La1106 – Exam Notes

Lecture 7

Equitable Remedies

Common law remedies may not always be sufficient

Equity has higher flexibility, so it may fashion a remedy to procure substantial and practical justice

Equitable remedies are only awarded if common law remedies are unavailable or inadequate

Damages arise as a right; equitable remedies are discretionary

Compliance with orders is required

Remedies are considered to act as a supplement to the harsher applications of the common law

Courts will always first consider whether the common law principles will be adequate for the circumstance

Then they may consider whether equitable remedies should be awarded

Main equitable remedies

Specific performance

Injunction

Equitable damages

Rescission

Rectification

Specific performance

• 
  An order of specific performance is a court order that requires a party to perform his/her obligations under the contract
  
• 
  i.e. If a party is not ready, willing, and able, or there has been a breach
  
• 
  Courts must agree that jurisdictional factors have been met
  
• 
  Discretionary factors should also have been considered
  

Jurisdictional factors

• 
  Specific performance is only granted if
  
  • 
    Damages would be inadequate
    
  • 
    Plaintiff has considered valuable consideration
    
  • 
    Contract is enforceable
    
• 
  If damages would be adequate then there is no need for equity to intervene
  
• 
  No jurisdictional grounds means there can be no specific performance, but discretionary factors are less absolute
  

Inadequacy of damages

• 
  Unique or rare items of personality
  
  • 
    Falcke v Grey
    
  • 
    Dougan v Ley
    
    • 
      ‘The subject matter… is the sale of a chattel and in general, a suit for the specific performance of an agreement to sell and deliver chattels will not be entertained. But, when the substance of the matter is considered, the agreement is not of this simple character… The subject of the sale is ... shown to be a special right attached to a chattel, transferable only with it, and numerically restricted.’
      
• 
  Contracts conferring a benefit to a third party
  
  • 
    Beswick v Beswick
    
• 
  Sale of land
  
  • 
    No two pieces of land are identically situated on the surface of the earth, so they must be considered unique
    
  • 
    Loan Investment Corp of Australia v Bonner (Barwick J at 745)
    
• 
  Difficulty is calculating damages
  
  • 
    Some losses are very difficult to calculate or prove so specific performance might be more appropriate
    
• 
  Inability of the defendant to pay damages
  
  • 
    If the defendant is financially incapable of paying damages, then specific performance may be more appropriate
    

Consideration

• 
  Equity will not assist a volunteer
  
• 
  A volunteer is someone who has not provided consideration to a contract
  
• 
  Consideration must be adequate
  
• 
  Adequacy is determined according to general principles – adequacy does not equal sufficiency, not nominal or trivial
  
• 
  A court will not grant an order of specific performance if the contract is not enforceable
  
  • 
    Illegality
    

Discretionary factors

• 
  Contracts of personal service
  
  • 
    Courts are reluctant to grant specific performance, as it would be akin to slavery
    
  • 
    CH Giles & Co Ltd Morris
    
    • 
      In this case it was granted, and it was made in relation to a contract that did involve personal services
      
    • 
      The overall contract could be enforced, even though there was a service aspect
      
• 
  Contracts requiring constant supervision
  
  • 
    Will not require specific performance that involves constant supervision over a long period of time
    
  • 
    Ryan v Mutual Tontine Westminster Chambers Association
    
  • 
    Co-operative Insurance Society Ltd v Argull Stores (holdings) Ltd
    
  • 
    Patrick Stevedores Operations v MUA
    
• 
  Lack of mutuality
  
  • 
    Specific performance will be refused unless the remedy is available to both parties
    
  • 
    This is as of the day that specific performance is granted, not the formation of the contract
    
  • 
    E.g. if party A’s performance required personal services or constant supervision, party B would not be able to get specific performance. As such, party A cannot get specific performance against party B.
    

• 
  Delay (laches)
  
  • 
    Equity assists the diligent and not the tardy
    
  • 
    If the plaintiff has unreasonably delayed bringing a request for specific performance, the court will not grant it if it the delay would cause undue hardship to the defendant
    
  • 
    The time of the delay starts when the plaintiff learns of the action on which the claim is based
    
  • 
    Fitzgerald v Masters
    
• 
  Breach or repudiation
  
  • 
    A person who comes to equity must have clean hands
    
  • 
    The court is unlikely to deny specific performance unless there has been a breach of a major term
    
  • 
    Whether the plaintiff ready, willing and able is considered, but not absolutely
    
  • 
    Ready, willing and able at the time that the court is considering specific performance
    
  • 
    Mehmet v Benson
    
• 
  Hardship
  
  • 
    Specific performance will be refused if it would cause undue hardship
    
  • 
    Norton v Angus
    
• 
  Vitiating factors
  
  • 
    Specific performance will not be enforced in circumstances will not be enforced if there has been coercion, undue influence, unconscionable conduct, etc.; if it would be unfair
    
  • 
    Blomley v Ryan
    
• 
  Impossibility, illegality, futility
  
  • 
    E.g. if the property has been destroyed
    

Injunctions

• 
  An order by the court inhibiting or compelling the performance of an act
  
• 
  Mandatory injunctions
  
  • 
    For compelling performance
    
• 
  Prohibitory injunctions
  
  • 
    To stop/prevent breach
    
  • 
    Commonly used to enforce restraint of trade and confidentiality clauses
    

Restraint of trade clause

• 
  An injunction may be granted if it prohibits the employee to work for a third party, but not if this would result in compelling the employee to stay with the plaintiff employer.
  
• 
  Lumley v Wagner
  
• 
  Warner Bros Pictures v Nelson
  
• 
  Curro v Beyond Productions Ltd
  
• 
  Page One Records Ltd v Britton
  

• 
  To determine whether to grant an injunction to enforce a negative covenant, the court will consider
  
  • 
    Length of the relationship created by the contract
    
  • 
    Nature of the relationship
    
  • 
    Likelihood of compulsion to continue the relationship
    

Equitable damages

• 
  Damages under Lord Cairns’ Act
  
  • 
    In all states but Queensland
    
• 
  Jurisdictional factors
  
• 
  Available in 3 situations:
  
  • 
    Court has refused specific performance or an injunction on discretionary grounds;
    
  • 
    Court has granted an order for specific performance or an injunction but compliance is impossible;
    
  • 
    In addition to specific performance or injunction.
    
• 
  Aim to place the plaintiff in the same position as if the contract had been performed.