Remedies – Equity & Trusts (Part 2) Study Notes

Definition: ‘quia timet’ = ‘since he fears’ → interlocutory → to prevent a wrong from being committed
Redland Bricks v Morris (per Lord Upjohn): Quia timet injunctions sought & granted where
- i) threatened or intended harm, or
- ii) earlier incidents of compensated harm but fear of future wrongs, &
- iii) very strong probability of infringement of rights,
- iv) the defendant will not suffer unnecessary disproportionate hardship (some hardship ok)
Quia timet Injunction

Temporary injunction pending trial of issues: ‘interim’ (only until a specified date) vs ‘interlocutory’ (pending final hearing)
Commonwealth of Australia v John Fairfax & Sons Ltd: Courts take the lower risk of injustice approach in exercising discretion to grant
Usually inter partes but may be ex parte if urgent
On a practical level, matter is normally resolved at this stage
Interlocutory Injunction

Test the court applies in exercising discretion → i) prima facie case establishes probability of relief at trial (serious question to be tried)
ii) balance of convenience → comparative injury from granting / withholding interlocutory injunction
ABC v O’Neill; ABC v Lenah Game Meats; the court may require an undertaking by the plaintiff to pay possible damages

Mandatory restorative injunction to repair a wrongful act committed
Redland Bricks Ltd v Morris (per Lord Upjohn): guidelines for discretion
1) strong probability that grave damage will occur in the future
2) damages inadequate remedy
3) cost to the defendant of preventing future occurrences & reasonableness of the defendant’s conduct
4) must be clearly & exactly worded if granted
Mandatory enforcing injunctions → positive act
Mandatory Injunction

To enforce express or implied negative contractual obligations: Warner Bros Pictures Inc v Nelson; Dalgetty Wine Estates v Rizzon (per Mason J) → consider:
1) the nature of the term
2) the nature of the contract
3) the effect enforcement would have on the relationship of the parties
4) the character of the order
To enforce statutory obligations: Cooney v Ku-Ring-Gai Council or private statutory rights
ACL Prohibitory Injunction

Traced to English Lord Cairns’ Act
Statutory jurisdiction in Australian states
Equitable damages awarded in lieu of or in addition to specific performance or injunction where a court has jurisdiction to grant specific performance or injunction
Authorities: Patel v Ali; Waltons Stores v Maher
Traditionally arises in equity’s auxiliary jurisdiction, but extended to cover equity’s exclusive jurisdiction through statutory interpretation (e.g. Wentworth v Woollahra; Giller v Procopets)
Calculation is flexible: Johnson v Agnew; Break Fast

Equitable remedy for equitable wrongs (Australian position cf. English position AG v Blake)
May seek account of profits or equitable compensation, but not both
A discretionary remedy to avoid unjust enrichment: Ancient Order of Foresters v Lifeplan; Victoria University of Technology v Wilson
Calculated on the basis of the net profit from breach; allowance may be made for skill and effort
Account of Profits: Warman International v Dwyer

Available for breaches of equitable obligations
Arises in equity’s exclusive jurisdiction
Formerly inherent and currently statutory jurisdiction
Only granted on a restitutionary basis – to place the aggrieved person in the position they would be in had the equitable obligation not been breached
Cases: Re Dawson; Youyang Pty Ltd v Minter Ellison – substitutive compensation; Nocton v Lord Ashburton – reparative compensation; O’Halloran v R T Thomas & Family Pty Ltd – Equitable Compensation

Liability is strict for most equitable obligations (e.g. breach of trust; breach of fiduciary duties)
Remoteness, contributory conduct, and mitigation are generally not factors that affect the assessment of compensation
Leading authority: Pilmer v Duke Group Ltd (in liq)
Discretionary & maxims apply: Maguire v Makaronis
Amount awarded should not be exemplary: Harris v Digital Pulse (cf. Mason P’s dissent)
Equitable Compensation

May be excluded by statute by clear words: Telstra Corp Ltd v Australian Telecommunications Authority
May be granted in public law: NSW Fish Authority v Phillips
Locus standi → special interest in the subject matter (more than intellectual or emotional concern): Australian Conservation Foundation Inc v Cth; Onus v Alcoa of Australia Ltd
May be granted in criminal law & procedure: Sankey v Whitlam
Declaration

Constructive trusts are founded upon equitable notions of unconscionability and unconscientious retention of benefit; a remedial institution (Muschinski v Dodds; Baumgartner v Baumgartner)
An equitable proprietary remedy imposed / recognised as in existence (retrospective = institutional) by the court
Not dependent upon intention of the parties but upon the circumstances of the relationship and breach of duties / obligations
Constructive trust

Per Campbell J: four conditions for joint endeavour remedies
1) Joint relationship or endeavour towards a common benefit
2) Joint relationship or endeavour ends without attributable blame
3) Unconscionable to allow benefits to be retained by one party to the exclusion of the other
4) No express agreement which dictates outcomes
Equally suited to remedy breaches of fiduciary duties: Chan v Zacharia (professional partnerships – medical, legal, etc.)
Constructive trust

Availability of other appropriate remedies to be considered before a constructive trust may be imposed: Daly v Sydney Stock Exchange

A voidable contract entered into in breach of fiduciary duty must be made void before a constructive trust may be imposed: Greater Pacific Investments Pty Ltd (in liq) v Australian National Industries Ltd
Bribes & secret commissions – constructive trust or debt owing? AG for Hong Kong v Reid; Daly v Sydney Stock Exchange
Constructive trust

Only duty upon constructive trustee is to deliver up trust property to the beneficiary
Prevents the holder of legal title from inequitably retaining / disposing beneficial interest in property: Muschinski v Dodds
Generally requires identifiable trust property but exceptions have been made → impose personal liability to account for losses sustained by constructive beneficiaries
3rd party rights may bar relief: Giumelli v Giumelli
Constructive trust