REASONS FOR JUDGMENT
EMMETT J:
164 I have read in draft the reasons of Hill & Finkelstein JJ. I agree with everything they have said, except their conclusion that the Full Court should determine whether any award of exemplary damages should be made or whether the matter should be returned to the learned primary Judge. In particular, I agree with their conclusion, for the reasons they have stated, that the learned primary Judge erred in so far as he had regard to breaches of contract on the part of THG in awarding exemplary damages. That would be sufficient to justify setting aside the judgment for $100,000.
165 However, I consider that the case is one where impressions formed by the learned primary Judge from the way in which the case was conducted at trial cannot be properly replicated on appeal. His Honour managed the proceeding to trial and heard all of the evidence. The Full Court has not had the advantage of being taken in detail to all of the evidence. I consider that it is preferable to remit the matter to the learned primary Judge for reconsideration of the question of relief in the light of the conclusions reached by the Full Court that there has been no breach of contract by THG or ICM.
166 For the reasons that I shall state briefly below, I consider that it would be open to his Honour, if he concludes that it is appropriate, to order THG and ICM to account to ARU for any profit derived by them as a consequence of their having induced breaches of the Ticket Contract and clause 3.11 of the ATFS Contract.
167 Whenever one person gains a benefit through the commission of a wrong, the availability of restitution might be determined under one of two distinct approaches. One approach is founded upon concepts of property in the broadest sense. Such concepts would include a spectrum of interests ranging from legal ownership of property, both corporeal and incorporeal, to expectations and opportunities. The essence of such an approach is that a claimant should be entitled to any benefits derived, as a result of wrongdoing, from that which belongs to the claimant. That approach responds to the notion that such benefits belong to the victim of the wrongdoing.
168 The other approach is based upon the notion of deterrence. Restitution based on notions of deterrence emphasises the injustice and inequity of permitting a wrongdoer to keep gains derived from the wrongdoing, rather than responding on any notion that the gains belong to the claimant. The forfeiture of profits acquired through the perpetration of wrongdoing, when those profits are not derived from another's property, may be seen as punitive. It may be, therefore, that, like punitive or exemplary damages, deterrent restitution ought generally to be confined to exceptional circumstances - see Daniel Friedman "Restitution of Benefits obtained through the Appropriation of Property or the Commission of a Wrong" (1980) 80 Colombia Law Review 505 at 556‑558.
169 One area where Courts have awarded an account of profits is in the commission of the tort of inducing a breach of contract between master and servant. Where a wrongdoer acquires the benefits of the labour of an employee by reason of inducing that employee to breach his contract of employment with his employer, the employer is entitled to the value of the labour that he has lost. The action is brought for the benefit acquired by the wrongdoer from the service of the employee.
170 Historically, the rationale for such a result was said to be that the wronged employer is entitled to "waive the tort" and adopt the new contract entered into between the wrongdoer and the employee - see Lightly v Clouston (1808) 127 ER 774 at 775 and Foster v Stewart (1814) 105 ER 582 at 585. This legal fiction was created to fit the remedy within the shape of the action for money had and received. It no longer serves any useful purpose - see Goff & Jones The Law of Restitution (5th ed.) at 775-778.
171 Cases that involve inducing breach of contract between master and servant might be regarded as analogous to those where goods are sold wrongfully and the proceeds of sale find their way into the pocket of the wrongdoer. The wrongdoer acquires something that can be said to belong to the claimant. In such circumstances, it has been said, an action for account will lie only where the wrongdoer has something in his hands representing the claimant's property or the proceeds or value of it - Phillips v Homfray (1883) 24 Ch D 439 at 463. On the other hand, it has been said that where a wrongdoer, as a consequence of his wrongdoing, does not acquire any additional property or value belonging to another person, even if the wrongdoer derived a benefit by avoiding an expense, an action for account will not lie.
172 It is not necessary, in all cases where an account of profits derived by a wrongdoer will be ordered, to demonstrate that the benefit derived by the wrongdoer is a benefit that the claimant would have derived but for the wrongdoing - see Federal Sugar Refining Co. v United States Sugar Equalisation Board 268 F. 575 (1920) (S.DN.Y.) at 582. An account of profits is therefore confined to profits actually made. The guiding principle is that an account of profits aims to have the wrongdoer account for the actual profit, no more and no less, that has been gained from the wrongdoing. The purpose of the order is not to punish the wrongdoer but to prevent the unjust enrichment of the wrongdoer - Dart Industries v Décor Corporation Pty Ltd (1993) 179 CLR 101 at 111 and 116.
173 Under an order for an account of profits, a wrongdoer is made to account for, and is then stripped of, profits which the wrongdoer has dishonestly made by the wrongdoing and which it would be unconscionable for it to retain. The requirement that the profit be made "dishonestly" must be understood, in this context, as signifying no more than knowing infringement as distinct from innocent infringement. It is not necessary to establish the elements required for an action in deceit - see 10th Cantanae Pty Ltd v Shoshana Pty Ltd (1987) 79 ALR 299 at 332.
174 The finding of wrongfully inducing breach of contract that has been made against THG and ICM would satisfy any requirement that they derived profits dishonestly in that sense. The Court has concluded that THG or ICM wrongfully induced both ATFS and the original purchasers of tickets to breach the terms of their contracts with ARU. That required a finding of intent on their part. THG and ICM knowingly put themselves in a position where they stood to derive a benefit that could not have been derived but for the breaches of contract that their conduct induced. If either of THG or ICM has derived profits from the use of the tickets that were acquired as a consequence of the breaches that it induced, it has done so by doing the very thing that it knew ARU was determined to prevent.
175 The conduct of THG and ICM was a wrongful interference with incorporeal rights of ARU. The choses in action comprising the ATFS Contract and the Ticket Contracts constituted incorporeal property of ARU, in so far as those contracts remained executory and partly performed. True it is that the greater part of the performance remaining at the time of the breaches was performance by ARU. That is to say, ARU was under the obligation to procure access to the stadium for the purposes of watching the Matches. Nevertheless, ARU continued to have the benefit of the obligations imposed upon the other parties, since those obligations remained executory and unperformed by them. In other words, ARU had the benefit of promises that the tickets would not be resold at a premium or used for commercial purposes. It also had the benefit of a promise that tickets made available to ATFS would not be sold except as part of a travel package. The effect of the conduct of THG and ICM was that the benefit of those incorporeal rights was lost to ARU.
176 ARU, by reason of its contract in relation to the stadium, had the capacity to confer on individuals the right of access to the stadium for the purpose of watching the Matches. That right was conferred upon the original purchasers of tickets. Under the ATFS contract, ATFS was, in effect, given the capacity to confer such rights, subject to the restrictions contained in clause 3.11. The effect of the wrongful conduct of THG was to appropriate that capacity to itself. It effectively procured that the nominees of its clients were given the right of access, rather than the persons for whom ARU was prepared to procure access.
177 While the rights of ARU in relation to the stadium may not be property in the same sense that legal ownership of goods or land is property, they are, for present purposes, analogous to rights of ownership. Just as the right to the services of an employee can be characterised as property in the relevant sense, the right to procure access to the stadium can be so characterised. There is no reason in principle why ARU should not be entitled to a restitutionary remedy.
178 ARU would have been entitled to injunctions to prevent the breaches of contract now complained of, if the proceeding could have been heard in time. It has in fact obtained injunctions to prevent future breach by THG and ICM. That is the type of situation that makes an account of profits a just response to prevent THG and ICM from deriving a benefit from its wrongdoing.
179 ARU made a decision as to how many tickets it would allocate to the corporate hospitality market. It forewent possible revenue from the corporate hospitality sector in order to advance other legitimate goals that it wished to achieve. It would be difficult to measure the benefit that ARU would have derived from the advancement or achievement of those other goals. Nevertheless, ARU forewent that possible revenue without advancing those other goals. ARU has, therefore, lost the benefit that it would have derived from advancing those goals. At the very least, it has lost the opportunity of advancing those goals. Whatever benefit such advancement may have been to ARU, the opportunity of that benefit has been lost in consequence of the conduct of THG or ICM. Further, by reason of that conduct, THG or ICM may have derived some benefit. .
180 Where the remedy of an account of profits is imposed, the remedy can result in a windfall for the claimant. That is also the consequence of exemplary damages. However, the difference between exemplary damages and an account of profits is that an award of exemplary damages is in the discretion of the court, while an account of profits and forfeiture of the benefit to the claimant is measured by the wrongdoer's gain. A restitutionary remedy, therefore, may be less harsh than the punitive remedy of exemplary damages. Wrongdoers are required to hand over only their profits. Even though the profits may have been to a large extent due to their efforts and investment risk, their capital will remain intact. On the other hand, exemplary damages may be awarded even though the wrongdoer made no gain against which the damages can be offset.
181 ARU contends that THG made a profit of more than $200,000 by using the tickets in question. There was sufficient material before the learned primary Judge to warrant a conclusion that THG had derived some profit. The learned primary Judge considered that, if such profits could be retained, whatever they may have been, THG might well decide to "chance the odds again". The injunctions ordered by the learned primary Judge would, of course, have prohibited such "chancing". However, even if there was no basis for concluding that THG would not have acted in contravention of the orders of the Court, the taking of an account to deprive THG of its unjust enrichment may be an appropriate deterrent against future wrongdoing. It may also be regarded as an appropriate punishment for the deliberate interference with ARU's rights. Those questions should be decided by the learned primary Judge.
182 It follows from the above that I agree that the appeal should be upheld insofar as it relates to the order made by the learned primary Judge that there be judgment for ARU against THG and ICM in the sum of $100,000 as exemplary damages. I would set aside the judgment in the sum of $100,000 and order that the proceeding be remitted to the learned primary Judge for further consideration, in the light of these reasons, of the further relief, if any, to be ordered in favour of ARU. There should be no order as to costs of the appeals.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.