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RESTITUTION FOR EQUITABLE WRONGDOING

GENERAL PRINCIPLES

(A) THE RATIONALE BEHIND THE AWARD OF GAIN-BASED REMEDIES FOR EQUITABLE WRONGDOING

Where the defendant has committed a tort or breached a contract, gain-based remedies tend to be available only in exceptional circumstances. Where, however, the defendant has breached an equitable duty which he or she owed to the claimant, such relief is much more common. There are two reasons for this. First, the Equitable jurisdiction relating to the award of remedies tends to be more adaptable than the equivalent Common Law jurisdiction. Secondly, the policies which justify the award of gain-based remedies for wrongdoing are much more likely to come into play where the defendant commits an equitable wrong.[1] This is because the typical equitable duty which the defendant owes to the claimant arises from a relationship of trust and confidence. As Jackman has recog- nized,[2] the nature of such relationships gives the defendant an opportunity to abuse and exploit the claimant, so that the relationship is in particular need of protection. Consequently, it is necessary to deter the defendant from exploiting the relationship and this is done by ensuring that, at the very least, the value of any benefit which the defendant obtained from the breach of duty should be paid to the claimant to whom the duty was owed. It is irrelevant that the claimant did not suffer any loss by reason of the breach of duty, since the function of the award of gain-based remedies is to ensure that the defendant does not benefit from the commission of the equitable wrong.

There is one other principle which underlies the award of gain-based remedies for wrongs which is particularly important in the context of equitable wrongdoing, and this relates to the moral nature of the defendant’s breach of duty. Analysis of the cases in Equity suggests that, where the defendant can be considered to be more culpable in breaching his or her equitable duty, a more extensive form of gain-based remedy may be available. Also, where the defendant is not considered to be culpable in breaching his or her duty, an equitable allowance will be awarded to reflect the value of the defendant’s contribution to the benefit which he or she obtained.[3] Culpability in Equity is assessed by reference to the old equitable language of conscience and unconscionability. Whilst these words have been interpreted in various ways, in the particular context of determining liability for equitable wrongs and the award of gain-based remedies the defendant will be considered to have acted unconscionably when, in the light of his or her knowledge of the facts, a reasonable person in the position of the defendant would have acted differently.[4]

  • [1] See p 422, above. 2 IM Jackman, ‘Restitution for Wrongs’ (1989) 48 CLJ 302, 311.
  • [2] 3 Compare Boardman v Phipps [1967] 2 AC46and O’Sullivan v Management Agency and Music Ltd [1985]
  • [3] QB 428 with Guinness plc v Saunders [1990] 2 AC 663.
  • [4] See p 650, below.
 
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