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Equitable Remedies Notes

BPTC Law Notes > Property and Chancery Notes

This is an extract of our Equitable Remedies document, which we sell as part of our Property and Chancery Notes collection written by the top tier of City Law School students.

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EQUITABLE REMEDIES INTRODUCTION........................................................................................................................................... 2 FIVE (5) REMEDIES..................................................................................................................................... 2 PRINCIPLES................................................................................................................................................. 3 SPECIFIC PERFORMANCE......................................................................................................................... 5 Specifically Enforceable............................................................................................................................. 6 Building Contracts.................................................................................................................................. 8 Leasehold Covenants............................................................................................................................. 8 Constant Supervision............................................................................................................................... 10 Personal Services.................................................................................................................................... 11 Defence................................................................................................................................................... 12 Laches (Delay)..................................................................................................................................... 12 Hardship............................................................................................................................................... 13 Lack of Clean Hands............................................................................................................................ 14 Want of mutuality.................................................................................................................................. 14 Damages................................................................................................................................................. 14 INJUNCTIONS............................................................................................................................................ 16 Final (perpetual) or interim................................................................................................................... 16 Prohibitory............................................................................................................................................ 16 Mandatory............................................................................................................................................ 16 Principles................................................................................................................................................. 17 Personal Services.................................................................................................................................... 18 Defences.................................................................................................................................................. 19 No clean hands.................................................................................................................................... 19 Laches.................................................................................................................................................. 20 Acquiescence....................................................................................................................................... 20 Hardship............................................................................................................................................... 20 Damages................................................................................................................................................. 20 Quantification of Damages....................................................................................................................... 21 Rectification............................................................................................................................................... 23 Accounts & Enquiries............................................................................................................................... 23 Delivery up of documents......................................................................................................................... 23 Appointment of receiver........................................................................................................................... 24 Rescission................................................................................................................................................. 24 Writ ne exeat regno: Felton v Callis 1969................................................................................................24

INTRODUCTION 1

EQUITABLE REMEDIES This is to look at specialist laws on obtaining equitable remedies such as injunctions and specific performance as opposed to the common law remedies of damages. General Principles:

They are granted where the common law remedy is inadequate. This may be because the amount of damages cannot be quantified; Remedy sought by the party is not monetary. Discretionary

The solution to a legal claim is often money, an award of damages. By now it should be fixed in your mind that the usual remedy at common law is damages.

FIVE (5) REMEDIES The main equitable remedies are: i.

Specific Performance

ii. Injunction iii. Account of profits Profits to be paid over by fiduciary iv. Rescission Where a contract is rescinded for misrepresentation or mistake v. Rectification Rectification of a deed where it does not represent the true intention of the parties or some other document Specific Performance and Injunction(s) are the most important remedies - arise most often in practice and crop up time and again in exams. The other three remedies which you need to have some familiarity with are: i.

Account Account, which requires someone (usually a trustee for our purposes) to disgorge or pay over unauthorised profits is the more common of the three. It would be appropriate, for example, when someone makes a profit from selling your confidential information to a newspaper or to a commercial competitor. In these circumstances you can make the defendant account to you for the profits made. This remedy is still fairly rare in practice because there is a cost and a practical difficulty in ascertaining what profits have been made.

ii. Rescission

iii. Rectification 2

EQUITABLE REMEDIES PRINCIPLESDiscretionaryThey are not available as a matter of right - they will only be granted in the exercise of the courts discretion in accordance with certain will established principlesUnlike damages, which you are automatically entitled to once you prove your main case, ie for trespass/breach of confidence (whatever it may be), equitable remedies are all discretionary. They are awarded at the discretion of the court.In exercising that discretion the court is guided by equitable principles and equitable maxims.Equitable remedies are a form of court order. Breach of that order will lead to contempt of court proceedings. Contempt of court proceedings are criminal proceedings and your client could be sent to prison, or, at the very least, fined for his breach.Your client's breach could also have very serious personal ramifications for you. It is a matter of professional conduct and could lead to being struck off as a practising solicitor or barrister.This means that the award of a court order granting an equitable remedy is a very serious matter.Common Law remedies inadequateMaxims of Equity Apply"Equity will not suffer a wrong to be without a remedy""Equity follows the law""He who seeks equity must do equity:"Equality is equity"Equity looks to the intent rather than form""Equity looks on that as done which ought to be done""Equity imputes an intention to fulfil an Obligation""Equity acts in personam""Where the equities are equal, the first in time prevail""Where the equities are equal, the law prevails""You must come to equity with clean hands" If C has broken the contract themselves, they may not get specific performance or injunction if they are also in breach of obligations to the other party"Equity does not act in vain" Equity will not order specific performance where it would not be possible to supervise, eg. the performance of the contract"Delay defeat Equity"

All should be taken seriously - the court will not exercise in favour of a claimant who is himself or herself in breach of contract, or grant an injunction which could never be enforced 3

EQUITABLE REMEDIES

4 EQUITABLE REMEDIES SPECIFIC PERFORMANCE SP orders the other party to perform a Contract or complete the performance of his/her obligations under the Contract rather than just paying damages. The effect therefore is to place the parties into the position they would have been in had the contract been performed, this is the equitable equivalent of damages.

Contract existence Moreover, a Contract must exist - SP is only ordered to enforce a Contract whereas an injunction can be used to enforce other causes of action such as Tort, Breach of Confidence. Although, a current breach of contract is not necessarily required, SP could be ordered to perform a Contract where an imminent breach of Contract is threatened by the other party [Hasham v Zenab [1960] AC 316]

Positive term Moreover, SP must be based on a positive term of the Contract. Eg If X has a contract for Y to paint his house, but it doesn't say what colour - X can get SP to make Y paint his house, he can't get SP to make him paint the house blue. The contractual term to be specifically performed must be identified, if the term cannot be identified, other remedies needs to be looked at.

Final remedy A drawback of SP is that it is only available as a final remedy - you may already realise that litigation can be a slow business and getting to a final hearing may take several years. Various interim applications may be made during the course of litigation, but SP is only available at the very end. If protection is required on an interim basis, you have to look at other remedies, usually an injunction.

Discretionary Like all the other equitable remedies, it is discretionary in all the circumstances on whether SP could actually be ordered. There are numerous bars on SP created by the Court. The most common bar is that they do not wish the remedy of damages and SP to overlap, so they do not want to grant SP when damages would have been adequate

5 EQUITABLE REMEDIES Damages Inadequate Damages must be inadequate as a remedy, what the party wants is actual performance of the contract. Common to all equitable remedies. You need to start from the premise that the Courts prefer to make an order for damages, it's the simplest and neatest solution. Courts feel far less comfortable granting equitable remedies which tell somebody to do or not to do something. So the most important first hurdle to cross for the claimant is that damages are not adequate - in most cases damages in fact will be adequate - C will usually have to show either that something is so unique damages will not be enough or that financially damages will have no effect The first hurdle to overcome with equitable remedies, identifying the legal or equitable right which is your "main case", is easy with specific performance - the main case will always be a breach of contract. It is the question of whether damages are an adequate remedy which will often require a substantial amount of discussion. Hasham v Zenab [1960] AC 316 -

a Contract was signed by D in Nairobi for a TWO ACRE PLOT OF LAND. Contracts were signed and exchanged for completion with 6 months of signing, however, D repudiated the contract and ripped it up within minutes of exchange on the basis that she had only agreed to sell half an acre not two acres. 2 days before the original agreed completion date the purchasers requested an order for SP. Court held that C had to wait until Contract was actually in breach before requested order for SP but held that the C was entitled to a claim for SP.

In equity all that was required was to show circumstances which would justify the intervention by the court.

Specifically Enforceable

Specifically enforceable Contracts There are many types of specifically enforceable Contract, particularly Land. Equity commonly orders specific performance of a Contract for the sale of Land because Land is considered unique. The theory is a party is unable to just buy a replacement land in the market. The Land was chosen and equity is ready to grant SP for a sale of Land. On exchange of contracts, the property becomes yours in equity because the contract is specifically enforceable.

6 EQUITABLE REMEDIES Interest It does not necessarily enforce a proprietary interest in land, SP can be ordered of a licence to occupy land
[Verrall V Gt Yarmouth B.C. [1981] QB 202]. In the Verrall Case, the National Front in April 1979 had booked a hall for their conference in Great Yarmouth for two days in October, however, after they have booked to use the hall, the political make up of the Council changed (May 1979) and the Council did not want the National Front to use the hall and tried to revoke the licence by repudiating the Contract. However, the Court (Lord Denning) ordered the SP of licence because of the principles of freedom of speech. SP can also be ordered as to land out of the jurisdiction of England and Wales.

Property/Chattels

Chattels are items of personal property. In general, Contracts for the sale of property, the adequacy of damages may well depend on the uniqueness of what C contracted to buy - whether because no other thing like it is in existence or if awarded damages even with those damages, C would not be able to find another like it anywhere else. Land is generally however, even if it an ordinary house considered unique and contracts for the sale of property are routinely enforced - the tradition is so deeply routed that it can be considered as virtually automatic. If they are just common goods that can easily be bought elsewhere in the market place, such as hepplewhite chairs [Towin v Roach], the Court will not order SP in a Contract of goods, damages will be awarded. If they are difficult to purchase elsewhere, and the goods are of unusual rarity or distinction, the Court will order SP for the sale of goods [Phillips v Lamdin (1949) 2 KB 33]. In the Phillips Case, C, a naturopath, (health practitioner - natural remedies) entered into a contract with D for the purchase of leasehold premises which she required for professional and residential use. Completion date was fixed as March 28,

1947. In the event of failure to complete on the agreed date, the Contract provided for the payment of interest on the outstanding purchase-money from the date fixed for completion to the date of actual completion. C had issued a writ for specific performance on April 15, 1947, but the matter never came to trial as possession was granted on June 5, 1947. C now claimed damages including damages for loss of earnings and expenses caused by the vendor's failure to give her possession on March 28. She also claimed the reinstatement of an Adam door removed by the vendor at some time between the date of the contract and completion. The Court held that the vendor's delay in completion of the contract was wilful and wrongful, and C was entitled to recover so both given damages and essentially SP took over possession. The Court also ordered SP for the sale of Adam Door, a very unusual type of door which could not be easily bought elsewhere.

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