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Remedies Hypothetical Notes REMEDIES HYPOTHETICAL NOTES TABLE OF CONTENTS Introduction .................................................................................................................................................................... 2 Conclusion ....................................................................................................................................................................... 2 Compensation: Breach of Contract .............................................................................................................................. 3 Things that look like compensation but aren’t .......................................................................................................................... 7 Compensation in Tort .................................................................................................................................................... 8 Compensation under the ACL .................................................................................................................................... 13 Compensation: Equitable wrongs ............................................................................................................................... 16 Damages for Vindication (i.e. for the wrong itself).................................................................................................... 18 Punitive damages .......................................................................................................................................................... 19 Specific Performance .................................................................................................................................................... 20 Injunctions..................................................................................................................................................................... 23 A. Permanent Injunctions .......................................................................................................................................................... 23 B. Interlocutory injunctions ....................................................................................................................................................... 26 Lord Cairns’ Act damages (in lieu of specific performance or an injunction) ....................................................... 27 Gain-based remedies .................................................................................................................................................... 29 Account of profit (Disgorgement) .............................................................................................................................................. 29 Reasonable fee ............................................................................................................................................................................. 31 Restitution for Unjust Enrichment ............................................................................................................................. 32 Rescission....................................................................................................................................................................... 33 Rescission under the ACL .......................................................................................................................................................... 35 Constructive Trust ........................................................................................................................................................ 36 1 INTRODUCTION [X] may claim remedies under the following causes of action: Cause of action Advantages Disadvantages Breach of contract ❖ Can get expectation loss ❖ Limiting principles: damages causation, remoteness, mitigation Tort ❖ Exemplary damages a. Deceit available b. Negligent misrepresentation ❖ Reasonable fee award c. Private nuisance available for proprietary d. Trespass torts e. Detinue f. Conversion ACL (misleading and deceptive ❖ You don’t have to prove conduct) fraud ❖ Wide range of remedies available Unjust enrichment ❖ Don’t have to prove a wrong ❖ Status unclear in Australia was committed ❖ Useful where the contract is void, unenforceable, frustrated, rescinded, terminated Equitable wrong ❖ Account of profits available ❖ Discretionary bars to relief a. Breach of fiduciary duty ❖ CT available (no conflict + no profit) b. Breach of trust c. Breach of equitable duty of care and skill CONCLUSION To conclude, it is recommended that [X] pursues [causes of action] because [A, B, C]. 2 COMPENSATION: BREACH OF CONTRACT (1) Measuring expectation loss General rule: Where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed (Parke B, Robinson v Harman). No loss? → Where no loss is suffered, only nominal damages are available (Tramways). (1A) Identify the appropriate measure of damages State: Different measures exist to calculate expectation losses. [X] would want to argue that [FILL] is the appropriate measure of damages. ❖ Loss of profit ❖ Cost of rectification ❖ Reliance damages ❖ Loss of a chance (i) Loss of profit State: [X]’s loss of profit is the difference between his expected profit and actual profit. ❖ Measure: Profit loss = [expected profit] – [actual profit] ❖ Appropriate when: parties contracting are expecting to profit ❖ Ask: Can the expectation be quantified in a meaningful way such that the plaintiff can be compensated? o The standard reference point is market value, but this can be varied in appropriate circumstances (Clarke) Clarke v Marcourt: Appellant purchased 3513 sperm straws (2500 could reasonably have been used), but could only use 504 of them (others did not comply with guidelines). Spent $1.2 million on replacement straws; awarded difference between value of the promised goods and the market value of the goods (measured by the market) = $1.2 million (ii) Cost of rectification State: There are two different measures of damages in rectification cases: ❖ Cost of cure; or ❖ Diminution in value. A. Cost of cure State: In building or property cases, a court will prima facie award the cost of rectification, which is the cost of restoring/rectifying the property (Tabcorp). ❖ Appropriate when: The cost of cure will be the measure of loss if the cure is both necessary and reasonable (Bellgrove) √ Bellgrove v Eldridge (HCA): house built with defective mortar which made the house unstable; impossible to measure diminution in value with reference to market price of comparable houses as there was no market for such reference. ❖ Court awarded cost of cure. ❖ Contract concerns property with subjective value. √ Tabcorp (HCA): contractual lease provided that no substantial alterations could be done to the foyer; tenant made alterations to the foyer; awarded $1.38 million, reflecting the cost of restoration/rectification. ❖ Not appropriate when: Cost of rectification is unreasonable or disproportionate ❖ The court goes further than any other court by telling us that it is only in very exceptional circumstances that it would not be reasonable to get the cost of cure. ❖ A court might not award it where P is exploiting the breach to get something that they really should not have. Ruxley Electronics (UK case): pool built 1 ft 6 inches too shallow. The cost of cure was denied: ❖ The pool was still safe for diving ❖ There was no evidence that the reduced depth decreased the pool’s value ❖ The only practicable method of rectifying the issue was to rebuild the pool at a cost of £21,560 ❖ The judge was not satisfied that the respondent intended to build a new pool at that cost (careful with this point) ❖ The cost of cure was disproportionate to the benefit, rendering rectification unreasonable ❖ The respondent was nonetheless permitted an award of £2,500 for loss of amenity 3 Comparing Ruxley and Tabcorp Ruxley Tabcorp ❖ Pool was still usable for diving ❖ The foyer was no longer usable for its subjective ❖ The error was an accidental oversight (late oral purpose variation) ❖ There was a contumelious disregard for the ❖ Uncertainty existed as to the terms of the contract plaintiff’s wishes ❖ A specific term existed to protect the foyer Managing intervening acts ❖ Is rectification still possible? o If not, the rectification measure is not available, regardless of the intent of the plaintiff ❖ Does the plaintiff actually intend to rectify? o Intention to rectify was held to be irrelevant in Bellgrove. However, in Ruxley (English case) the court took into account that P would not have used rectification damages to reconstruct pool. Reasonableness ❖ Considerations of reasonableness also appear to be relevant in determining the preferred course to adopt (Ruxley). ❖ The key question is whether the plaintiff would benefit from the repair ❖ Nonetheless, the court in Tabcorp suggested that ‘reasonableness’ has a low threshold and that it is only in very exceptional circumstances that it would not be reasonable to award the cost of cure. ❖ Might be unreasonable where: ‘P is using a technical breach to secure an uncovenanted profit’ (Tabcorp) B. Diminution in value ❖ Measure: Difference in value = [the value of what you expected] – [the value of what you received] (iii) Reliance damages (or damages for wasted expenditure) State: Where expectation damages cannot be measured, a court may award
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