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A Corrective Justice Account of Disgorgement for Breach of Contract by Analogy to Fiduciary Remedies

Published online by Cambridge University Press:  02 February 2016

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Abstract

A corrective justice account of a private law remedy attempts to the explain the remedy as giving back to the plaintiff something to which the plaintiff had a prior right that was breached by the defendant's receipt of that thing. It has proven challenging to explain how disgorgement for breach of contract is consistent with corrective justice. This remedy gives to the plaintiff any profit that a defendant received from a third party by breaching a contract with the plaintiff. In this paper, I critique two leading attempts to show how disgorgement for breach of contract is consistent with corrective justice. I argue that these attempts fail, and I suggest that a plausible corrective justice account of disgorgement should be based on something other than the nature of the contractual rights borne by a plaintiff. I then develop an alternative account based on an analogy between disgorgement for breach of contract and disgorgement for breach of fiduciary duty. To do so, I draw on recent scholarship on the consistency of disgorgement for breach of fiduciary with corrective justice and analyze the leading judicial decision on disgorgement for breach of contract by the UK House of Lords in Attorney General v. Blake. I argue that the fiduciary-based account can provide a plausible explanation for how disgorgement effectuates corrective justice by giving back to a plaintiff something to which he had an antecedent right that the defendant violated by profiting from a breach of contract.

Type
Research Article
Copyright
Copyright © Canadian Journal of Law and Jurisprudence 2016 

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References

1. For early cases suggesting the availability of the remedy, see, e.g., Reid-Newfoundland Company v Anglo-American Telegraph Company, [1912] AC 555 (PC); British Motor Trade Association v Gilbert, [1951] 2 All ER 641, 2 TLR 514 (Ch); Lake v Bayliss, [1974] 2 All ER 1114, [1974] 1 WLR 1073 (Ch); Wrotham Park Estate Co Ltd v Parkside Homes Ltd, [1974] 2 All ER 321, [1974] 1 WLR 798 (Ch).

2. Adras Building Material Ltd v Harlow & Jones Gmbh, [1995] 3 RLR 235 (Supreme Court of Israel, 1988) [Adras].

3. Robinson v Harmon (1848), 1 Exch 850, 154 ER 363; Wertheim v Chicoutimi Pulp Co, [1911] AC 301 (PC); Asamera Oil Corporation Ltd v Sea Oil & General Corporation et al, [1979] 1 SCR 633 at 645, 89 DLR (3d) 1; Keneric Tractor Sales Ltd v Langille, [1987] 2 SCR 440 at 456, 43 DLR (4th) 171.

4. For a comparative discussion, see Roberts, Caprice L, “A Commonwealth of Perspective on Restitutionary Disgorgement for Breach of Contract” (2008) 65:3Google Scholar Wash & Lee L Rev 945 at 953-61.

5. [2001], 4 All ER 385, 1 AC 268 (HL) [Blake HL, cited to All ER].

6. IBM Canada Limited v Waterman, 2013 SCC 70 at para 36, 3 SCR 985. See also Bank of America Canada v Mutual Trust Co, 2002 SCC 43 at paras 30-31, 2 SCR 601 (stating only that awards of contract damages based on the defendant’s gain might sometimes conflict with the desirability of permitting efficient breach).

7. Phillips v Homfray (1883), 24 Ch D 439, 52 LJ Ch 833 (CA); Edwards v Lee’s Administrator, 265 Ky 418, 96 SW 2d 1028 (CA, 1936); United Australia Ltd v Barclays Bank Ltd, [1940] 4 All ER 20, [1941] AC 1 (HL); Olwell v Nye and Nissen, 26 Wn2d 282, 173 P2d 652 (Sup Ct, 1946).

8. Keech v Sanford, [1726] All ER Rep 230, 25 ER 223; Boardman v Phipps, [1967] 2 AC 46, 3 All ER 721 (HL); Strother v 3464920 Canada Inc, 2007 SCC 24, 2 SCR 177 [Strother].

9. Lac Minerals Ltd v International Corona Resources Ltd, [1989] 2 SCR 574, 61 DLR (4th) 14 [Lac Minerals]; Cadbury Schweppes Inc v FBI Foods Ltd, [1999] 1 SCR 142, 167 DLR (4th) 577.

10. Andrew Botterell, Book Review of Accounting for Breach of Contract: Theory and Practice by Katy Barnett (2013) 54:1 Can Bus LJ 99 at 99 (“This is a welcome publication, as disgorgement damages continue to present both theoretical and practical puzzles for the law of contract”).

11. See, e.g., Friedmann, Daniel, “Restitution of Benefits Obtained through the Appropriation of Property or the Commission of a Wrong” (1980) 80:3Google Scholar Colum L Rev 504 [Friedman, “Restitution of Benefits”]; Jones, Gareth, “The Recovery of Benefits Gained from a Breach of Contract” (1983) 99:3Google Scholar Law Q Rev 443; Farnsworth, Allan E, “Your Loss or My Gain? The Dilemma of the Disgorgement Principle in Breach of Contract” (1985) 94:6Google Scholar Yale LJ 1339; Birks, Peter, “Restitutionary damages for breach of contract: Snepp and the fusion of law and equity” [1987]Google Scholar LMCLQ 421 [Birks, “Restitutionary Damages”]; Beatson, Jack, The Use and Abuse of Unjust Enrichment (Oxford: Clarendon Press, 1991) at 15-17Google Scholar; Waddams, SM, “Restitution as Part of Contract Law” in Burrows, Andrew, ed, Essays on the Law of Restitution (Oxford: Clarendon Press, 1991) 197Google Scholar; Burrows, Andrew, “No restitutionary damages for breach of contract” [1993]Google Scholar LMCLQ 453; Smith, Lionel D, “Disgorgement of the Profits of Breach of Contract: Property, Contract and ‘Efficient Breach’” (1994) 24:1Google Scholar Can Bus LJ 121; Jaffey, Peter, “Restitutionary Damages and Disgorgement” (1995) 3Google Scholar RLR 30; Chen-Wishart, Mindy, “Restitutionary Damages for Breach of Contract” (1998) 114:3Google Scholar Law Q Rev 363; McInnes, Mitchell, “Gain-Based Relief for Breach of Contract: Attorney General v. Blake (2001) 35:1Google Scholar Can Bus LJ 72; Kull, Andrew, “Disgorgement for Breach, the ‘Restitution Interest,’ and the Restatement of Contracts” (2001) 79:9Google Scholar Tex L Rev 2021; Edelman, James, Gain-Based Damages: Contract, Tort, Equity, and Intellectual Property (Portland, OR: Hart, 2002); John D McCamus, “Disgorgement for Breach of Contract: A Comparative Perspective” (2003) 36:2Google Scholar Loy LA L Rev 943 [McCamus, “Disgorgement”]; Roberts, Caprice L, “Restitutionary Disgorgement as a Moral Compass for Breach of Contract” (2009) 77:3Google Scholar U Cin L Rev 991; Roberts, Caprice L, “Restitutionary Disgorgement for Opportunistic Breach of Contract and Mitigation of Damages” (2008) 42:1Google Scholar Loy LA L Rev 131; Barnett, Katy, Accounting for Breach of Contract: Theory and Practice (Oxford: Hart, 2012).Google Scholar

12. Palsgraf v The Long Island Railway Company, 248 NY 339 at 344-45, 162 NE 99 (CA, 1928).

13. Ibid at 345.

14. Weinrib, Ernest J, Corrective Justice (Oxford: Oxford University Press, 2012)CrossRefGoogle Scholar at ch 5 [Weinrib, Corrective Justice]; Weinrib, Ernest, “Punishment and Disgorgement as Contract Remedies” (2003) 78:1Google Scholar Chicago-Kent L Rev 55 [Weinrib, “Punishment and Disgorgement”].

15. See, e.g., Weinrib, Ernest J, “Restitutionary Damages as Corrective Justice” (2000) 1:1Google Scholar Theor Inq L 1 [Weinrib, “Restitutionary Damages”]; Weinrib, Corrective Justice, supra note 14 at ch 6; Mitchell McInnes, “The Measure of Restitution” (2002) 52:2 UTLJ 163; Smith, Lionel, “Restitution: The Heart of Corrective Justice” (2001) 79:7Google Scholar Tex L Rev 2115 [L Smith, “Heart of Corrective Justice”]. But see Smith, Stephen A, “Justifying the Law of Unjust Enrichment” 79:7Google Scholar Tex L Rev 2177 at 2190; Klimchuk, Dennis, “Unjust Enrichment and Corrective Justice” in Nyers, Jason W, McInnes, Mitchell & Stephan, GA Pitel, eds, Understanding Unjust Enrichment (Portland, OR: Hart, 2004)Google Scholar [Nyers, McInnes & Pitel, Understanding Unjust Enrichment] 110; Priel, Dan, “The Justice in Unjust Enrichment” (2014) 51:3Google Scholar Osgoode Hall LJ 813 [Priel, “Justice in Unjust Enrichment”].

16. See, e.g., Weinrib, Ernest J, “The Gains and Losses of Corrective Justice” (1994) 44:2Google Scholar Duke LJ 277; Weinrib, “Restitutionary Damages,” supra note 15; Weinrib, “Punishment and Disgorgement,” supra note 14; Peter Benson, “Disgorgement for Breach of Contract and Corrective Justice: An Analysis in Outline” in Nyers, McInnes & Pitel, Understanding Unjust Enrichment, supra note 15, 311 at 313-20 [Benson, “Disgorgement”]; Weinrib, Corrective Justice, supra note 14 at ch 4.

17. Benson, “Disgorgement,” supra note 16.

18. “Contractual Performance, Corrective Justice, and Disgorgement for Breach of Contract” (2010) 16:3 Legal Theory 135 [Botterell, “Disgorgement”].

19. Miller, Paul B, “Justifying Fiduciary Remedies” (2013) 63:4Google Scholar UTLJ 570 [Miller, “Fiduciary Remedies”]. See also Miller, Paul B, “A Theory of Fiduciary Liability” (2011) 56:2Google Scholar McGill LJ 235 [Miller, “Theory of Fiduciary Liability”]; Miller, Paul B, “Justifying Fiduciary Duties” (2013) 58:4Google Scholar McGill LJ 969 [Miller, “Fiduciary Duties”]; Miller, Paul B, “The Fiduciary Relationship” in Gold, Andrew S & Miller, Paul B, Philosophical Foundations of Fiduciary Law (Oxford: Oxford University Press, 2014) [Google Scholar Gold & Miller, Fiduciary Law] 63.

20. See generally Aristotle, Nicomachean Ethics, translated by Roger Crisp (Cambridge: Cambridge University Press, 2000), Book V, ch 4.

21. On the significance of court orders to understanding the normative structure of private law, see Stephen A Smith, “Why Courts Make Orders (and What This Tells Us about Damages)” (2011) 64:1 Curr Legal Probs 51 [S Smith, “Court Orders”].

22. See generally Weinrib, Ernest J, “Corrective Justice in a Nutshell” (2002) 52:4Google Scholar UTLJ 349.

23. Benson and Botterell each adopt Weinrib’s understanding of corrective justice to offer their reconciliations of corrective justice with the remedy of disgorgement for breach of contract See Benson, “Disgorgement,” supra note 16 at 318, n 11; Botterell, “Disgorgement,” supra note 18 at 138, n 9. As will be seen in Part II.A, below, I briefly describe a corrective justice view of the normative structure of private law remedies that draws on the work of corrective justice theorists other than Weinrib. This alternative view reaches roughly the same conclusion about remedies as Weinrib’s conclusion, but I sketch it in recognition of the fact that not all adherents of corrective justice may accept some of the metaphysical claims about persons and the normative claims about the justifications for private law’s structural features that Weinrib accepts. For examples of these different conceptions of the underlying metaphysical and normative claims of corrective justice, see Dagan, Hanoch, “The Distributive Foundations of Corrective Justice” (1999) 98:1Google Scholar Mich L Rev 138; Coleman, Jules, The Practice of Principle: In Defence of a Pragmatist Approach to Legal Theory (New York: Oxford University Press, 2001);Google Scholar Arthur Ripstein, “Authority and Coercion” (2004) 32:1 Phil & Pub Affairs 2; Arthur Ripstein, “As If It Had Never Happened” (2007) 48:5 Wm & Mary L Rev 1957 [Ripstein, “As If”]; John Gardner, “What is Tort Law For? Part 1. The Place of Corrective Justice” (2011) 30:1 L & Phil 1.

24. See also Ripstein, Arthur, Force and Freedom: Kant’s Legal and Political Philosophy (Cambridge: Harvard University Press, 2009)CrossRefGoogle Scholar ch 2 [Ripstein, Force and Freedom]; Thompson, Michael, “What is it to Wrong Someone? A Puzzle about Justice” in Wallace, R Jay et al. , eds, Reason and Value: Themes from the Moral Philosophy of Joseph Raz (New York: Oxford University Press, 2006) 333.Google Scholar

25. The Supreme Court of Canada has articulated a test for a cause of action in unjust enrichment that tracks this understanding of private law injustice as involving a benefit to the defendant and a corresponding deprivation of the plaintiff for which there is no juristic reason. See, e.g., Pettkus v Becker, [1980] 2 SCR 834 at 848, 117 DLR (3d) 257 [Pettkus]; Garland v Consumers’ Gas Co, 2004 SCC 25 at para 30, 1 SCR 629.

26. See also Klimchuk, supra note 15 at 114-15; Zoë Sinel, “Through Thick and Thin: The Place of Corrective Justice in Unjust Enrichment” (2011) 31:3 Oxford J Legal Stud 551.

27. Weinrib, Corrective Justice, supra note 14 at 17.

28. See also Weinrib, Ernest J, “Correlativity, Personality and the Emerging Consensus on Corrective Justice” (2001) 2:1Google Scholar Theor Inq L 107.

29. Weinrib, Corrective Justice, supra note 14 at 17.

30. Ibid at 20.

31. Miller, “Fiduciary Remedies,” supra note 19 at 582.

32. Weinrib, Corrective Justice, supra note 14 at 159.

33. Birks, Peter, “Rights, Wrongs, and Remedies” (2000) 20:1Google Scholar Oxford J Legal Stud 1.

34. For discussion, see ibid; S Smith, “Court Orders,” supra note 20.

35. Civil recourse theorists have interpreted this secondary right not as a right at all, and thus as not entailing a correlative secondary duty of redress on the part of the defendant, but a power to seek redress through a civil proceeding. See, e.g., Zipursky, Benjamin, “Civil Recourse, Not Corrective Justice” (2003) 91:3Google Scholar Geo LJ 695; Hershovitz, Scott, “Corrective Justice for Civil Recourse Theorists” (2011) 39:1Google Scholar Fla St UL Rev 107; Goldberg, John CP & Zipursky, Benjamin C, “Civil Recourse Revisited” (2011) 39:1Google Scholar Fla St UL Rev 341.

36. Ripstein, “As If,” supra note 23.

37. Miller, “Fiduciary Remedies,” supra note 19 at 582.

38. Gardner, supra note 23 at 33.

39. Botterell, “Disgorgement,” supra note 18 at 141.

40. Arthur Ripstein, “Editor’s Note” (2011) 61:2 UTLJ i at ii-iii.

41. Weinrib, Corrective Justice, supra note 14 at 13. Dan Priel, however, argues that corrective justice’s distinctive “doctrinalist” approach is misguided, at least in the context of explaining unjust enrichment in private law. In his critique, Priel usefully explains the different ways in which the doctrinalism of corrective justice manifests in the writings of several leading scholars on the subject. See Priel, “Justice in Unjust Enrichment,” supra note 15 at 817-21.

42. It has been famously said that, by awarding the remedy, “we ‘compensate’ the plaintiff by giving him something he never had,” which seems to be “a queer kind of ‘compensation.’” Fuller, LL & Perdue, William R Jr, “The Reliance Interest in Contract Damages” (1936) 36:1Google Scholar Yale LJ 52 at 53. See also Friedmann, Daniel, “The Performance Interest in Contract Damages” (1995) 111:4Google Scholar Law Q Rev 628. We also seem to impose a kind of positive obligation on the defendant to provide a benefit to the plaintiff to which the plaintiff has no right, which conflicts with private law’s typical reluctance to impose liability for nonfeasance. See Bohlen, Francis H, “The Moral Duty to Aid Others as a Basis of Tort Liability” (1908) 56:4Google Scholar U Pa L Rev 217 at 219; Benson, Peter, “Philosophy of Property Law” in Coleman, Jules L, Himma, Kenneth Einar & Shapiro, Scott J, eds, The Oxford Handbook of Jurisprudence and Philosophy of Law (Oxford: Oxford University Press, 2004) 753 at 782Google Scholar [Benson, “Philosophy of Property Law”]; Home Office v Dorset Yacht, [1970] AC 1004, 2 All ER 294 (HL), Diplock LJ.

43. This conception is also known as the “transfer theory of contract.” For discussion, see Stephen A Smith, Contract Theory (Oxford: Oxford University Press, 2004); Ripstein, Force and Freedom, supra note 24 at 5; Peter Benson, “External Freedom According to Kant” (1987) 87:3 Colum L Rev 559; Peter Benson, “Contract” in Dennis Patterson, ed, A Companion to Philosophy of Law and Legal Theory (Oxford, UK: Blackwell, 1996); Peter Benson, “The Unity of Contract Law” in Peter Benson, ed, The Theory of Contract Law: New Essays (Cambridge: Cambridge University Press, 2001) 118 [Benson, “Unity of Contract Law”]; Peter Jaffey, “Restitutionary Claims Arising on Contractual Termination” in EJH Schrage, ed, Unjust Enrichment and the Law of Contract (New York: Kluwer Law, 2001) 243; Benson, “Philosophy of Property Law,” supra note 42. That a contractual right enforceable in personam against the promisor is a something capable of being owned in the traditional sense of being constituted by a bundle of rights to exclusive possession, use, and disposition is illustrated by the fact that a contractual right can be classified and assigned as a chose in action. For discussion, see Arthur L Corbin, “Assignment of Contract Rights” (1926) 74:3 U Pa L Rev 207.

44. Benson, “Disgorgement,” supra note 16 at 313.

45. See Kant, Immanuel, The Metaphysics of Morals, in Practical Philosophy, translated by Gregor, Mary J (Cambridge: Cambridge University Press, 1999) at 401-44.Google Scholar

46. See Sage, NW, “Original Acquisition and Unilateralism: Kant, Hegel, and Corrective Justice” (2012) 25:1Google Scholar Can JL & Juris 119.

47. See Kant, supra note 45 at 421.

48. See Weinrib, Corrective Justice, supra note 14 at 152-53; Benson, “Disgorgement,” supra note 16 at 313-24; Botterell, “Disgorgement,” supra note 18 at 146-48; B Sharon Byrd & Joachim Hruschka, “Kant on ‘Why Must I Keep My Promise?’” (2006) 81:1 Chicago-Kent L Rev 47. Benson does describe a Hegelian view of contractual right according to which the promisee does come to own the object of a contract at the time of contract formation, although his writing elsewhere suggests that he prefers the view according to which what the promisee acquires is a personal right to another’s choice to perform a specific deed. See Benson, “Unity of Contract Law,” supra note 43 at 135-37.

49. Benson, “Disgorgement,” supra note 16 at 322.

50. Weinrib, Corrective Justice, supra note 14 at 153-54.

51. Benson, “Disgorgement,” supra note 16 at 318 [emphasis removed].

52. Weinrib, Corrective Justice, supra note 14 at 162. See also ibid at 165.

53. Benson, “Disgorgement,” supra note 16 at 319. See also ibid at 316-21.

54. Ibid at 327.

55. The puzzle of disgorgement from the perspective of corrective justice is that the remedy “seems to remedy without compensating.” Botterell, “Disgorgement,” supra note 18 at 141. Before the decision of the House of Lords in Blake, the law recognized this puzzle. For example, in Tito v Waddell (No 2), the plaintiffs contracted to allow the defendant to conduct mining operations on their island under the agreement that the defendant would replant the island afterwards. The defendant breached by failing to replant and accordingly saved money. The plaintiffs suffered no loss because they no longer lived on the island and the difference in the island’s value was negligible, so they sued to recover the money the defendant saved. The claim was denied, and Vice Chancellor Megarry stated that “if the defendant has saved himself money, as by not doing what he has contracted to do, that does not of itself entitle the plaintiff to recover the saving as damages; for it by no means necessarily follows that what the defendant has saved the plaintiff has lost.” See Tito v Waddell No 2, [1977] Ch D 106 at 332, 3 All ER 129.

56. Weinrib, Corrective Justice, supra note 14 at 159.

57. Benson, “Disgorgement,” supra note 16 at 326.

58. Botterell, “Disgorgement,” supra note 18 at 145.

59. Ibid at 152; Benson, “Disgorgement,” supra note 16 at 326-27.

60. Ibid at 328.

61. Ibid at 329.

62. Ibid.

63. Benson claims that the need to specify a contractual performance and render it fully determinate by reference to the object that the performance delivers derives from the need to give the performance a cognizable legal reality that is expressed in the common law doctrine of consideration. See ibid at 329, n 28. See also Peter Benson, “The Idea of Consideration” (2011) 61:2 UTLJ 241.

64. Weinrib, Corrective Justice, supra note 14 at 165.

65. I signal here that the interpretation I give to Weinrib’s comment on Benson’s attempted reconciliation constitutes my contribution to the scholarly response to Benson. I do not mean to suggest that Weinrib himself would endorse this interpretation, and, setting his comment aside, I think that my interpretation can stand alone as a critique of Benson’s view. Still, it might be thought that it is implausible to suppose that Weinrib could dismiss Benson’s detailed argument in a single paragraph, and that something other than the argument in the excerpt is required before Benson’s argument can be tenably rejected. In response, I agree that Weinrib’s comment, taken alone, is much too perfunctory to be thoroughly convincing. I think that there is, however, the kernel of a convincing reply in it that I attempt to draw out and elaborate on in the text that follows. This kind of extended interpretation is important given the dialectic that has played out between Weinrib and Benson. Weinrib made the comment after Benson published his corrective justice account of disgorgement and it did not appear in his earlier treatment of disgorgement that was published before Benson’s account was published. See Weinrib, “Punishment and Disgorgement,” supra note 14. Given his initial stance on the incompatibility of disgorgement and corrective justice, and his pedigree as a prominent contemporary expositor of corrective justice, it is an illuminating exercise to come to full grips with why Weinrib was not shaken from his position by Benson’s account. I am unaware of any attempt to undertake this exercise in the literature. Furthermore, in my view it can be seen as a worthwhile endeavor to provide a critique of Benson’s account by means of an interpretation of Weinrib’s work in a way that adds to the literature on the topic with which this paper is concerned, in the same way that an interpretation of sometimes-obscure writings of a historical philosopher (such as Kant or Aristotle) on a particular topic can genuinely add to the contemporary literature on that topic.

66. See supra note 61.

67. Ripstein, Force and Freedom, supra note 24 at 115.

68. See Smith v Hughes, [1871] All ER Rep 632, LR 6 QB 597; Carlill v Carbolic Smoke Ball Co, [1893] 1 QB 256, All ER Rep 127 (CA).

69. See Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd, [1915] AC 847, All ER Rep 333; London Drugs Ltd v Kuehne & Nagel Int Ltd, [1992] 3 SCR 299, 97 DLR (4th) 261. Benson seems to accept that these contract law doctrines express the fundamentally bilateral normativity of contractual acquisition. See Benson, “Disgorgement,” supra note 16 at 323, n 19.

70. Weinrib, Corrective Justice, supra note 14 at 164.

71. Botterell, “Disgorgement,” supra note 18 at 150.

72. Ibid at 151.

73. Botterell also claims that the establishment of the promisor’s right to ϕiii need not even arise from implicit consent but could also arise out of the promisee’s explicit consent to not ϕiii. He claims that there was such explicit consent in the Federal Court of Australia case of Hospitality Group Pty Ltd v Australian Rugby Union Ltd ([2001] FCA 1040). In that case, the plaintiff rugby association sold tickets to a third party who then sold them to the defendant company. The contract for the sale of tickets contained an explicit condition that they were not to be resold for profit. The defendant in fact resold the tickets to customers at a profit. The court found that the defendant was not precluded from contractual liability by the doctrine of privity of contract but that disgorgement of the defendant’s profits was not available to the plaintiff because contract damages must always be compensatory. For Botterell, this case was wrongly decided because the contract between the plaintiff and defendant contains an explicit subsidiary promise that the defendant would not resell the tickets a profit. Therefore, the plaintiff had an ownership right in the plaintiff’s performance of the specific act of selling the tickets, which the defendant wrongfully alienated to produce a profit to which the plaintiff ought to have been entitled via the remedy of disgorgement. Botterell, “Disgorgement,” supra note 18 at 156. Botterell quite clearly states that a consequence of his view is that “where what is contracted for is that the promisor not do something, then where that thing is done, the promisee is entitled by way of right to any profits realized by the promisor as a result of her breach.” Ibid at 155, n 61.

74. Ibid at 150.

75. Attorney General v Blake, [1998] 1 All ER 833 at 846, 2 WLR 805 (CA), citing Birks, “Restitutionary Damages,” supra note 11 at 434 (“If you promise not to pursue a particular profit-making activity and then you do pursue it, nothing is more apt than that you should make restitution of your profits”).

76. Blake HL, supra note 5 at 398.

77. Botterell does hold this view. See the discussion in note 73.

78. Botterell also seems to accept this desideratum. He writes that “the law of contract must have the resources available to draw a distinction between actions contracted for that are particular and actions contracted for that are generic; otherwise, certain remedial features of contract law become mysterious.” Botterell, “Disgorgement,” supra note 18 at 152.

79. The promisor might profit from violating the supposed implied negative covenant to not act inconsistently with the act initially acquired by the promisee at the time of contract formation. For example, he might be earning passive income, such as interest or investment returns, on the object to be transferred to the promisee the total of which is higher than the amount that he agreed to sell the object to the defendant for. Failing to transfer the object in order to continue to earn this passive income would be a profitable breach of contract.

80. Ibid at 152.

81. Ibid at 152-53.

82. Ibid at 153.

83. Birks, Peter, An Introduction to the Law of Restitution (Oxford: Oxford University Press, 1985) at 24Google Scholar [Birks, Law of Restitution]. For further discussion, see Smith, Lionel D, “The Province of the Law of Restitution” (1992) 71:4Google Scholar Can Bar Rev 672; Mitchell McInnes, “Disgorgement for Breach of Contract: The Search for a Principled Relationship” in Schrage, supra note 43, 225.

84. Botterell, “Disgorgement,” supra note 18 at 157-58. Benson also states that his account construes disgorgement for breach of contract as compensatory in nature. See Benson, “Disgorgement,” supra note 16 at 320.

85. See, e.g., Chandler v Webster, [1994] KB 493, 52 WR 290 (CA); Sinclair v Brougham, [1914] AC 398, All ER Rep 622 (HL); Royal Bank of Canada v The King, [1913] AC 283, All ER Rep 846 (PC). For further discussion, see Westdeutsche Landesbank Girozentrale v Islington London Borough Council, [1994] 4 All ER 890 at 912, 1 WLR 938, Hobhouse J (“Up until even the second decade of this century and the decision in Sinclair v Brougham it was normal to categorise the remedy of restitution under the common law as an aspect of quasi contract depending upon implied contract. This approach … meant that if there was some objection to the implication of a promise by the recipient of a benefit to reimburse the party at whose expense that benefit had been enjoyed then, because no contract could be implied, no remedy was given by the common law” [citation omitted]).

86. See, e.g., Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, [1943] AC 32, 2 All ER 122 (HL) [Fibrosa]; Woolwich Equitable Building Society v Inland Revenue Commissioners, [1993] AC 70, [1992] 3 WLR 366; Westdeutsche Landesbank Girozentrale v Islington London Borough Council, [1996] AC 669, 2 All ER 961 (HL); Banque Financière de la Cité v Parc (Battersea) Ltd, [1999] AC 221, 1 All ER 737 (HL); For the rejection of quasi-contract in Canada, see Deglman v The Guaranty Trust Co of Canada, [1954] SCR 725, 3 DLR 785, Cartwright J [Deglman]; Pettkus, supra note 25. For the same rejection in Australia and New Zealand, see David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; National Bank of New Zealand Ltd v Waitaki, [1999] 2 NZLR 211 (CA). See also Birks, Law of Restitution, supra note 83 at 22; Peter Birks, Unjust Enrichment, 2d ed (Oxford: Oxford University Press, 2005) at 271 [Birks, Unjust Enrichment]; Graham Virgo, The Principles of the Law of Restitution, 2d ed (Oxford: Oxford University Press, 2006) at 21; Andrew Burrows, The Law or Restitution, 3d ed (Oxford: Oxford University Press, 2011) 28. But see Dan Priel, “In Defence of Quasi-Contract” (2012) 75:1 Md L Rev 54 (arguing that the language of quasi-contract can play an illuminating role in the analysis of some topics in the law of restitution).

87. See, e.g., Fibrosa, supra note 86; Deglman, supra note 86. See also Warren A Seavey & Austin W Scott, “Restitution” (1938) 54:1 Law Q Rev 29; Andrew Kull, “James Barr Ames and the Early Modern History of Unjust Enrichment” (2005) 25:2 Oxford J Legal Stud 297.

88. Kleinwort Benson Ltd v Lincoln City Council, [1999] 2 AC 349 at 408, [1998] 3 WLR 1095.

89. For discussion of this constraint on the justification of private law doctrine from the perspective of corrective justice, see Weinrib, Corrective Justice, supra note 14 at 17-18.

90. Ibid at 189.

91. Sinel, supra note 26 at 559.

92. Blake HL, supra note 5 at 390.

93. Ibid at 388-90.

94. Ibid at 398.

95. Ibid.

96. Ibid at 398-99.

97. Ibid at 399.

98. Ibid.

99. See Frame v Smith, [1987] 2 SCR 99, 42 DLR (4th) 81 at para 60 [Frame]; Soulos v Korkontzilas, [1997] 2 SCR 217, 146 DLR (4th) 214 at para 34 (the objective of imposing fiduciary duties is to “maintain the integrity of institutions dependent on trust-like relationships”); Strother, supra note 8 at paras 74-77; Friedman, “Restitution of Benefits,” supra note 11; Richard Holton, “Fiduciary Relations and the Nature of Trust” (2011) 91:3 BUL Rev 991. Miller argues against this view of the wrong of breach of fiduciary duty, holding that it is at bottom not illuminating and leaves several questions open. See Miller, “Fiduciary Remedies,” supra note 19 at 594-98.

100. Blake HL, supra note 5 at 400.

101. Ibid at 404.

102. 444 US 507, 100 S Ct 763 [cited to US].

103. Ibid at 507-08.

104. Ibid at 516.

105. Blake HL, supra note 5 at 400.

106. McCamus, “Disgorgement,” supra note 11 at 967. See also Peter D Maddaugh & John D McCamus, The Law of Restitution, student ed (Toronto: Thomson Reuters, 2014) at 25:400.

107. 2011 ABQB 38, 43 Alta LR (5th) 83 [Indutech, cited to ABQB].

108. See also Smith v Landstar Properties Inc, 2011 BCCA 44, 14 BCLR (5th) 48; Inuit of Nunavut v Canada (Attorney General), 2014 NUCA 2, 242 ACWS (3d) 829.

109. Indutech, supra note 107 at para 522.

110. Ibid at para 524.

111. Supra note 2.

112. Ibid at 271-72. What Justice Barak recognized was, of course, that some have advocated for the “efficient breach” theory of contract remedies. See, e.g., Richard A Posner, Economic Analysis of Law, 8th ed (New York: Aspen, 2011) at 2.

113. Adras, supra note 2 at 272.

114. Weinrib interprets Justice Barak’s opinion in Adras in the same way. However, he is critical of Justice Barak’s approach because, according to corrective justice, a private law remedy cannot be grounded in normative considerations, such as the social value of promise keeping, that are external to the bilateral relationship between the parties to a private transaction, which is defined by the parties correlative relationship to each other through the juridical concepts of correlative rights and duties. Weinrib, Corrective Justice, supra note 14 at 161. It might be thought that because, as I claim, the approach to disgorgement discernible in Adras parallels that in Blake, and, as Weinrib claims, the approach in Adras is inconsistent with corrective justice, then a fortiori the notion articulated in Blake that disgorgement should be available where a breach of contract is closely akin to a breach of a fiduciary duty that engages important social values external to the bilateral relationship between parties to a private transactions is also inconsistent with corrective justice. However, I do not hold the view that remedies for breach of fiduciary are incapable of being explained in terms of corrective justice. Indeed, I adopt the corrective justice account of fiduciary relationships developed recently by Paul Miller. I explain this account momentarily, in Part V, below.

115. See also Securities and Exchange Commission v Chenery Corporation et al, 318 US 80 at 85-86, 63 S Ct 454 (1943); Canadian Aero Service Ltd v O’Malley, [1974] SCR 592 at 605, 40 DLR (3d) 371; Guerin v The Queen, [1984] 2 SCR 335 at 384, 13 DLR (4th) 321; Galambos v Perez, 2009 SCC 48 at para 70, 3 SCR 247 [Galambos].

116. See, e.g., Frame, supra note 99 at para 60; Galambos, supra note 115 at para 70; Wewaykam Indian Band v Canada, 2002 SCC 79 at para 79, 4 SCR 245; Alberta v Elder Advocates of Alberta Society, 2011 SCC 24 at para 27, 2 SCR 261. See also Miller, “A Theory of Fiduciary Liability,” supra note 19 at 262; Weinrib, “The Fiduciary Obligation” (1975) 25:1 UTLJ 1.

117. Miller, “Fiduciary Remedies,” supra note 19 at 602.

118. Ibid at 604.

119. Ibid at 603.

120. Ibid.

121. Ibid at 604.

122. Ibid.

123. Ibid at 604-06.

124. Ibid at 607 [emphasis in original].

125. Ibid at 608-09.

126. Ibid at 610.

127. Ibid at 615, 617.

128. See United States v Dial, 757 F (2d) 163 at 168 (7th Cir 1985) (“The essence of a fiduciary relationship is that the fiduciary agrees to act as his principal’s alter ego rather than to assume the standard arm’s length stance of traders in a market.”).

129. Miller, “Fiduciary Remedies,” supra note 19 at 611. Miller thus sees the right to the fiduciary’s exercise of discretionary decision making power in matters that affect the beneficiary’s practical interests as akin to a property right; it a right of ownership entailing exclusive possession, use, and alienation. Cf Weinrib, “Restitutionary Damages,” supra note 15 at 33-34; Weinrib, “Corrective Justice,” supra note 14 at 143 ([a]lthough gain-based damages do not … respond to the violation of what is strictly speaking a proprietary right, the relationship between the parties can give rise to an interest that is sufficiently property-like to allow this kind of award”).

130. Miller, “Fiduciary Remedies,” supra note 19 at 615.

131. Ibid.

132. Ibid at 617.

133. For discussion, see Shiffrin, Seana Valentine, “Promising, Intimate Relationships, and Conventionalism” (2008) 117:4Google Scholar Philosophical Rev 481; Pallikkathayil, Japa, “The Possibility of Choice: Three Accounts of the Problem of Coercion” (2011) 11:16Google Scholar Philosopher’s Imprint 1.

134. See, e.g., Easterbrook, Frank H & Fischel, Daniel R, “Contract and Fiduciary Duty” (1993) 36:1Google Scholar JL & Econ 425.

135. Ripstein, Force and Freedom, supra note 24 at 73.

136. See, e.g., M(K) v M(H), [1992] 3 SCR 6, 96 DLR (4th) 289; KLB v British Columbia, 2003 SCC 51, 2 SCR 403. See also Ripstein, Force and Freedom, supra note 24 at 71-72.

137. Miller, “Fiduciary Duties,” supra note 19 at 983.

138. For a recent discussion, see Bhasin v Hrynew, 2014 SCC 71 at para 70, 3 SCR 495 (“The principle of good faith must be applied in a manner that is consistent with the fundamental commitments of the common law of contract which generally places great weight on the freedom of contracting parties to pursue their individual self-interest”).

139. Markovits, Daniel, “Sharing Ex Ante and Sharing Ex Post: The Non-Contractual Basis of Fiduciary Relations”Google Scholar in Gold & Miller, Fiduciary Law, supra note 19, 209 at 214 [Markovits, “Sharing”]. See also Daniel Markovits, “Contract and Collaboration” (2004) 113:7 Yale LJ 1417; Farnsworth, supra note 11 at 1354-60 (“However appropriate such rules may be for fiduciary relations, they seem oversolicitous of your interests when applied to our contract for the sale of a widget. The rules that limit the discretion of the trustee are intended to protect both the beneficiary and the public in ways inappropriate to ordinary commercial dealings”).

140. Markovits, “Sharing,” supra note 139 at 216-18; Miller, “Fiduciary Duties,” supra note 19 at 983.

141. It is thus said that an employee is under the control of the employer and is integrated into and must advance the employer’s business. See Montreal (City) v Montreal Locomotive Works, [1947] 1 DLR 161 at 169, 3 WWR 748 (PC); Stevenson Jordan & Harrison Ltd v MacDonald and Evans, [1952] 1 TLR 101 at 111 (CA). See also Ripstein, Force and Freedom, supra note 24 at 75-76.

142. Robb v Green, [1895] 2 QB 315; Hivac Ltd v Park Royal Scientific Instruments Ltd, [1946] Ch 169, 1 All ER 350 (CA); RBC Dominion Securities Ltd v Merill Lynch Inc, 2008 SCC 54, 3 SCR 79; Geoffrey England, Individual Employment Law (Toronto: Irwin Law, 2008) at 58-59.

143. Laws v London Chronicle (Indicator Newspapers) Ltd, [1959] 2 All ER 285, 1 WLR 698 (CA).

144. 671122 Ontario Ltd v Sagaz Industries Canada Inc, 2001 SCC 59, 2 SCR 983.

145. Wallace v United Grain Growers (cob Public Press), [1997] 3 SCR 701, 152 DLR (4th) 1; Honda Canada Inc v Keays, 2008 SCC 39, 2 SCR 362.

146. For the cases from which these examples are drawn, see, e.g., Holiday Pacific Ltd v Valhalla Custom Homes Ltd (1990), 29 CPR (3d) 1, 19 ACWS (3d) 1231 (Ont H Ct J); Lac Minerals, supra note 9; McCleod v Sweezey, [1944] SCR 111, 2 DLR 145.

147. For recognition of the fiduciary relationship between solicitors and clients, see Nocton v Lord Ashubrn, [1914] AC 932, All ER Rep 45; Strother, supra note 8.

148. For similar factual circumstances and recognition of the fiduciary relationship between doctor and patient, see Norberg v Wynrib, [1992] 2 SCR 226, 92 DLR (4th) 449.

149. Birks, Unjust Enrichment, supra note 86 at 21.

150. For discussion of the distinction between the cause of a breach of a right and normative justification for a remedial response to it, see Weinrib, Corrective Justice, supra note 14 at ch 3.