Equitable remedy

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Equitable remedies are judicial remedies developed by courts of equity from about the time of Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based common law. [1] [2] [3]

Equitable remedies were granted by the Court of Chancery in England, and remain available today in most common law jurisdictions. [4] In many jurisdictions, legal and equitable remedies have been merged and a single court can issue either, or both, remedies. Despite widespread judicial merger, the distinction between equitable and legal remedies remains relevant in a number of significant instances. Notably, the United States Constitution's Seventh Amendment preserves the right to a jury trial in civil cases over $20 to cases "at common law".

Equity is said to operate on the conscience of the defendant, so an equitable remedy is always directed at a particular person, and that person's knowledge, state of mind and motives may be relevant to whether a remedy should be granted or not.

Equitable remedies are distinguished from "legal" remedies (which are available to a successful claimant as of right) by the discretion of the court to grant them. In common law jurisdictions, there are a variety of equitable remedies, but the principal remedies are:

  1. injunction [5] [6]
  2. specific performance
  3. account of profits
  4. rescission
  5. rectification
  6. equitable estoppel
  7. certain proprietary remedies, such as constructive trusts [7]
  8. subrogation
  9. in very specific circumstances, an equitable lien. [8]
  10. equitable compensation
  11. appointment or removal of fiduciary
  12. interpleader
  13. equitable tracing as a remedy for unjust enrichment

The two main equitable remedies are injunctions and specific performance, and in casual legal parlance references to equitable remedies are often expressed as referring to those two remedies alone. Injunctions may be mandatory (requiring a person to do something) or prohibitory (stopping them doing something). Specific performance requires a party to perform a contract, for example by transferring a piece of land to the claimant. The award of specific performance requires that the two following criteria must be satisfied: [9] (i) Common law damages must be an inadequate remedy. For instance, when damages for a breach of contract found in favour of a third party are an inadequate remedy. [10] (ii) No bars to equitable relief prevent specific performance. A bar to relief arises for example, when the court's continuous supervision of the defendant is not feasible. [11]

An account of profits is usually ordered where payment of damages would still leave the wrongdoer unjustly enriched at the expense of the wronged party. However, orders for an account are not normally available as of right, and only arise in certain circumstances. [12]

Rescission and rectification are remedies in relation to contracts (or, exceptionally, deeds) which may become available.

Constructive trusts and tracing remedies are usually used where the claimant asserts that property has been wrongly appropriated from them, and then either (i) the property has increased in value, and thus they should have an interest in the increase in value which occurred at their expense, or (ii) the property has been transferred by the wrongdoer to an innocent third party, and the original owner should be able to claim a right to the property as against the innocent third party.

Equitable liens normally only arise in very specific factual circumstances, such as unpaid vendor's lien.

Equitable principles can also limit the granting of equitable remedies. This includes "he who comes to equity must come with clean hands" (that is, the court will not assist a claimant who is himself in the wrong or acting for improper motives), laches (equitable remedies will not be granted if the claimant has delayed unduly in seeking them), "equity will not assist a volunteer" (meaning that a person cannot litigate against a settlor without providing the appropriate consideration, for example, Money) and that equitable remedies will not normally be granted where damages would be an adequate remedy. The most important limitation relating to equitable remedies is that an equitable remedy will not lie against a bona fide purchaser for value without notice.

Damages can also be awarded in "equity" as opposed to "at law", [13] and in some legal systems, by historical accident, interest on damages can be awarded on a compound basis only on equitable damages, but not on damages awarded at law. [14] However, most jurisdictions either have ended this anachronism, or evinced an intention to do so, by modernising legislation. Two versions of the legislation are in force in Australian jurisdiction with one version placing emphasis on "commission of a wrongful act" and the other omits the reference to wrongdoing. [15]

The classification of a remedy as equitable has various consequences. For example, equitable remedies may be enforced by contempt, [16] and equitable remedies are subject to equitable defenses. [17]

See also

Related Research Articles

At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognised for the award of damages.

Equity is a particular body of law that was developed in the English Court of Chancery. Its general purpose is to provide a remedy for situations where the law is not flexible enough for the usual court system to deliver a fair resolution to a case. The concept of equity is deeply intertwined with its historical origins in the common law system used in England. However, equity is in some ways a separate system from common law: it has its own established rules and principles, and was historically administered by separate courts, called "courts of equity" or "courts of chancery".

<span class="mw-page-title-main">Maxims of equity</span> Principles that govern the operation of equity within English law

Maxims of equity are legal maxims that serve as a set of general principles or rules which are said to govern the way in which equity operates. They tend to illustrate the qualities of equity, in contrast to the common law, as a more flexible, responsive approach to the needs of the individual, inclined to take into account the parties' conduct and worthiness. They were developed by the English Court of Chancery and other courts that administer equity jurisdiction, including the law of trusts. Although the most fundamental and time honored of the maxims, listed on this page, are often referred to on their own as the 'maxims of equity' or 'the equitable maxims',The first equitable maxim is 'equity delights in equality' or equity is equality Like other kinds of legal maxims or principles, they were originally, and sometimes still are, expressed in Latin.

<span class="mw-page-title-main">Estoppel</span> Preventive judicial device in common law

Estoppel is a judicial device in common law legal systems whereby a court may prevent or "estop" a person from making assertions or from going back on his or her word; the person being sanctioned is "estopped". Estoppel may prevent someone from bringing a particular claim. Legal doctrines of estoppel are based in both common law and equity. It is also a concept in international law.

<span class="mw-page-title-main">Specific performance</span> Equitable remedy in contract law

Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. It is typically available in the sale of land law, but otherwise is not generally available if damages are an appropriate alternative. Specific performance is almost never available for contracts of personal service, although performance may also be ensured through the threat of proceedings for contempt of court.

Restitution and unjust enrichment is the field of law relating to gains-based recovery. In contrast with damages, restitution is a claim or remedy requiring a defendant to give up benefits wrongfully obtained. Liability for restitution is primarily governed by the "principle of unjust enrichment": A person who has been unjustly enriched at the expense of another is required to make restitution.

<span class="mw-page-title-main">Fiduciary</span> Person who holds a legal or ethical relationship of trust

A fiduciary is a person who holds a legal or ethical relationship of trust with one or more other parties. Typically, a fiduciary prudently takes care of money or other assets for another person. One party, for example, a corporate trust company or the trust department of a bank, acts in a fiduciary capacity to another party, who, for example, has entrusted funds to the fiduciary for safekeeping or investment. Likewise, financial advisers, financial planners, and asset managers, including managers of pension plans, endowments, and other tax-exempt assets, are considered fiduciaries under applicable statutes and laws. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance, and trust in another whose aid, advice, or protection is sought in some matter. In such a relation, good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts.

A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.

<span class="mw-page-title-main">Subrogation</span>

Subrogation is the assumption by a third party of another party's legal right to collect debts or damages. It is a legal doctrine whereby one person is entitled to enforce the subsisting or revived rights of another for one's own benefit. A right of subrogation typically arises by operation of law, but can also arise by statute or by agreement. Subrogation is an equitable remedy, having first developed in the English Court of Chancery. It is a familiar feature of common law systems. Analogous doctrines exist in civil law jurisdictions.

A legal remedy, also referred to as judicial relief or a judicial remedy, is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to impose its will in order to compensate for the harm of a wrongful act inflicted upon an individual.

<span class="mw-page-title-main">Constructive trust</span>

A constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess due to unjust enrichment or interference, or due to a breach of fiduciary duty, which is intercausative with unjust enrichment and/or property interference. It is a type of implied trust.

<span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

<span class="mw-page-title-main">Rescission (contract law)</span> Remedy which allows a contractual party to cancel the contract

In contract law, rescission is an equitable remedy which allows a contractual party to cancel the contract. Parties may rescind if they are the victims of a vitiating factor, such as misrepresentation, mistake, duress, or undue influence. Rescission is the unwinding of a transaction. This is done to bring the parties, as far as possible, back to the position in which they were before they entered into a contract.

<span class="mw-page-title-main">Adequate remedy</span>

An adequate remedy or adequate remedy at law is part of a legal remedy which the court deems satisfactory, without recourse to an equitable remedy This consideration expresses to the court whether money should be awarded or a court order should be decreed.. Adequate remedy at law refers to the sufficient compensation for the loss or damages caused by the defendant with a proper monetary award. The court must grant the adequacy of remedy that will lead to a "meaningful hearing". Whether legal damages or equitable relief are requested depends largely on,whether or not the remedy can be valued. Both two elements, compensation and the meaningfulness of hearing, provide a proper way to have an adequate remedy. The word "meaningfulness" of hearing in the law process is the assumption that the defendant compensated must be meaningful for the injured party where the defendant made a fully covered compensation for all the losses. Hence, the hearing in which cannot give any right amount of compensation award or settlement is not "meaningful", and the unavailability of the compensation will lead to an inadequate remedy. The adequate remedy at law is the legal remedies by meaning it is satisfactory compensation by way of monetary damages without granting equitable remedies.

<span class="mw-page-title-main">Tracing (law)</span>

Tracing is a legal process, not a remedy, by which a claimant demonstrates what has happened to his/her property, identifies its proceeds and those persons who have handled or received them, and asks the court to award a proprietary remedy in respect of the property, or an asset substituted for the original property or its proceeds. Tracing allows transmission of legal claims from the original assets to either the proceeds of sale of the assets or new substituted assets.

Australian trust law is the law of trusts as it is applied in Australia. It is derived from, and largely continues to follow English trust law, as modified by state and federal legislation. A number of unique features of Australian trust law arise from interactions with the Australian systems of company law, family law and taxation.

An interlocutory injunction is a court order to compel or prevent a party from doing certain acts pending the final determination of the case. It is an order made at an interim stage during the trial, and is usually issued to maintain the status quo until judgment can be made.

<span class="mw-page-title-main">Equitable interest</span>

An equitable interest is an "interest held by virtue of an equitable title or claimed on equitable grounds, such as the interest held by a trust beneficiary". The equitable interest is a right in equity that may be protected by an equitable remedy. This concept exists only in systems influenced by the common law tradition, such as New Zealand, England, Canada, Australia, and the United States.

An account of profits is a type of equitable remedy most commonly used in cases of breach of fiduciary duty. It is an action taken against a defendant to recover the profits taken as a result of the breach of duty, in order to prevent unjust enrichment.

<span class="mw-page-title-main">Contract</span> Legally binding document establishing rights and duties between parties

A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. A binding agreement between actors in international law is known as a treaty.

<i>Attorney General v Blake</i> English contract law case on damages for breach of contract

Attorney General v Blake[2000] UKHL 45, [2001] 1 AC 268 is a leading English contract law case on damages for breach of contract. It established that in some circumstances, where ordinary remedies are inadequate, restitutionary damages may be awarded.

References

  1. ↑ F W Maitland (1908). The Constitutional History of England. Cambridge University Press. pp. 221–226.
  2. ↑ Lord Denning (1979). The Discipline of Law. Butterworths. p. 197. ISBN   0406176051.
  3. ↑ Titi, Catharine (2021). The Function of Equity in International Law. Oxford: Oxford University Press. pp. 24ff. doi:10.1093/oso/9780198868002.001.0001/oso-9780198868002. ISBN   978-0-19-886800-2.
  4. ↑ See generally, Meagher and Gummow, Equity, Doctrines and Remedies, 3rd ed.
  5. ↑ In English law, see generally American Cyanimid Co v Ethicon [1975] AC 396
  6. ↑ See also, Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 , High Court (Australia).
  7. ↑ See generally, Oakley, Constructive Trusts, 2nd ed.
  8. ↑ Giumelli v Giumelli [1999] HCA 10 , (1999) 196 CLR 101, High Court (Australia).
  9. ↑ Bryan, Degeling, Donald and Vann, A Sourcebook on Equity and Trusts in Australia, Cambridge University Press pp. 24–31.
  10. ↑ See generally, Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR AustLII
  11. ↑ See, Co-operative Insurance Society Ltd v Argyll Stores [1997] UKHL 17 , [1998] AC 1, House of Lords (UK).
  12. ↑ Goff & Jones, The Law of Restitution, 4th ed.
  13. ↑ Mcgregor on Damages, 17th rev ed.
  14. ↑ Westdeutsche v Islington BC [1996] AC 669
  15. ↑ See, Supreme Court Act 1970 (NSW) s 68 and Supreme Court Act 1986 (Vic) s 38. See also, Wentworth v Woollahra Municipal Council [1982] HCA 41 , (1982) 149 CLR 672, High Court (Australia).
  16. ↑ International Union, United Mine Workers of America v. Bagwell, 512 U.S. 821 (1994).
  17. ↑ Bray, Samuel (2014). "A Little Bit of Laches Goes a Long Way: Notes on Petrella v. Metro-Goldwyn-Mayer, Inc". Vanderbilt Law Review En Banc . 67: 1. SSRN   2376080.
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