Introduction to remedies Part 1

Equity S2 2018 – Wk1 Cls 2

Julian Laurens

1
 Key remedies
– Specific performance
– Injunctions Slides Part 1
– Equitable damages

– Account of profits
– Equitable compensation
– Rescission Slides Part 2
– Rectification
– Declarations

• Constructive trust? –Normally a finding, that underpins

a particular remedy? Declaration that there is a trust
etc?
2
 Bars to relief

• Laches (‘delay’)
• Acquiescence
• Unclean hands
• Hardship
• Effect of order on third parties
3
 Practice Point!!!
LIMITATION PERIODS
• http://lawcover.com.au/wp-
content/uploads/2016/12/4235_Schedule-of-
Limitations-2016_V18.pdf
• And the relevant LEGISLATION!
– Yes statutory limitation periods do now apply to
some equitable actions – note differences
between the States on this.

4
 Introduction to remedies

• Equitable remedies are always discretionary

– grew out of the delivery of ‘individual
justice’ which was determined on the merits
of the particular case and the circumstances
of the particular parties.

• A key feature of equitable remedies – both

parties positions are considered.
5
 Distinction between
Personal and Proprietary remedies
Personal remedies – order directed towards a
person (the defendant)
• i.e. and award of damages at contract or
tort.
• In equity such a personal remedy may
be equitable compensation, account of
profits or an injunction (B & V p27)
(relevant to breaches of fiduciary
duty/breaches by a Trustee)
6
Proprietary remedies – directed
towards property which the D holds
title to (2 types of proprietary remedy)
• E.g. P may declare it is held on
trust for the P or
• Can order sale of property (where
there is an equitable lien) for
example.
7
 Types of Proprietary remedies
There are TWO proprietary remedies:
1. Constructive trust
1. In equity the D holds the property the subject on
TRUST for the P. (in Land Law we look at
equitable leases and a legal interest having
notice of that and acknowledging that notice
creates a trust in favour of the lease holders:
Bahr v Nicolay)
2. The equitable lien (or charge)
1. A security interest – attaches to property but
only for amount of specific debt – D property can
be sold to pay the debt if no other resources. 8
 Advantages of proprietary remedies
(B&V p28)

P can make claim on property!

If only a personal remedy and the D

has no money then you may get
nothing – unsecured creditor.

9
 Advantages of proprietary remedies
(B&V p28)

1. Enforceable against third parties who

may have received the property from
the D (except where the third party
purchaser has acted bona fide in good
faith and without notice of the
previous interest of the P). Personal
remedy only against the D.
1. Think about this for the future class on
tracing
10
 Advantages of proprietary remedies
(B&V 28)

2. May also assist the P receiving

something (i.e. property) to
which they may have a
sentimental attachment, and
for which monetary damages
would not suffice.
11
 Objectives of equitable remedies 1

• Coercion – demand you do

something or stop doing something
–Specific performance; injunctions
• Compensatory
–Equitable compensation – for loss
from an ‘equitable wrong’ such as
breach of trust.
12
 Objectives of equitable remedies 2

• Disgorgement – if you have made a profit from a

breach of an equitable obligation (ie fiduciary) then
these must be returned to the P (disgorged)
– Account of profits (personal remedy – but what if D has
spent the money on intangible like food and drink)
– Constructive trust – if land or on money in bank account
etc
– Equitable lien on property purchased with P’s money by
the D.

13
 Objectives of equitable remedies 3

• Restitution – ‘restoration’- return P property.

– Also see Rescission – rescind contract from
D and restore property to the P - property
can be held on constructive trust. If no
property then a personal remedy.
– If there was a contract for property transfer
which was voidable for breach of fiduciary
duty but the third party did act in good faith
then the P is able to claim monetary
compensation for the value of the sale from
the D – is now a personal remedy.
14
 Objectives of equitable remedies 4

• Nullification – where equity orders rescission

of a contract
• Reformation – with remedy of rectification –
reforms a legal document so it better reflects
the actual objective bargain of the parties.
Note partial rescission?
• Vindication – classic remedy here is a
Declaration – of the parties rights and
obligations - can validate the P’s rights – note
also injunctions.
15
Introduction to remedies

16
 Specific performance – (Ch 3, B & V)

• Only available for common law

action of breach of contract
(equity in auxiliary jurisdiction)

• Bars?:
– discretionary

17
 Specific performance
General considerations:

1. Fairness to both parties (mutuality)

1. Price v Strange [1978] Ch 337, 367-8
(Buckley LJ)
2. The supervision requirement
1. Co-operative Insurance Society Ltd v Argyll
Stores (Holdings) Ltd [1998] AC 1
1. A specific or particular result (i.e. conveyance) is
preferred.

18
 Specific performance – types of contracts

Construction contracts? (B&V p. 34)

1. Is the contract sufficiently precise to be

enforced;
2. Does the P have a substantial interest in
performance, which cannot be compensated by
damages;
3. Does the D have possession of the land on
which building is to be done.

From Wolverhampton Corp v Emmons [1901] 1 KB 515, 524-5

19
 Specific performance – types of contracts

• Contracts for personal services? No.

• Employment contracts?
No – not usually – pragmatic – though note TWO
exceptions (B&V p 36)
– 1. Some employment matters where pragmatic
reasons for refusing are absent (Patrick Stevedores (1998)
195 CLR 1)
– 2. An injunction can be given stopping a person
working for another company, but an order for SP cant be
made compelling the person to keep working for the
current company – also must be satisfied that the plaintiff
can still make a living working potentially for someone else
– they do not want to make a plaintiff destitute etc: Lumley
v Wagner (1852) 1 De GM & G 604; 42 ER 687. 20
 Specific performance

Pre requisites for an award of specific

performance (B&V p. 36):

1. Contract must be capable of being specifically

enforceable;
2. Valuable consideration must have been
exchanged;
3. Damages must be an inadequate remedy (this
is KEY).
1. (you already get damages at common law so no need
for equity to do this as it is acting in its auxiliary
jurisdiction)
21
• Classic example of contract that is specifically
enforceable:

Sale of Land

And also Chattels which can not be purchased

easily on the market (damages inadequate as P
could not get satisfactory alternative with the
money – I have that problem with my music
collection and insurance for example).
22
Introduction to remedies

23
 Injunctions (B&V, p40)
• An order enforcing legal or equitable rights –
can restrain an act or require an act be done.

• The principle COERCIVE remedy in Equity.

(content if ignored)

• Available in both exclusive and auxiliary

jurisdiction (support CL rights here).
24
 Injunctions
4 main classifications of injunctions:

1. Mandatory or prohibitory;
2. Perpetual, interim and interlocutory
(common)
3. Ex parte
4. Quia timet

Jurisidcition in NSW for injunctions: see

Supreme Court Act 1970 (NSW) s 66(4)
25
 Injunctions

An injunction can only be awarded in

support of established legal, equitable
or statutory rights (statutory
injunction): Australian Broadcasting
Corp v Lenah Game Meats Pty Ltd
(2001)208 CLR 199.

Doesn't have to be a property right.

26
 Injunctions

3 Critical criteria for award of an injunction (B&V p.40-41):

1. P must show that D has committed a legal, equitable

or statutory wrong;
2. P must show that the wrong is likely to continue or be
repeated: Irving v Emu & Prospect Gravel (1909) 26
WN (NSW) 137, or that it is imminent (for a quia timet
injunction)
3. P who wants to prevent a common law wrong from
occurring must show that damages or other common
law remedy is inadequate.
1. i.e. conversion of some chattels = no injunctive remedy =
as damages would be fine – nothing special about them
can get a new one easily.
27
 Injunctions
Interlocutory injunctions

Happen DURING legal proceedings – COMMON in

practice.

2 considerations:

1. Will the proposed order be fair to both parties (note

the P’s cause of action has not yet been proved!! So
you can give ordered that indicate an approval of the
merits of the wider matter) (how do you manage
this? See the considerations on the next slide)
2. Can the court supervise the order? 28
 Injunctions
TWO criteria from the High Court for awarding an interlocutory
injunction: Beecham Group Ltd v Bristol Laboratories Pty Ltd
(1968) 118 CLR 618 (affirmed in Australian Broadcasting
Corporation v O’Neill )

1. Has the P made out a prima facie case on the evidence that
they would be entitled to the remedy at trial;

2. Will the injury etc to the P if the injunction is refused

outweigh the injury to the D if an injunction is granted?

What we have here is a Balancing act.

29
Mandatory injunctions forcing a defendant to
act vs prohibitory injunctions (B & V p.42)

Reluctance to grant a mandatory injunction? But

can be granted if it can be enforced with little
judicial supervision, and the D will not incur
excessive costs (when measured against the P’s
loss) in complying with the order: Redland Bricks
v Morris; Wrotham Park Estate v Parkside
Homes Ltd.

30
Injunctions to restrain breach of contract?
• Breach of Contract is a CL action. (note again that
injunction and specific performance will only be
granted where damages for breach would be
inadequate remedy).

Relationship between injunctions and specific

performance:
• Note that an injunction will not be awarded if its
effect will be to compel the D to perform
obligations which could not have been specifically
performed. i.e. employment related: Whitwood
Chemical Co v Hardmann
31
 B& V p.43

A negative injunction to restrain a breach

of contract is often readily awarded:
Doherty v Allman and Dowden. But should
be cautious in suggesting that it will always
be granted as a matter of course as this
undermines the idea of discretion in
equity: Dalgety Wine Estates v Rizzon

32
 Injunctions and specific performance?

In the NSW case Curro v Beyond Productions Pty Ltd

an injunction was given to the P to prevent Curro
from breaking her contract to present a TV program
and go an work at another TV studio. The court
looked at three things:
1. The injunction would not force Curro into
‘destitution’;
2. The duration of the injunction was short (3 mths
– this was till the end of her actual contract)
3. The D’s breach (Curro) had been ‘flagrantly and
opportunistic
33
Injunctions to restrain the commission of a tort:

1. Trespass to land?
1. Yes (except if a bar to relief), assumed that damages
inadequate: Bendal Pty Ltd v Mirvac Project Pty Ltd

2. Restrain loss or damage to Chattels?

1. No, not usually – damages appropriate unless chattel
is rare: Pacific Hotels Pty Ltd v Asian Pacific
International Ltd. Or if chattel was otherwise unique
or was in danger of being converted to a ‘fixture’ for
example and could not easily be sold elsewhere on
market e.g special chairs: Aristoc Industries Pty Ltd v
R A Wenham (Builders) Pty Ltd.
34
 The exercise of discretion and
injunctions
Injunction a discretionary remedy (though structured and
not arbitrary).

Will be denied if D can establish a bar to equitable relief.

Bars are the same as for specific performance.

2 questions:
1. Will the injunction be fair to all parties? (this is
broader than under specific performance as n
injunction can affect third parties not party to the
proceedings)
2. As a practical matter, can the court supervise the
order it makes?
35
Note that such ‘bars to relief’ (‘defences’) that
the D may raise against the P include:
• ‘unclean hands’;
• Hardship;
• Delay (laches).

Key further reason a injunction may not be

given – It cannot be enforced (like for SP):
Humane Society v Kyodo

36
OMG I cant specific performance or an
injunction? What to do???

Will be remitted to a CL claim for damages: Summers v Cocks

Failure to get an injunction? Maybe still damages at CL (i.e. for a trespass). Or

other monetary award via equity if just trying to uphold an equitable right.

Also the P may still be able to get EQUITABLE damages if they cant get SP or
an injunction.

37
Equitable damages

Can get damages instead of OR IN ADDITION to an order for

SP or an Injunction: see e.g Supreme Court Act 1970 (NSW) s
68.
They are available in torts like nuisance where the tort is only
threatened and there is no damage suffered yet.

Does it apply to ‘equitable wrongs’? Arguments it only applies

to CL wrongs arising from contract (and thus is in addition to
SP where there has been a breach) and tort (and thus in
addition to an injunction to prevent the tort).

BUT some authority suggesting that no, you can get equitable
damages for equitable wrongs – but does this only apply to
some States such as VIC where the wording of their Act is
slightly different?
38
How are equitable damages assessed? (B&V p.51)
a) Damages in addition to injunction or specific
performance .
b) Damages in substitution for injunction or specific
performance.

The issue is that for an award of equitable damages you must

also be entitled to an injunction of SP (doesn’t mean that you
WILL get injunction of SP) just that you are entitled to.

In situations were common law damages are an adequate

remedy or in situations in which equity does not intervene
(i.e. contracts for personal service) then the jurisdiction of
Equity is not enlivened.

Not intended to be punitive in nature.

39