Discretion and Equitable Compensation

Abstract

This chapter considers the ambit of equitable compensation. As an equitable remedy, equitable compensation is given within equity’s discretion to grant or refuse relief, or otherwise fashion the remedy, to meet the equity of the case. We know that historically chancery concealed its remedy of compensating loss behind the language of account. So it shouldn’t surprise us that the discretionary character of the order which flows after the taking of an account is also bound up in the description of the account itself as being discretionary in nature. Such is implied by Lord Millett NPJ in Libertarian Investments Ltd v Hall, who refers to the orthodox approach of taking a formal account prior to considering any subsequent obligation on the defendant to pay equitable compensation in the following terms: [a]lthough like all equitable remedies an order for an account is discretionary, in making the order the court is not granting a remedy for [a] wrong but enforcing performance of an obligation’, and later in the same case confirms that ‘the court will always have the last word.’ Equity’s discretion is principles based. It lies beyond the remit of this chapter to model the nature of equitable judicial decision making and it is important not to overstate the contingent nature of equitable discretion. Judges and juries tasked with fact finding may properly bring to bear individual judgment and diverse methods. Similarly, choices are inevitable in much legal reasoning. However, this is not an arbitrary selection between possible facts, principles and outcomes. As stated by Gleeson CJ (speaking of the defendant’s and ultimately equity’s conscience): ‘[t]he conscience of the appellant, which equity will seek to relieve, is a properly formed and instructed conscience.’ A majority of the High Court of Australia has since reiterated that equitable conscience is properly informed and instructed by ‘established equitable principles and doctrines’ and that ‘“[t]he conscience spoken of here is a construct of values and standards against which the conduct of 'suitors' – not only defendants – is to be judged."’ Equity’s margin of decision making in awarding equitable compensation encompasses two distinct questions. The first is more obviously familiar in equitable analysis, and is concerned with the considerations of factors which weigh in the balance in shaping the availability or appropriateness of an equitable remedy given the facts and circumstances of the case. Such considerations are commonly labelled bars to relief and so called discretionary factors. The second is a more particular exercise of discretion in relation to the calculation of the money sum to be paid to the plaintiff as equitable compensation. These considerations arise in particular since it turns out that many claims for equitable compensation concern the loss of a chance. Each will be considered in turn.

Keywords: Equitable compensation, Remedies, Equitable Remedies, Fiduciaries, Equity, Trusts