1.2 Admin Equitable Remedies (Brief Overview) PDF

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BRIEF OVERVIEW OF EQUITABLE REMEDIES

Remedy

Description

Injunction:

An order of the court compelling a party to refrain from doing something (a negative or prohibitory injunction) or to perform some positive act (a mandatory injunction). For example, an injunction may be ordered in equity to restrain the breach of an equitable obligation, such as an apprehended or continuing breach of trust. Injunctions may be ordered on an interlocutory basis, pending final hearing, to preserve the subject matter of the dispute, or on a final and permanent basis.

Specific performance:

An order of the court directing a party to a contract to perform obligations due by that party under the contract. Equity will not order specific performance where there would be an adequate remedy at common law, such as damages. Traditionally, land has been regarded as unique and consequently, a contract for the sale of land will invariably be considered appropriate for relief by way of specific performance, whereas goods which are readily obtainable on the market will ordinarily be compensable by an order for damages.

Damages in equity:

Since 1858,1 Equity Courts have had a statutory power to award damages in lieu of, or in addition to, equitable relief in the form of an injunction or specific performance. The availability of equitable damages depends upon the jurisdiction of the court to order specific performance or an injunction. As a discretionary remedy, equitable damages are not available as of right and may be reduced or denied by reason of equitable considerations not relevant at common law, such as hardship to the defendant or acquiescence by the plaintiff.

Equitable compensation:

Equitable compensation is an order to pay a sum of money for breach of a purely equitable obligation (e.g. breach of trust) assessed on the basis that the obligation is personal and absolute in nature; requiring the defendant to put the plaintiff back into the position in which he or she would have been had there been no breach. Common law considerations of causation, remoteness and foreseeability are irrelevant. The relevant inquiry is whether the loss would have happened had there been no breach.2 A plaintiff must make an election between equitable compensation and an account of profits where there are alternative remedies available (see below).

1 Lord Cairns’ Act 1858, adopted in NSW as s 32 of the Equity Act 1880 and later s 9 of the Equity Act 1901 [Evans, 24.19]

2 Re Dawson (Dec’d) (1966) 84 WN (Pt 1) NSW 399 at 404-6.

Account of profits:

Where the equitable breach was a breach of a fiduciary duty, then the courts of equity have jurisdiction to order the fiduciary to account to the plaintiff for the profit made as a result of the breach.3

Rescission:

A party to a contract or gift may disaffirm the transaction. The purpose of rescission is to put the parties back into the position they were in before the transaction was entered: restitutio in integrum. Rescission is not ordered by the court: the court adjudicates on the validity of the plaintiff’s act of rescission. The party seeking rescission must be prepared to do equity and make any necessary restitution.

Rectification

Where parties set out the terms of an agreement or transaction in a written instrument which by mistake does not embody the true agreement, equity will allow rectification of the document.

Declarations:

An authoritative and final statement by the court of the law or of the rights of a party or the parties in a matter.4 A plaintiff seeking a declaration needs to show a real interest in the subject matter to having standing to seek declaratory relief. Declarations may be refused if the issue is purely theoretical, or if the declaration sought does not resolve the dispute between the parties. A declaration will only be ordered if it has some effect on the rights or obligations of the parties to the dispute.

Constructive Trust:

The term ‘constructive trust’ is used in two different ways. The first is in reference to a trust imposed by the court regardless of the intention of the parties requiring a party to hold property for the benefit of another if it would be unconscionable for the party holding title to assert his common law rights and so deny the interest claimed by another. A constructive trust also be imposed on third parties who knowingly receive trust property or assisted in a breach of trust or fiduciary duty. In the latter case, the third party defendant is made liable as if he were a trustee, although there may be no property in his possession made the subject of the trust.

Equitable Lien:

An equitable lien is a form of security interest, or charge, over property. It is imposed by the court – not by agreement - and secures discharge of an actual or potential indebtedness5. It gives the plaintiff the right to be paid out of certain property, but not title to property. For example, equity recognises a vendor’s lien over property transferred to a purchaser until the purchase price has been received by the vendor.

Equitable Charge:

A proprietary form of equitable security created by agreement between parties that allows the creditor to order the sale of the defendant’s property after a particular event, such as default in payment. The proceeds of sale are available to satisfy the debt due to the holder of the charge.

Appointment of a

A receiver is a person appointed either by the court, or privately pursuant to an

3 Equity does not impose penalties so the award must be for actual gain and not a cent more. [Evans, 24.8] 4 For examples of declarations, see Evans, 26.18

5 Hewett v Court (1982) 149 CLR 639 at 663 per Deane J

Receiver:

express power in a contract for provision of security, to take possession of or recover the property of another on behalf of a creditor by getting in debts and other moneys due and paying outgoings. The role of a receiver is not to manage the property but to preserve the assets for those who will ultimately take them.6

Equitable Contribution:

Contribution is a doctrine of equity and the common law under which parties who share a common liability are entitled to seek contribution from each other in the event that one discharges the common liability. An order for contribution ensures that the common burden is borne equally between those liable for it.

6 Duffy v Super Centre Development Corp Ltd [1967] 1 NSWR 382 at 383-4....