Undue Influence

Common Law Position (both UI and UC)

Person is bound by terms of contract, cannot revoke gifts (e.g. Equuscorp; Toll v
Alphapharm).
o Equuscorp: The respondents each having executed a loan agreement, each is
bound by it. Having executed the document, and not having been induced to do so
by fraud, mistake, or misrepresentation, the respondents cannot now be heard to
say that they are not bound by the agreement recorded in it.
o Toll: The representation [of a signed contract] is that the person who signs either
has read and approved the contents of the document or is willing to take the
chance of being bound by those contents.

Can only reverse transactions in extreme cases:

o Incapacity, non est factum (not deed of alleged signatory), fraud, mistake, duress.

Undue Influence

Undue influence can cause a court to set aside the transaction.

o When a stronger party (via confidence, control, domination or influence) is used
to influence a weaker party to enter into a transfer of property.

Courts role is to determine how WPs intention to contract was produced, not whether
WP knew what they were doing (Huguenin v Basely; approved in Bridgewater v Leahy).

Applies to inter vivos transactions wills are covered by different rules.

Principal case: Johnson v Buttress:

o Person with diminishing mental capacity (B) transferred property to another (J).
Bs son sued, arguing he should have received the house. Therefore J had to show
that Bs sale was a freely desired gift to her and not because of UI.
o J couldnt prove it, so she lost the title.

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Presumed Relationships

Certain relationships are considered to involve such trust and confidence, as well as
likelihood of SP exercising authority over WP, that they are automatically deemed to be
ones of UI.
o e.g. Solicitor-client; doctor-patient; religious advisor-disciple; parent-child;
guardian-ward.
o However, not husband-wife (Yerkey v Jones).

It is not considered natural in these relationships to expect one party to give property to
another (Yerkey v Jones).

If PR present, SP has to rebut this presumption (Johnson v Buttress).

What if not a presumed relationship?

Not to worry the plaintiff simply has to prove that there was a relationship of influence
rather than the court automatically assuming one existed.

Once a relationship of influence is shown to exist

The SP has to rebut this presumption in order to enforce the transaction. Can rebut by
demonstrating that:
o the gift was the independent and a well understood act of a man in a position to
exercise a free judgement based on information as that of the donee (Johnson v
Buttress).

Why does SP have to do this?

o When he takes from that man a substantial gift of property, it is incumbent upon
him to show that it cannot be ascribed to the inequality between them which must
arise from his special position (Johnson v Buttress).
o Not sufficient to show that WP understood/assented to deal intention must be
free of influence by SP.

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If SP cant prove that UI wasnt present, the court will find that theres been an abuse of
power/authority, or at least that the close relationship makes it difficult to hold in SPs
favour.

Third Parties

Often occurs in context of guarantors being subjected by debtors UI to help them with
creditors (i.e. CBA v Amadio).

If creditor (i) has actual knowledge of debtors UI; (ii) had knowledge of the
circumstances where UI arose, or (iii) ought to have known that UI could occur, their
transaction can be set aside.
o (CBA v Amadio Since CBA ought to have known that dodgy son was heavily
influential on parents, it acted upon the UI and so could have its contract
reversed).

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Unconscionable Dealing

Not undue influence a parallel, but separate, jurisdiction of equity.

Occurs when one party has a special disability which the other party exploits (Blomley v
Ryan):
o Kitto J: whenever one party to a transaction is at a special disadvantage in dealing
with the other party because of illness, ignorance, inexperience, impaired
faculties, financial need or other circumstances affect his ability to conserve his
own interests, and the other party unconscientiously takes advantage of the
opportunity thus placed in his hands.
o Fullagar J: age, sex and lack of assistance or explanation where assistance or
explanation is necessary.
o Lack of English (CBA v Amadio).

Includes transactions involving gifts (Louth v Diprose), contracts of sale (Bridgewater v

Leahy), and guarantees (CBA v Amadio).

Differences from Undue Influence:

o UI mainly deals with inappropriate or undue control, domination, assertion or
persuasiveness over a party.
o UC in comparison focuses entirely on special disadvantage of one party. Also
easier to establish a claim with this doctrine.

Special Disability (Amadio UC)

1. A special disability must exist in the innocent party.
o Must be one that seriously affects the ability of the innocent party to make a
judgement as to his own best interests (CBA v Amadio).
o Doesnt have to be detrimental to plaintiff (CBA v Amadio).
2. D should be aware of Ps special disadvantage.
o If D has actual knowledge then no difficulty (Louth v Diprose).
3. D exploits Ps SD to get beneficial bargain.
o If two previous elements established by plaintiff, defendant must prove that the
transaction was just, fair and reasonable (Fry v Lane; CBA v Amadio).

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o Passive acceptance of a benefit when P has SD satisfies exploitation requirement

(Bridgewater v Leahy).
o Inadequacy of consideration may be relevant to make decision (Blomley v Ryan).

Though not essential to prove UD (Amadio).

HOWEVER:
o Transaction wont necessarily be set aside if bargain itself is unfair (ACCC v
Berbatis):

Lessor had no obligation to renew and so was allowed to dictate unfair

terms to lessees.

Gleeson CJ: many, perhaps even most, contracts are made between parties
of unequal bargaining power, and good conscience does not require parties
to contractual negotiations to forfeit their advantages, or neglect their own
interests.

Applies to gifts (Wilton v Farnworth; Louth v Diprose) contracts of sale

(Blomley v Ryan) and contracts of guarantee (Amadio).

Spousal Volunteer Guarantees (Garcia UC)

If married woman enters into guarantee for husbands benefit, and subject to undue
influence or didnt understand nature/effect of guarantee:
o Presumption arises against lender that it knew of disability (Yerkey v Jones).

Unconscionable for D to enforce transaction where (Garcia v NAB, updating Yerkey):

o Surety didnt understand purpose/effect of transaction;
o Transaction voluntary;
o Lender is taken to have understood that husband may not give sufficient details to
wife about guarantee; and yet
o Lender didnt take steps to explain transaction/find out what she knew.

Despite this, a litigant does not necessarily have to meet all these requirements not
possible or desirable for equity to do this:
o Jenys v Public Curator: Such cases do not depend upon legal categories
susceptible of clear definition and giving rise to definite issues of fact readily

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formulated which, when found, automatically determined the validity of the

disposition.
Difference between Garcia and Amadio
GARCIA

Plaintiff a volunteer, victim of UI or didnt understand transaction, lender aware

borrower/guarantor spouses or closely related, and lender didnt take steps to ensure
guarantor understood transaction.

Confined to security-giver seeking to avoid security transaction.

No need for special disadvantage, but P must be a volunteer and lender must know of
spouse relationship.

Defences for:
o Undue influence component

Lender must show guarantor received independent advice.

o Lack of knowledge component

Lender must show adequate steps taken to reverse this.

AMADIO

Special disability, known to enforcing party, unconscientious advantage taken.

Applies to any party avoiding transaction.

P doesnt have to be a volunteer, but lender must have actual/constructive knowledge of

special disability.

Defences:
o Must show no unconscientious advantage taken.

Unity of Doctrine of Unconscionability?

No, not much of a proper unity at all.

Although equity (and UC by association) generally intervenes to prevent a stronger party

acting inequitably and in bad conscience by trying to enforce/retain benefit of an
agreement, this doesnt help determine what unconscionable conduct is.

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Amadio is a generally straightforward case in which to demonstrate unconscionability:

o Clearly requires the existence of SD, knowledge of SD by SP, and exploitation of
WP.
o Also extended scope of UC to include constructive knowledge of SD, and in
obiter stated that UC should not be used merely to remedy a bad bargain, but the
facts to which they were applied (i.e. dodgy bank rep) were uncontroversial and
easily fit within UCs framework.
o However, by leaving a non-exhaustive list of circumstances in which SD could
arise problems were caused by subsequent cases.

Bridgewater appears to have been determined almost solely on the desire of the High
Court to remedy a bad bargain rather than anything particularly related to
unconscionablity.
o Although it ostensibly applied the Amadio principles, the Court seems to have
ignored evidence showing that the deceased had good reason to effect the
transaction, as well as undisputed evidence showing that the deceased was in good
health, educated and retaining his mental faculties.

All in all, there was no special disability clearly defined.

o The main factor in the decision seems to have been the rashness of the transaction,
as well as the fact that the nephew was the party to suggest it, not the deceased.

Dal Pont: One wonders whether the majority would have decided any
differently had the idea for the transaction had come solely from the
deceased. If so, what the court is saying is that sowing the seed in the
mind of another person as to what he or she could do with his or her
property can of itself amount to exploitation even though the course
which the transferor chooses to adopt also serves his or her ends a
remarkable conclusion.

Garcia, in comparison, uses a completely different principle to establish unconscionable

conduct namely, focuses on the trust and confidence a husband and wife have for one
another.
o Although the original principle, Yerkey v Jones, has been criticised for its sexist
and outdated perspective of the role of women in relationships, the HCA
interpretation emphasises that a husband may innocently give a poor explanation
of a guarantee to his wife.

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o This isnt attributable to an imbalance between parties or a vulnerability to

exploitation (as per Amadio) only the relationship dynamic they hold.
o This case ultimately seems to take the same approach as Bridgewater in terms of
waiving firm principle in favour of righting the immediate wrong of the case at
hand.

Dal Pont: To premise the presence or otherwise of unconscionable

conduct on a black and white distinction, such as whether or not a
transaction is voluntary or a relationship a de jure marital one, seems to go
against the multifaceted inquiry which is usually part and parcel of any
inquiry in to the blameworthiness of a person's conduct.

Hard to fathom how external factors that a creditor cannot control

can be construed to indicate unconscionable conduct.

Based on these cases, any strongly defined concept of unconscionable conduct has been
rendered uncertain by later HCA cases. The trend towards individualised justice, whereby
each court twists overarching and vague principles to suit the facts of each case, has
hindered the foundation of a core concept of unconscionability that can be used in a
consistent and effective manner.

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Fiduciary Relationships
General Definition

A relationship in which one of the parties is not free to pursue his/her own separate
interests.
o The essence of a fiduciary relationship, by contrast, is that one party exercises
power on behalf of another and pledges himself or herself to act in the best
interests of the other (Norberg v Wynrib).

Fiduciary duties are obligations imposed by a court of equity, and are not consensually
agreed to by parties.

Duties can be breached even if unintended strict liability:

o The rule of equity which insists on those who by use of a fiduciary position make
a profit, being liable to account for that profit, in no way depends on fraud, or
absence of bona fide the liability arises from the mere fact of a profit having
been made (Regal Hastings).

Dramatically different from common law, in which the underlying principle is the free
pursuit of self-interest, regardless of good faith or fairness.
o a concept of a duty to carry on negotiations in good faith is inherently repugnant
to the adversarial position of the parties involved in negotiations each party is
entitled to pursue his own interest, so long as he avoids making
misrepresentations. (Walford v Miles)
o An architect can use materials for a building that allows him to receive a
commission, and so long as the products are not inferior or arent specified in the
contract this is not wrong at common law.

However, only the third degree of legal altruism demanded of

fiduciaries requires self denial of that kind (Birks, The Content of
Fiduciary Obligation).

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Categories of Fiduciary

Accepted categories: trustee-beneficiary; agent-principal; solicitor-client; employeeemployer; director-company; and partners (Hospital Products Limited).
o The critical feature of these relationships is that the fiduciary undertakes or
agrees to act for or on behalf of or in the interests of another person in the exercise
of a power or discretion which will affect the interests of the other person in a
legal or practical sense (Mason J in Hospital Products).

However, the categories have not closed (Hospital Products).

o Example is doctor-patient, if doctor giving advice (Breen v Williams).
o the difficultyis that the law has not, as yet, been able to formulate any
precise or comprehensive definition of the circumstances in which a person is
constituted a fiduciary in his or her relations with another (Breen v Williams).
o If a party is not free to pursue their separate interest, likely to be a fiduciary.

Other factors such as presence of relationship of trust/confidence, or

ability to exercise clients powers (as per trustee) wont necessarily mean a
fiduciary relationship exists.

May simply point to tortious duty of care or, conversely, a fiduciary

relationship could arise with no rights being held on behalf of principals
(i.e. solicitors).

o Can argue that as a result fiduciary categories remain uncertain. But this is not a
bad thing it simply shows equitys flexibility.
Nature of fiduciary obligations

The utmost duty to disclosure any conflicts and profits by a fiduciary forms the core of a
fiduciary relationship (see Breen v Williams).

Positive obligations of a fiduciary:

o Duty to disclose unusual terms in agreement (UDC v Brian).
o Duty to disclose material to prospective investors (Directors of Central Railway v
Kisch).

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Fiduciary cannot pursue business opportunity if such conduct would put him in position
where fiduciary obligations conflict with personal interests. As such, any potential
conflict must be avoided.
o A man of integrity can be a defaulting fiduciary without ceasing to be honest
(Hughes Aircraft v Airservices).
o The rule of equity which insists on those who by use of a fiduciary position make
a profit, being liable to account for that profit, in no way depends on fraud, or
absence of bona fide the liability arises from the mere fact of a profit having
been made (Regal (Hastings) Ltd v Gulliver).

In case, directors put own money into venture that their company could not
afford, all parties reaped profits. But by participating in an opportunity of
the company the directors had breached FD and so had to return their
share of money.

Should be clear that fiduciary breaches are not always fault-based, but are
ultimately relationships held to exceptionally high standards.

Commercial relationships and fiduciaries

Quite often a purely commercial agreement conducted at arms length and on equal
footing indicates no fiduciary duty (Gibbs CJ Hospital Products).
o However, Mason J also stated that ultimately each case must be examined on its
merits to determine if a fiduciary relationship is present.

Fiduciary relationships can exist, and even be forced to accommodate to the terms of, a
contractual arrangement (Hospital Products).
o i.e. Can contract out of fiduciary duties.

Joint ventures

Fiduciary relationships can exist between parties attempting to form a joint venture
(United Dominions v Brian).
o A fiduciary relationship can arise and fiduciary duties can exist between
parties who have not reached, and who may never reach, agreement upon the
consensual terms which are to govern the arrangement between them

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This case meant that equitable duties, such as making full and frank
disclosures or avoiding any conflict of interest, would apply during
negotiations to enter into joint ventures.

Less likely to be present in commercial transactions where parties are acting at arms
length (Gibson Motorsports).
o Although such transactions are ripe with fiduciary potential, if this is not
realised then there is no such duty.
o All the above parties embarking on separate interests whilst negotiating a joint
venture was evidence that all were acting in distinctively non-fiduciary manner.

In England, equitable jurisdiction enlivened because one party removed itself from the
market so the other could purchase assets, the capital being shared as part of an intended
JV (Banner Homes).
o The equity is invoked where the defendant has acquired property in
circumstances where it would be inequitable to allow him to treat it as his own,
and where because it would be inequitable to allow him to treat the property as his
own, it is necessary to impose on him the obligations of a trustee in relation to
it. It is invoked because there is no bargain which is capable of being enforced. If
there were an enforceable bargain there would have been no need for equity to
intervene in the way that it has done in the cases to which I have referred.

Extent of fiduciary duties within a relationship

Can be fiduciary as to none, all or some of its aspects.

o It is important to appreciate that the existence of a fiduciary relationship does not
determine the content of the duties owed by one fiduciary to another. It has long
been recognised that the nature and extent of the duties depend on the
circumstances surrounding the particular relationship and the context in which
relief is sought (News Ltd).

In contractual relationships, the nature of fiduciary obligations may be determined by the

terms, if any exist.
o Noranda v Lachlan: Selling an interest in JV falls outside the scope of fiduciary
duties and so exiting partner does not need to act in the interests of other partners.

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o Also in Noranda, fiduciary obligations do not supply rules of positive obligations

owed e.g. if director makes decision to make appalling invest, but doesnt act in
self-interest, only breaches contractual duties as fiduciary principles would not
state whether or not hes breaching FD.

Simply stating that a relationship is fiduciary does not provide a complete description of
the legal nature of the relationship.
o the extent and nature of the fiduciary duties owed in any particular case ought
to be determined by reference to any underlying contractual relationship between
the parties. Thus, in the case of an agent employed under a contract, the scope of
his fiduciary duties is determined by the terms of the underlying contract
(Henderson v Merrett Syndicates).

Basically, other legal rules likely apply to a contractual relationship

make sure that they dont override fiduciary duties.

Defence of informed consent

To waive fiduciary duties, must make full disclosure to party who is owed duty, and that
party must consent.
o Strict application if substantial documentation to be given to beneficiaries then
this must be disclosed (Boardman v Phipps).

In above case solicitor did not get permission from a trustee who was not
sui juris. As a result he was liable even though all other trustees had
approved the measure.

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Accessorial Liability in Equity

Property Rights

To be one, it:
o Must be both capable of assignment to third parties and capable of binding
third parties without their consent.
o Cannot be destroyed just because the property comes into the possession of a third
party.

Generally, if one party (X) holds anothers (Y) item of property, Y has an equitable title
and can enforce the return of the property.
o However, if X is a bona fide purchaser for value without notice, the equitable
title is extinguished Y cannot get the property back.

Types of claims against trustees

Proprietary:
o Plaintiff asserts that item of property is held by defendant on trust.
o Claim is not for the loss incurred by P, but for the property itself (therefore if
property value increases, the plaintiff benefits from this).

Personal:
o Plaintiff asserts claim against trustee for loss and illegal breach of trust assets.
o Effectively claims security interest over asset illegally acquired in order to get
back what was originally lost from the trust (if property value increased in Ds
hands, P doesnt benefit from this).

Barnes v Addy Claims

Case principle

Principle (Lord Selborne):

o Those who create a trust clothe the trustee with legal power and control over the
trust property, imposing on him a corresponding responsibility. That responsibility
may no doubt be extended in equity to others if they are found either making
themselves trustees de son tort [by assuming duties wrongly primary liability],

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or actually participating in any fraudulent conduct of the trustee to the injury of

the cestui que trust [beneficiary fraudulent conduct according to common law
principles].
o But, on the other hand, strangers are not to be made constructive trustees merely
because they act as the agents of trustees in transactions within their legal powers,
transactions, perhaps a court of equity may disapprove, unless those agents
receive and become chargeable with some part of the trust property, or unless
they assist with knowledge in a dishonest and fraudulent design on the part of
the trustees.

Application in Barnes v Addy:

o Not necessary to affect the outcome the third parties (solicitors) didnt receive
ant trust property, nor was it argued that they had knowledge of Barnes intended
misappropriation. Furthermore, the express trustees (Addy) default was not
dishonest or fraudulent.

Additional note:
o Although Lord Selborne formulated the third party liability principle, there were
other cases in the 1840s that held that a stranger might be liable for knowingly
inducing or assisting the commission of a breach of trust, even if the trustee had
not been dishonest or fraudulent.

Relates to second limb claims, which require bad trustee conduct.

o The High Court in Farah noted these cases, and accordingly has left open the
possibility that third parties may in future be liable under innocent breaches of
fiduciary duty.
First limb Knowing Receipt

Lord Selbornes actual expression receive and become chargeable.

Plaintiff must prove elements of this cause of action (Farah). Must demonstrate three
things:
1. Defendant received trust property beneficially (not merely as an agent for
another);

Information is not trust property for this limb (Farah).

2. Defendant knew property was part of the trust; and

3. D knew of circumstances that made payment a misapplication of trust funds.
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Knowledge requirement first four parts of the Baden 5-part classification

(Consult Development). Doesnt have to be aware at time trust property
acquired, but if later realises and continues to use property as own then liable.
o Most stringent requirement knowledge of circumstances that would
indicate the facts to a reasonable and honest person (Baden v SocieteGeneral).

Historically in England, liability required knowledge amounting to a want of

probity by recipient more stringent requirement than in Australia.

Second limb Knowing Assistance

Three elements (as above, burden of proof on plaintiff):

1. A fraudulent breach of trust by the fiduciary must have occurred (Farah [180]);

Not all breaches dishonest/fraudulent, but Australian cases (Consul; Farah)

rely on common law principles and not equitable.
o Also see Farah High Court regarding 1840 cases in future Australian
courts may find scope to make third party liable even when fiduciary is
not at fault, and can do so whilst following orthodox manner.

NOTE: Fiduciaries no longer need to fraudulent breach trust in England

(Royal Brunei; Twinsectra).

2. Defendant must have assisted in that breach;

Can be omission by D failing to stop trustees breach. However, assistance

must be of some significance.

3. D must have had knowledge of the breach.

Same actual/constructive requirement as the first limb.

In England, dishonesty has replaced knowledge (Royal Brunei; Twinsectra).

o Reflects modern societal views about third party liability especially
when professionals are assisting trustees and become embroiled in
liability (i.e. Enron, HIH).
o cf Lord Selborne trust performance would benefit from solicitors and
so reluctant to extend liability to them.

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Farah and the NSW Court of Appeal

Case Facts

Joint venture between Farah and Say-Dee to purchase and redevelop land (No. 11).
However, the council refused development applications as land too narrow without
amalgamation with adjacent lots.

After refusal Mr Elias (F), his wife and 2 daughters bought surrounding lots. Farah then
tried to buy out Say-Dees share in No. 11 SD refused, F brought proceedings seeking
trustee to be appointed and property sold.

SD counterclaimed, arguing F held its interests in surrounding property on constructive

trust. F won at trial, but overturned by Court of Appeal on the basis of unjust enrichment,
despite neither claimant raising this issue.

High Court strongly rejected COAs decision and reasoning.

Scope of Fiduciary Obligation and informed consent:

COA held Elias did not properly obtain informed consent in order to avoid breaching
fiduciary duty.

High Court held otherwise - the sufficiency of disclosure can depend on the
sophistication and intelligence of the persons to whom disclosure must be made and
so Elias had adequately discharged his fiduciary obligations in that respect.

Knowing Receipt/Unjust Enrichment:

The proposal by the COA to allow unjust enrichment to run alongside knowing
receipt (and Say-Dees proposal replacing the first limb claim with unjust enrichment)
was thoroughly rejected by the High Court.
o It was an unjust solution purely because neither claimant had raised the issue
it was an independent creation of the COA.
o A restitution-based response, whether complementing or replacing knowing
receipt, would cause serious confusion in the lower courts. This is because
they would not know whether to enforce a flawed restitution cause of action
(COA) or High Court obiter (Consul).
o There was no valid justification to modify the existing causes of action. In
fact, the COA reasoning was so unsupported that the High Court felt that there
was a belief that restitution had an inalienable right to exist.

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Interestingly, although the Court of Appeal attempted to refer to Birks as

a general authority for its decision, the High Court found that Birks had
actually retreated from his initial support for restitution in this field.

o Ultimately, the Farah High Court held that unjust enrichment exists only if there
is a relevant qualifying or vitiating factor falling into a pre-existing category.

Referred cases such as David Security indicate that courts do not

determine whether a matter is unjust by reference to subjective evaluation
of fairness or unconscionable conduct.

UE is not a definitive legal principle on its own terms because (quoting

Gummow) its existence could restrict dynamism and substance in the legal
field, result in new fictions being created to support its thesis, distort
existing legal principles and ultimately create serious uncertainty in
Australias legal system.

Knowing Assistance

The High Court reiterated that there was no need to look to English cases in regards to
dishonesty or the jury question Consul remains the authority for assessing which
parties are liable under the second limb claim.

Purple Patch or Isolation?

The decision in Farah could be regarded as stubbornness except for the fact that the
High Court was undoing what should be wholly regarded as bad law.

Quoting Gummow J, the Court held that general principle is derived from judicial
decisions upon particular instances, not the other way around
o In contrast, the Court of Appeal had favoured academic notions of an ideal
taxonomy, and by doing this had created a principle that, first, was unsupported
by and heavily clashed with existing Australian law and, second, unnecessary for
fair and just outcomes.
o In regards to the latter point, the High Court emphasised that failure of a party to
obtain a favourable outcome was in itself not unjust the principle itself would
have to be flawed to justify change.

Based upon these facts, Farah represents a clarion call to orthodoxy and a return to
existing precedent, which have been shown to create good and certain law.

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Misrepresentation and Mistake

Misrepresentation Common Law
CL Position

If misrepresentation fraudulent (i.e. was done dishonestly) a contract can be rescinded:

o First, in order to sustain an action of deceit, there must be proof of fraud, and
nothing short of that will suffice. Secondly, fraud is proved when it is shown that
a false representation has been made (1) knowingly, or (2) without belief in its
truth, or (3) recklessly, careless whether it be true or false (Derry v Peek).
o However, if a duty of care is present certain innocent misrepresentations are liable
for damages at law (Hedley Byrne v Heller).

Rules as to causation:
o Fraudulent statement must be a cause, not the absolute cause inducing entry into
the contract.
o Influence of statement on plaintiff assessed objectively.
o Remoteness fraudulent defendant must make amends for all damages directly
attributable to fraudulent inducement.

Damages place plaintiff in position would have been in if fraud not

committed (Hedley Byrne v Heller).

Rescission can be done at Common Law?

Yes, this proprietary remedy can be granted transfer of title was induced by fraudulent
misrepresentation. Permits rescission of contract and re-vesting of title in plaintiff.

Although a proprietary remedy, rescission has both personal and proprietary

consqeuences:
o Personal Permit victim to avoid contract at his/her discretion.
o Proprietary Title vested in transferee is conditional, and if power
holder/plaintiff successfully exercises rescission power the title:

(i) re-vests in plaintiff; and

(ii) power holders proprietal rights become vested in defendant

(contractual counterparty).

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o Sounds confusing, but basically proprietal rights are transferred simultaneously so

that there is no multiplication of rights.

Ensures restitutio integrum (restoration to original position) occurs.

Steps required when rescinding contract

The power holder:

o Must elect to rescind while power survives;
o Mustnt have affirmed contract while being aware of fraud; and
o Must be in position to make restitution of any benefits received under the contract.

i.e. If plaintiff got money from fraudulent sale, must be able to return in to
get the property back.

In Specie restitution:
o After rescission, if property is being returned it must be returned in present form
under common law cannot sell it and distribute the profits.

e.g. A induced to enter fraudulent contract to transfer title of painting to B

in exchange for title in Bs car. If B found to have induced A, conditional
common law title passes to B subject to power to re-vest title in A. If A
decides to re-vest title in painting, must make in specie restitution of Bs
car.

However, this power to rescind can be destroyed:

o Nemo dat quod non habet noone gives what he does not have.

Cardinal property law rule: If X gain possession of property from Y, who

does not have ownership rights, X will also be denied such rights.

[T]he assets come to the liquidator with their history and inherent
characteristics. Although the liquidator takes the assets on behalf of the
creditors, third parties retain any rights which ensure to them as a result of
that history or those characteristics (Vagrand v Fielding).

o But because the power is absolutely proprietary in nature, it is destroyed by

good faith purchaser of title for value without notice.

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Common Law Cases

Car & Universal Finance Co Ltd v Caldwell

Caldwell sold car to dodgy dealer, when cheque bounced C rescinded successfully.

In meantime car sold a number of different people, eventually ending up with C&U who
purchased in good faith/for value.

However, rescinding contract first meant that title already re-vested in C:

o The contract of sale to these rogues was avoided and Caldwell then became the
owner of the car again. It was only after he avoided it (so that it was once again
his property), that these rogues purported to sell it to Motobella and Motobella
purported to sell it to C & G Finance. Those sales were ineffective to pass the
property because it had already re-vested in Caldwell.

Re Eastgate; Ex parte Ward [1905] 1 KB 465

Fraudulent purchaser bought furniture from vendor on credit. Purchaser engaged in

bankruptcy, vendor entered the house and repossessed furniture.

Purchaser formally went bankrupt, his property vested in trustee. Trustee sued vendor for
possession of taken furniture.

Court right to rescind required against both purchaser and trustee. Vendor had not
engaged in conversion by taking back furniture:
o the trustee acquired the interest of the bankrupt in the property subject to
the rights of third parties. One of those rights in this case was the right of the
vendors of the goods to disaffirm the contract and to retake possession of the
goods.

Equitys concurrent jurisdiction with common law

Equitable remedies available if contract void at common law.

o Notably, if power holders right to rescind ineffective because in specie restitution
not possible, equity intervenes to treat the exercise as valid and therefore re-vest
rights in equity at that time.

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Full proprietary and personal restitution can be decreed at the time of the subsequent
equity suit.
o Equity takes less substantial view of the requirements of restitution in integrum;
o CL lacks means of adjustment to provide a remedy where one or other party
benefits from the possession of property.

e.g. Shareholder receives dividends from shares before exercises right to

rescind. Common law wont allow rescission because sholder has gained
profit from the deal, but in equity this will be ignored and restitution
granted.

Rescission differences Alati v Kruger leading case:

o Essentially, equity can re-vest equitable title to property in a much wider variety
of cases than CL.

Of course, a rescission which the common law courts would not accept
as valid cannot of its own force revesting legal title to property which
had passed, but if a court of equity would treat it as effectual the equitable
title to such property revests upon the rescission.

If CL cant find rescission valid equity doesnt apply, but if CL

does approve of rescission equitable remedies are relevant.

o Proprietary consequences of rescission in equity is to make the parties to the

contract (and those who take through them) trustees of the re-vested titles for
their contractual counter-party.

Effectively a resulting trust (El Ajou v Dollar Land Holdings).

Innocent Misrepresentation

In a nutshell common law provides no remedy, Equity does.

o Rescission is the remedy equity provides (Redgrave v Hurd)

Where rescission [on the ground of misrepresentation of a material fact] is

claimed it is only necessary to prove that there was misrepresentation;
then, however, honestly it may have been made, however free from
blaming the person who made it, the contract, having been obtained by
misrepresentation, cannot stand (Derry v Peek).

o Bars to rescession: As per fraudulent misrepresentation, i.e. bona fide purchase,

affirmation, lapse of time.
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Rescission & Restitution vs Common Law Damages

Rescission/restitution dissolves contract ab initio (from the start) so no claim of

contractual damages can occur.

However, at CL rescission doesnt prevent a victim bringing other claims against D.

o So can rescind contract, re-vest title and get resitution (if profits made) and then,
providing no element of double recovery, initiate a claimm for damages in deceit
(i.e. for fraudulent conduct).

Equitable Fraud
Definition

Different meaning in equity than common law:

o Common law dishonesty, intention to cheat.
o Equity much broader, acts as preventative measure rather than dealing with
issues after problems occur.

Jurisidiction of equity a prophylactic.

By disarming the parties of all legal sanction and protection for their acts,
they suppress the temptations and encouragements which might otherwise
be found too strong for their virtue(Story).

Even innocent wrongs will be held liable an extremely high standard of

openness and fairness by parties (Maguire v Makaronis).

Other Heads of Equitable Fraud

Inducement:
o Needs to be more than inequality and capacities of parties, i.e. EF (MGL).

the touchstone is whether the pressure (unlawful or lawful) amounts to

conduct which is unconscionable; but that, as stated in [12-090] below, is
no more than saying that it is fraudulent in the equitable sense.

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Part Performance:
o Equity can decree specific performance even if contract rendered unenforceable
by Statute of Frauds (modern counterpart s 53(1) Property Law Act).

Only possible if D reasonably aware of Ps acts and then relies on statute

to render the contract unenforceable

Basically indicates that D is being sneaky by not remedying the situation.

However, no more new heads of EF according to MGL:

o The door may now appear shut to fresh appeals but the terms in which fraud is
seen to appear in various cases will provide sufficient lee-ways for further
development.
o Such a principle upholds the notion that Courts should adhere to precedent
and should not seek to stray from it.

Mistake
General Rule

Equity can rescind a concluded contract that parties have entered under mutual, common
or otherwise unilateral mistake, leaving defective datain Ps head.

Generally, all such contracts have either an:

1. Induced Mistake (error brought on by Ds misrepresentation). Equity is more
likely to be intervene in this type of mistake.
2. Self-Directed Mistake (D innocent of any wrongdoing).

Equity wont intervene if contracting parties of one mind (ad idem).

o Only intervenes when plaintiff is subjectively mistaken to the bargain and, if
objectively construed, there is conduct suggestive of contractual formation and
the defendant is not at fault.

If it does intervene, equity does so in concurrent jurisdiction (both CL and equity) or

auxiliary jurisdiction (equity supplements CL).

Heads of Mistake

Unilateral:

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o Mistake made because guilty party knew about error and induced contract
anyway.
o If acknowledged that understanding of one party correct, will fit into this
subcategory (Goldborough Mort v Quinn).

Mutual:
o Both parties make mistakes, but different from one another.
o Offer and acceptance are in their true meanings different, so no contract created
(Sharp v Thomson).

Common:
o Both parties make the exact same mistake.
o Transfers made under this mistake can be subject to restitution in integrum.

However, only if misapprehension fundamental and party seeking equity

not at faul (Solle v Butcher).

o Contract void?

Possibly at law, but not ab initio (Bell v Lever Bros).

Contract void in futuro from time common mistake discovered (McRae v

Cth).

Recovery of Mistaken Payments

Equity allows return of mistaken payment or other transfers outside contractual

formation.
o Strict liability in cases of mistaken beneficiary to deceaseds estate must pay
back money regardless of fault (Re Diplocks Estate).

Only requirement P must have exhausted remedy against those making

the mistake (i.e. the trustees).

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Estoppel
Equitable Estoppel

Two types: Promissory and Proprietary.

However, Waltons Stores signalled a potential merger of these doctrines

o NOTE: It is uncertain as to whether this has occurred or not.

Promissory Estoppel
Occurs when (Legione v Hately):
1. Parties are in pre-existing contractual relationships;
2. One party make an express/implied representation;
3. The representation is clear and unambiguous; and
4. The other party has acted in reliance on the representation and is in a position where
material disadvantage will be suffered if estoppel is denied.
Legione failed on the facts

Did not satisfy point 3 secretary gave uncertain and unqualified response about delay.

Promissory estoppel acts as a defensive shield only:

This was because concern that to enforce voluntary promises of future conduct without
consideration would undermine the law of contract.
o It would cut up the doctrine of consideration by the roots, if a promisee could
make a gratuitous promise binding by subsequently acting in reliance of it (Cth v
Scituate Savings).

Proprietary Estoppel
Occurs when (Dillwyn v Llewellyn):
1. An expectation has been created/encouraged by landowner;
2. Second party had expended money on land in accordance with this expectation;
3. Owner know of expenditure, does not object; and
4. Second party will suffer detriment if the expectation not fulfilled.

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Dillwyn Relevant facts

Father promised to transfer son land. Transfer not completed, but son built house on land
with his fathers knowledge and approval. Son successfully argued proprietary estoppel
because of his fathers conduct.

Functions as a cause of action (sword) as well as defence (shield).

Post-Waltons Equitable Estoppel
Occurs when (Brennan J in Waltons):
1. Assumed Legal Relationship: Plaintiff assumed a particular legal relationship
existed/would exist with defendant;
2. Defendant Induced: Defendant induced plaintiff to adopt that assumption/expectation;
3. Plaintiff Acted: Plaintiff acts in reliance of this promise;
4. Defendant knew of Action: Defendant knew plaintiff was acting in reliance of the
promise;
5. Plaintiff Suffered: Plaintiffs actions would cause detriment if assumption/expectation not
fulfilled; and
6. Defendant didnt attempt to avoid: Defendant fails to act to avoid the detriment, whether
by keeping the promise or otherwise.

NOTE: EE speaks in terms of assumption/expectations, not representations. However,

must be unambiguous, clear and unequivocal or equity will not intervene if not
reasonable to rely upon representation cant invoke EE.

Waltons Stores Relevant facts

Mahers in negotiations with Waltons Stores about granting a lease. Building on site had to
be demolished so that new department store to Waltons specifications could be
constructed.

7 November Mahers solicitors requested prompt finalisation of contract, Waltons

solicitors sent redrafted lease same day.

11 November Mahers solicitors sent executed lease to Waltons, began to demolish

building.

21 November Waltons had second thoughts about lease, told solicitors to go slow.

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Mid-December Waltons becomes aware of demolition works, decides not to proceed

with lease. Does not inform Mahers of this decision.

19 January Waltons makes first communication with Mahers since 21 November,

informs that Waltons will not go ahead with lease. Demolition works 40 per cent
complete at this stage.

Waltons Stores Decision and reasoning

Mahers could not claim common law estoppel by representation, or promissory estoppel:
o CLE: Was not a representation of existing fact (i.e. lease not in existence);
o PE: Parties not in pre-existing relationship, and Mahers were plaintiffs and so not
relying on estoppel defence.

However, the High Court made a remarkable departure from existing principle:
o Extended the Legione principle so as to preclude departure by a person from a
non-contractual representation (Mason CJ, Wilson J [399]).

Now a sword as well as a shield.

o The need for clear and unequivocal representation was satisfied the terms of the
lease were settled and there was an assumption that the contract would be
completed as a matter of course (Mason CJ, Wilson J).

Accordingly, a new head of equitable jurisdiction had to be established to

circumvent the constraints of Jorden v Money.

o Waltons silence from 21 November to 19 January was, in the circumstances,

enough to found an equitable estoppel.

Silence only supports estoppel if it is inequitable to assert a legal

relationship different from the one which, to the silent partys knowledge,
the other party assumed/expected (Brennan J).

Elements of urgency in obtaining a response, and because the last

communication between parties was the sending of lease documents, the
assumption that the contract would be completed remained unchallenged.
Therefore appellant under obligation to communicate with Mahers within
reasonable time (Mason CJ, Wilson J 407).

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Minimum Equity
A court of equity must make an order that simply addresses the detriment suffered by relying
on the representation.

i.e. Mahers would be compensated for demolished building, not loss of contract.

Cth v Verwayen: Minority found that stress and additional legal costs would allow
estoppel, but majority held that only measurable detriment was the delays and that could
be resolved by an order for costs.

Common Law Estoppel

Estoppel by judgement

Res judicata

Issue estoppel
o Any matter of fact or law decided by earlier judgement estopped from use in later
proceeding.
o e.g. If court rejects that you were beaten into confessing, you cant argue it later double jeopardy-esque.

Anshun Estoppel

Cannot raise an issue in a proceeding that could/should have been raised in an earlier one.
o Not strictly estoppel, but derived from need for public interest considerations.

Estoppel by Writing

Precludes parties from disputing any matter recited in a deed between them.

Estoppel in pais (by conduct)

Estoppel by Convention
o Made when two parties reach mutual agreement or mutual assumption of a state of
fact - estopped from denying this fact.
o Must prove that:

P has adopted assumption as to terms of legal relationship with D;

D has adopted the same assumption;

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Both parties have conducted affairs on basis of assumption;

Each party knew/intended that the other act on that basis; and

Departure would detriment P.

o Conventional estoppel can act alongside contractual variation:

If parties to contract put particular interpretation on its terms and hold faith
that other party has acted the same, bound by interpretation (Amalgamated
Investment v Texas Commerce).

Irrelevant whether interpretation mistaken or not - both parties have

reached consensual interpretation and bound by it.

Estoppel by Representation
o Can be representation of either fact and law, or law alone (Foran v Wright).
o Must be an existing representation, not future (Jordan v Money).

Future representations dealt with by contract under CL - otherwise it

would destroy the doctrine of consideration (Cth v Scituate).

Basically, if there were no contract between parties CL estoppel could not

apply to render a promise binding.

Differences between common law and equitable estoppel

When representations occurred:

CL existing fact (Jorden v Money).

o Laws of contract at the common law cover future representations.
o It would cut up the doctrine of consideration by the roots, if a promisee could
make a gratuitous promise binding by subsequently acting in reliance of it (Cth v
Scituate Savings).

Equity future conduct (Waltons Stores).

Defence or cause of action:

CL Defence (or shield) only.

Equity Both shield and sword.

o Can be used as an independent cause of action by a plaintiff if they satisfy the 6step test as per Brennan J (Waltons Stores).

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One unified doctrine of estoppel?

Mason CJ (Cth v Verwayen): the consistent trend in the modern decisions points
inexorably towards the emergence of one overarching doctrine of estoppel rather than a
series of independent rules.
o However, no unified doctrine of estoppel yet.

Issues surrounding a unified doctrine

In favour:
o Deane J has claimed in a number of cases (Waltons; Foran v Wright; Cth v
Verwayen) that there has always been one doctrine of estoppel even before the
Judicature Acts, and with the exception of Jorden v Money this extended to
representations of future conduct that are the concern of proprietary estoppel.
o The unification of estoppel by conduct avoids the restrictive nature of the common
law, and allows wider scope for relief based upon the assumed state of affairs (Cth
v Verwayen).

For example, in Giumelli the landowner was estopped from retreating from
the promise to give his son land in exchange for his work on it.

However, as another family member had already occupied the land it

would have been unjust to force this third party (who was not part of the
proceedings) to hold the property on constructive trust.

Accordingly, the equitable solution was to give a pecuniary remedy

instead.

Against unification:
o Relatively few estoppel cases to further modify this area of equity, and of the
cases to reach the High Court the question of unification has been left open
(Giumelli v Giumelli).
o The main issue when unifying common law and equitable estoppel by conduct is
that both doctrines are fundamentally different.

Equity requires that plaintiffs be willing to do equity, whilst at the common

law this is not needed.

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At common law the truth and justice of individual cases is shut out, with
strict application of estoppel principles. In complete contrast, equity
promotes these concepts in an attempt to subdue fraud (both actual and
equitable) and promote honest and fair dealing (Perley CJ in Horn v Cole).

CL: Estoppel by conduct is evidentiary in character, not a source of rights.

Eq: Must show sufficient detriment to be granted estoppel, not just prove
reliance on a representation.

From these references it seems that, although a unified doctrine of estoppel would have
many benefits, the fundamental differences between common law and equity must be
considered before any further changes are made (perhaps these difficulties are a reason
why the courts have not expanded upon this question in recent years).

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Confidential Information
Starting Point

Exclusive jurisdiction:
o Equity can restrain and compensate breaches of confidence.
o Typically, possessors of confidential info subject to fiduciary duties which prevent
misuse of information/knowledge for their own advantage.

However, equitys jurisdiction over confidences and confidential

information not confined to FRs two distinct doctrines, the former not
requiring FR or special relationship.

Auxiliary jurisdiction:
o Equity may be relevant in aid of granting contractual rights following a breach of
confidence (e.g. granting injunctions).
o However, contractual primacy equity moulds itself to suit contract at hand,
purely acts a possible supplementaryn remedy.

Elements of modern cause of action

Three elements (Megarry J in Coco v AN Clark):

1. Information itself must have necessary quality of cconfidence about it.
2. Information must have been imparted in circumstances importing an obligation
of confidence.
3. Must be an unauthorised use of that information to detriment of party
communicating it.

However, although formulation will suffice as a working statement, two caveats:

1. Inclusion of eavedroppers and similar parties.
2. Inessentiality of detriment in any specific sense of economic loss (i.e. can be
humiliation or distress instead).
o Basically, a court of equity will restrain publication of confidential info
improperly/surreptitiously obtained, or of info imparted in confidence which
should not be divulged (Smith Kline).

Two species of same genus: confidential info (i) improperly obtained, and
(ii) imparted in confidence.

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o Possible third caveat:

D may have obligation of confidence if he ought to have known that

confidential info being imparted to him (see Gummow J in Smith Kline;
Gibbs J in Consul Development).

Confidential Information
Definition

Confidential information different from information:

o The former suggests communication of secrets or private matters. It will not exist
in something which is public knowledge.
o However, no bright line between public and private (Gleeson CJ in Lenah).

Examples of CI (Parkinson):
o Commercial/trade secrets; confidential ideas not yet in public domain (TV show
Talbot); Information about business operations; Personal biographical or
commercially sensitive information.

Last example establishes and enforces a personal zone of privacy free

from public scrutiny.

Confidential Info Commercial Context

Information not property, so breach of confidence does not bestow proprietary rights:
o Equity acts on conscience of the defendant, not in aid of proprietary right.
o Sometimes confidential information has proprietary characteristics (e.g. capacity
to assign), but not the reason for equitable intervention.

Lenah Game Meats case

Main question was it appropriate to grant an interlocutory injunction on the basis of

unconscionability and not an established cause of action?

Gleeson CJ:
o [17] The language of unconscionability cannot conjure up the right to
interlocutory relief if there is no right available.

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o [25] Operations filmed were not secret or confidential, since had to be licensed by
a public authority and would have had inspections from officials.
o [29] the circumstances in which the film was made, the nature of the activities
recorded, a persons concern that they not be seen by the general public, and an
inference thattrespassers and broadcasters or publishers knew of that concern,
could make the image and the sounds confidential.

Has left scope for future development of equity to protect from illegal
filming of private activities.

o [34], [39] The slaughtering method was not private, meaning that an injunction
could (and should) not be granted.
o [41] Expansion of breach of confidence better than creating a new tort of privacy.
Lack of precision of the concept of privacy means caution when developing new
torts. Also issues regarding free speech constrained by privacy.
o [43] Even if privacy protected, concept enshrined in human dignity and so
unlikely a corporation would receive this protection. Therefore Lenah would lose
because a company.

Gummow and Hayne JJ:

o [73] Absence of publicity does not mean something is invested with necessary
qualities of confidence to allow an injunction.

Refers to Saltman.

The information, to be confidential must not be something which is

public property and public knowledge.

o [79] Difference between a corporation, who seeks to protect its pocket book
from bad publicity, and a person, who seeks the seclusion of personal life.

One monetary, the other actual privacy.

o [125]-[126] Four categories of wrongs:

(i) Appropriation of Ps name and likeness (i.e. complaint about

deprivation of opportunity of commercial exploitation of name/likeness for
his/her benefit);

(ii) Putting P in false light damages reputation or causes financial

detriment or both (can be protected by defamation);

(iii) Disclosure of private facts and (iv) unreasonable intrustion upon

seclusion.

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These come closest to reflection a concern for privacy as a legal

principle drawn from the fundamental value of personal autonomy.

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Equitable Defences
Laches and Acquiescence
Arises when plaintiff has allowed an unreasonable delay to occur before commencing legal
proceedings, or was negligent in issuing proceedings.

Court can refuse to grant P relief as a result.

However, mere delay alone wont defeat equitable claim.

Not bound by any Statutory Limitations (these generally relate to common law claims,
NOT equitable).

Two considerations:
o Length of delay, or laches (in modern era parties expected to act expeditiously, so
not specific quantifier for appropriate length of delay); and
o Nature of the acts done during interval the following may be considered as a
waiver by plaintiff and thus defeat equitable claim:

P acquiesced to Ds conduct (i.e. knew of equitable breach, yet did not

commence proceedings until much later).

P caused D to alter position in reasonable reliance of Ps acceptance of the

status quo (e.g. D went ahead and built a house on land after believing that
P would not take legal action).

Ps actions have permitted a situation to arise that would be unjust to

disturb (e.g. D sold property to third party and unfair to latter to force
return of property).

o Scott: Treat two as separate L being inexcusable delay, A confined to situations

where P knows of rights yet willingly allows them to be violated.

whether the plaintiffs conduct amounts in point of law to

acquiescence or laches, or whether it amounts to an election not to avoid a
voidable transaction, or whether it amounts to a ratification or a
confirmation of her gifts, are questions of mere words which it is needless
to discuss (Allcard v Skinner).

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Unclean Hands
Equitable maxim: he who comes into equity must come with clean hands.

Pretty straightforward if P also guilty of improper conduct during transaction, then

relief will be refused.
o e.g. Cannot claim specific performance if agreement procured by
misrepresentation.

For this defence to operate, complainant must have an immediate and necessary relation
to the equity sued for.
o i.e. Ps unclean hands must be related to the matter at hand, not just any old
unethical conduct by P since any D would simply unearth the skeletons of their
adversary to claim the defence.

Equitable Set-off
Defendant has a separate and distinct legal claim against a plaintiff.

Must go to the root of Ps title to sue, so if not closely related no defence.

o e.g. P claims money under building contract, D seeks damages for breach of
the same contract for faulty workmanship.

Informed Consent
As per Fiduciary Duties, must make full disclosure to party who is owed duty, and that party
must consent (Boardman v Phipps).
o Strict application full facts provided to relevant parties, who must all be capable
of approving.
Bona Fide Purchase
Only related to cases where plaintiff asserts entitlement to a remedy that involves the
vindication of their equitable proprietary interests.

If party is a bona fide purchaser of the legal title for value without notice, the earlier
equitable interest is extinguished.

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Equitable Remedies
Starting Point
Equity, if it provides a remedy (its completely discretionary), seeks to achieve practical
justice between the parties.

Must emphasise that remedy may be something neither party expects.

o Gummow J: the requirement that a person seeking equity must be prepared to do
equity and the operation of the various equitable defences always have the
potential to produce relief in a form which could not have been wholly anticipated
[by the litigants].

Remedies can come from equitys exclusive jurisdiction:

Remarkably flexible when fashioning a remedy for parties.

o Giumelli constructive trust for P held to be unjust to third party, so equivalent
monetary compensation given in lieu of land.
o Bridgewater Setting aside entire deed unfair, but the price paid for it was too
low as well. Therefore sent back to lower courts to determine what a fair price
would be!

Remedies also come from the concurrent/auxiliary jurisdiction:

Must show to court that CL remedies are inadequate.

o CL generally gives damages, so must show that its not enough to get paid out.
Examples:
Injunction to prevent showing film that will destroy a persons credibility;
Specific performance forcing land sale because P already living on
property;
D sells off property and gets profit, not enough for P to just get the original
purchase price and not reap benefit of sale.

Specific Performance

Concurrent jurisdiction.

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Applies to the enforcement of executory contracts:

o An agreement that requires the execution of an instrument, or the doing of an act
in law, which would put the parties in the position relative to each other which the
contract contemplates.
Generally, an agreement to transfer interest in property!

OR executed contracts:
o Doesnt require execution of an instrument contract itself already does this.
See JC Williamson Ps right to sell sweets in theatre was right by virtue
of the contract itself, and no further instrument or act in law was necessary
to allow this right.

Pre-requisites to grant remedy:

o Binding contract;
o P ready, willing and able to perform obligations; and
o Inadequate remedy available at CL.

Defences that prevent SP being used:

o Cannot be used to compel performance of personal work (employer-employee
relationship).
Akin to slavery as no right to leave the contract until over (if it actually
ends).
o Wont be upheld if undue hardship imposed on D.

Injunction
Types of Injunctions

Defied by the purpose of the injunction:

o Prohibitory court order restraining party from performing a specific act.
o Mandatory court order requiring party to perform a specific, positive act.

Categorised by point of trial granted:

o Interim/interlocutory If P can prove cause of action, can get a temporary
injunction awarded prior to commencement of proceedings (i.e. protects P from

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injury that could occur if D could continue activities before decision handed
down).

P must prove that they have a cause of action to rely upon or this
injunction cannot be granted. If injunction wrongly given, P may have to
pay D damages.

An injunction can only issue to protect a legal/equitable right, or to prevent

equitable/legal wrong (Lenah Game Meats).

o Final Court holds that P has cause of action, upholds injunction.

Other types of injunction

o Mareva Restrains D from disposing of its assets in an effort to render future
judgement ineffective (i.e. go spend-crazy and wipe out assets owed to another).
o Anton Piller order D compelled to permit P to inspect Ds premises in order to
discover and remove any material relevant to Ps case (i.e. cant destroy
confidential records that demonstrate liability).
o Anti-suit Protects courts processes from frustration due to commencement of
proceedings in another, inappropriate forum.
o Norwich v Commissioners Bailee forced to hold duty to third party where bailee
has innocently become caught up in wrongdoing of another.

Distinction between equitable and legal injunctions

Equitable injunction part of equitys exclusive jurisdiction.

o No need to ask whether damages are sufficient this remedy can be applied
whenever a court believes discretion is warranted.

Legal injunction part of equitys auxiliary jurisdiction.

o Must always ask whether damages can suffice if they can, then this remedy
cannot be used!

Equitable Compensation

Exclusive jurisdiction, equitable breaches only (otherwise just go to CL).

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Equity traditionally cannot award damages instead can give compensation in form of
account of profits, money equivalent to property value, etc.
o Supreme Court Act s 38 allows equity to give damages in lieu of equitable
remedies.

Not limited by CL concepts like remoteness, foreseeability, etc.

Rescission

If concurrent jurisdiction:
o Applies when contract voidable at law for fraudulent misrepresentation/duress/etc.

If exclusive jurisdiction:
o Is a means of setting aside contract induced by some wrong that equity recognises.
o Examples: innocent misrepresentation, undue influence, unconscionable conduct,
mistake or breach of fiduciary duty.

Account of Profits

Both auxiliary and exclusive jurisdictions.

Works out profits made by D in order to return them to P.

Constructive Trust
Difference between C Trust and C Trustee

Millett LJ in Paragon Finance plc v DB Thakerar.

Constructive Trust (proprietary right):

o D, though not expressly appointed, has assumed duties of trustee by lawful
transaction that arose prior to the breach of trust. Note: The transaction itself is
not being disputed by P, only the breach.
o In these cases the plaintiff does not impugn the transaction by which the
defendant obtained control of the property. He alleges that the circumstances in
which the defendant obtained control make it unconscionable for him
thereafter to assert a beneficial interest in the property.

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o D is a trustee

Constructive Trustee (personal right):

o A trust obligation arises as a direct consequence of the unlawful transaction that is
impugned by P.
o It arises when the defendant is implicated in a fraud. Equity has always given
relief against fraud by making any person sufficiently implicated in the fraud
accountable in equity.
o D is not a trustee

Accordingly expressions C Trust/Trustee are misleading for there is no

trust and usually no possibility of a proprietary remedy; they are 'nothing
more than a formula for equitable relief.

Extra

If CT not available (i.e. makes an unjust result to other party/third party) damages can be
given in lieu of this remedy (Giumelli v Giumelli).

Constructive trust nothing more than a formula for equitable relief

Lord Millett has outlined two definitions under constructive trust:

o Trust refers to an actual trust with a trustee who, although lawfully assuming this
role has committed a breach of trust.
o Trustee refers to situations where D has committed fraud. The party is not a
trustee at all, but has somehow acquired property (e.g. taken from trust, made a
profit at Ps expense) that a court will deem is held on trust to return to P.

Regarding the latter, this is the definition described as a formula for equitable relief. By
this it means that, rather than a discrete remedy, it simply outlines a situation whereby a
plaintiff can argue for whatever equitable remedy a court find appropriate at the time.

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and Questions to Law Clerkships and Jobs. Credit: Christopher Angus.