Illiquidx Limited v Altana Wealth Limited & Anor

The choice between damages and an account of profits for breach of contract is discretionary. The usual remedy is compensation for the claimant’s loss. An account of profits may be justified only in exceptional circumstances, particularly where the right is proprietary or especially powerful, the claimant has a particularly strong interest in full performance, or the relationship involves special trust such as a fiduciary relationship. In an arm’s-length commercial claim for misuse of confidential information, the contractual nature of the right is important. A defendant’s retention of profit will not ordinarily justify an account where the breach was not deliberate and the relationship involved no special trust.

The claimant brought a claim concerning the misuse of confidential information in breach of contract. The issue addressed in this ruling was the appropriate remedy: whether the claimant should receive damages for its loss or be given an election to seek an account of the defendants’ profits.

The court considered the contractual character of the obligation, the commercial relationship between the parties, the nature of the right asserted, and the defendants’ conduct.

1. Remedial discretion. The court has a discretion whether to offer damages or an account of profits. The task is to identify the appropriate remedy for the particular wrongdoing. Compensation for the claimant’s loss is normally appropriate; stripping the defendant of profit is exceptional.
2. Relevant considerations. Departure from the usual remedy may be warranted where the claimant asserts a particularly powerful or proprietary right, has an especially strong interest in full performance, or is protected by a relationship of special trust, such as a fiduciary relationship. Retention of a benefit may also be offensive where the breach is deliberate or calculated.
3. Contractual confidentiality. The claim concerned misuse of confidential information in breach of contract. The right arose from the contract and was not a proprietary right comparable to a patent. The appropriate starting point was therefore a remedy similar to those available for breach of contract.
4. Application. The business opportunity had monetary value and was intended to be commercially exploited, but the relationship was arm’s length and involved no fiduciary or special trust. The claim was not otherwise exceptional. The defendants had not deliberately breached the obligation and had not realised that the information was protected by the non-disclosure agreement. The confidential nature of the information did not itself make the case unusual.
5. The usual remedy was appropriate. There would be an inquiry into damages, with no election by the claimant to seek an account of profits.