Table&of&Contents&
The$History$and$Nature$of$Equity"............................................................................................."3"
What$is$Equity?$History$and$Nature$of$Equity"........................................................................."3"
The$Effects$of$the$Judicature$Acts$and$the$‘Fusion$Fallacy'"....................................................."4$
The$Maxims$of$Equity"..............................................................................................................."7"
Applications$of$the$Conscience$of$Equity"..............................................................................."11$
Breach$of$Confidence".............................................................................................................."11"
Estoppel".................................................................................................................................."19"
Remedial$Equity"......................................................................................................................"29$
Specific$Performance".............................................................................................................."29$
Injunctions".............................................................................................................................."34$
Damages$under$Lord$Cairns’$Act"............................................................................................"40"
The$Nature$and$Constitution$of$Trusts".................................................................................."43$
Nature$and$Classification$of$Trusts"........................................................................................"43$
Distinction$between$Trusts$and$Other$Legal$Relationships!..................................................!44$
The$Three$Certainties"............................................................................................................."46$
Beneficiary$Principle"..............................................................................................................."50$
Operation$of$Express$Trusts"..................................................................................................."54$
Powers$and$Duties$of$Trustees"..............................................................................................."54$
Rights$and$Liabilities$of$Trustees"............................................................................................"60$
Rights$of$Beneficiaries"............................................................................................................"65$
Fiduciary$Obligations".............................................................................................................."67$
Categories$of$Fiduciary$Obligations"......................................................................................."67$
Fiduciary$Obligations".............................................................................................................."71"
Defences$to$Breaches$of$Fiduciary$Duty"................................................................................"74"
Remedies$for$Breaches$of$Fiduciary$Duty".............................................................................."75"
Resulting$Trusts"......................................................................................................................"79$
Resulting$Trusts"......................................................................................................................"79$
Automatic$Resulting$Trusts"...................................................................................................."79"
Presumed$Resulting$Trusts"....................................................................................................."81$
Resulting$Trusts$and$Illegality"................................................................................................"84$
Quistclose*Trusts"....................................................................................................................."85$
1"
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Constructive$Trusts"................................................................................................................."88$
Constructive$Trusts"................................................................................................................."88$
Constructive$Trusts$and$Third$Parties"...................................................................................."89$
Constructive$Trusts$and$Unconscionable$Conduct"................................................................"95$
Remedial$Constructive$Trusts"................................................................................................."99$
Tracing".................................................................................................................................."101$
Tracing"..................................................................................................................................."101$
Applications$of$Equitable$Tracing$Rules"..............................................................................."102$
Charity"..................................................................................................................................."109$
Legal$Concept$of$Charity"......................................................................................................."109$
Charitable$Purposes:$Poverty"..............................................................................................."111$
Charitable$Purposes:$Education"..........................................................................................."112$
Charitable$Purposes:$Religion".............................................................................................."113$
Charitable$Purposes:$Other$Beneficial$Purposes"................................................................."115$
Charitable$Purposes:$Mixed$Purposes"................................................................................."116$
Public$Benefit"........................................................................................................................"117$
Political$Purposes".................................................................................................................."120$
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2"
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The$History$and$Nature$of$Equity$
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What$is$Equity?:$History$and$Nature$of$Equity:$
$
• History"and"nature"of"equity"
o Purpose"of"equity6"to"address"the"various"defects"found"in"the"medieval"
system"of"common"law,"which"was"suffering"a"‘sclerosis’,"according"to"Peter"
Radan"and"Cameron"Stewart"in"Principles!of!Australian!Equity!and!Trusts"
o Strong"influence"of"Aristotelian"philosophy"in"equity6"equity"is"“a"rectification"
of"law"in"so"far"as"law"is"defective"on"account"of"its"generality”,"as"argued"by"
Aristotle"in"Nichomachean!Ethics"
o All"equitable"doctrines"originate"in"the"equitable"jurisdiction"of"the"Lord"
Chancellor,"sitting"judicially"in"the"English"Court"of"Chancery"
o Origin"of"the"Court"of"Chancery6"as"a"one6man"court"of"the"Lord"Chancellor"
who"developed"and"administered"the"principles"of"equity,"established"due"to"
the"increasing"number"of"litigants,"dissatisfied"by"the"common"law"courts,"
who"were"petitioning"the"king"directly"for"redress"through"his"residual"
prerogative"power"
o Another"important"influence"in"the"development"of"the"Court"of"Chancery"
was"the"recognition"of"the"system"of"‘uses’,"whereby"a"landowner"would"
convey"land"to"a"feofee!to!use,"who"would"hold"the"land"for"the"benefit"of"the"
cestui!que!use"
o The"common"law"only"recognised"the"rights"of"the"feofee!to!use6"but"equity"
would"focus"on"the"conscience"of"the"feofee!to!use,"preventing"the"
unconscientious"exercise"of"common"law"rights"by"the"feofee!to!use"and"
compelling"him"to"exercise"such"rights"for"the"benefit"of"the"cestui!que!use"
o The"common"injunction"was"the"primary"remedy"deployed"by"the"Lord"
Chancellor"in"a"discretionary"manner,"to"order"a"plaintiff"at"common"law"to"
discontinue"proceedings"or"to"prevent"a"verdict"being"enforced6"the"remedy"
was"an"in!personam!remedy"as"it"attached"to"the"person"of"the"common"law"
plaintiff"
"
• History"and"nature"of"equity:"The!Earl!of!Oxford’s!Case"(1615)"
o This"case"represented"the"chief"battle"between"Sir"Edward"Coke,"leading"the"
common"law"as"Chief"Justice"of"the"Court"of"King’s"Bench,"and"Baron"
Ellesmere,"leading"equity"as"Lord"Chancellor"of"the"Court"of"Chancery"
o The"dominance"of"the"common"law"had"recently"been"established"in"Glanvile!
v!Courtney"(1614),"but"this"case"reversed"that"dominance"
o Baron"Ellesmere"outlined"how"the"idea"of"‘conscience’"underpins"all"equitable"
doctrines:"“when"a"[common"law]"Judgment"is"obtained"by"Oppression,"
Wrong"and"a"hard"Conscience,"the"Chancellor"will"frustrate"it"and"set"it"aside,"
not"for"any"error"or"Defect"in"the"Judgment,"but"for"the"hard"Conscience"of"
the"party”"
o The"outcome"of"this"case"was"that"in"cases"of"conflict"between"the"common"
law"and"equity,"equity"will"prevail"(as"provided"by"s"5"of"the"Law!Reform!(Law!
and!Equity)!Act!1972"(NSW))"
3"
"
o So"the"role"of"equity"is"to"control"or"restrain"the"common"law"where"the"
exercise"of"common"law"rights"is"unconscientious:"“the"Office"of"the"
Chancellor"is"to"correct"Men’s"consciences"for"Frauds,"Breach"of"Trusts,"
Wrongs"and"oppressions,"of"what"Nature"soever"they"be,"and"to"soften"and"
mollify"the"Extremity"of"the"Law”"
o This"was"confirmed"by"the"High"Court"recently"in"Australian!Broadcasting!
Corporation!v!Lenah!Game!Meats"(2001):"“the"conscience"of"the"appellant,"
which"equity"will"seek"to"relieve,"is"a"properly"formed"and"instructed"
conscience."The"real"task"is"to"decide"what"a"properly"formed"and"instructed"
conscience"has"to"say”"
o So"equity"is"intended"“to"support"and"protect"the"common"law”,"as"stated"by"
Lord"Cowper"in"Dudley!v!Dudley"(1705)"
o This"reflects"the"fact"that"equity"is"now"a"‘settled"system’,"complementary"to"
the"common"law,"as"noted"by"William"Holdsworth"in"Some!Makers!of!English!
Law"
$
The$Effects$of$the$Judicature$Acts$and$the$‘Fusion$Fallacy’:$
$
• The"effects"of"the"Judicature"Acts"
o Procedural"issues"in"equity:"
! Excessive"delay6"there"were"only"two"judges"
! Great"expense6"fees"were"paid"by"reference"to"the"number"of"pages"of"
the"claim"
! It"could"be"necessary"to"make"claims"in"both"courts"to"obtain"a"full"
remedy"
! Confusion6"a"beneficiary"of"a"trust"failed"in"his"claim"of"dispossession"
by"a"trustee"in"the"common"law"court"in"Doe!d!Reade!v!Reade"(1799),"
as"the"common"law"would"not"recognise"the"beneficiary"as"the"
landowner"(needed"to"be"brought"in"the"Court"of"Chancery)"
o So,"passage"of"the"Judicature!Acts"of"1873"and"1875"in"the"United"Kingdom6"
abolished"the"historic"courts"of"common"law"and"equity,"replacing"them"with"
a"single"court"of"the"High"Court"of"Judicature"with"two"divisions"of"the"
Queen’s"Bench"Division"and"the"Chancery"Division,"which"could"administer"
both"common"law"and"equity"
o Thus,"the"key"effect"was"the"procedural"fusion"of"law"and"equity:"the"First!
Report!of!the!Judicature!Commission"stated"that"“sending"the"suitor"from"
equity"to"law"and"from"law"to"equity,"to"begin"his"suit"over"again"in"order"to"
obtain"redress,"will"no"longer"be"possible”"
o In"cases"of"conflict"between"the"common"law"and"equity,"equity"will"prevail,"
as"provided"by"s"25(11)"of"the"Judicature!Act!1873"(UK)"
o The"Judicature"Acts"in"Australia6"first"adopted"by"Queensland"in"1876,"and"
then"introduced"in"New"South"Wales"in"1970"through"the"Supreme!Court!Act!
1970!(NSW)"
o Similarly"to"the"United"Kingdom,"in"cases"of"conflict"between"the"common"
law"and"equity,"equity"will"prevail,"as"provided"by"s"5"of"the"Law!Reform!(Law!
and!Equity)!Act!1972"(NSW)"
"
4"
"
•
The"‘fusion"fallacy’"
o Nature"of"the"‘fusion"fallacy’6"where"there"is"substantive"fusion"of"the"
principles"of"common"law"and"equity,"not"just"procedural"fusion"as"intended"
o Meagher,"Gummow"and"Lehane"coined"the"term"of"the"‘fusion"fallacy’"in"
Equity:!Doctrines!and!Remedies:"“the"fusion"fallacy"involves"the"
administration"of"a"remedy,"for"example,"common"law"damages"for"breach"of"
fiduciary"duty,"not"previously"available"at"law"or"in"equity,"or"the"modification"
of"principles"in"one"branch"of"the"jurisdiction"by"concepts"which"are"imported"
from"the"other"and"thus"are"foreign”"
o As"stressed"by"Jessel"MR"in"Salt!v!Cooper"(1880),"the"effect"of"the"Judicature"
Acts"was"“the"vesting"in"one"tribunal"the"administration"of"Law"and"Equity"in"
every"cause,"action"or"dispute"which"should"come"before"that"tribunal”,"so"it"
is"not"a"“fusion"of"Law"and"Equity”"
•
The"‘fusion"fallacy’:"Walsh!v!Lonsdale"(1882)"and"Chan!v!Cresdon!(1989)"
o In"this"case,"a"landlord"granted"a"7"year"lease"of"a"mill"to"a"tenant"which"was"
in"writing"but"unsealed,"so"it"was"void"at"law;"the"agreement"provided"that"an"
entire"year’s"rent"would"be"paid"in"advance"
o The"dispute"arose"after"the"tenant"entered"into"possession,"as"the"landlord"
demanded"a"year’s"rent"in"advance,"which"the"tenant"failed"to"pay;"the"
landlord"then"made"a"common"law"claim"for"distress,"while"the"tenant"sought"
an"injunction"
o Key"legal"question6"was"the"landlord’s"common"law"remedy"of"distress"
available,"despite"the"absence"of"a"lease"at"common"law?"
o Jessel"MR"held"that"there"was"an"equitable"lease,"as"there"was"a"specifically"
performable"agreement""and"‘equity"regards"as"done"that"which"ought"to"be"
done’"[a"key"equitable"maxim]"
o Then,"the"landlord"could"make"the"common"law"claim"for"distress,"because"
“he"holds,"therefore,"under"the"same"terms"in"equity"as"if"a"lease"had"been"
granted”"
o This"was"possible"only"due"to"the"Judicature"Acts:"“there"are"not"two"estates"
as"there"were"formerly,"one"estate"at"common"law"by"reason"of"the"payment"
of"the"rent"from"year"to"year,"and"an"estate"in"equity"under"the"agreement."
There"is"only"one"Court,"and"the"equity"rules"prevail"in"it”"
o The"High"Court"explained"in"Chan!v!Cresdon!(1989)"that"Walsh!v!Lonsdale"
(1882)"was"not"an"example"of"the"‘fusion"fallacy’"
o Rather,"the"case"“involved"no"more"than"giving"the"Judicature"Acts"a"
procedural"operation”:"even"before"the"Judicature"Acts,"equity"could"award"
specific"performance"of"an"agreement"retrospectively"
o The"High"Court"thus"stressed"that"there"is"still"a"distinction"between"a"legal"
lease"and"an"agreement"for"a"lease"specifically"enforceable"in"equity:"the"
latter"is"only"an"equitable"interest,"so"can"be"defeated"by"a"bona!fide"
purchaser"for"value"without"notice"(and"specific"performance"may"not"always"
be"available)"
•
The"‘fusion"fallacy’:"Day!v!Mead"(1987)"
o This"case"is"a"key"example"of"the"‘fusion"fallacy’"in"New"Zealand"case"law"
"
"
5"
"
o In"this"case,"the"plaintiff"sued"his"former"solicitor"for"breach"of"fiduciary"duty"
due"to"a"conflict"of"interest,"alleging"that"he"acted"on"the"advice"of"the"
defendant"in"investing"money"in"a"company"which"went"into"receivership"
soon"after;"the"defendant"was"also"director"of"that"company"
o Key"legal"issue6"whether"the"award"of"equitable"compensation"for"breach"of"
fiduciary"duty"could"be"reduced"by"contributory"negligence,"on"the"basis"that"
the"plaintiff"should"have"obtained"independent"advice"
o The"New"Zealand"Court"of"Appeal"held"that"the"award"of"equitable"
compensation"for"breach"of"fiduciary"duty"could"indeed"be"reduced"by"
contributory"negligence"(despite"being"a"common"law"concept)"
o This"was"possible"because"“law"and"equity"have"mingled"or"are"interacting”"
(Cooke"P)"
o Another"example"of"the"‘fusion"fallacy’"in"the"New"Zealand"case"law"is"Cooke"
P’s"judgment"in"Aquaculture!v!New!Zealand!Green!Mussel!Co"(1990),"who"
stated"that"“for"all"purposes"now"material,"equity"and"common"law"are"
mingled"or"merged”,"in"justifying"the"award"of"exemplary"damages"for"breach"
of"confidence"(being"the"administration"of"a"remedy"in"equity"which"was"not"
previously"available)"
"
•
The"‘fusion"fallacy’:"Harris!v!Digital!Pulse"(2003)"
o In"this"case,"an"employee"secretly"worked"for"the"benefit"of"his"own"business"
in"competition"with"the"employer,"during"the"course"of"his"employment"
o Key"legal"issue6"whether"exemplary"damages"could"be"awarded"for"breach"of"
fiduciary"duty"to"punish"the"wrongdoer"(similar"issue"as"in"Aquaculture!v!New!
Zealand!Green!Mussel!Co"(1990))"
o Heydon"JA"stressed"that"this"was"a"“crude"fusion"fallacy”,"in"the"sense"of"the"
administration"of"a"remedy"in"equity"which"was"not"previously"available"
o Only"the"High"Court"had"authority"to"change"the"law"in"such"a"manner:"
Spigleman"CJ"noted"that"“there"is"no"relevant"precedent”"for"awarding"
exemplary"damages"for"breach"of"a"fiduciary"duty,"while"Heydon"JA"stated"
that"the"New"South"Wales"Court"of"Appeal"“ought"not"to"change"the"law"of"
New"South"Wales"so"as"to"create"power"to"do"so”"
o In"dissent,"Mason"P"held"that"exemplary"damages"could"be"awarded"for"
breach"of"fiduciary"duty,"due"to"an"analogy"with"the"law"of"torts"where"
exemplary"damages"were"available"(but"Spigelman"CJ"thought"that"if"an"
analogy"was"appropriate"at"all,"an"analogy"with"the"law"of"contract"was"
superior"where"exemplary"damages"were"unavailable)"
•
The"‘fusion"fallacy’:"fusion"by"convergence"over"time?"
o Andrew"Burrows"argued"in"‘We"Do"This"at"Common"Law"but"That"in"Equity’"
that"the"principles"of"common"law"and"the"principles"of"equity"have"
essentially"converged"
o A"key"example"of"this"is"Mason"P’s"judgment"in"Harris!v!Digital!Pulse"(2003),"
who"deemed"it"possible"to"award"exemplary"damages"for"breach"of"fiduciary"
duty"
o This"has"some"support"from"Sir"Anthony"Mason"in"‘The"Place"of"Equity"and"
Equitable"Remedies"in"the"Contemporary"Common"Law"World’,"who"stated"
"
6"
"
that"“there"is"no"reason"why"the"courts"in"shaping"principles…should"not"
have"regard"to"both"common"law"and"equitable"concepts"and"doctrines”"
o But"this"is"rather"about"the"development"of"case"law"rather"than"the"
operation"of"the"Judicature"Acts"
o So"equity"remains"distinctive"from"the"common"law,"while"“to"subsume"
equity"into"a"larger"scheme"of"private"law"obligations"and"property"rights"
would"risk"losing"an"explicit"ethical"element”"(John"McGhee"in"Snell’s!Equity),"
with"the"basis"of"equitable"doctrines"being"unconscientiousness"in"the"
exercise"of"common"law"rights"
$
The$Maxims$of$Equity:$
$
• The"maxims"of"equity"
o The"maxims"of"equity"serve"to"guide"the"courts;"but"the"maxims"of"equity"will"
be"departed"from"where"it"is"appropriate"to"do"so"
o Inherent"limitation"of"maxims6"“it"would"be"a"mistake"to"set"too"much"store"
by"the"maxim…It"is"not"a"specific"rule"or"principle"of"law."It"is"a"summary"
statement"of"a"broad"theme"which"underlies"equitable"concepts"and"
principles”,"as"stated"by"Mason"CJ"and"McHugh"J"in"Corin!v!Patton"(1990)"
o Key"maxims"of"equity:"
" Equity"will"not"suffer"a"wrong"to"be"without"a"remedy"
" Equity"follows"the"law"
" Equity"looks"to"intention"and"substance,"rather"than"form"
" Equity"regards"as"done"that"which"ought"to"be"done"
" Where"the"equities"are"equal,"the"first"in"time"shall"prevail;"where"
there"is"equal"equity,"the"law"shall"prevail"
" Equity"presumes"equality"
" He"who"seeks"equity"must"do"equity"
" He"who"comes"to"equity"must"come"with"clean"hands"
" Delay"defeats"equity"
" Equity"will"not"assist"a"volunteer"
" Equity"acts"in!personam"
"
• The"maxims"of"equity:"Corin!v!Patton"(1990)"
o This"is"a"case"where"equitable"maxims"conflicted6"so"the"High"Court"had"to"
choose"which"one"to"follow"
o In"this"case,"Mr"and"Mrs"Patton"were"joint"registered"proprietors"of"land"at"
Belrose"
o Mrs"Patton"was"terminally"ill"and"attempted"to"transfer"her"interest"in"the"
land"to"her"brother,"Mr"Corin,"as"a"gift;"when"Mrs"Patton"died,"Mr"Patton"
argued"that"she"had"failed"to"effectively"alienate"her"interest"in"the"land,"so"
that"he"was"entitled"to"the"whole"of"the"land"due"to"the"principle"of"
survivorship"in"a"joint"tenancy"
o Prima!facie,"the"High"Court"acknowledged"the"equitable"maxims"that"‘equity"
will"not"assist"a"volunteer’"and"‘equity"will"not"perfect"an"imperfect"gift’,"
which"suggested"that"Mr"Corin"would"not"have"the"assistance"of"equity"as"he"
was"receiving"the"interest"in"the"land"as"a"gift!
7"
"
o But"there"was"an"exception"for"the"beneficiary"of"a"trust,"and"there"was"a"
competing"equitable"maxim"of"‘equity"looks"to"intention"and"substance,"
rather"than"form’:"this"could"assist"Mr"Corin"because"in"Anning!v!Anning"
(1907),"Griffith"CJ"held"that"a"gift"can"be"completed"in"equity"if"the"transferor"
has"done"everything"that"that"transferor"needs"to"do"to"transfer"legal"title!
o Ultimately,"the"High"Court"held"that"Mrs"Patton’s"interest"in"the"land"was"not"
successfully"alienated,"because"she"had"not"done"all"that"she"herself"needed"
to"do"(the"certificate"of"title"to"the"land"remained"with"the"bank)!
"
•
The"maxims"of"equity:"equity"will"not"suffer"a"wrong"to"be"without"a"remedy"
o This"equitable"maxim"relates"to"the"historical"purpose"of"equity,"being"to"
address"deficiencies"in"the"common"law"system"
o Although"equity"is"developed"cautiously,"“equity"is"a"living"force"and…it"
responds"to"new"situations."It"must"do"so"in"ways"that"are"consistent"with"
equitable"principles."If"it"were"to"fail"to"respond,"it"would"atrophy”"(Kirby"J"in"
Australian!Broadcasting!Corporation!v!Lenah!Game!Meats"(2001))"
o Only"the"High"Court"has"authority"to"develop"equitable"principles,"as"held"by"
Heydon"JA"in"Harris!v!Digital!Pulse"(2003)"
o This"was"confirmed"by"the"High"Court"itself"in"Farah!Constructions!v!SayYDee"
(2007)"
•
The"maxims"of"equity:"equity"follows"the"law"
o Equity"recognises"common"law"rights"as"valid;"it"merely"controls"or"restrains"
the"common"law"where"the"exercise"of"common"law"rights"is"
unconscientious,"as"outlined"by"Baron"Ellesmere"in"The!Earl!of!Oxford’s!Case"
(1615)"
o Thus,"“equity"followed"and"built"upon"the"common"law,"adding"its"remedies"
by"way"of"enforcement"of"the"common"law”,"as"stated"by"Deane"J"in"AMEVY
UDC!Finance!v!Austin"(1986)"
•
The"maxims"of"equity:"equity"looks"to"intention"and"substance,"rather"than"form"
o This"equitable"maxim"addresses"the"situation"where"if"“by"insisting"on"the"
form,"the"substance"will"be"defeated,"[equity]"holds"it"to"be"inequitable"to"
allow"a"person"to"insist"on"such"form”"(Lord"Romilly"MR"in"Parkin!v!Thorold"
(1852)”"
o Key"case"authority"of"Paul!v!Constance"(2007)6"a"trust"can"be"created,"even"
where"the"word"‘trust’"is"not"actually"used"
•
The"maxims"of"equity:"equity"regards"as"done"that"which"ought"to"be"done"
o This"equitable"maxim"was"utilised"by"Jessel"MR"in"Walsh!v!Lonsdale"(1882),"a"
landlord"granted"a"7"year"lease"of"a"mill"to"a"tenant"which"was"in"writing"but"
unsealed,"so"it"was"void"at"law;"the"agreement"provided"that"an"entire"year’s"
rent"would"be"paid"in"advance"
o The"dispute"arose"after"the"tenant"entered"into"possession,"as"the"landlord"
demanded"a"year’s"rent"in"advance,"which"the"tenant"failed"to"pay;"the"
landlord"then"made"a"common"law"claim"for"distress,"while"the"tenant"sought"
an"injunction"
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o Key"legal"question6"was"the"landlord’s"common"law"remedy"of"distress"
available,"despite"the"absence"of"a"lease"at"common"law?"
o Jessel"MR"held"that"there"was"an"equitable"lease,"as"there"was"a"specifically"
performable"agreement""and"‘equity"regards"as"done"that"which"ought"to"be"
done’"[a"key"equitable"maxim]"
o Then,"the"landlord"could"make"the"common"law"claim"for"distress,"because"
“he"holds,"therefore,"under"the"same"terms"in"equity"as"if"a"lease"had"been"
granted”"
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•
The"maxims"of"equity:"where"the"equities"are"equal,"the"first"in"time"shall"prevail;"
where"there"is"equal"equity,"the"law"shall"prevail"
o These"twin"equitable"maxims"address"priority"disputes"between"competing"
proprietary"interests"
o Where"the"equities"are"equal,"the"first"in"time"shall"prevail6"basic"rule"for"
determining"a"priority"dispute"between"two"holders"of"equitable"interests"
o Where"there"is"equal"equity,"the"law"shall"prevail6"basic"rule"for"determining"a"
priority"dispute"between"a"holder"of"an"earlier"equitable"interest"and"a"holder"
of"a"later"legal"interest"(where"the"holder"of"the"legal"interest"is"a"bona!fide"
purchaser"for"value"without"notice)"
•
The"maxims"of"equity:"equity"presumes"equality"
o Equity"attempts"to"distribute"profits"and"losses"in"proportion"to"the"claims"
and"liabilities"of"the"parties"concerned"
o But"in"the"absence"of"evidence,"‘equity"presumes"equality’,"as"held"in"
Waikato!Regional!Airport!v!AttorneyYGeneral!of!New!Zealand"(2003)"
•
The"maxims"of"equity:"he"who"seeks"equity"must"do"equity"
o A"plaintiff"in"equity"must"also"fulfil"his"legal"and"equitable"obligations"when"
seeking"a"remedy"themselves"(concerned"with"future"conduct)"
o Key"case"authority"of"Verduci!v!Golotta"(2010),"where"a"mortgage"entered"
into"as"the"result"of"undue"influence"could"be"set"aside"in"equity;"but"only"on"
the"condition"that"the"borrower"repaid"the"sum"borrowed"with"interest"
•
The"maxims"of"equity:"he"who"comes"to"equity"must"come"with"clean"hands"
o A"plaintiff"in"equity"will"only"be"granted"relief"if"he"is"not"guilty"of"some"
improper"conduct"(concerned"with"past"conduct)"
o Here,"the"wrongdoing"must"be"serious,"as"held"in"Geltch!v!MacDonald"(2007),"
where"the"wrongdoing"was"only"minor"so"did"not"preclude"relief"being"
granted"
o Furthermore,"the"wrongdoing"must"relate"to"the"equitable"relief"sought,"as"
held"in"Black!Uhlans!v!New!South!Wales!Crime!Commission"(2002)"
o In"that"case,"a"motorcycle"club"argued"that"the"clubhouse"property"was"held"
on"resulting"trust"for"itself,"when"it"was"put"into"the"name"of"one"member"
only"
o The"New"South"Wales"Crime"Commission"argued"that"the"motorcycle"club"
had"‘unclean"hands’"due"to"its"criminal"activity,"so"was"not"precluded"from"
being"granted"relief"
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o But"Campbell"J"in"the"Supreme"Court"of"New"South"Wales"granted"the"
equitable"relief"desired"by"the"motorcycle"club,"as"its"criminal"activity"had"
nothing"to"do"with"the"purchase"of"the"clubhouse"property"
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•
The"maxims"of"equity:"delay"defeats"equity"
o A"plaintiff"seeking"equitable"relief"must"act"promptly"and"diligently"
o This"is"given"effect"through"the"equitable"doctrine"of"‘laches’6"the"right"to"
equitable"relief"may"be"lost"due"to"delay"
•
The"maxims"of"equity:"equity"will"not"assist"a"volunteer"
o Equity"will"only"assist"a"plaintiff"where"valuable"consideration"has"been"
provided:"it"is"the"presence"of"valuable"consideration"that"“will"attract"the"
intervention"of"equity”,"as"stated"in"Director!of!Public!Prosecutions!for!
Victoria!v!Le"(2007)"
o So"equity"will"not"assist"a"volunteer,"someone"who"has"not"provided"valuable"
consideration"(there"are"some"exceptions,"like"the"beneficiary"of"a"trust"as"in"
Corin!v!Patton"(1990))"
•
The"maxims"of"equity:"equity"acts"in!personam"
o Equity"is"addressed"to"the"individual"defendant,"as"held"by"Baron"Ellesmere"in"
The!Earl!of!Oxford’s!Case"(1615)"
o So"if"a"defendant"in"equity"proceedings"fails"to"comply"with"an"order"in"
equity,"the"property"of"the"defendant"is"not"at"risk;"rather,"the"defendant"will"
be"held"to"be"in"contempt"of"court"
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Applications$of$the$Conscience$of$Equity$
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•
Two"key"applications"of"the"conscience"of"equity:"
1. Breach"of"confidence"
2. Estoppel"
$
Breach$of$Confidence:$
$
• Origins"of"breach"of"confidence"
o There"are"various"origins"of"breach"of"confidence"according"to"Turner"VC"in"
Morison!v!Moat"(1851),"including:"
Property"
Contract"
Torts"
Human"rights"
Unjust"enrichment"
o But"the"origin"of"the"equitable"claim"for"breach"of"confidence"is"conscience,"
independent"of"property,"contract,"torts"and"so"on"
o In"Moorgate!Tobacco!v!Philip!Morris!(No!2)"(1984),"Deane"J"stated"that"the"
origin"of"the"equitable"claim"for"breach"of"confidence"is"located"“in"the"notion"
of"an"obligation"of"conscience"arising"from"the"circumstances"in"or"through"
which"the"information"was"communicated"or"obtained”"
o An"equitable"claim"for"breach"of"confidence"can"be"argued"in"the"absence"of"
a"contract,"as"in"Coco!v!AN!Clark!(Engineers)"(1969)"
o Key"remedial"distinction"between"a"contractual"claim"for"breach"of"contract"
and"an"equitable"claim"for"breach"of"contract:"
# Contractual"claim"for"breach"of"contract6"key"remedy"is"damages"
# Equitable"claim"for"breach"of"contract6"key"remedy"is"an"account"of"
profits"
o A"contract"can"oust"the"possibility"of"an"equitable"claim"for"breach"of"contract"
in"the"construction"of"the"contract,"as"held"by"the"Federal"Court"in"Optus!
Networks!v!Telstra!Corporation"(2010)"
o But"if"it"has"not"been"ousted,"as"was"the"case"(a"clause"actually"provided"that"
the"rights,"powers"and"remedies"in"the"contract"were"cumulative"to"and"not"
exclusive"of"the"rights,"powers"and"remedies"provided"by"law),"then"the"
contractual"duty"to"maintain"confidence"co6exists"with"the"equitable"duty"to"
maintain"confidence,"so"that"the"plaintiff"can"“sue"either"for"damages"for"
breach"of"contract…or"for"an"account"of"profits”"
o But"the"Supreme"Court"of"New"South"Wales"suggested"in"Gold!&!Copper!
Resources!v!Newcrest!Operations"(2013)"that"where"equity"is"not"mentioned"
in"the"contract,"then"equity"would"have"no"role"
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• Elements"of"breach"of"confidence:"Coco!v!AN!Clark!(Engineers)"(1969)"
o Three"elements"of"breach"of"confidence,"according"to"Megarry"J:"
1. The"information"must"have"“the"necessary"quality"of"confidence”"
2. The"information"must"have"been"“imparted"in"circumstances"
importing"an"obligation"of"confidence”"
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3. There"must"be"an"unauthorised"use"of"the"information"“to"the"
detriment"of"the"party"communicating"it”"
In"this"case,"there"was"a"breach"of"confidence"with"respect"to"an"idea"for"a"
moped"engine"and"the"three"elements"were"found:"
1. The"information"had"“the"necessary"quality"of"confidence”"as"it"was"
not"information"in"the"public"domain"(despite"involving"materials"in"
the"public"domain)"
2. The"information"was"“imparted"in"circumstances"importing"an"
obligation"of"confidence”,"in"applying"a"‘reasonable"person’"test:"
because"it"was"“given"on"a"businesslike"basis”"with"the"common"
purpose"of"building"the"moped"engine"in"a"joint"venture"
3. There"was"an"unauthorised"use"of"the"information"“to"the"detriment"
of"the"party"communicating"it”,"because"the"defendant"created"the"
moped"engine"itself"
Key"weakness"of"Megarry"J’s"conception"of"breach"of"confidence6"there"is"
now"no"requirement"of"detriment"as"a"necessary"element"of"a"breach"of"
confidence"
As"stated"by"Gummow"J"in"Smith!Kline!&!French!Laboratories!(Aust)!v!
Secretary,!Department!of!Community!Services!and!Health"(1990),"there"is"no"
requirement"of"detriment"because"“the"obligation"of"confidence"is"to"respect"
the"confidence,"not"merely"to"refrain"from"causing"detriment"to"the"plaintiff”"
[with"remedy"of"an"account"of"profits,"where"there"may"be"no"loss"suffered]"
Another"weakness"of"Megarry"J’s"conception"of"breach"of"confidence"is"that"
the"confidential"information"may"not"be"“imparted”,"but"obtained"
surreptitiously"by"an"eavesdropper"
Elements"of"breach"of"confidence:"Optus!Networks!v!Telstra!Corporation"(2010)"
o The"Full"Court"of"the"Federal"Court"addressed"the"weaknesses"of"Megarry"J’s"
conception"of"breach"of"confidence"in"Coco!v!AN!Clark!(Engineers)"(1969),"
outlining"four"elements:"
1. The"information"in"question"must"be"identified"with"specificity"[new"
element]"
2. The"information"must"have"the"necessary"quality"of"confidence"
3. The"information"must"have"been"received"by"the"defendant"in"
circumstances"importing"an"obligation"of"confidence"[so"includes"
information"obtained"surreptitiously,"not"just"information"imparted"
directly]"
4. There"must"be"an"actual"or"threatened"misuse"of"the"information"
without"the"plaintiff’s"consent"[so"no"requirement"of"detriment]"
o As"the"contract"expressly"envisaged"the"operation"of"equity,"Optus"could"
bring"a"claim"for"equitable"breach"of"confidence,"rather"than"for"contractual"
breach"of"confidence"
o This"was"beneficial"to"Optus"as"it"could"then"receive"an"account"of"profits"due"
to"the"equitable"breach"of"confidence,"which"was"greater"than"the"damages"
for"loss"due"to"the"contractual"breach"of"confidence"
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The"information"in"question"must"be"identified"with"specificity:"O’Brien!v!Komesaroff"
(1982)"
o The"requirement"that"the"information"in"question"must"be"identified"with"
specificity"arises"because"the"court"must"be"able"to"make"an"order"clearly"as"
to"what"the"defendant"can"or"cannot"do"[otherwise,"there"is"the"threat"of"
contempt"of"court"and"a"prison"sentence"for"the"defendant,"which"could"be"
unduly"harsh]"
o In"this"case,"a"solicitor"had"developed"a"unit"trust"deed"and"associated"articles"
of"association"for"a"life"insurance"salesman,"for"the"purpose"of"tax"benefits,"
which"was"then"marketed"by"the"life"insurance"salesman"without"consent,"so"
the"solicitor"brought"a"claim"for"equitable"breach"of"confidence"
o The"solicitor"argued"that"the"confidential"information"was"“the"effect"and"
practical"operation"of"his"unit"trust"scheme”,"which"was"communicated"in:"
# The"unit"trust"deed"itself"
# The"draft"memorandum"and"articles"of"association"for"a"proprietary"
company"
# Oral"communications"
o The"High"Court"through"Mason"J"dismissed"the"claim"of"the"solicitor,"because"
the"trust"deed"and"the"draft"memorandum"and"articles"of"association"for"a"
proprietary"company"involved"matters"of"common"knowledge"in"the"public"
domain"
o Then,"the"solicitor"was"unable"to"identify"in"the"oral"communications"any"
information"with"specificity"that"constituted"confidential"information"that"
was"not"in"the"public"domain"
•
The"information"must"have"the"necessary"quality"of"confidence"
o Key"factors"in"determining"whether"information"has"the"necessary"quality"of"
confidence,"according"to"the"Federal"Court"in"Australian!MedicYCare!v!
Hamilton!Pharmaceutical"(2008):"
$ Whether"the"information"in"question"is"widely"known"in"the"relevant"
industry"or"trade"
$ Whether"the"confider"has"made"the"information"public"by"using"it"in"
its"manufactured"products"and"placing"it"on"the"market"
$ Whether"the"confider"has"obtained"the"information"only"after"the"
expenditure"of"time"and"money,"through"research"or"applying"skill"
and"ingenuity"
$ Whether"the"confider"has"taken"steps"to"preserve"the"secrecy"of"the"
information"
$ Whether"the"information"is"intrinsically"valuable,"or"valuable"to"the"
confider"and"its"competitors"
$ Whether"a"reasonable"person"in"all"the"circumstances"would"
recognise"the"information"to"be"the"‘property’"of"the"confider"
o Confidential"information"typically"arises"in"three"situations:"
1. Private"confidences:"Giller!v!Procopets"(2008)"
2. Confidences"relating"to"government"secrets:"Commonwealth!v!John!
Fairfax!&!Sons"(1980)"
3. Commercial"confidences:"Coco!v!AN!Clark!(Engineers)!(1969)"
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