluded (ibid, 292D):

“In my view, there is no reason why compensatory damages for future trespasses and continuing breaches of covenant should not reflect the value of the rights which she has lost, or why such damages should not be measured by the amount which she could reasonably have expected to receive for their release.”

“. . .examination of the facts stated in the headnote [[1993] 1 WLR 1361]reveals that the defendant had disposed of all the houses on the estate before the plaintiffs commenced proceedings, and that the purchasers were not joined as parties. Any claim to damages under Lord Cairns’ Act must have failed; at the date of the writ the court could not have ordered the defendant to pull down the houses, since this was no longer something which was within its power to do.”

He went on, (ibid, 292A-C):

“. . . The plaintiffs did not bring the proceedings until after the defendant had sold the houses and was no longer susceptible to an injunction. The plaintiffs had thereby deprived themselves of any bargaining position. Unable to obtain an injunction, they were equally unable to invoke the jurisdiction to award damages under Lord Cairns’ Act. No longer exposed to the risk of an injunction, and having successfully disposed of the houses, the defendant had no reason to pay anything for the release of the covenant. Unless they were able to recover damages in accordance with restitutionary principles, neither at common law nor in equity could the plaintiffs recover more than nominal damages.”

“A welcome consequence of Jaggard v. Sawyer is that it has firmly established the Wrotham Park basis of assessing damages as the basis appropriate to cases such as this. There have been some differences of opinion as to the correct analysis of that decision, the difficulty being, as the plaintiffs there conceded, that the defendants' breaches of covenant had caused no diminution in the value of the land to which the benefit of the covenant was annexed; see [1974] 1 WLR at p 182F-G. No doubt it was for that reason that in Surrey County Council v. Bredero Homes Ltd [1993] 1WLR 1361, 1369, Steyn LJ expressed the view that the Wrotham Park damages were defensible only on the basis that they were restitutionary in nature. However, that view was rejected in Jaggard v. Sawyer by both Sir Thomas Bingham MR and Millett LJ who, agreeing with Megarry VC in Tito v. Waddell (No. 2) [1977] Ch 106, 335, thought that Brightman J's approach had been compensatory, in that the damages awarded were intended to compensate the plaintiffs for not having obtained the price they would have been able to obtain for giving their consent, had they been asked to give it.

The compensatory analysis, if accompanied by a recognition that it was not a diminution in value of the dominant tenement that was compensated, is perfectly acceptable. Equally, in a case where there has been such a diminution, there seems to be no reason why it should not be taken into account in assessing the sum which might reasonably have been demanded as a quid pro quo for relaxing the covenant. Whatever the correct analysis may be, Jaggard v. Sawyer, as both sides agree, is clear authority for the adoption of the Wrotham Park basis of assessing damages in this case. I therefore proceed to assess them by reference to the sum which the plaintiff might reasonably have demanded as a quid pro quo for relaxing the restrictions in perpetuity . . .”

“. . . Prima facie the measure of damages . . . for breach of a covenant not to build a house on neighbouring land is the diminution in the value of the plaintiff's land occasioned by the breach. One element in the value of the plaintiff's land immediately before the breach is attributable to his ability to obtain an injunction to prevent the building. Clearly a defendant who wished to build would pay for the release of the covenant, but only so long as the court could still protect it by the grant of an injunction. The proviso is important. It is the ability to claim an injunction which gives the benefit of the covenant much of its value. If the plaintiff delays proceedings until it is no longer possible for him to obtain an injunction, he destroys his own bargaining position and devalues his right. The unavailability of the remedy of injunction at one and the same time deprives the court of jurisdiction to award damages under the Act and removes the basis for awarding substantial damages at common law. For this reason, I take the view that damages can be awarded at common law in accordance with the approach adopted in Wrotham Park, but in practice only in the circumstances in which they could also be awarded under [Lord Cairns’s Act]. ”

“The power to give damages in lieu of an injunction imported the power to give an equivalent for what was lost by the refusal of an injunction: see Leeds Industrial Co-operative Society Ltd. v. Slack [1924] A.C. 851, 859, per Viscount Finlay L.C. It is important to note, however, that although the Act had the effect of enabling the court in this regard to award damages in respect of the future as well as the past, the Act did not alter the measure to be employed in assessing damages: see Johnson v. Agnew [1980] A.C. 367, 400, per Lord Wilberforce. Thus, in the same way as damages at common law for violations of a property right may be measured by reference to the benefits wrongfully obtained by a defendant, so under Lord Cairns’ Act damages may include damages measured by reference to the benefits likely to be obtained in future by the defendant. This approach has been adopted on many occasions. Recent examples are Bracewell v. Appleby [1975] Ch. 408 and Jaggard v. Sawyer [1995] 1 WLR 269, both cases concerned with access to a newly-built house over another's land.

The measure of damages awarded in this type of case is often analysed as damages for loss of a bargaining opportunity or, which comes to the same, the price payable for the compulsory acquisition of a right. This analysis is correct. The court's refusal to grant an injunction means that in practice the defendant is thereby permitted to perpetuate the wrongful state of affairs he has brought about. . . .”

“. . . In practice, these specific remedies go a long way towards providing suitable protection for innocent parties who will suffer loss from breaches of contract which are not adequately remediable by an award of damages. But these remedies are not always available. . . . Further, these specific remedies are discretionary. . . . The court may, for instance, decline to grant specific relief on the ground that this would be oppressive.

An instance of this nature occurred in Wrotham Park Estate Co. Ltd. v. Parkside Homes Ltd. [1974] 1 W.L.R. 798. For social and economic reasons the court refused to make a mandatory order for the demolition of houses built on land burdened with a restrictive covenant. Instead, Brightman J. made an award of damages under the jurisdiction which originated with Lord Cairns’s Act. The existence of the new houses did not diminish the value of the benefited land by one farthing. The judge considered that if the plaintiffs were given a nominal sum, or no sum, justice would manifestly not have been done. He assessed the damages at five per cent of the developer's anticipated profit, this being the amount of money which could reasonably have been demanded for a relaxation of the covenant.

In reaching his conclusion the judge applied by analogy the cases mentioned above concerning the assessment of damages when a defendant has invaded another's property rights but without diminishing the value of the property. I consider he was right to do so. . . .”

“ . . . The general rule is that, in the oft quoted words of Lord Blackburn, the measure of damages is to be, as far as possible, that amount of money which will put the injured party in the same position he would have been in had he not sustained the wrong: Livingstone v. Rawyards Coal Co. (1880) 5 App. Cas. 25, 39. Damages are measured by the plaintiff's loss, not the defendant's gain. But the common law, pragmatic as ever, has long recognised that there are many commonplace situations where a strict application of this principle would not do justice between the parties. Then compensation for the wrong done to the plaintiff is measured by a different yardstick. A trespasser who enters another's land may cause the landowner no financial loss. In such a case damages are measured by the benefit received by the trespasser, namely, by his use of the land.

The same principle is applied where the wrong consists of use of another's land for depositing waste, or by using a path across the land or using passages in an underground mine. In this type of case the damages recoverable will be, in short, the price a reasonable person would pay for the right of user: see Whitwham v. Westminster Brymbo Coal and Coke Co. [1892] 2 Ch. 538, and the 'wayleave' cases such as Martin v. Porter (1839) 5 M. and W. 351 and Jegon v. Vivian (1871) L.R. 6 Ch. App. 742. A more recent example was the non-removal of a floating dock, in Penarth Dock Engineering Co. Ltd. v. Pounds [1963] 1 L1oyd's Rep. 359.”

“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 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.”

To that question the House of Lords (Lord Hobhouse of Woodborough dissenting) gave an affirmative answer.

“ . . . Where the plaintiff has failed to obtain or failed to apply for an injunction, he has to be content with a remedy in damages. What has happened in such cases is that there has either actually or in effect been a compulsory purchase of the plaintiff's right of refusal. . . . What the plaintiff has lost is the sum which he could have exacted from the defendant as the price of his consent to the development. This is an example of compensatory damages. They are damages for breach. They do not involve any concept of restitution and so to describe them is an error. The error comes about because of the assumption that the only loss which the plaintiff can have suffered is a reduction in the value of the dominant tenement. It is for this reason that I agree with my noble and learned friend Lord Nicholls that the decision in Wrotham Park Estate Co. Ltd. v Parkside Homes Ltd. [1974] 1 WLR 798 is to be preferred to that in Surrey C.C. v Bredero Homes Ltd. [1993] 1 WLR 1361: see also Jaggard v Sawyer [1995] 1 WLR 269. . . .”

Indeed, Lord Hobhouse’s dissent was founded on his view that there was a real distinction between compensatory damages as awarded on the Wrotham Park basis and an account of profits; and that there was no proper basis for extending the latter remedy, which (as he thought) was based on proprietary principles, to cases in which underlying proprietary rights were absent. The passage which I have just cited is followed by observations which make this clear (ibid, 298h-299c):

“I would however add that the order proposed by your Lordships does not reflect this principle; it goes further. It does not award to the Crown damages for breach of contract assessed by reference to what would be the reasonable price to pay for permission to publish. It awards the Crown damages which equal the whole amount owed by Jonathan Cape to Blake. That is a remedy based on proprietary principles when the necessary proprietary rights are absent.

The principle of compensation is both intellectually sound as the remedy for breach and provides the just answer. The examples discussed in my noble and learned friend's speech do not on the correct analysis disclose the supposed need to extend the boundaries of remedies for breach of contract.. . .”

Lord Hobhouse accepted that breach of the defendant’s undertaking (if the undertaking were to be regarded as still enforceable at the date of the breach) “would have supported compensatory damages on the ‘compulsory purchase’ basis”.

“[15] This appeal raises as a matter of principle whether the Court can and should order the recovery of any damages or an account of profits in circumstances where the appellant has not proved that it has suffered any financial loss.”

He went on

“[16] The inspiration for the appellant's amendment of its case was the House of Lords decision in Attorney General v. Blake [2001] 1 AC 268. This marks a new start in this area of law. The exposition by counsel before us of prior authority threw light on considerations which may still be relevant to its future development. But, as I see the decision in Blake, it freed us from some constraints that prior authority in this court (particularly Surrey County Council v. Bredero Homes Ltd. [1993] 1 WLR 1361 and some of the reasoning in Jaggard v. Sawyer [1995] 1 WLR 269) would have imposed. To apply Lord Steyn's words, Blake leaves future courts with the task of ‘hammering out on the anvil of decided cases’ when and how far remedies such as the appellant now seeks should be available.”

“[34] . . . The argument is that the award in Wrotham Park was only possible because the Court was refusing an injunction, in which connection it was entitled under Lord Cairns’s Act to assess damages to compensate the plaintiffs for the continuing invasion of their right in the future. That, it is submitted, is not an order that a common law court could or would have made. Common law courts could only grant relief for losses crystallised prior to the issue of a writ. We were referred to the statements on these points in Bredero and in Jaggard. The decision in Blake in my view avoids the need to consider Mr Englehart's submissions on these points at length. The remedies for breach of contract have a flexibility which they fail to recognise. Since Blake I see no reason why, if the beneficiary of a restrictive covenant is unaware of its infringement in time to obtain an injunction immediately, but is able to obtain an injunction for the future after the defendant by the infringement has obtained some benefit, the appellant should be precluded from obtaining an injunction and, if justice requires, a reasonable sum to compensate for the past infringement, even though he may not be able to show any financial loss to himself. If compensation on this basis is available in respect of the permanent deprivation of a right because the law does not consider that injunctive relief is appropriate, there seems no justification for refusing it in respect of a temporary deprivation arising because the infringement has been committed too quickly for the law to be able to intervene. In either case, though for different reasons, the compensation awarded would be in substitution for an injunction.”

“[56] It is apparent from Lord Nicholls' speech that he regarded the decision of Brightman J. in Wrotham Park Estate Ltd. v Parkside Homes Ltd. [1974] 1 WLR 798 as a crucial stepping stone in his reasoning as to why the absence of financially measurable loss flowing from a breach of contract was not necessarily fatal to a claimant's claim for compensation. . . . True it is that in that case, unlike the present case, no injunction was awarded; it was by the time of the hearing before Brightman J. too late to restrain future breaches, because the houses, the building of which breached the restrictive covenant, had already been built. Brightman J. awarded damages under the jurisdiction originating with Lord Cairns's Act in lieu of an injunction. But that Act specifically permitted the award of damages in addition to or in substitution for an injunction or specific performance (see now s. 50 Supreme Court Act 1981) and the fact that an injunction was awarded by Buckley J. to restrain future breaches does not detract from the availability of damages as a remedy for past breaches. Although the Wrotham Park case related to an infringement of a property right, there having been a breach of a restrictive covenant imposed for the benefit of an estate, it is noticeable that Lord Nicholls did not treat the significance of the case as so limited. He discussed the case in the section of his judgment (commencing at p. 282) dealing with breach of contract. It is apparent that he regarded the case as a guiding authority on compensation for breach of a contractual obligation. . . .”.

The other member of the Court, Lord Justice Hooper, agreed with both judgments.

“[25] . . . As to [Lord Hobhouse’s] analysis of the damages awarded in Wrotham Park as compensatory, that designation does not avoid the fact that the damages awarded there (and in other cases, . . .) cannot be related or limited to any actual financial loss caused by the breach. In Wrotham Park the estate owners would never have agreed to any relaxation on any terms of the restrictive covenant.

[26] Whether the adoption of a standard measure of damages represents a departure from a compensatory approach depends upon what one understands by compensation and whether the term is only apt in circumstances where an injured party's financial position, viewed subjectively, is being precisely restored. . . . In a case such as Wrotham Park the law gives effect to the instinctive reaction that, whether or not the appellant would have been better off if the wrong had not been committed, the wrongdoer ought not to gain an advantage for free, and should make some reasonable recompense.”

[26] . . . In such a context [where the instinctive reaction is that, whether or not the claimant would have been better off if the wrong had not been committed, the wrongdoer should make some reasonable recompense] it is natural to pay regard to any profit made by the wrongdoer . . . The law can in such cases act either by ordering payment over of a percentage of any profit or, in some cases, by taking the cost which the wrongdoer would have had to incur to obtain (if feasible) equivalent benefit from another source.”

In Experience Hendrix there were compelling reasons why the appropriate order was for payment over of a percentage of turnover (by way of royalty); but that outcome does not lead to the conclusion that this Court saw the remedy as other than compensatory in nature.

“My conclusion is that there seems to be no reason, in principle, why the court must in all circumstances rule out an account of profits as a remedy for breach of contract. I prefer to avoid the unhappy expression ‘restitutionary damages’. Remedies are the law's response to a wrong (or, more precisely, to a cause of action). When, exceptionally, a just response to a breach of contract so requires, the court should be able to grant the discretionary remedy of requiring a defendant to account to the plaintiff for the benefits he has received from his 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 for specific performance or grant 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.

The state of the authorities encourages me to reach this conclusion, rather than the reverse. The law recognises that damages are not always a sufficient remedy for breach of contract. This is the foundation of the court's jurisdiction to grant the remedies of specific performance and injunction. Even when awarding damages, the law does not adhere slavishly to the concept of compensation for financially measurable loss. When the circumstances require, damages are measured by reference to the benefit obtained by the wrongdoer. . . . . With the established authorities going thus far, I consider it would be only a modest step for the law to recognise openly that, exceptionally, an account of profits may be the most appropriate remedy for breach of contract. . . .”

Paragraph 5 of the amended notice of application

“[36] It is plain in my view that at [the time of the application before Mr Justice Jacob] the Fund had no intention of seeking to claim damages based upon the principle that they now wish to rely upon. The amendment sought was not to raise this method of claiming damages and in a later hearing in a separate action to which I shall make reference below it is clear that counsel then representing the Fund (Mr Christopher Morcom QC) indicated that no such claim was being contemplated. ”

The “later hearing” to which the judge referred there was the hearing in this Court of an appeal from an order made by Mr Justice Jacob in 2002 on an application by one of the Federation’s licensees, THQ/JAKKS Pacific LLC (“THQ”). It is to that hearing that reference is made at sub-paragraph (e) of paragraph 5 of the amended application notice.

The THQ application

“Mr Justice Jacob: You have said they can claim against the Federation for damages, and they have got an enquiry to damages going on what basis would the damages be assessed? Actual damage caused to [the Fund], it is a pretty tricky thing to measure. Reasonable royalty?

. . .

Mr Justice Jacob: Well, if it was an intellectual property right you would know where you - - it would be a reasonable royalty or actual damage.

Mr Thorley: Or actual lost sales or reasonable royalty.

Mr Justice Jacob: I do not know how contract law would deal with it. On a normal basis . . .

Mr Thorley: That is right. Again, if I have to say this off the top of my head right, you endeavour to compensate for loss.

Mr Justice Jacob: Yes, but you see we do not in intellectual property because we invent this head of [reasonable] royalty. The question is whether it would apply to a contract as well?

Mr Thorley: Maybe your Lordship will be faced with that in due course.”

At the date of that hearing, of course, the analysis of Lord Nicholls’ speech in Attorney General v Blake which was later to appear in the judgments in this Court in Experience Hendrix could not have been before Mr Justice Jacob. He may not, then, have appreciated the juridical link between the basis on which an account of profits is available as a remedy for breach of contract, and the basis upon which an award of Wrotham Park damages is made. His observations on 25 November 2002 tend to confirm that the need to consider the question whether to order an account of profits in conjunction with the question whether an award of Wrotham Park damages would, more aptly, meet the circumstances of the particular case had not been raised before him in 2001.

“Mr Morcom QC: Two principal heads, I can say, will be not only the very considerable amount, and one is well into six figures, that we have had to spend in policing trademark applications around the world made in breach of the original agreement; but a very large aspect is the damage to our exclusivity, the dilution of our rights. I just pick those out as two main points. There may be some lesser heads.”

At paragraph [71] of his judgment ([2003] EWCA Civ 401) Lord Justice Peter Gibson noted that the Fund did not seek an account of profits as against the Federation; and went on to say this:

“[71] I add for completeness that Mr Morcom has told us that no consideration had been given by the Fund to seeking compensation on the basis used in Wrotham Park Estate Co Ltd v Parkside Homes Ltd [1974] 1 WLR 798, a basis approved by the House of Lords in AG v Blake [2001] 1 AC 268.”

It may be that, in making the observations which he did, Lord Justice Peter Gibson had in mind the arguments which had been addressed to the Court in the Experience Hendrix case ([2003] EWCA Civ 323); and in which he had delivered judgment a week earlier.

Is it now open to the Fund to pursue a claim for damages to be assessed on the Wrotham Park basis?

“[61] I say nothing about how, if such an account were ordered, it could work other than to ask, rhetorically, how it could be shown that the Federation had made profits from the use of the initials as distinct from its actual commercial activities and the use of its full name. Fortunately I do not have to try to answer that question – I simply have to decide whether it should be answered.

[62] It used to be thought that the equitable remedy of account of profits was not available for breach of contract. But the House of Lords has held otherwise in Attorney-General v Blake [2001] AC 268. In that case a spy had to account for the profits he made from his memoirs. However the majority speeches in the House make it clear that the remedy is very exceptional. Thus Lord Nicholls (with whom Lords Goff, Browne-Wilkinson and Steyn agreed) having held that, ‘exceptionally, an account of profits may be the most appropriate remedy for breach of contract’ went on to consider when it might be available. He said:

A useful general guide, although not exhaustive, is whether the plaintiff had a legitimate interest in preventing the defendant’s profit making activity, and hence in depriving him of his profit.

Lord Nicholls then went on to consider situations where it would not be available. One of these is a negative covenant. He said:

The second suggested category was where the defendant has obtained his profit by doing the very thing he contracted not to do. This category is defined too widely to assist. The category is apt to embrace all express negative obligations. But something more is required than mere breach of such an obligation before an account of profits will be the appropriate remedy.

And three further categories were ruled out as individual factors:

Lord Woolf MR [1998] Ch 439, 457, 458, also suggested three facts which should not be a sufficient ground for departing from the normal basis on which damages are awarded: the fact that the breach was cynical and deliberate; the fact that the breach enabled the defendant to enter into a more profitable contract elsewhere; and the fact that by entering into a new and more profitable contract the defendant put it out of his power to perform his contract with the plaintiff. I agree that none of these facts would be, by itself, a good reason for ordering an account of profits.

[63] When I look at what are ruled out by Lord Nicholls, and compare it with the list of factors in the proposed pleading I can see nothing which makes this case one of the exceptional character called for by the decision in Blake. All one really has here is a negative covenant. The fact that it relates to the use of initials and so is a bit ‘trademarkish’ or ‘IPish’ does not mean the common law should provide what Parliament provides by statute for an infringement of a registered mark or intellectual property right. It would indeed be odd if breach of an ordinary full restraint of trade clause (e.g. not to work in a defined area at a defined job for a defined period) did not attract an account, whereas breach of a lesser restraint (not to use a mark in a trade otherwise permitted) did. I conclude that the proposed amendment should not be allowed.”

“In trying this question I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

“It [the rule in Henderson v Henderson] is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on for ever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed.”

and the judgments of Lord Justice May in Manson v Vooght [1999] BPIR 376, 387-8 and of Lord Justice Auld in Bradford and Bingley Building Society v Seddon [1999] 1 WLR 1482, 1490-1491, 1492-1493 - Lord Bingham said this (ibid, 31A-F):

“. . . Henderson v. Henderson abuse of process, as now understood, although separate and distinct from cause of action estoppel and issue estoppel, has much in common with them. The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. The bringing of a claim or the raising of a defence in later proceedings may, without more, amount to abuse if the court is satisfied (the onus being on the party alleging abuse) that the claim or defence should have been raised in the earlier proceedings if it was to be raised at all. I would not accept that it is necessary, before abuse may be found, to identify any additional element such as a collateral attack on a previous decision or some dishonesty, but where those elements are present the later proceedings will be much more obviously abusive, and there will rarely be a finding of abuse unless the later proceeding involves what the court regards as unjust harassment of a party. It is, however, wrong to hold that because a matter could have been raised in earlier proceedings it should have been, so as to render the raising of it in later proceedings necessarily abusive. That is to adopt too dogmatic an approach to what should in my opinion be a broad, merits-based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not. Thus while I would accept that lack of funds would not ordinarily excuse a failure to raise in earlier proceedings an issue which could and should have been raised then, I would not regard it as necessarily irrelevant, particularly if it appears that the lack of funds has been caused by the party against whom it is sought to claim. While the result may often be the same, it is in my view preferable to ask whether in all the circumstances a party's conduct is an abuse than to ask whether the conduct is an abuse and then, if it is, to ask whether the abuse is excused or justified by special circumstances. Properly applied, and whatever the legitimacy of its descent, the rule has in my view a valuable part to play in protecting the interests of justice.”

The other grounds of appeal

Lord Justice Maurice Kay:

Lord Justice Wilson:

78. I also agree.