Damages Without Loss - Can Hohfeld Help?

Abstract

This paper focuses on a tricky and much debated puzzle: what is the proper explanation of cases in which courts make substantial (non-nominal) awards of damages to plaintiffs whose rights have been infringed, but who do not appear to have suffered any factual loss as a result of the infringement?

An example on which I focus is the one provided by Lord Shaw in Watson, Laidlaw & Co v Pott, Cassels and Williamson: A can claim a reasonable fee from B for the latter’s use of his horse, even if the horse was at the time sitting idle in A’s stable and A and would never have deployed it to any profitable use. He can claim even if the horse is returned to him in a better condition than it was in when it left him. He can claim even if he was wholly unaware that it was gone. It seems possible that he can claim even if B himself gained nothing in fact as a result of the infringement, because he did not himself ride the horse, but just ‘drove it out’ of the stable.

A great number of solutions have been suggested to this puzzle, but none is wholly satisfactory and each leaves something potentially unexplained. In their place (or as a supplement to the diet), I offer an analysis of user and ‘permission fee’ damages which draws on Hohfeld. I suggest that such awards may compensate A for the loss of legal powers that A had by virtue of his primary rights. These powers I refer to colloquially as contingent powers to ‘insist’ on A’s primary rights, or contingent powers to ‘stop’ an infringement ex ante by obtaining injunctive relief from a court. Such powers attach to only certain types of primary claim-right in our civil law and they have assessable monetary value. Whilst a wrongdoer’s unilateral infringement never destroys another’s primary claim-rights in the law, it can destroy some associated powers and it is the factual value of such ‘ lost’ powers that courts are arguably seeking to compensate with permission fee awards.

For those that think this debate is the world’s largest storm in the world’s smallest tea-cup, I hope also to show that how one chooses to analyse this puzzle can have far-reaching longer-term implications for the shape of our civil law.

Keywords: user fee, license fee, damages, compensation, mesne profits, conversion, Hohfeld, Bunnings