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REMEDIES LAW
SUMMARY
2011
LAWSKOOL PTY LTD
REMEDIES LAW
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TABLE OF CONTENTS CASE LIST........................................................................................................................ 6
1. INTRODUCTION TO CIVIL REMEDIES......................................................... 15
1.1 OVERVIEW ......................................................................................................... 15
1.1.1 The Law of Remedies ................................................................................ 15
1.1.2 Exceptions to the General Principle ......................................................... 15
1.1.3 Categories of Civil Wrongs....................................................................... 15
1.1.4 Alternative and Cumulative Remedies ...................................................... 16
1.1.5 Limitation Periods .................................................................................... 16
1.2 COMMON LAW AND EQUITY .............................................................................. 17
1.2.1 The Fusion Fallacy ................................................................................... 18
2. NON-JUDICIAL REMEDIES - SELF-HELP REMEDIES............................... 18
2.1 OVERVIEW ......................................................................................................... 18
2.2 ABATEMENT OF NUISANCE ................................................................................ 18
2.3 SELF-DEFENCE................................................................................................... 19
2.3.1 Overview – Common Law......................................................................... 19
2.3.2 Statutory Defence...................................................................................... 19
2.4 DEFAMATION ..................................................................................................... 20
2.5 CONTRACT ......................................................................................................... 20
2.5.1 Rescission.................................................................................................. 20
2.5.2 Liquidated Damages Clauses ................................................................... 20
3. INTRODUCTION TO DAMAGES ...................................................................... 21
3.1 OVERVIEW ......................................................................................................... 21
3.1.1 Types of Damages ..................................................................................... 21
3.1.2 Assessment of Damages ............................................................................ 22
3.1.3 Pre-Trial Damages and Interest ............................................................... 22
3.1.4 Future Damages and Present Value ......................................................... 22
3.1.5 Taxation – Personal Injury Awards.......................................................... 23
3.1.6 Taxation – Other Awards.......................................................................... 23
3.2 FUNDAMENTAL FEATURES OF DAMAGES’ AWARDS .......................................... 23
3.2.1 Awarded Unconditionally ......................................................................... 23
3.2.2 Awarded “Once and For All”................................................................... 23
3.2.3 Lump Sum Rule ......................................................................................... 24
3.2.4 Date of Assessment ................................................................................... 24
3.2.5 Multiple Defendants.................................................................................. 25
3.2.6 Enforcement .............................................................................................. 26
4. COMPENSATORY DAMAGES AND LIMITING DEVICES ......................... 26
4.1 THE COMPENSATION PRINCIPLE ........................................................................ 26
4.1.1 Application to Contract, Tort and Statutory Actions ................................ 26
4.1.2 Application to Misrepresentation Actions ................................................ 26
4.1.3 Plaintiff Must be Worse Off ...................................................................... 27
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4.1.4 General Rule in Conversion Cases ........................................................... 27
4.2 HEADS OF DAMAGES.......................................................................................... 28
4.3 MITIGATION ....................................................................................................... 29
4.3.1 General Principles .................................................................................... 29
4.3.2 Case Examples – Breach of Contract ....................................................... 30
4.3.3 Case Examples – Trade Practices Act Claims and Tort Claims .............. 31
4.3.4 Case Examples – Personal Injury Actions................................................ 31
4.4 REMOTENESS ..................................................................................................... 33
4.4.1 Overview ................................................................................................... 33
4.4.2 Contractual Actions .................................................................................. 33
4.4.3 Tortious Actions ........................................................................................ 35
4.4.4 Deceit ........................................................................................................ 35
4.4.5 Other Intentional Torts ............................................................................. 35
4.5 OVERLAP BETWEEN MITIGATION AND REMOTENESS......................................... 36
4.6 CAUSATION........................................................................................................ 38
4.6.1 Overview ................................................................................................... 38
4.6.2 Test of Causation ...................................................................................... 38
4.6.3 Codification of “But For” Test in the Civil Liability Act ......................... 39
4.6.4 Failure to Warn – Elective Surgery Cases ............................................... 40
4.6.5 Codification of “Common Sense” Causation in the Civil Liability Act ... 41
4.6.6 Intervening Cause – Plaintiff’s Conduct................................................... 41
4.7 LOST CHANCES .................................................................................................. 42
4.7.1 Overview ................................................................................................... 42
4.7.2 Causation and Contingencies ................................................................... 42
4.7.3 Causation and Loss of a Valuable Chance ............................................... 43
4.7.4 Causation is Possible but not Probable.................................................... 45
4.8 UNCERTAINTIES AND CONTINGENCIES............................................................... 47
4.9 CONTRIBUTORY NEGLIGENCE............................................................................ 48
4.9.1 Overview ................................................................................................... 48
4.9.2 Application of the Defence........................................................................ 49
4.9.3 Multiple Defendants.................................................................................. 49
4.10 INDIVISIBLE AND SEVERABLE LOSSES................................................................ 50
4.11 SUMMARY OF LIMITING DEVICES ...................................................................... 50
5. ANTICIPATORY BREACH ................................................................................. 51
5.1 DEBTS DISTINGUISHED FROM DAMAGES ........................................................... 51
5.2 EFFECT OF AN ANTICIPATORY BREACH ............................................................. 51
6. PERSONAL INJURY CLAIMS FOR DAMAGES............................................. 52
6.1 OVERVIEW ......................................................................................................... 52
6.1.1 Compensation Principle............................................................................ 52
6.1.2 The Civil Liability Act ............................................................................... 53
6.1.3 Dead Plaintiff Actions............................................................................... 53
6.2 RECOGNISED HEADS OF DAMAGES .................................................................... 54
6.2.1 Loss of Earning Capacity.......................................................................... 54
6.2.2 Medical and Related Needs ...................................................................... 56
6.2.3 Loss of Domestic / Parenting Capacity .................................................... 58
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6.2.4 Non-Economic Losses ............................................................................... 58
6.2.5 Consequential Losses................................................................................ 59
6.2.6 Aggravated Damages................................................................................ 60
6.2.7 Collateral Benefits .................................................................................... 60
6.2.8 Interest ...................................................................................................... 60
7. WRONGFUL BIRTH, LIFE AND DEATH ACTIONS ..................................... 61
7.1 WRONGFUL BIRTH AND WRONGFUL LIFE ACTIONS........................................... 61
7.1.1 Overview ................................................................................................... 61
7.1.2 Wrongful Life ............................................................................................ 61
7.1.3 Wrongful Birth .......................................................................................... 61
7.2 WRONGFUL DEATH ACTION .............................................................................. 62
7.2.1 Overview ................................................................................................... 62
7.2.2 Compensatory Damages ........................................................................... 62
8. PROPERTY DAMAGE ......................................................................................... 63
8.1 OVERVIEW ......................................................................................................... 63
8.2 COSTS OF REPAIRS AND DIMINUTION IN VALUE ................................................ 63
8.2.1 Compensation Principle and Duty to Mitigate ......................................... 63
8.2.2 Difference in Costs of Repairs and Diminution in Value ......................... 63
8.2.3 Damage to Goods ..................................................................................... 64
8.2.4 Damage to Land / House / Building ......................................................... 64
8.2.5 Doctrine of Betterment.............................................................................. 66
8.3 CONSEQUENTIAL LOSSES ................................................................................... 67
8.4 AGGRAVATED DAMAGES ................................................................................... 67
9. ECONOMIC LOSS ................................................................................................ 68
9.1 OVERVIEW ......................................................................................................... 68
9.2 RELIANCE AND EXPECTATION LOSSES GENERALLY .......................................... 68
9.2.1 Relationship With Remoteness.................................................................. 68
9.2.2 Reliance Losses and Mitigation ................................................................ 69
9.2.3 Application to Wrongful Dismissal Claims............................................... 69
9.3 RELIANCE LOSSES – BREACH OF CONTRACT ..................................................... 70
9.3.1 The Break Even Presumption.................................................................... 70
9.3.2 Pre-Contract Expenditure......................................................................... 71
9.4 EXPECTATION LOSSES – BREACH OF CONTRACT ............................................... 71
9.4.1 Proof that the Contract Would Have Been Profitable .............................. 71
9.4.2 Least Burdensome to the Defendant Rule ................................................. 71
9.5 RELIANCE AND EXPECTATION LOSSES - MISREPRESENTATION .......................... 72
9.6 CONSEQUENTIAL LOSSES ................................................................................... 73
9.6.1 Doctrine of Betterment.............................................................................. 73
9.7 AGGRAVATED DAMAGES ................................................................................... 73
10. EQUITABLE COMPENSATION......................................................................... 74
10.1 OVERVIEW ......................................................................................................... 74
10.2 CAUSATION........................................................................................................ 74
10.2.1 But For Test .............................................................................................. 74
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10.2.2 Novus Actus Interveniens .......................................................................... 74
10.3 CONTRIBUTORY NEGLIGENCE............................................................................ 74
10.4 REMOTENESS ..................................................................................................... 75
10.5 MITIGATION ....................................................................................................... 75
10.6 LOSSES UNRELATED TO THE DEFENDANT’S WRONG ......................................... 75
10.7 CARELESS BREACH OF FIDUCIARY DUTY .......................................................... 76
10.7.1 Case Law................................................................................................... 76
11. RESTITUTIONARY DAMAGES AND ACCOUNT OF PROFITS................. 78
11.1 OVERVIEW TO RESTITUTIONARY DAMAGES ...................................................... 78
11.2 REASONABLE USER FEE..................................................................................... 79
11.2.1 Trespass to Land and Goods..................................................................... 79
11.2.2 Mesne Profits and Wayleave Cases .......................................................... 79
11.2.3 Measurement of Reasonable User Fee ..................................................... 79
11.3 ACCOUNT OF PROFITS ........................................................................................ 80
11.3.1 Application................................................................................................ 80
11.3.2 Breach of Trust ......................................................................................... 81
11.3.3 Breach of Fiduciary Duty ......................................................................... 81
11.3.4 Breach of Confidence................................................................................ 82
11.3.5 Intellectual Property Infringements .......................................................... 82
11.3.6 Assessment of Defendant’s Profit ............................................................. 83
12. EXEMPLARY AND NOMINAL DAMAGES..................................................... 86
12.1 EXEMPLARY DAMAGES...................................................................................... 86
12.1.1 Overview ................................................................................................... 86
12.1.2 General Principles .................................................................................... 87
12.1.3 Availability of Exemplary Damages ......................................................... 88
12.2 NOMINAL DAMAGES .......................................................................................... 89
13. RESTITUTION FOR UNJUST ENRICHMENT................................................ 89
13.1 OVERVIEW ......................................................................................................... 89
13.2 ACTION FOR MONEY HAD AND RECEIVED ......................................................... 90
13.2.1 Duress ....................................................................................................... 90
13.2.2 Mistake of Fact/Law ................................................................................. 90
13.2.3 Total Failure of Consideration ................................................................. 91
13.2.4 Passing On is Not a Defence .................................................................... 92
13.2.5 Defence – Change of Position................................................................... 92
13.3 QUANTUM MERUIT AND QUANTUM VALEBAT ACTIONS.................................... 93
13.3.1 Overview ................................................................................................... 93
13.3.2 Elements .................................................................................................... 93
13.3.3 Measure of Restitution .............................................................................. 94
13.4 SERVICES MISTAKENLY PROVIDED.................................................................... 94
14. NON-MONETARY RELIEF – COERCIVE REMEDIES................................. 95
14.1 OVERVIEW ......................................................................................................... 95
14.1.1 Jurisdictional Requirements for Non-Monetary Equitable Remedies ...... 96
14.2 FINAL INJUNCTIONS ........................................................................................... 96
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14.2.1 Overview ................................................................................................... 96
14.2.2 Jurisdictional Requirements ..................................................................... 97
14.2.3 Application to Equitable Wrongs.............................................................. 98
14.2.4 Application to Tortious Wrongs................................................................ 99
14.2.5 Application to Contractual Wrongs .......................................................... 99
14.2.6 Application to Crime............................................................................... 101
14.2.7 Application to Intellectual Property Infringements ................................ 101
14.3 SPECIFIC PERFORMANCE .................................................................................. 102
14.3.1 Overview ................................................................................................. 102
14.3.2 Jurisdictional Requirements ................................................................... 102
15. RESCISSION ........................................................................................................ 106
15.1 OVERVIEW ....................................................................................................... 106
15.1.1 Distinguished From Termination............................................................ 106
15.2 ELEMENTS........................................................................................................ 106
15.2.1 Overview ................................................................................................. 106
15.2.2 Vitiating Factors - Misrepresentation .................................................... 107
15.2.3 Vitiating Factors - Mistake ..................................................................... 108
15.2.4 Vitiating Factors - Duress ...................................................................... 108
15.2.5 Vitiating Factors – Undue Influence....................................................... 109
15.2.6 Vitiating Factors – Unconscionable Dealings........................................ 110
15.2.7 Election ................................................................................................... 111
15.2.8 Restoration Must Be Possible ................................................................. 111
16. DECLARATIONS, RECTIFICATION AND DELIVERY UP ....................... 111
16.1 DECLARATIONS................................................................................................ 111
16.1.1 Overview ................................................................................................. 111
16.1.2 Jurisdictional Limits of the Court ........................................................... 112
16.1.3 Standing .................................................................................................. 112
16.1.4 Discretionary Grounds ........................................................................... 112
16.1.5 Declarations in Criminal Law ................................................................ 113
16.2 RECTIFICATION ................................................................................................ 114
16.2.1 Overview ................................................................................................. 114
16.2.2 Rectification Distinguished From Construction ..................................... 114
16.2.3 Rectification Distinguished From Implied Terms................................... 115
16.2.4 Elements – Common Mistake.................................................................. 115
16.2.5 Elements – Unilateral Mistake................................................................ 116
16.3 DELIVERY OF DOCUMENTS AND GOODS .......................................................... 116
16.3.1 Overview ................................................................................................. 116
16.3.2 Delivery Up and Cancellation ................................................................ 117
16.3.3 Delivery Up and Destruction .................................................................. 117
17. EQUITABLE DEFENCES .................................................................................. 117
17.1 OVERVIEW ....................................................................................................... 117
17.2 FUTILITY AND IMPOSSIBILITY .......................................................................... 118
17.3 HARDSHIP ........................................................................................................ 118
17.4 UNCLEAN HANDS............................................................................................. 119
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17.4.1 Immediate and Necessary Connection to Relief ..................................... 119
17.5 CONTINUOUS SUPERVISION / PERSONAL SERVICES .......................................... 120
17.5.1 Overview ................................................................................................. 120
17.5.2 Actions for Specific Performance ........................................................... 120
17.5.3 Running a Business Over an Extended Period ....................................... 121
17.5.4 Delegation of Personal Services ............................................................. 122
17.6 LACHES AND ACQUIESCENCE........................................................................... 123
17.6.1 Distinction............................................................................................... 123
17.6.2 Case Examples ........................................................................................ 123
17.7 DEFENCES RELATING EXCLUSIVELY TO SPECIFIC PERFORMANCE ................... 124
17.7.1 Lack of Mutuality .................................................................................... 124
17.7.2 Ready, Willing and Able ......................................................................... 124
18. EQUITABLE DAMAGES UNDER THE LORD CAIRNS ACT .................... 124
18.1 OVERVIEW ....................................................................................................... 124
18.1.1 Jurisdiction ............................................................................................. 124
18.1.2 Power to Grant Specific Relief ............................................................... 125
18.1.3 Availability of Common Law Damages .................................................. 125
18.2 SECTION 68 OF THE SUPREME COURT ACT 1970.............................................. 125
18.2.1 Two-Fold Discretion............................................................................... 125
19. INTERLOCUTORY ORDERS ........................................................................... 126
19.1 OVERVIEW ....................................................................................................... 126
19.2 INTERLOCUTORY INJUNCTIONS ........................................................................ 127
19.2.1 Overview ................................................................................................. 127
19.2.2 Legal, Statutory or Equitable Cause of Action ....................................... 127
19.2.3 Sufficient Likelihood of Success (Prima Facie Case) ............................. 128
19.2.4 Balance of Justice/Convenience ............................................................. 128
19.2.5 Undertaking as to Damages.................................................................... 129
19.3 MAREVA ORDERS ............................................................................................ 130
19.3.1 Overview ................................................................................................. 130
19.3.2 Elements .................................................................................................. 130
19.3.3 Mareva Orders Against Third Parties .................................................... 131
19.4 ANTON PILLER ORDERS ................................................................................... 132
19.4.1 Overview ................................................................................................. 132
19.4.2 The Anton Piller Decision....................................................................... 132
19.4.3 Elements .................................................................................................. 133
19.4.4 Nature of the Order................................................................................. 134
19.4.5 Compliance With an Anton Piller Order ................................................ 134
Case List
A v Bottrill [2003] 1 AC 449………………………………………………..12.1.1; 12.1.3
Adams v Kennedy (2000) 49 NSWLR 78………………………………..12.1.3
Adderley v Dixon (1824) 57 ER 239………………………………………14.3.2
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Addis v Grammaphone [1909] AC 488…………………………………...9.7
Ainsworth v Criminal Justice Commission (1992) 175 CLR 564……….16.1.4
Anglia Television v Reed [1972] 1 QB 60………………………………... 9.3.2
Anton Piller KG v Manufacturing Process Ltd [1976] 1 Ch 55…………. 19.4.2
ANZ Executors and Trustees Ltd v Humes Ltd [1990] VR 615………… 14.3.2; 17.3
Aristoc Industries v RA Webnam (Builders) [1965] NSWR 581………...14.3.2
Arthur Robinson (Grafton) Pty Ltd v Carter (1968) 41 ALJR 327……….6.2.1
Astley v Austrust Ltd (1999) 197 CLR 1……………………………………4.9.2; 9.1; 10.3
Athey v Leonati (1996) 140 DLR 235………………………………………4.7.3
Attorney-General v Blake [2001] 1 AC 268………………………………..11.3.1
Australian Broadcasting Corp v Lenah Game Meats (2001) 208 CLR 199
………………………………………………..........................................11.3.4; 14.2.2; 19.2.1
Australian Conversation Foundation Inc v Cth (1980) 146 CLR 493…..16.1.3
Baker v Willoughby [1970] AC 467………………………………………... 4.8
Baltic Shipping v Dillon (1993) 176 CLR 344………………………….6.2.6; 9.6; 9.7; 13.2.3
Bank of NZ v New Zealand Guardian Trust [1999] 1 NZLR 664............ 10.7
Barton v Armstrong [1976] AC 104………………………………………...15.2.4
Bateman’s Bay Local Aboriginal Council v Aboriginal Community Benefit Fund (1998) 194 CLR 247………………………………………………. ……………….. 14.2.2
Beecham Group Ltd v Bristol Laboratories (1968) 118 CLR 618……….19.2.3
Bellgrove v Elridge (1954) 90 CLR 613……………………………………9.2.2
Bendal Pty Ltd v Mirvac Project Pty Ltd (1991) 23 NSWLR 464………. 14.2.4
Beswick v Beswick [1968] AC 58………………………………………….. 14.3.2
Bird v Holbrook (1828) 130 ER 911………………………………………. 2.3.1
Blomley v Ryan (1956) 99 CLR 362……………………………………….15.2.6
Bosaid v Andry [1963] VR 465……………………………………………...16.2.1
Boyd v State Government Insurance Office [1978] Qd R 195…………. 4.3.4
Brereton v Milstein [1988] VR 508………………………………………… 19.3.2
Bridge Wholesale Acceptance v Burnard (1992) 27 NSWLR 279…….. 14.3.1
British Westinghouse Electric & Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673………………………………………….. 4.3.1; 4.3.2
Buckenara v Hawthorn Football [1988] VR 39……………………………14.2.5
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653………….4.3.1; 4.5
Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499……………………………………………………………………19.2.4
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Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185……..4.1.4
Campbelltown CC v Mackay (1988) 15 NSWLR 501…………………….8.4
Canson Enterprises v Boughton & Co [1991] 3 SCR 534…………………………………………………………3.2.4; 10.1; 10.4; 10.5; 10.6; 10.7.1
Cardile v LED Builders (1999) 198 CLR 380………………………… 19.3.1; 19.3.2; 19.3.3
Castlemaine Tooheys Ltd v SA (1986) 161 CLR 148……………………19.2.4
Cattanach v Melchoir (2003) 77 ALJR 1312……………………………...7.1.3
Chaplin v Hicks [1911] 2 KB 787…………………………………………...4.7.3
Chapman v Hearse (1961) 106 CLR 112………………………………….4.4.3
Chappel v Hart (1998) 195 CLR 232……………………………………….4.6.2; 4.6.4
Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25…….11.3.5; 11.3.6
Commercial Bank v Amadio (1983) 151 CLR 447………………………..15.2.6
Commonwealth v Amann Aviation (1991) 174 CLR 64……………4.7.3; 9.2; 9.3.1; 12.1.3
Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR 39……14.2.2; 14.2.3; 14.2.7
Commonwealth v Murray [1988] Aust Torts Rep 68,038………………..12.1.3
Cook v Rodgers (1946) 46 SR (NSW) 229……………………………….14.3.2
Co-operative Insurance v Argyll Stores [1998] AC 1…………………14.2.2; 17.5.2; 17.5.3
Coulls v Bagot’s Executors & Trustee (1967) 119 CLR 460……………14.3.2
Cullen v Trappell (1980) 146 CLR 1……………………………………….3.1.5
Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337…………...14.2.2; 14.2.5
Dalgety Wine Estate Pty Ltd v Rizzon (1979) 141 CLR 552…………….14.2.5
Darley Main Colliery Co v Mitchell (1886) 11 App Cas 127……………...3.2.2
Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500…2.5.2
Dart Industries Inc v The Décor Corporation (1993) 179 CLR 101……..11.3.6
Day v Mead [1987] 2 NZLR 443……………………………………………1.2.1; 10.3
De Sales v Ingrilli (2002) 77 ALJR 99……………………………………..7.2.2
Diagnostic X-Ray Services v Jewell Food Stores (2001) 4 VR 632……17.5.3
Diesen v Samson [1971] SLT 49…………………………………………..9.7
Dodd Properties v Canterbury City Council [1980] 1 WLR 433………...3.2.4
Doherty v Allman (1878) 3 App Cas 709………………………………….14.2.5
Dougan v Ley (1946) 71 CLR 142…………………………………………14.3.2
Doulton Potteries v Bronotte [1971] 1 NSWLR 591……………………...14.3.2
Doyle v Olby [1969] 2 QB 158……………………………………………...4.4.4
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Dunlop Pneumatic Tyres Co Ltd v New Garage [1915] AC 79…………2.5.2
Dunn v Disc Jockey Unlimited (1978) 20 OR (2d) 122………………….9.7
Esanda Finance Corp v Plessnig (1989) 166 CLR 131………………….2.5.2
Evans v Bolag [1976] 1 NSWLR 36………………………………………..8.2.2; 8.2.4
Falcke v Gray (1859) 62 ER 250…………………………………………...17.3
Fitter v Veal (1701) 88 ER 1506……………………………………………3.2.2
Fitzgerald v Lane [1989] 1 AC 328…………………………………………4.9.3
Fitzgerald v Masters (1956) 95 CLR 420………………………………….17.6.2
Fontin v Katapodis (1962) 108 CLR 117…………………………………..2.3.1; 12.1.2
Forster v Jododex Aust Pty Ltd (1972) 127 CLR 421……………………16.1.2
Fox v Wood (1981) 148 CLR 438………………………………………….6.2.5
Frigo v Culhaci [1998] NSWSC 393 (17 July 1998, Unreported)………19.3.1; 19.3.2
Gaba Formwork Contractors v Turner Corp (1991) 32 NSWLR 175….11.2.1
Gates v City Mutual Life Assurance Society Ltd (1986)160 CLR 1……9.5
Gill v Australian Wheat Board [1980] 2 NSWLR 795……………………3.1.6
Gillespie v Whiteoak [1989] 1 Qd R 284………………………………….17.5.4
Glavonjic v Foster [1979] VR 536………………………………………….4.3.4
Gould v Vaggelas (1985) 157 CLR 215…………………………………..4.4.4; 15.2.2
Gray v Motor Accident Commission (1998) 196 CLR 1……………12.1.1; 12.1.2; 12.1.3
Green v Sommerville (1979) 141 CLR 594............................................17.7.2
Greenwood v Bennett [1973] QB 195…………………………………….13.4
Griffiths v Kerkemeyer (1977) 139 CLR 161……………………………..6.2.2
Hadley v Baxendale (1854) 156 ER 145……………………………4.4.1; 4.4.2; 9.2.1; 9.3.2
Hansen v Gloucester Developments [1991] Aust Torts Reports 68,501……8.2.4
Harbutt’s “Plasticine” v Wayne Tank & Pump [1970] 1 QB 447……….8.2.5
Harnett v Yielding (1805) 9 RR 98………………………………………..14.3.2
Harris v Digital Pulse (2003) 56 NSWLR 298…………………………1.2.1; 10.2.1; 12.1.2
Hawthorn Football Club v Harding [1988] VR 49……………………….14.2.5
Healing Sales v Inglis Electrix (1968) 121 CLR 584……………………12.1.3
Henjo Investments v Collins Marrickville (1989) 40 FCR 76…………..4.3.3
Henry v Thompson [1989] 2 Qd R 412…………………………………..12.1.1
Henville v Walker (2001) 206 CLR 459…………………………………..4.6.2; 4.6.6
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Heywood v Wellers [1976] 1 QB 446…………………………………….9.7
Hill v CA Parsons & Co Ltd [1972] Ch 306………………………………14.2.5
Hoad v Scone Motors Pty Ltd [1977] 1 NSWLR 88……………………8.2.5
Hodgson v Duce (1856) 2 Jur NS 104…………………………………..14.3.2
Horkin v North Melbourne Social Club Football Club [1983] VR 153...4.9.2
Hospitality Group v Australian Rugby Union [2001] 110 FCR 157…...11.3.1
Hotson v East Berkshire Area Health Authority [1987] 1 AC 751……..4.7.3
Howe v Teefy (1927) 27 SR (NSW) 301…………………………………4.7.3
Hughes v Lord Advocate [1963] AC 837…………………………………4.4.3
Hungerfords v Walker (1990) 171 CLR 125…………………………….4.5
Hussey v Eels [1990] 2 QB 227…………………………………………..9.6.1
Jackson v Sterling Industries (1987) 162 CLR 612……………………..19.3.1
Jarvis v Swans Tours [1973] QB 233…………………………………….9.7
J C Williamson Ltd v Lukey & Mulholland (1931) 45 CLR 282………...14.3.1; 17.7.1
Jobling v Associated Dairies Ltd [1982] AC 794…………………………4.8
Johnson v Agnew (1936) AC 367……………………………………….17.2; 18.1.3; 18.2.1
Johnson v Buttress (1936) 56 CLR 113………………………………….15.2.5
Johnson v Perez (1989) 166 CLR 351…………………………………...4.7.3
Kars v Kars (1996) 187 CLR 354…………………………………………6.2.2
Kavanagh v Akhtar (1998) 45 NSWLR 588……………………………..4.3.4; 4.4.3
Kennaway v Thompson [1981] QB 88…………………………………...14.2.2
Koufos v C Czarnikow Ltd [1969] 1 AC 350……………………………..4.4.2
Lamb v Cotogno (1987) 164 CLR 1……………………………………12.1.1; 12.1.2; 12.1.3
Lamshed v Lamshed (1963) 109 CLR 440……………………………...17.6.2
Lavarack v Woods of Colchester Ltd [1967] 1 QB 278………………..9.2.3; 9.6
Liesbosch Dredger v S S Edison [1933] AC 449……………………….4.10
Lipkin Gorman v Karpale Ltd [1991] 3 WLR 10…………………………13.2.5
Livingstone v Rawyards Coal Co (1880) 5 App Cas 25………………..4.1.1
LJP Investments v Howard Chia Investments (1990) 24 NSWLR 499………………………………………………………………11.2.1; 11.2.2; 11.2.3; 12.1.2
Loan Investment Corp of Australia v Bonner [1970] NZLR 724……….14.3.2
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Longton v Oberon Council (Unreported, NSWSC, Young J, 29 August 1996, 5056/93)……………………………………………………………………...17.3
Lumley v Wagner (1852) 42 ER 687………………………………………14.2.5
McIntosh v Dalwood (No 4) (1930) 30 SR (NSW) 415………………….14.3.2
McKeown v Cavalier Yachts (1988) 13 NSWLR 303……………………13.4; 14.3.2
McPhail v Persons Unknown [1973] Ch 447……………………………...2.3.1
Maguire v Makaronis (1997) 188 CLR 449………………………………..10.2.1; 10.2.2
Mahoney v Kruschich (1985) 156 CLR 522……………………………….4.6.5
Malec v JC Hutton (1990) 169 CLR 638…………………………………..4.7.3; 4.8
March v E and MH Stramare Pty Ltd (1991) 171 CLR 506……………...4.6.2; 4.9.4; 4.10
Marks v GIO Holdings Ltd (1998) 196 CLR 514………………………….9.5
Marsland v Andjelic (1993) 31 NSWLR 162………………………………6.2.2
Mayfair Ltd v Pears [1987] 1 NZLR 459…………………………………...4.4.5
Mayfair Trading Co Pty Ltd v Dreyer (1958) 101 CLR 428………………16.1.4
MBP (SA) Pty Ltd v Gogic (1991) 171 CLR 657......................................3.1.3
Medlin v State Government Insurance Commission (1995) 182 CLR 1...6.2.1
Miller v Jackson [1977] 1 QB 966…………………………………………...14.2.2
Morris v Redlands Brick Ltd [1970] AC 652………………………………..14.2.4
Murphy v Overton (2001) 112 FCR 182…………………………………….3.2.2
Musca v Astle Corporation Pty Ltd (1988) 80 ALR 251…………………...12.1.3
National Insurance Co of NZ v Espagne (1961) 105 CLR 569…………...6.2.7
Nguyen v Nguyen (1990) 169 CLR 245……………………………………..7.2.1; 7.2.2
Norton v Angus (1926) 38 CLR 523………………………………………….14.1.1
O’Grady v Westminster Scaffolding [1962] 2 Lloyd’s Rep 238…………….8.2.3
O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262……….10.2.1
O’Sullivan v Management Agency and Music Ltd [1985] QB 428…………3.1.6
Olwell v Nye & Nissen Co 173 P 2d 652 (1946)…………………………….11.2.3
Page One Records v Britton [1968] 1 WLR 157…………………………….14.2.5
Palmer Bruyn & Parker v Parsons (2001) 208 CLR 388……………………4.4.5
Pantalone v Alaouie (1989) 18 NSWLR 119…………………………………8.2.4
Parry v Crooks (1981) 27 SASR 1…………………………………………….14.2.4
Patel v Ali [1984] Ch 283……………………………………………………….17.3
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Patrick Stevedores v Maritime Union of Australia (1998) 195 CLR 1……...17.3; 17.5.1
Patterson v BTR Engineering (1989) 18 NSWLR 319……………………….19.3.2
Paul v Rendell (1981) 34 ALR 569……………………………………………..3.2.3; 4.8
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221…………13.1; 13.3.2; 13.3.3; 13.4
Payzu Ltd v Saunders [1919] 2 KB 581………………………………….4.3.1; 4.3.2
PC Developments v Revell (1991) 22 NSWLR 615…………………….2.5.2
Peek v NSW Egg Corp (1986) 6 NSWLR 1……………………………...14.2.6
Penarth Dock Engineering Co v Pounds [1963] 1 Lloyd’s Rep 359……11.2.2; 11.2.3
Performance Cars Ltd v Abraham [1962] 1 QB 33……………………...4.1.3
Permanent Building Society v Wheeler (1994) 11 WAR 187…………..10.7
Personal Representatives of Tang Mang Sit v Capacious Investments Ltd [1996] 1 AC 514……………………………………………………………………………1.1.4
Photo Production Ltd v Securior Transport Ltd [1980] AC 827………...1.1.1
Pilmer v Duke Group Ltd (2001) 207 CLR 165…………………………..10.3
Pollack v Volpato [1973] 1 NSWLR 653…………………………………..12.1.2
Posner v Scott-Lewis [1987] Ch 25………………………………………..17.5.4
Price v Strange [1978] Ch 337……………………………………………...17.7.1
Proprietors of Strata Plan No 14198 v Cowell (1991) 24 NSWLR 478….2.2
Ralevski v Dimovski (1986) 1 NSWLR 487..............................................6.2.4
Rentokil Pty Ltd v Channon (1990) 19 NSWLR 417………………………3.2.4; 8.3
Richardson v Schultz (1980) 25 SASR 1…………………………………..4.3.1
Robinson v Harman (1848) 1 Ex 850……………………………………….4.1.1; 9.2
Rookes v Barnard [1964] AC 1129………………………………………….12.1.2
Rosenberg v Percival (2001) 205 CLR 434………………………………..4.6.4
Roxborough v Rothmans of Pall Mall (2001) 185 ALR 335………………13.2.3; 13.2.4
Ruxley Electronics v Forsyth [1996] AC 344………………………………8.4; 9.2.2; 9.7
Scott v Scott (1963) 109 CLR 649…………………………………………..11.3.2
Sellers v Adelaide Petroleum (1994) 179 CLR 332……………………….4.7.3; 9.5
Sharman v Evans (1977) 138 CLR 563…………………………………….6.2.1; 6.2.2; 6.2.4
Shaw v Applegate [1977] 1 WLR 970………………………………………17.6.2
Shelfer v City of London Electricity Lighting Co [1895] 1 Ch 287………..18.1.1; 18.2.1
Skelton v Collins (1966) 115 CLR 94……………………………………….6.2.1; 6.2.4
Sky Petroleum Ltd v VIP Petroleum Ltd [1974] 1 WLR 576……………...14.3.2
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Slee v Warke (1952) 86 CLR 271……………………………………………16.2.4; 17.3
Standard Chartered Bank v Pakistan National Shipping [2002] 3 WLR 1547…………………………………………………………………………….4.9.2
State Rail Authority v Wiegold (1991) 25 NSWLR 500…………………..4.6.6
Target Holdings Ltd v Redferns [1996] AC 421…………………………10.1; 10.2.1; 10.7.1
TCN Channel Nine v Anning (2002) 54 NSWLR 333……………………4.4.5
TCN Channel Nine v Hayden Enterprises (1989) 16 NSWLR 130…….9.4.2
Third Chandris Shipping Corp v Unimarine SA [1979] QB 645…………19.3.2
Thomas v Harper (1935) 36 SR (NSW) 142……………………………...17.5.2
Todrovic v Waller (1981) 150 CLR 402……………………………………3.1.4; 3.2.1; 3.2.2
Toteff v Antonas (1952) 87 CLR 647………………………………………9.5
Traian v Ware [1957] VR 200………………………………………………2.2
Trident General Insurance v McNiece Bros (1988) 165 CLR 107……...14.3.2
Turner v Bladin (1951) 82 CLR 463………………………………………..14.3.2; 17.7.1
Underhill v Sherwell (Unreported, NSWCA, 18 December 1997)………2.3.1
Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118………………12.1.2
Van Garvan v Fenton (1992) 175 CLR 327………………………………6.2.2
Victoria Laundry (Windsor) v Newman Industries [1949] 2 KB 529……4.4.2; 9.2.1
Wardley Australia Ltd v Western Australia (1992) 175 CLR 514………1.1.5; 4.4.1
Warman International Ltd v Dwyer (1995) 182 CLR 544………………11.1; 11.3.3; 11.3.6
Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209……………….14.2.5
Watts v Rake (1960) 108 CLR 158………………………………………..4.3.1
Wentworth v Wollabra Council (1982) 149 CLR 672……………………18.2.1
White & Carter (Councils) Ltd v McGregor [1962] AC 413……………..5.2
Whitfield v De Lauret (1920) 29 CLR 71………………………………….12.1.1; 12.1.3
Wight v Haberdan Pty Ltd [1984] 2 NSWLR 280………………………...14.3.2
Wilsher v Essex Area Health Authority [1986] 3 All ER 801…………….4.7.4
Woodhead v Barrow [1993] Aust Torts Reports 62,462…………………6.2.1
Wrotham Park Estate v Parkside Homes [1974] 1 WLR 798…………...11.2.3; 18.2.1
Wylde v A-G for NSW (1948) 78 CLR 224………………………………..14.2.3
Wynn v NSW Insurance Ministerial Corp (1995) 184 CLR 485…………6.2.1
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XL Petroleum (NSW) v Caltex Oil (Aust) (1985) 155 CLR 448…………12.1.2; 12.1.3
Yammine v Kalway [1979] NSWLR 151…………………………………...6.2.1
Yerkey v Jones (1939) 63 CLR 649………………………………………..15.2.5
Young v Wheeler (1987) Aust Torts Reports 80-126…………………….2.2
Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15…………………………………………………………………10.1; 10.4; 10.6; 10.7; 10.7.1
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1. Introduction to Civil Remedies
1.1 Overview
1.1.1 The Law of Remedies
• The law of remedies is essentially concerned with the range of options available to a plaintiff who can establish a successful cause of action against the defendant. This notion has been described along the following lines:
o The violation of a legal right (which is established by the cause of action) gives rise to a remedy (Letang v Cooper per Diplock LJ). The flaw in this line of reasoning is that remedies are another species of rights (“secondary rights”) which are available when a “primary” right is violated (John Austin).
o The failure to perform a primary obligation, whether the obligation arises in contract, tort or equity, constitutes a breach of contract to which a secondary obligation arises on the part of the Defendant to rectify the wrong that has been made (i.e. to pay damages to the Plaintiff - Photo Production Ltd v Securior Transport Ltd per Lord Diplock).
1.1.2 Exceptions to the General Principle
• There are exceptions to the notion that remedies are only available where a cause of action can be established such as:
o the pleading of restitution for unjust enrichment which is not concerned with the loss sustained by the Plaintiff as a result of breach but with the unjust gain of the Defendant caused by no fault of his/her own (i.e. where money is paid to the Defendant by mistake to the Plaintiff);
o no fault statutory compensation schemes including workers compensation (Safety Rehabilitation and Compensation Act 1988 (Cth); Workers Compensation Act 1987 (NSW)), motor accidents (Motor Accidents Compensation Act 1999 (NSW)), victims of crime (Victims Support and Rehabilitation Act 1996 (NSW)) and sporting injuries (Sporting Injuries Insurance Act 1978 (NSW)).
1.1.3 Categories of Civil Wrongs
• There are three categories of civil wrongs the breach of which will lead to a remedy:
o legal common law wrongs (breach of torts and breach of contract) – the remedies available are outlined by the common law which include damages (as of right) and/or equitable remedies which are available as a matter of discretion in the auxiliary jurisdiction of equity;
o legal statutory wrongs (misleading or deceptive conduct under s 52 of the Trade Practices Act 1974 (Cth) / s 42 of the Fair Trading Act 1987 (NSW); intellectual property infringements; and wrongful death actions) – the range of available remedies are exclusively prescribed by the requisite statute; and
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o equitable wrongs (breach of trust, breach of fiduciary duty, breach of confidence (i.e. confidential information); unreasonable restraint of trade) – equitable remedies are available in exclusive jurisdiction of equity.
1.1.4 Alternative and Cumulative Remedies
• In particular situations, the Plaintiff may have a range of remedies available with respect to his/her successful cause of action. These remedies can either be alternative remedies or cumulative remedies.
• Alternative remedies require the Plaintiff to elect which remedy s/he desires when judgment is entered in his/her favour (Personal Representatives of Tang Mang Sit v Capacious Investments Ltd per Lord Nicholls). Examples of alternative remedies include:
o rescission/specific performance of a contract and damages (compensatory or restitutionary); and
o account of profits and damages (compensatory).
• Cumulative remedies involve the Plaintiff electing to have more than one remedy with respect to a cause of action. This situation can arise in the following scenarios:
o where more than one remedy is available against one defendant (i.e. where the defendant breaches a condition of a contract, the Plaintiff can set aside the contract and claim damages for breach); or
o where the plaintiff has a cause of action against two persons with respect to the same loss (however it is important to note that in this situation, the Plaintiff can only recover from both defendants the full amount of the damages such that double recovery is prohibited).
1.1.5 Limitation Periods
• The Plaintiff must be aware of the relevant limitation periods that outline the time before which a cause of action must be commenced against the Defendant. It is important to note that the cause of action does not accrue until the Plaintiff suffers actual loss or damage (Wardley Australia Ltd v Western Australia).
• Statutory actions may prescribe a specific period such as:
o the Trade Practices Act which outlines a limitation period of six years for actions associated with claiming damages pursuant to s 82;
o the Copyright Act (s 134) and the Patents Act (s 120) which both outline a limitation period of six years for copyright and patent infringements;
o the Workplace Injury Management and Workers Compensation Act 1988 (NSW) outlines a limitation period of six months for personal injury / death workers compensation claims pursuant to s 65 (note that this period can be extended pursuant to s 65D); and
o the Workers Compensation Act 1987 outlines a limitation period of 3 years for employment-related damages claims for personal injury/death pursuant to s 151D – may be extended under s 151DA.
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• Also, where the Defendant is a statutory body, a statute establishing the particular body may prescribe a specific limitation period which must be observed by a Plaintiff.
• In general, the Limitation Act 1969 (NSW) provides for the following limitation periods:
o 3 years for personal injury and death claims (ss 18A, 19 – may be extended under ss 50A – 50F);
o 1 year for defamation claims (s 14B – may be extended under s 56A);
o 6 years for tort actions, contract actions, actions for restitution for unjust enrichment (s 14);
o 12 years for deeds (s 16); and
o 2 years after accrual of contribution claim or 4 years after expiration of limitation period for principal claim, whichever occurs first (s 26).
• The limitation period may be suspended during a period of legal disability and cases of fraud or mistake (ss 52, 55 and 56).
• Equitable remedies are generally not subject to limitation periods with some exceptions such as breach of trust (ss 47 – 50).
1.2 Common Law and Equity
• The remedies which are available to a successful Plaintiff are either legal or equitable in origin. However, the equitable remedies (i.e. injunctions / specific performance) are available in the following circumstances:
o where there has been a breach of an equitable wrong; or
o where there has been a breach of a legal wrong and the legal remedy of damages is inadequate according to a court of equity (i.e. a discretionary remedy).
• The historical background between the interaction of common law and equity can be explained on the following basis:
o Equity developed as a court of conscience to perfect the inadequacies of the common law by creating causes of action which did not exist at common law and by creating new remedies where damages were inadequate.
o Equity and the common law were administered in separate courts such that common law courts could not order equitable remedies and courts of equity could not order common law remedies.
o The Supreme Court of Judicature Act 1873 effectively fused the two systems so as to enable one court to administer both equitable and common law remedies.
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1.2.1 The Fusion Fallacy
• The fusion of the two systems has lead to criticism from academics that the merging of the systems has culminated in the merging of legal and equitable doctrines which should be kept separated (the fusion fallacy).
• In Harris v Digital Pulse, the majority of the NSWCA held that the fusion of the two systems created by the Supreme Court Act 1970 (NSW) did not have the effect that the doctrines enunciated in each jurisdiction fused as well. The reasoning behind this notion is captured in the seminal statement of Ashburner that “the two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters”. Accordingly, the common law remedy of exemplary damages is not available to an equitable action based on breach of fiduciary duty.
• President Mason dissented in this judgment and followed the approach taken by the UK, NZ (Day v Mead), and Canada on the basis that procedural reforms cannot have the effect of preventing areas of judge-made law evolving by reference to other areas of law. His Honour stated that the “principles of equity are not so invincibly superior to the concepts of common law that equity cannot occasionally profit from common law ideas”.
2. Non-Judicial Remedies - Self-Help Remedies
2.1 Overview
• Self-help remedies are essentially those remedies which are not awarded by the judiciary but are lawfully available to individuals in particular situations.
2.2 Abatement of Nuisance
• The abatement of nuisance is a self-help remedy which is available to an individual who is affected by a nuisance that enables the individual to take reasonable steps to “abate” or avert the harm (i.e. cutting a branch from a neighbour’s tree that overhangs in your property).
• The general principles associated with this self-help remedy include:
o Where the acts taken by the individual to abate the nuisance involve entering the defendant’s property, notice of intention must be given to the defendant because such an act constitutes trespass.
o Where the acts taken by the individual to abate the nuisance involve entering the defendant’s property, notice does not have to be given to the defendant where there is an imminent danger to life or health such that it is unsafe to wait (Traian v Ware).
o Where the plaintiff chooses to abate the nuisance, s/he loses the right to sue for an injunction because these are alternative remedies. However, this does not prevent the plaintiff from pursuing an action for damages suffered before the abatement.
o The costs associated with pursuing the abatement are generally not recoverable (Young v Wheeler) except where such abatement is a
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reasonable step taken by the plaintiff to mitigate significant future damage (Proprietors of Strata Plan No 14198 v Cowell).
2.3 Self-Defence
2.3.1 Overview – Common Law
• Where an action is commenced against an individual for trespass, the Defendant may plead the common law defence of self-defence where:
o the trespass was committed based on a reasonably (“objective”) perceived threat to oneself, one’s property, another person or another person’s property (“reasonably perceived threat”);
o the conduct which makes up the trespass was necessary in the sense that there was no practical alternative (“necessary”); and
o the conduct which makes up the trespass was reasonable in the sense that it was not excessive / disproportionate to the threat (“reasonable”).
• The onus of proving this defence rests with the Defendant (Underhill v Sherwell).
• The Defence failed in:
o Bird v Holbrook where the Defendant set up a trip-wire gun to injure trespassers of his property in circumstances where no notice was given to potential trespassers – the court distinguished the defendant’s intention to injure the trespasser from the reasonable intention of deterring trespassers such that the conduct was not reasonable.
o Fontin v Katapodis where the Defendant shopkeeper used a sharp glass projective against the Plaintiff customer in response to being hit by a wooden ruler – such conduct was ruled to be not necessary because the shopkeeper could of walked away from the threat of being hit with a wooden ruler and the conduct was excessive in the sense that it was disproportionate to the threat.
• In McPhail v Persons Unknown, Lord Denning MR held that an owner of land is entitled to use reasonable force to remove a squatter from his/her land or obtain an order from the court to remove the squatter (i.e. a writ of possession). However, an owner of land cannot remove a tenant by force but is rather obliged to go to court to obtain a writ of possession.
2.3.2 Statutory Defence
• The Civil Liability Act has established a defence which may be pleaded in addition to the common law defence (s 3(1) of the Civil Liability Act).
• The statutory defence is provided for in section 52 and outlines the following elements:
o the conduct of the Defendant (i.e. the trespass / battery) must be in response to conduct of the Plaintiff which is unlawful;
o the Defendant must actually (“subjective”) perceive a threat to oneself, another person, or property; and
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o the conduct of the Defendant must be reasonable in all of the circumstances.
• The statutory defence is available to all civil actions for personal injury, death and property damage (s 51) except for death intentionally or recklessly inflicted to protect property (s 52(3)).
• The primary difference between the common law and statutory defences is that under the statute, the necessity of the tort must be established by the defendant’s actual (rather than reasonable) belief as to the threat posed by the Plaintiff (s 52(2)).
• Where the Defendant can only establish that the necessity of the tort was caused by the defendant’s reasonable belief, the only recourse available to the Defendant is that the Plaintiff’s damages may be limited pursuant to s 52(2) and (3).
• There is a further defence provided for in section 54 which precludes the Plaintiff from recovering damages against the Defendant where the Plaintiff has committed a serious offence (i.e. punishable by imprisonment for greater than six months). However, this defence is not applicable where the Defendant has committed a criminal offence.
2.4 Defamation
• In response to an action commenced by the Plaintiff for defamation, the Defendant may make a prompt offer of amends (i.e. to publish correction, make an apology, or pay compensation).
• Under the Defamation Act, where the offer is accepted, no action can be brought by the Plaintiff and where the offer is “reasonable” but rejected, this can be relied upon by the Defendant as a complete defence (ss 12- 19).
2.5 Contract
2.5.1 Rescission
• One of the central self-help remedies available to a Plaintiff is rescission which involves setting aside a contract where the Defendant commits a breach of a condition of the contract. This remedy may be taken without the aid of the judiciary.
2.5.2 Liquidated Damages Clauses
• The parties to a contract are permitted to include a “liquidated damages clause” into the contract which essentially provides the amount of damages that become payable when a party to the contract commits a breach of a particular term. The purpose of these clauses is to provide incentives to the parties to comply with their obligations under the contract.
• Such clauses are interpreted according to their natural and ordinary meaning taking into account contextual factors. However, where such terms are ambiguous, the courts must prefer an interpretation that is not favourable to the
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party seeking to rely on the clause (Darlington Futures Ltd v Delco Australia Pty Ltd).
• In order for a “liquidated damages clause” to be binding, the amount stipulated must be a genuine pre-estimate of the innocent party’s loss (Dunlop Pneumatic Tyres Co Ltd v New Garage) and not extravagant, exorbitant or unconscionable so as to amount to a “penalty” (Esanda Finance Corp v Plessnig). Where the clause constitutes a “penalty”, it will be rendered void and the court must assess the damages.
• A presumption will arise that a “liquidated damages clause” is a “penalty” where a single lump sum is made payable on the occurrence of a breach regardless of whether the breach causes serious or trifling damage (Dunlop Pneumatic).
• An alternative test has been proposed in PC Developments v Revell per Meagher JA that the liquidated damages clause will be considered a penalty where it results in the innocent party receiving a greater sum than would be awarded by the court.
3. Introduction to Damages
3.1 Overview
• The remedy of damages is essentially a specific monetary remedy which values the loss actually suffered by the Plaintiff or any monetary remedy (other than an order to pay a debt, interest or costs) awarded to the Plaintiff for a civil wrong.
• The award of damages may relate to losses suffered during the pre-trial period or to the future. However, there is no future component with respect to the award of damages for defamation, property damage and pure economic loss claims because the plaintiff can fully mitigate the loss upon receipt of damages. Conversely, in permanent personal injury and death claims where losses cannot be fully mitigated, a future component will need to be included in the award of damages.
3.1.1 Types of Damages
• There are four categories of damages including:
o Nominal damages – the amount awarded will be a token amount (i.e. $25.00) to prove that the Plaintiff has succeeded in his/her action but failed to establish injury or losses associated with the action.
o Compensatory damages – the amount awarded reflects the injury or losses suffered by the plaintiff as a result of the defendant’s breach.
o Restitutionary damages – the amount awarded reflects the defendant’s gain associated with a civil wrong.
o Exemplary damages – the amount awarded is made to punish the defendant and deter others from engaging in such conduct.
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3.1.2 Assessment of Damages
• Compensatory and restitutionary damages are assessed according to the application of legal principles to the facts of the present situation.
• The following principles are applicable with respect to the assessment of damages:
o Where non-economic damages are suffered by the Plaintiff such as pain and suffering, the court will make an assessment of the value of such damages as at the date of the trial.
o Where pre-trial economic damages are claimed by the Plaintiff, the court will make an assessment of the actual value at the relevant time.
• Where post-trial economic damages are claimed by the Plaintiff, the court will make an assessment of the value of such damages as at the date of the trial.
3.1.3 Pre-Trial Damages and Interest
• Theoretically, the Plaintiff is entitled to a monetary award at the moment the cause of action accrued. As such, the court has a power to award interest up until judgment to adjust for inflation before trial and / or to compensate the Plaintiff for being denied the monetary award at the moment the Plaintiff suffered loss or injury (MBP (SA) Pty Ltd v Gogic). However, it must be noted that compensating for being kept out of an award until trial has been abolished by the Civil Liability Act 2002 (NSW), s 18 with respect to damages for non-economic loss and gratuitous attendant care services.
• Section 100 of the Civil Procedure Act 2005 (NSW) enables the State courts in New South Wales to make an order of interest up until the date of judgment. However, this power is discretionary.
• Section 51A of the Federal Court of Australia Act 1976 (Cth) provides a presumption in favour of awarding pre-judgment interest unless good cause is shown to the contrary.
3.1.4 Future Damages and Present Value
• In assessing damages for future losses and expenses, the courts will not consider evidence with respect to the likely course of inflation, the possible increase in wage rates and the amount of tax on income from investment of the sum awarded. Conversely, the court applies a “discount rate” of 3% with respect to a damages award that relates to future losses (Todrovic v Waller). However, this discount rate has been increased to 5% in claims regulated by the Civil Liability Act 2002 (s 14), Workers Compensation Act (s 151), Motor Accidents Compensation Act (s 127) and the Trade Practices Act (s 87Y).
• The award of the damages is not reduced by 5% but rather the Plaintiff is awarded an amount which compounds at 5% until the time the loss is actually suffered by the Plaintiff. For example, if the Plaintiff suffered injuries that resulted in a loss of earnings of $500 per week for the next twenty years, the award would be discounted from $520,000 to $333,200. Similarly, where the Plaintiff suffers an injury which requires an operation in twenty years that will cost $5,000, the amount of the award will compound at $1,885.
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3.1.5 Taxation – Personal Injury Awards
• A lump sum damages award for personal injury or death is not considered income for the purposes of taxation (McLaurin v Federal Commissioner of Taxation) and is exempt from capital gains tax pursuant to s 118.37(1) of the Income Tax Assessment Act 1997 (Cth). This exemption remains applicable for structured settlements pursuant to Div 54 of the Income Tax Assessment Act.
• The consequence of the non-application of taxation on personal injury awards is that the court must assess the loss of earnings in “after-tax values” (i.e. net weekly earnings) as opposed to gross weekly earnings (Cullen v Trappell).
3.1.6 Taxation – Other Awards
• A damages award for loss of business profits will be taxed as income such that the amount of the award will be based on before-tax values. However, where an award is to compensate for losses generated over several years, the lump sum award will be taxed at a higher rate in a single year. Accordingly, the court increases the amount of the damages award to compensate the Plaintiff for being taxed at a higher rate (Gill v Australian Wheat Board).
• A damages award based on restitution will reflect profits earned by the Defendant after-tax. Accordingly, the award will be based on before-tax profits unless the defendant is entitled to refund of tax paid (O’Sullivan v Management Agency and Music Ltd).
3.2 Fundamental Features of Damages’ Awards
3.2.1 Awarded Unconditionally
• An award of damages is unconditional in the sense that the court cannot direct the Plaintiff as to the manner in which the sum of money is spent (Todrovic v Waller). This notion flows from the principle that a plaintiff who establishes a common law action is entitled to damages as of right as opposed to discretion (as is the case with equitable actions).
3.2.2 Awarded “Once and For All”
• An award of damages for a cause of action can only be recovered “once and forever” (Todrovic v Waller). The effect of this notion is that a Plaintiff cannot seek more damages from the Defendant if his/her injury worsens after judgment is entered because the damages award takes into account future losses (Fitter v Veal).
• The “once and for all” rule is based upon the public interest in finality of litigation and fairness to the Defendant.
• However, it must be observed that the “once and for all” rule is strictly a common law rule and does not qualify the recovery of damages under the Trade Practices Act (Murphy v Overton).
• This principle carries the result that a judgment or settlement of an action will extinguish the cause of action subject to:
o an appeal of the court’s judgment;
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o setting aside of the settlement agreement on grounds of unconscionability of fraud; or
o establishment of the exception in Darley Main Colliery Co v Mitchell in circumstances where the Defendant has withdrawn lateral support from the Plaintiff’s land causing it to subside such that each further subsidence will give rise to a new cause of action regardless of the fact that the nuisance of withdrawing the support has ceased.
• The “once and for all” principle does not affect a Plaintiff’s cause of action against any other defendant or any other Plaintiff’s action against the Defendant (except under the Compensation to Relatives Act where only one action can be brought on behalf of all dependents).
3.2.3 Lump Sum Rule
• The general principle is that an award of damages must be awarded as a lump sum to the Defendant.
• Concerns have been raised with the viability of this principle in Lim Poh Choo where Lord Scarman stated that as knowledge of the future is unknown, an award of damages compensating for future loss will “almost always be wrong”. In personal injury cases, the Privy Council has further observed in Paul v Rendell that an assessment of damages involves speculating as to the future for the injured plaintiff and the future of the plaintiff had s/he not been injured.
• There are exceptions to this principle such as:
o various statutes such as ss 22-26 of the Civil Liability Act 2002 allow the court to make a structured settlement whereby the lump sum award is payable as an annuity (however there is no power to adjust the amount of the award after judgment);
o sections 81 to 84 of the Civil Liability Act enable the court to make an “interim award” and defer final assessment of damages provided that liability has been established; and
o in motor accident cases, the Plaintiff can elect between a lump sum award or reimbursement of medical and related expenses as and when the need arises (Motor Accidents (Lifetime Care and Support) Act 2006 (NSW); Motor Accidents Compensation Act 1999 (NSW)).
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