Devenish Nutrition Ltd & Ors v Sanofi-Aventis SA (France) & Ors

The first principle is that which is called for short “non bis in idem” (or “ne bis in idem”). This principle is a reflection of the common principle that a person is not to be punished twice for the same wrong (or the principle against double jeopardy). It is a fundamental principle of Community law. National measures adopted in order to give effect to Community rights must themselves comply with the fundamental principles of Community law: Case C-260/89 Elliniki Radiophonia Tileorassi AE (ERT) v Dimotiki Etairia Plinoforrisis [1991] ECR I-2925 para 43; R v Ministry of Agriculture Fisheries and Food ex p. First City Trading and others [1997] Eu LR 195. This much is not controversial.

In Archer Daniels Midland Co v. Commission of the European Communities [2006] 5 C.M.L.R. 28 the CFI said:

“the principle of ne bis in idem prohibits the same person from being sanctioned more than once for the same unlawful conduct in order to protect one and the same legal interest. The application of that principle is subject to three cumulative conditions: the identity of the facts, the unity of offender and the unity of legal interest protected.”

In the present case, the facts relied on by the Claimants as founding liability are the same facts as those found by the Commission. However, Mr Layton says that although the facts as found by the Commission are sufficient to found liability for compensatory damages, there are additional facts that must be proved in order to found liability for exemplary damages. Those facts are (as alleged in the Particulars of Claim):

“The Claimant avers that the Defendants’ wrongful actions have been carried out in the knowledge of and in wilful disregard of the Claimant’s rights, in a calculating fashion and/or with the expectation of profiting therefrom by amounts exceeding the amounts payable by them to the Claimant as a result of such wrongful actions. Such wrongful actions are properly such as to evoke a sense of outrage. The Claimant will ask for exemplary damages accordingly.”

It is common ground that these pleaded facts bring the case within the second category identified in Rookes v Barnard [1964] 1 AC 1129 in which exemplary damages may be awarded. Indeed the plea is little more than a statement of the applicable legal test; but the defendants do not complain on that account (contrast A.B. and others v South West Water Services Ltd [1993] 1 QB 507, 526 per Stuart-Smith LJ and 532 per Sir Thomas Bingham MR).

However, in my judgment these pleaded facts are not additional to those found by the Commission. The Commission found that the infringements of Article 81 were “deliberate” and carried out “with full knowledge of the illegality of their actions”. This is the same as a finding that the tort was carried out “in the knowledge of and in wilful disregard of the Claimant’s rights”. The Commission also found that there was “an important distortion of competition, which is of exclusive benefit to the participating producers”. Although the Commission did not expressly find that there was a calculation that the benefits outweighed the potential compensation payable, I do not regard that as material. The situation in which exemplary damages may be awarded is one where someone faces up to the possibility of having to pay damages for doing something which may be held to have been wrong but where nevertheless he deliberately carries out his plan because he thinks that it will work out satisfactorily for him: Cassell & Co Ltd v. Broome [1972] AC 1027 per Lord Morris of Borth-y-Gest; Borders (UK) Ltd v Metropolitan Police Commissioner [2005] EWCA Civ 197 per Rix LJ. The Commission’s finding of a deliberate and conscious breach for the participants’ financial gain is a sufficient finding. The sense of outrage is no more than a characterisation of the conduct and is not an independent fact. I consider therefore that there is identity of facts.

Mr Layton also argued that there was not identity of persons, because one of the Defendants (RPL) was not a person to whom the Decision was addressed. However, the Particulars of Claim specifically allege that all Defendants are bound by the Decision. On that basis the Defendants are bound by it for good or ill. The Particulars of Claim also allege that Hoffman-La Roche and RPL were part of the same undertaking; and refer to them together, compendiously, as “Roche”. In my judgment this is identity of persons.

Mr Layton next argued that there was not unity of interest. He said that the fines imposed by the Commission and an award of exemplary damages have different objectives. In my judgment it is plain that at least part of the purpose of the fine is deterrent. Recital (697) of the Decision says as much. It is also by its nature punitive. In addition to both deterrence and punishment, the Commission considered the extent of the benefits derived by the participants in the cartels. Thus the fines were influenced by the world wide turnover of each participant. In addition the Guidelines on the method of setting fines imposed under Article 81 state:

“It will also be necessary to take account of the effective economic capacity of offenders to cause significant damage to other operators, in particular consumers, and to set the fine at a level which ensures that it has a sufficiently deterrent effect.”

The classic statement of the purpose of exemplary damages is also to punish and deter. Many judicial statements to that effect could be quoted. One recent and authoritative one is that of Lord Nicholls in Kuddus v Chief Constable of Leicestershire [2002] 2 AC 122:

“Exemplary damages or punitive damages, the terms are synonymous, stand apart from awards of compensatory damages. They are additional to an award which is intended to compensate a plaintiff fully for the loss he has suffered, both pecuniary and non-pecuniary. They are intended to punish and deter.”

In my judgment in anti-trust cases the imposition of fines and an award of exemplary damages serve the same aim: namely to punish and deter anti-competitive behaviour.

Mr. Layton sought to support his argument by pointing out that the fines did not take account of damages that might be awarded in civil actions. That is true up to a point. But the kind of damages that the Commission contemplated did not, in my judgment, include exemplary damages intended to punish and deter. The Commission explained its position as follows:

“Finally, the possibility that undertakings may have been required to pay damages in civil actions is of no relevance. Payments of damages in civil law actions which have the objective of compensating for the harm caused by cartels to individual companies or consumers cannot be compared with public law sanctions for illegal behaviour.” (Emphasis added)

The damages that it was contemplating were compensatory damages. And the defendants accept that the claimants are entitled to compensatory damages. I do not therefore consider that this part of the Decision assists Mr Layton’s case.

Mr Layton also argued that in the case of the Aventis companies the fines had been commuted to zero as a result of the application of the Leniency Notice. Thus he said that these companies, at least, had not been sanctioned for the unlawful conduct at all. I do not accept this submission. The Commission decided in principle that fines should be imposed on the Aventis companies. It is true that by the application of the Leniency Notice, those fines were commuted to zero as a result of Aventis’ conduct as whistleblower; but the starting point for the application of the Leniency Notice was the finding of unlawful conduct coupled with the imposition, in principle, of a fine. The application of the Leniency Notice serves the important policy aim that it is of even more importance to encourage whistleblowers than to punish participants in a cartel. In my judgment the national court should not undermine that policy by an award of exemplary damages against a person who has had his fine commuted as a result of the application of the Leniency Notice. If Mr Layton’s submission were correct, then a more guilty wrongdoer would escape liability for exemplary damages, while a less guilty wrongdoer, whose fines had been commuted would not. This seems to me to be wrong in principle.

In my judgment, therefore, the principle of non bis in idem precludes the award of exemplary damages in a case in which the defendants have already been fined (or had fines imposed and then reduced or commuted) by the European Commission.

Mr de la Mare, appearing for the Aventis companies, had a different way of putting a similar point. He said that under the Modernisation Regulation it was now clear that the national court had to defer to the Commission. In particular Article 16 of the Regulation provides:

“1.

When national courts rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. This obligation is without prejudice to the rights and obligations under Article 234 of the Treaty.

2.

When competition authorities of the Member States rule on agreements, decisions or practices under Article 81 or Article 82 of the Treaty which are already the subject of a Commission decision, they cannot take decisions which would run counter to the decision adopted by the Commission.”

Mr de la Mare submits that the Commission has decided on the adequacy of punitive measures that should be taken against the defendants as a result of their participation in the vitamin cartels. If the national court were to award exemplary damages that could only be because the national court had concluded that the fines imposed by the Commission (including those fines that had been reduced or commuted) were insufficient to punish and deter. Indeed, Mr Layton submitted, by reference to guidelines for the imposition of fines that came into force after the Decision, that the fines were indeed insufficient. But Mr de la Mare submitted that the national court is not in a position to reach such a conclusion, because it would “run counter” to the decision already adopted by the Commission. I agree. In my judgment this is a second reason why exemplary damages are not available in national proceedings following a decision by the Commission to impose (or to commute) fines.

Accordingly, I agree with the defendants that before one gets to the principle of equivalence, there are Community rules that preclude the award of exemplary damages on the facts of this case.

It is common ground that:

However, the defendants say that it is clear on the pleaded case that this is not a case in which the discretion could ever be exercised in the claimants’ favour. The first reason overlaps with that which I have already considered, namely the principle of double jeopardy. The second reason is that the claimants are multiple claimants which is said to preclude an award. The third, which is a variant of the second, is that the claimants are members of a class not all of whom are before the court.

In Archer v Brown [1985] QB 401 the claimant entered into an agreement to buy shares as a result of the defendant’s fraudulent misrepresentations. The defendant was subsequently convicted of offences under the Prevention of Fraud (Investments) Act 1958 and imprisoned. The claimant began proceedings in deceit in the course of which he claimed exemplary damages. Peter Pain J refused to award them. He said:

“But what seems to put the claim under this head out of court is the fact that exemplary damages are meant to punish and the defendant has been punished. Even if he wins his appeal he will have spent a considerable time in gaol. It is not surprising that there is no authority as to whether this provides a defence, since there is no direct authority as to whether exemplary damages can be given in deceit. I rest my decision on the basic principle that a man should not be punished twice for the same offence. Since he has undoubtedly been punished, I should not enrich the plaintiff by punishing the defendant again.”

The question of double jeopardy arose again in Borders (UK) Ltd v Metropolitan Police Commissioner [2005] EWCA Civ 197. Mr Jordan was sued by eight major book retailers for their losses of thousands of new books stolen from them by shoplifters and sold by him from his market stalls. He was convicted of conspiracy to steal books and of handling stolen books and sentenced to 30 months' imprisonment. An application was made in the criminal proceedings for a compensation order in favour of the booksellers under s.130 of the Powers of Criminal Courts Act 2000. In parallel a civil action was brought, and while Mr Jordan was in gaol, judgment was entered on the claim for damages to be assessed. As another part of the criminal process, confiscation proceedings were initiated in the Crown Court under the Criminal Justice Act 1988. Those were adjourned pending appeal in the civil proceedings. The Master assessed damages in the sum of £100,000. On appeal one of the arguments for Mr Jordan was that the Master’s award exposed him to double jeopardy, because of the adjourned confiscation proceedings. He does not appear to have advanced the argument that the question of double jeopardy arose because of his sentence of imprisonment (which was the consideration on which Peter Pain J relied in Archer but which does not appear to have been cited in Borders). Sedley LJ gave the argument short shrift. He said:

“The argument from double jeopardy is not in my judgment a sound one. The convictions were a legitimate part of the evidence in support of the civil claim, but there is no duplication of penalty. If the £100,000 award of exemplary damages stands, the appellant's available assets will be depleted by that amount by the time the matter returns to the Crown Court for completion of the confiscation proceedings. If confiscation does not reach all his assets, while this court cannot dictate what is to happen, it can confidently anticipate that Mr Jordan will not be mulcted in the same sum twice.”

Rix and May LJJ seem to me to have had rather more difficulty but in the end agreed with Sedley LJ. What was decisive for both of them was that there was no practical danger of double counting. Rix LJ said:

“It is arguable that the function of exemplary damages is nowadays better left to the confiscation regime, at any rate where there are parallel civil and criminal proceedings. However, the statutory regime has done nothing explicit to discourage the civil process, and I agree with what Sedley and May LJJ have said about the interrelationship of the Criminal Justice Act 1988 and Master Leslie's award in this case. In my judgment there is no danger in practice that Mr Jordan will be required to pay the £100,000 twice.”

May LJ said:

“45.

I was at first attracted by Mr Hellman's twin submissions, on behalf of Mr Jordan, (a) that the Master should not have awarded exemplary damages as a scarcely concealed substitute for additional compensatory damages which the claimants did not claim and did not attempt to quantify; and (b) that exemplary damages, being punitive, were quite inappropriate in this case, when Mr Jordan has been punished by imprisonment, and is very probably going to be punished further by a swingeing confiscation order under sections 71 and 72AA of the Criminal Justice Act 1988.

46.

I am, however, persuaded by Mr Convey to the contrary. First, in my judgment, Part VI of the 1988 Act was not intended to negate a proper claim for exemplary damages in civil proceedings. Section 71(1C) may not literally prohibit the Crown Court from making a confiscation order which overlaps a claim by the victim in civil proceedings. But it plainly contemplates that the victim's proper civil claims are to be preserved and is a strong indication that the Crown Court should usually avoid double counting -- see also the discretionary safeguards in section 72AA. In addition, at least in a case in which the defendant's benefit from criminal conduct exceeds his realisable assets, the amount of any judgment in civil proceedings will reduce the defendant's realisable assets, and thus reduce the amount of the confiscation order -- see section 71(6).”

I draw from Borders that the fact that a person has been imprisoned for an offence is not, in itself, enough to bring the principle against double jeopardy into play; but that so far as financial remedies are concerned, the principle is still a good one to the extent that there should be no practical danger of double counting or duplication of penalty.

The danger is particularly acute where the defendant has already been fined. In A.B. and others v South West Water Services Ltd [1993] 1 QB 507 aluminium sulphate was accidentally introduced into the drinking water system at a water treatment works operated by the defendant water authority. The defendant had been prosecuted and fined. The plaintiffs (some 180 of the defendant’s customers) brought actions against the defendant claiming compensation in respect of injuries suffered as a result of drinking contaminated water. The claims included a claim for exemplary damages. The Court of Appeal dismissed the claim for exemplary damages on the principal ground that that it had not been accepted before 1964 that exemplary damages were available in respect of the causes of action relied upon. This ground can no longer stand in the light of the decision of the House of Lords in Kuddus. It was conceded in the Court of Appeal that the defendants’ conviction and fine was not an absolute bar to an award of exemplary damages, although Stuart-Smith LJ was careful to say that he was not to be taken as accepting that the concession was rightly made. However, Stuart-Smith LJ went on to say:

“In the present case there is the further complication to which I have already referred of the conviction and fine of the defendants. These problems persuade me that there would be a serious risk of injustice to the defendants in this case if an award of exemplary damages were to be made against them. There is no injustice to the plaintiffs in refusing to permit such an award; they are not foregoing compensation to which they are entitled, but an additional windfall based solely on the defendants' alleged improper conduct.”

In my judgment the fact that a defendant has been fined for his conduct is a powerful factor against the award of exemplary damages, although it may not be conclusive in itself.

There is also the problem that there are multiple claimants. The defendants submitted that this, of itself, was a bar to an award of exemplary damages. The defendants relied on an earlier part of the judgment of Stuart-Smith LJ in A.B. and others v South West Water Services Ltd:

“There is however one aspect of the case which in my view makes it peculiarly unsuitable for an award of exemplary damages, even if the first two hoops are negotiated, and that is the number of plaintiffs. Unless all their claims are quantified by the court at the same time, how is the court to fix and apportion the punitive element of the damages? Should the court fix a global sum of £x and divide it by 180, equally among the plaintiffs? Or should it be divided according to the gravity of the personal injury suffered? Some plaintiffs may have been affected by the alleged oppressive, arbitrary, arrogant and high handed behaviour, others not. If the assessment is made separately at different times for different plaintiffs, how is the court to know that the overall punishment is appropriate?”

Difficulties of a similar kind were referred to by the Divisional Court in R v Secretary of State for Transport ex p. Factortame and others (No.5) [1997] EuLR 475 at 526E-F. (I should add that the defendants did not rely on the decision of the Divisional Court that exemplary damages were not in any event available for breach of a statutory duty arising under the European Communities Act 1972, because that conclusion appears to derive from the application of the now discredited “cause of action” test).

Mr Layton submitted that the mere fact that there were multiple claimants was not an absolute bar to an award of exemplary damages. Thus far, I think he is right. On the unusual facts of Borders, damages labelled “exemplary damages” were awarded to eight claimant booksellers. It was not argued before me that this was explicable on the basis that the theft of each book was a separate tort of conversion against the individual bookseller from whom it was stolen (and the multiple claimants point does not seem to have arisen in Borders itself).

However, in the present case the claimants are not the only persons affected by the unlawful conduct. The cartels that the Commission found to exist affected the market in the whole of the European Union. If exemplary damages are awarded to the claimants, on what basis are they to be awarded? If the court attempts to fix a global amount by reference to the cartels as a whole, it would in effect be awarding a remedy that could not be awarded in most member states. Even if the court were to attempt to limit the exemplary damages to the activities of the cartel within England and Wales, the claimants are not the only ones who are affected within England and Wales. Why should they scoop the pool? Once the court has fixed the amount of the exemplary damages, how is it to take into account the fines that have been imposed? If it deducts the fines from the exemplary damages, then, taking BASF as an example, there is no practical utility in the claim for exemplary damages unless there is a real prospect that the exemplary damages would exceed €236 million. It also seems to me that in a case where the discretionary remedy of exemplary damages is invoked in aid of rights arising under the EC Treaty, the court should be wary of granting a remedy which is potentially unavailable in most member states. As the Divisional Court observed in Factortame (No 5):

“For English law to give the remedy of penal damages for breaches of Community law would decrease the move towards uniformity, it would involve distinctions between the practice of national courts and the liabilities of different Member States and between the United Kingdom and the Community Institutions, and would accordingly in itself be potentially discriminatory since litigants in England would be treated differently from those elsewhere. The arguments of the applicants under this head need to be considered with great caution. Their acceptance would risk introducing into the law of Community obligations, anomalies and conflicts which do not at present exist and would not serve a useful purpose.”

The order for trial of the preliminary issues requires me to determine whether exemplary damages are or might be available on the assumed facts. The plea for exemplary damages is at large. As pleaded there is no way of limiting the exemplary damages to avoid the danger of double counting. There is also the serious problem of assessing the damages, and the fact that the claimants are only part of the class affected by the wrongful conduct; not to mention the scale of the fines imposed by the European Commission. These cumulative factors persuade me that the court would not, at trial, award exemplary damages to these claimants.

Mr Layton sought to escape from that difficulty by saying that his claim for exemplary damages was really a claim for compensatory damages and was framed as a claim for exemplary damages only because of the difficulties of proof. However, as I have said, this is not how the claim has been pleaded. If Mr Layton were to limit his claim in the manner suggested, then an amendment to the pleadings would, in my judgment, be necessary. In submitting that this was a permissible basis on which to advance a claim for exemplary damages, Mr Layton relied heavily on the Borders case. I must therefore return to that case.

I have already given a brief account of the facts; but it is now necessary to explain how the Master came to award exemplary damages of £100,000. He first assessed compensatory damages. This was the difference in value between the retail value of the recovered books when stolen, and their retail value when recovered. No award of compensatory damages was made in relation to books that had been stolen and sold by Mr Jordan (and hence not recovered). The Master found as a fact that Mr Jordan had made more profit from selling stolen books than the compensatory damages that the claimants had claimed. Since the claimants had limited their claim to the recovered books only, this was not surprising. He then quantified the exemplary damages by averaging the recommended retail price of the lost books at £10.00, and assuming that for each such book Mr Jordan was paying 60% of recommended retail price (£6) and selling it at 80% (£8). On that basis his estimated turnover of 700 books a week was yielding him, at £2 profit per book, £1,400 a week or £72,800 a year. The Master accepted Mr Jordan’s evidence that he ran his “racket” for three years; and gave him credit for certain expenses (e.g. rent of a lock-up garage). After making certain further adjustments the Master arrived at round figures of £20,000 as the net proceeds of crime in the first year, £30,000 in the second and £50,000 in the third. The total, £100,000, became the amount of exemplary damages.

In the Court of Appeal Sedley LJ pointed out that:

“If this part of the claim had been framed as a further claim for compensatory damages, it is evident from the master's findings that it would have succeeded. Indeed it is evident that while Master Leslie had no difficulty in quantifying this element of the claim as part of the claimants' losses, he had rather more difficulty in characterising it as exemplary damages. But neither at the hearing, where the claimants were represented by counsel, nor before this court, was any application made to amend … the claim so as to make it a further head of compensatory damages. Nor, however, did Mr Hellman [counsel for Mr Jordan] at any stage demur to this part of the pleading as unsustainable in law. Mr Convey [counsel for the booksellers], consistently but hazardously, has stuck throughout to his argument that, albeit they were computed so as to reflect the claimants' losses, these were in law punitive damages.”

Sedley LJ took the view that at first blush an award of compensatory damages and an award of exemplary damages were mutually exclusive. However, what persuaded him that the Master’s decision was appropriate was that there was no windfall in the claimants’ hands. In his concluding observations he said:

“Notwithstanding therefore that the second element could, and in my judgment should, have been pleaded before judgment as a second head of compensation, the fact that it bore a compensatory character did not prevent it from ranking within the second common law category of exemplary damages.” (Emphasis added)

In my judgment, in order to limit the claim for exemplary damages in the way that Mr Layton said that it was intended to be limited, an amendment to the pleadings will be necessary. But if the pleadings are to be amended in order to incorporate Mr Layton’s limitation, I can see no reason why the claim should not be framed as a claim for compensatory damages, in precisely the way that Sedley LJ said should be done. What Sedley LJ said also illustrates the ability of the court to award effective compensatory damages, even where the loss cannot be proved with precision. On that basis, the claim for exemplary damages serves no useful purpose. For all these reasons I have concluded that the claimants are not entitled to exemplary damages.

The claim for a restitutionary award is pleaded in the following terms:

“Further or alternatively, in the premises, the Defendants have been unjustly enriched by their implementation of and/or giving effect to the Vitamins Cartel as a consequence of the difference between the prices actually paid and the prices that would have been paid in the absence of the Vitamins Cartel. Accordingly, the Defendants are liable in restitution and/or for restitutionary damages to the Claimant for the unjust enrichment of the Defendants.”

In the course of his expert report Dr Veljanovski says:

“I note that the Claimant has also pleaded for exemplary and restitutionary damages. I offer no comments on these other than to note that in theory compensatory and restitutionary damages are likely to be identical based on the overcharge or price difference method.”

Mr Layton based his argument in support of the claim to a restitutionary award principally by reference to the decision of the House of Lords in Attorney-General v Blake and subsequent cases in the Court of Appeal that have begun to work out its implications. The starting point, he said, was the decision of Brightman J in Wrotham Park Estate Co v. Parkside Homes Ltd [1974] 1 WLR 798 in which damages were awarded for a developer’s breach of a restrictive covenant on the basis of what could reasonably have been demanded by the plaintiff for relaxation of the covenant. Although Brightman J was awarding damages in lieu of an injunction, I accept that that fact makes no difference to the manner in which damages are assessed. It seems to me to be clear that in assessing damages Brightman J applied the usual principle that damages should be measured by reference to that sum that would place the victim in the position in which he would have been if the wrong had not taken place. On the facts he assessed the damages by reference to what the wrongdoer would have paid for permission to carry out the wrongful acts. This does not, in my judgment, amount to stripping the defendant of his gain, or even part of his gain. Rather, on the evidence, the judge concluded that the price for a relaxation of the covenant would have been negotiated by reference to the developer’s anticipated profit. As Potter LJ explained in the trespass case of Severn Trent Water Ltd v Barnes [2004] 2 EGLR 95:

“It is of course the position that in cases of trespass of this kind there is no right to a share in, or account of, profits in any conventional sense. The only relevance of the defendant's profits is that they are likely to be a helpful reference point for the court when seeking to fix upon a fair price for a notional licence.”

The price is objectively ascertained. The sum awarded in Wrotham Park was treated by Brightman J as compensation for loss rather than as stripping a gain. The damages are user damages. In WWF World Wide Fund for Nature v World Wrestling Federation Inc [2007] EWCA Civ 286 Chadwick LJ also said that Brightman J regarded himself as having awarded compensatory damages rather than a gains-based award: para 29.

In Attorney-General v Blake Lord Nicholls surveyed the way in which the courts award compensation. He began by considering interference with rights of property. As he pointed out:

“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.”

He referred to the price or hire cases, including The Mediana and Watson Laidlaw & Co Ltd v Pott Cassells and Williamson. He referred to the difficulty of aligning this measure of damages within the basic compensatory measure. He noted that the “label” of restitutionary damages had been applied to damages calculated on this basis, although he regarded it as an “unhappy phrase”. His conclusion was that:

“these awards cannot be regarded as conforming to the strictly compensatory measure of damage for the injured person's loss unless loss is given a strained and artificial meaning. The reality is that the injured person's rights were invaded but, in financial terms, he suffered no loss. Nevertheless the common law has found a means to award him a sensibly calculated amount of money. Such awards are probably best regarded as an exception to the general rule.”

These observations do not, in my judgment, support the view that Lord Nicholls was supporting a restitutionary award based on the defendant’s personal gain. In the price or hire cases, the damages have been assessed as user damages. This is an objective measure and is awarded where, in financial terms, the claimant has suffered no loss. It is not a case of a claimant having suffered financial loss but having evidential difficulties in proving it. It is precisely because he has suffered no loss that the law’s response is to seek a different way to compensate him for the invasion of his rights.

However, Lord Nicholls went on to examine cases in which a court of equity would grant a claimant an account of profits. This went further than the common law, because the wrongdoer was required to disgorge all his gains. Equity adopted this approach in cases where it was difficult to quantify the financial loss that the victim had suffered. Lord Nicholls commented:

“Considered as a matter of principle, it is difficult to see why equity required the wrongdoer to account for all his profits in these cases, whereas the common law's response was to require a wrongdoer merely to pay a reasonable fee for use of another's land or goods. In all these cases rights of property were infringed. This difference in remedial response appears to have arisen simply as an accident of history.”

He then considered the cases in which damages had been awarded in lieu of an injunction, including the Wrotham Park case. He said of these cases that:

“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.”

If analysed in the way that Lord Nicholls approved, these cases can be seen as cases in which the claimant is compensated for what he has lost, rather than cases in which the defendant is stripped of his gains. However, Lord Nicholls also said of these cases that:

“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.”

He then pointed out that the Crown sought to go further and obtain an account of all profits that Blake made from the book. This led him to a discussion of the circumstances in which a court could award the remedy of an account of profits as a response to a breach of contract. He said:

“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. ... 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.”

He then considered the circumstances in which an account of profits would be a just response to a breach of contract and concluded:

“An account of profits will be appropriate only in exceptional circumstances. Normally the remedies of damages, specific performance and injunction, coupled with the characterisation of some contractual obligations as fiduciary, will provide an adequate response to a breach of contract. It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise. No fixed rules can be prescribed. The court will have regard to all the circumstances, including the subject matter of the contract, the purpose of the contractual provision which has been breached, the circumstances in which the breach occurred, the consequences of the breach and the circumstances in which relief is being sought. 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.”

The defendants point out that Lord Nicholls’ observations were all concerned with breach of contract, whereas the cause of action in the present case is breach of statutory duty. However, Lord Nicholls’ discussion of the law began with a consideration of remedies for torts. It is true that, as the defendants point out, the torts concerned were all concerned with invasion of proprietary rights. But in the context of Lord Nicholls’ speech that seems to be no more than a historical accident. Nevertheless the defendants argue that I am precluded by binding authority from applying Lord Nicholls’ approach to a claim for damages in tort, if the tort is not an invasion of proprietary rights. I will return to this point after I have considered the remaining cases in which Attorney-General v Blake has been considered.

In Esso Petroleum Co Ltd v Niad Ltd [2001] EWHC 6 (Ch) Esso entered into a solus agreement with Naid covering one filling station. Esso introduced a marketing scheme called “Pricewatch” under which it made financial support available to its dealers in return for their selling petrol at recommended retail prices, designed to compete with or undercut Esso’s competitors. Niad agreed to join the scheme, but in fact sold petrol at prices in excess of the recommended prices. Morritt V-C awarded Esso an account of Niad’s profits. His reasons for doing so were that:

“First, damages is an inadequate remedy. It is almost impossible to attribute lost sales to a breach by one out of several hundred dealers who operated Pricewatch. Second, the obligation to implement and maintain the recommended pump prices was fundamental to Pricewatch. Failure to observe it gives the lie to the advertising campaign by which it was publicised and therefore undermines the effectiveness of Pricewatch in achieving the benefits intended for both Esso and all its dealers within Pricewatch. Third, complaint was made of Niad on four occasions. On all of them Niad appeared to comply without demur. It now appears that the breaches of its obligation were much more extensive than Esso at first thought. Fourth, Esso undoubtedly has a legitimate interest in preventing Niad from profiting from its breach of obligation.”

In addition the Vice-Chancellor considered that Esso were in principle entitled to a restitutionary award. His reasons for that conclusion were:

“It is undoubted that Niad obtained a benefit, in the form of the price support, to which it was only entitled if it complied with its obligation to implement and maintain the recommended pump prices to be supported. In these circumstances it can hardly be denied that Niad was enriched to the extent that it charged pump prices in excess of the recommended prices. The enrichment was unjust because it was obtained in breach of contract. It was obtained at the expense of Esso because Esso was providing price support for a lower price than that charged by Niad. I can see no reason why this remedy should be unavailable to Esso if it wishes to pursue it. Indeed it appears to me to be the most appropriate remedy in that it matches most closely the reality of the case, namely that Niad took an extra benefit to which it was not entitled. It is just that it should be made to restore it to its effective source.”

The extent of the restitutionary award was the amount by which the pump prices it charged its customers exceeded the recommended prices between certain dates. Esso would have to elect between these two remedies. It will be seen that the first and fundamental reason for awarding an account of profits was the impossibility of assessing any damage caused to Esso by conventional means. The legitimate interest that Esso had in preventing Niad from retaining its profit is seen in the fact that Niad had done precisely what it had agreed not to do, and the fact that Pricewatch was intended to benefit all Esso’s dealers.

In Experience Hendrix LLP v PPX Enterprises Inc [2003] 1 All ER (Comm) 830 the Court of Appeal considered the question of compensation for breach of a settlement agreement. Under the terms of the agreement the defendant was entitled to licence certain recordings by Jimi Hendrix at agreed royalty rates. In fact the defendant licensed other recordings. At the opening of the trial counsel for the claimant made it clear “that he had no evidence, and he said that he did not imagine that he could ever possibly get any evidence, to show or quantify any financial loss suffered by the [claimant] as a result of PPX's breaches. So it was accepted that, if this was the only available measure, then no (or perhaps strictly only a nominal) award of damages could be made.” Thus the question for the Court of Appeal was:

“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.”

Mance LJ said that Attorney-General v Blake marked “a new start in this area”. He analysed the speech of Lord Nicholls and concluded:

“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. The law frequently introduces objective measures (e.g. the available market rules in sale of goods) or limitations (e.g. remoteness). The former may increase or limit a claimant's ability to recover loss actually suffered. … In a case such as the Wrotham Park case 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. In such a context it is natural to pay regard to any profit made by the wrongdoer (although a wrongdoer surely cannot always rely on avoiding having to make reasonable recompense by showing that despite his wrong he failed, perhaps simply due to his own incompetence, to make any profit). 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.”

The important point to my mind is that the claimant in that case could not show that it had suffered any financial loss; and that it was for that reason that the law gave effect to the instinctive reaction that the wrongdoer ought not to gain an advantage “for free”. As I read the decision, this was not merely a case of evidential difficulties of proof, but the lack of facts that could be alleged to support a claim for compensatory damages. Mance LJ then turned to consider what constituted “exceptional circumstances” such as to bring into play the remedy of an account of profits (either full or partial). He rejected the notion that skimped performance was enough; and also rejected the notion that doing what one had contracted not to do was enough. Nor was the fact that a breach of contract was deliberately or cynically committed. On the facts, Mance LJ concluded that the case was not exceptional in the sense that an account of profits was the just response. He held, however, that PPX should pay “a reasonable sum for its use of material in breach of the settlement agreement”. That sum was the amount that the claimant could reasonably have demanded for a relaxation of the contractual restrictions. In other words, the damages were user damages. Hooper J agreed with Mance J.

Applying Lord Nicholls’ analysis in Blake this measure of damages is properly analysed as compensation for loss of a bargaining position even though, as Mance LJ recognised, the analysis has some elements of artificiality.

Peter Gibson LJ took a slightly different approach. He said:

“In my judgment, because (1) there has been a deliberate breach by PPX of its contractual obligations for its own reward, (2) the claimant would have difficulty in establishing financial loss therefrom, and (3) the claimant has a legitimate interest in preventing PPX's profit-making activity carried out in breach of PPX's contractual obligations, the present case is a suitable one (as envisaged by Lord Nicholls …) in which damages for breach of contract may be measured by the benefits gained by the wrongdoer from the breach. To avoid injustice I would require PPX to make a reasonable payment in respect of the benefit it has gained. I agree with the guidance suggested by Mance LJ for the court assessing the damages.”

These were the considerations to which Lord Nicholls referred in dealing with the criteria which might be appropriate before ordering an account of profits. Yet as Mance LJ pointed out, the award made in Experience Hendrix was not an account of profits. PPX’s profits did not enter into the equation at all. Rather, PPX were required to pay the price that the claimant could reasonably have demanded for relaxing the contractual restrictions. Hooper J also agreed with Peter Gibson LJ. In so far as I am permitted to choose between these two lines of reasoning, I respectfully prefer that of Mance LJ.

In WWF World Wide Fund for Nature v World Wrestling Federation Inc [2007] EWCA Civ 286 the Court of Appeal again considered the award of damages on the basis applied in Wrotham Park. Chadwick LJ concluded that damages awarded on that basis were not “gains-based” but were compensatory. However, he went further, and held that an order for an account of profits is also a facet of compensatory damages. He said:

“When the court makes an award of damages on the Wrotham Park basis it does so because it is satisfied that that is a just response to circumstances in which the compensation which is the Claimant's due cannot be measured (or cannot be measured solely) by reference to identifiable financial loss. Lord Nicholls' analysis in A-G v Blake demonstrates that there are exceptional cases in which the just response to circumstances in which the compensation which is the Claimant's due cannot be measured by reference to identifiable financial loss is an order which deprives the wrongdoer of all the fruits of his wrong. The circumstances in which an award of damages on the Wrotham Park basis may be an appropriate response, and those in which the appropriate response is an account of profits, may differ in degree. But the underlying feature, in both cases, is that the court recognises the need to compensate the Claimant in circumstances where he cannot demonstrate identifiable financial loss. To label an award of damages on the Wrotham Park basis as a “compensatory” remedy and an order for an account of profits as a “gains-based” remedy does not assist an understanding of the principles on which the court acts. The two remedies should, I think, each be seen as a flexible response to the need to compensate the Claimant for the wrong which has been done to him.”

As Chadwick LJ points out, the underlying feature of each remedy is that the claimant “cannot demonstrate identifiable financial loss.” If, on the other hand, the claimant can demonstrate identifiable financial loss then principle would suggest that the compensation he receives should be commensurate with the loss that he demonstrates.

The post-Blake cases thus far have all been cases of breach of contract. As I have said, the defendants say that this flexible response is not available in tort. In support of this proposition they rely on the decision of the Court of Appeal in Stoke on Trent City Council v WJ Wass Ltd [1988] 1 WLR 1406. The council operated markets within its area on certain days of the week. The defendant set up a rival market on a different day of the week. The setting up of the rival market amounted to a nuisance; but one that is actionable without proof of actual loss. The trial judge awarded damages on the basis of the sum which the council could have charged for the right to operate a rival market. His decision was reversed by the Court of Appeal. Nourse LJ said:

“The general rule is that a successful plaintiff in an action in tort recovers damages equivalent to the loss which he has suffered, no more and no less. If he has suffered no loss, the most he can recover are nominal damages. A second general rule is that where the plaintiff has suffered loss to his property or some proprietary right, he recovers damages equivalent to the diminution in value of the property or right. The authorities establish that both these rules are subject to exceptions. These must be closely examined, in order to see whether a further exception ought to be made in this case.”

Nourse LJ went on to consider the trespass, detinue and infringement of patent cases and concluded:

“But it is only in the last-mentioned case [i.e. Wrotham Park] and in the trespass cases that damages have been awarded in accordance with either principle without proof of loss to the plaintiff. In all the other cases, the plaintiff having established his loss, the real question has not been whether substantial damages should be awarded at all, but whether they should be assessed in accordance with the user principle or by reference to the diminution in value of the property or right. In other words, those other cases are exceptions to the second, but not to the first, of the general rules stated above.”

At the end of his judgment he said:

“It is possible that the English law of tort, more especially of the so-called 'proprietary torts', will in due course make a more deliberate move towards recovery based not on loss suffered by the plaintiff but on the unjust enrichment of the defendant: see Goff and Jones The Law of Restitution(3rd edn, 1986) pp 612–614. But I do not think that that process can begin in this case and I doubt whether it can begin at all at this level of decision.”

Nicholls LJ agreed with Nourse LJ’s conclusion. He said:

“If, on the one hand, the unauthorised, other-day market has caused and is causing no loss, either of stallage or of tolls or under any of the other heads of loss which may affect the owner of a market right, there is no cause of action. There is, in that event, no question of applying the user principle. If, on the other hand, the owner of the market right does sustain loss under one or more of those heads, damages must surely be commensurate with the quantum of the loss so sustained. The damages will correspond, so far as the court can fairly assess them, to the amount of the loss flowing to the owner of the market right from the respects in which he has in fact been damnified in his enjoyment of that right by the holding of the unauthorised, other-day market. Again, there would be no place for awarding, by application of the user principle, damages in a sum greater than the amount of that loss.”

It is fair to say that Wass has been criticised by commentators (e.g. Goff & Jones on Restitution para 36-006). It has not, however, been suggested that Wass has been overruled or disapproved in subsequent cases. Indeed Goff & Jones themselves say (para 1-05):

“For example, not all torts ground a restitutionary claim. Existing authority suggests that only tortious acts which infringe the claimant’s proprietary or possessory title can ground a restitutionary claim.”

In Halifax Building Society v Thomas [1996] 1 Ch 217 the defendant had obtained a mortgage by means of fraudulent representations. He defaulted on the mortgage and the mortgagee sold the mortgaged property in exercise of its power of sale. The sales proceeds exceeded the amount of the mortgage debt; and the mortgagee claimed the surplus as a restitutionary award. The Court of Appeal rejected the claim. Peter Gibson LJ said:

“Further I am not satisfied that in the circumstances of the present case it would be right to treat the unjust enrichment of Mr. Thomas as having been gained "at the expense of" the society, even allowing for the possibility of an extended meaning for those words to apply to cases of non-subtractive restitution for a wrong. There is no decided authority that comes anywhere near to covering the present circumstances. I do not overlook the fact that the policy of law is to view with disfavour a wrongdoer benefiting from his wrong, the more so when the wrong amounts to fraud, but it cannot be suggested that there is a universally applicable principle that in every case there will be restitution of benefit from a wrong. As Professor Birks says (An Introduction to the Law of Restitution, p. 24): "there are some circumstances in which enrichment by wrongdoing has to be given up. That is, the wrong itself is not always in itself a sufficient factor to call for restitution." On the facts of the present case, in my judgment, the fraud is not in itself a sufficient factor to allow the society to require Mr. Thomas to account to it.”

Glidewell LJ (in observations later approved by Lord Nicholls in Blake) said:

“The proposition that a wrongdoer should not be allowed to profit from his wrongs has an obvious attraction. The further proposition, that the victim or intended victim of the wrongdoing, who has in the event suffered no loss, is entitled to retain or recover the amount of the profit is less obviously persuasive.”

Wass and Halifax do, in my judgment, show that a restitutionary award is not yet generally available in all cases of tort. Both these cases are decisions of the Court of Appeal and hence binding on me. Wass was not cited or referred to in Blake but since Lord Nicholls participated in Wass (as Nicholls LJ) and gave the leading speech in Blake it would be odd if he had undergone a Damascene conversion about the availability of restitutionary awards across the board in tort cases and yet had not referred to his earlier judgment.

In addition there is (once again) the problem that there are multiple claimants; and that the claimants before the court are only part of the class of persons injured by the tort. Goff & Jones, discussing the hypothetical case of a factory that creates a nuisance to a neighbourhood say (para 36-008):

“The difficulties confronting a court in measuring and valuing the benefit gained by the factory owner at the expense of the individual householder (possibly the value of an individual licence) in this example persuades us that, in some situations, where there may be multiple claimants who suffer loss from a tortious act, a restitutionary claim should be denied. Legal problems apart, any judicial enquiry, with the possibly complex attendant economic evidence which will have to be introduced, may well be inefficient in economic terms.”

On the basis of the decisions of the Court of Appeal in Wass and Halifax I conclude that whatever the law ought to be, it is not (yet) the law that a restitutionary award is available in all cases of tort. In my judgment a restitutionary award is not an available remedy in an anti-trust case. If the law is to be changed, it must be done by a higher court than this one. Moreover, even where a restitutionary award is available, it is generally awarded where an award of more traditionally based compensatory damages would be inadequate to compensate the claimant for the invasion of his rights. Yet in the present case, Dr Veljanovski says that the measure of restitutionary damages is the same as the measure of compensatory damages. If that is so, then on the assumed facts compensatory damages would be an adequate remedy.

I conclude therefore that, on the assumptions I am required to make, a restitutionary award is not available in the present case.

The defendants’ primary position is that Wass precludes an account of profits just as it precludes a restitutionary award. For the reasons I have given I consider that they are right.

In addition as Lord Nicholls said in Blake:

“It will be only in exceptional cases, where those remedies are inadequate, that any question of accounting for profits will arise.”

As I have said, on the assumptions that I am required to make, compensatory damages would be an adequate remedy. That being so, an account of profits is not an appropriate remedy in principle. But even if compensatory damages would not be adequate (because of the practical evidential difficulty of proof) I would still conclude that an account of profits is not an appropriate remedy in this case.

First, the claimants are simply part of an EU wide class of persons who have all been affected, to a greater or lesser degree, by the same tortious conduct. As members of a class, not all of whom are before the court, I cannot see how these particular claimants can be said to have a “legitimate interest” in preventing the defendants from making a profit from their tort. Their interest is an interest common to all tort claims, not an exceptional interest such as to justify an account of profits remedy. Mr Layton points out that the cartel was secret and that it committed a wrong designed to secure profit. However, it is clear from Blake that the mere fact that the wrongdoing in question was deliberately committed is not enough; and from Experience Hendrix that doing precisely what one had contracted not to do was likewise not enough.

Second, the representative claimants (Moy Park and Devenish) occupy different levels in the supply chain. Each of them has downstream customers, and in the case of Moy Park upstream suppliers as well. But unless all relevant claimants are before the court, how is the profit made by the Defendants to be allocated? There is no clear answer to that question. If no account is taken of whether a particular claimant passed through price increases to a downstream customer, then that claimant might itself be unjustly enriched. An avoidance of unjust enrichment of a claimant is a factor to which the ECJ drew attention in Crehan. But if account is taken of “pass through”, then an account of profits hardly differs from the measure of compensatory damages which the claimants advocate (and which I must assume will succeed). Moreover, if the two measures differ one cannot exclude the possibility that, if an account of profits were to be available, some claimants with better evidence might choose an award of compensatory damages, while other claimants with worse evidence might choose an account of profits. I do not think that it would be fair for remedies to be mixed and matched.

Third, if an account of profits were available, the fact that all the defendants have been fined (even though the fine imposed upon Aventis has been commuted) would have to be taken into account. Mr Layton argues that part of the rationale for the award of an account of profits is deterrence. But as I see it the question of deterrence has already been dealt with by the imposition of fines; and not to take those fines into account would be double punishment.

Finally, the scale of the inquiry that would be required in the case of these defendants all of which are or are parts of multi-national groups must be taken into account. The evidence about this is contained in the witness statements of Mr McDougall, Mr Lawrence, Mr Brown and Dr Baechli. It is very likely that disclosure of documents would be both enormous and multi-lingual; would require consideration of taxation and accounting methods in differing jurisdictions; and a difficult exercise in allocating profits as between vitamins that formed part of the cartels and other products. In addition in the case of the Roche defendants, the relevant vitamin businesses have been sold to a third party with the result that the Roche defendants no longer have access to the relevant documents. Mr Layton said that these concerns could be met by limiting the scope of the account; but no concrete suggestion was advanced.

Accordingly, for the reasons I have given I consider that on the assumptions I am required to make, the claimants are not entitled to an account of profits.

I answer the preliminary issues “No”.