This chapter discusses the general principles relating to the assessment of compensation for loss resulting from a civil wrong. Since courts and legislatures often lay down legal rules for a particular area of law, the assessment of compensation differs between areas. This is why Part 2 contains separate chapters for contract, tort, the Australian Consumer Law and equity. However, there are several commonalities between the areas, in particular, contract and tort. This chapter discusses the rules that are common to at least contract and tort. Most of them also apply in equity and under the Australian Consumer Law. Deviations from those rules in equity or under the Australian Consumer Law are discussed in the relevant chapters. This chapter also provides a brief introduction to those matters that differ between contract and tort. Comprehensive treatment is given to the date of assessment; even though there are significant differences between the causes of actions, there has been considerable convergence.

The Australian Consumer Law (‘ACL’) is the national consumer law and applies across Australia. It came into force on 1 January 2011. At the same time, the Trade Practices Act 1974 (Cth) changed its name to the Competition and Consumer Act 2010 (Cth). Schedule 2 of that Act now contains the ACL. The ACL replaced a number of consumer protection provisions in federal, state and territory laws. It was enacted with the cooperation of the federal, state and territory governments. This cooperation was necessary since the Commonwealth lacks the power to comprehensively legislate on consumer law.

The ACL applies as a federal law, or as a law of the relevant state or territory, or both. It is not necessary here to go into all the details of the demarcation since the same body of law generally applies. Broadly, the ACL applies as a law of the Commonwealth to the conduct of corporations and certain natural persons, and applies as a law of a state or territory to the conduct of corporate and natural persons with a connection to the relevant jurisdiction. The application of the ACL as a federal law and the application of the ACL as a state or territory law are not mutually exclusive (where there is no conflict).

This chapter is concerned with court orders made prior to final judgment, and with enforcement of final judgments. These are matters of civil procedure. They do not deal with final determinations of rights and are not remedies in the technical sense. Rather, they protect the ability of the court to award remedies.

First, if there is a dispute over certain subject matter, it is important that the subject matter of the dispute be maintained until the court can adjudicate the dispute. This is where interlocutory remedies and pre-judgment remedies are relevant. These remedies are awarded before the court makes a final determination of the proceedings and are generally intended to maintain the status quo pending the decision. Such remedies include interlocutory injunctions, which restrain or compel a person to do a particular thing. There are other pre-judgment remedies, such as freezing orders and search orders, which prevent the defendant from removing property from the jurisdiction or from destroying evidence before proceedings can be brought. These ensure that proceedings are not nugatory.

Secondly, after final judgment has been handed down, there must be a means of ensuring that the judgment debtor does what the court has ordered; otherwise the judgment lacks ‘teeth’. Courts have coercive mechanisms which ensure that a defendant complies with an order to pay damages or an order of specific relief.

This chapter discusses the account of profits, disgorgement, and other forms of gain-based relief. It will consider the difference between compensation, restitution and disgorgement. It will then consider the account of profits, and the operation of bars to relief and other limiting factors.

The primary rationales of the account of profits have been identified as deterrence and prophylaxis (that is, preventing a defendant from gaining from wrongdoing). Deterrence looks not to the dispute in question, but to the future conduct of the specific defendant (specific deterrence) and the future conduct of other potential defendants (general deterrence). By stripping the defendant of her gain (or part of her gain), the defendant (and other potential defendants) will be deterred from engaging in similar conduct in the future. It is argued that the remedies discussed in this chapter have a deterrent flavour.

Wrongful actions by two or more persons may affect a plaintiff at the same time. Where each wrongdoer causes separate harm to the plaintiff, there are generally separate causes of action without any connection between them. Satisfaction by one wrongdoer does not discharge the other wrongdoers, and the plaintiff cannot generally join the wrongdoers as co-defendants. An exception exists where the wrongdoers act in concert, in which case they are joint wrongdoers, rendering each of them liable (at common law) for the total damage caused by all of them. Thus, where A and B simultaneously trespass on C’s land, each of A and B causing separate damage, the liability regime depends upon whether A and B are acting in concert.

Common law damages cannot be awarded in respect of a purely equitable wrong such as breach of trust or breach of fiduciary duty. Instead, a compensatory remedy has developed in equity’s exclusive (or inherent) jurisdiction: equitable compensation. This remedy originated in cases involving breach of trust, although for many years it was not explicitly recognised as a compensatory remedy and was known instead as one of the forms of ‘account’ that a trustee must make when a breach of trust occurs. It is therefore necessary to have a brief look at the main forms of account, which are still used today.

A remedy is specific when the plaintiff seeks to get the court to coerce the defendant into doing (or not doing) a particular thing. The word ‘coercion’ is used advisedly. The court orders the defendant to do (or not to do) the particular thing, and if the defendant refuses to comply, the court may use measures such as imprisonment, sequestration and fines to encourage compliance with its order. The two most important examples of specific relief in Australia are the decree of specific performance and the injunction. This chapter will consider specific performance, and the next chapter will consider injunctions. Specific performance relates to ordering the defendant to comply with the terms of a contract, but injunctions may be ordered across private law and beyond. Specific performance is exclusively equitable, and generally operates in relation to a common law cause of action; namely, breach of contract.

Australian courts may grant ‘reasonable fee’ awards where defendants have used certain property or infringed certain rights in a tortious manner. ‘Reasonable fee’ refers to a method of calculating a monetary award for a wrong; namely, where the court awards the objectively ascertained fee that the parties would have agreed upon for permitting the defendant’s conduct. Reasonable fee awards may be made in various forms, including through an award of compensation, in an action for money had and received through ‘waiver of tort’, as ‘restitutionary damages’, or under Lord Cairns’ Act in lieu of an injunction. They are generally awarded for common law causes of action. As discussed in this chapter, the rationale for reasonable fee damages is highly contested. In previous editions of this book, we conceptualised reasonable fee awards as being gain-based and discussed them in the chapter on gain-based relief. The latest cases from the apex courts of the United Kingdom and Singapore suggest that reasonable fee awards are an instance of ‘substitutive compensation’. It remains to be seen whether Australian courts will adopt this approach.

Rescission is a form of relief which is available in respect of a variety of transactions (contract, gifts and conveyances) where one of the parties is subject to a vitiating factor (such as duress, fraud or misrepresentation) and she wants to get out of or ‘set aside’ the transaction. Rescission allows her to reverse the transaction. It has been said that ‘[t]he basic objective of the relief given upon rescission is to restore the parties to their original positions or, where rescission occurs in equity, as near to those positions as may be’. There is no requirement for the party seeking to rescind to suffer loss in the sense in which this is understood in the context of compensatory damages: she merely has to point to a vitiating factor. Although the party seeking to rescind can set aside the transaction, it is not voided: rather, it is rendered ‘voidable’. In other words, a voidable contract is valid and effective unless and until the plaintiff elects to rescind it. However, once a contract is rescinded it ‘is treated in law as never having come into existence’, although it is recognised that it formerly existed. All unperformed obligations under the contract are extinguished once a contract has been rescinded. The contract is extinguished as from the beginning (ab initio).

The concept of ‘remedy’ used in this chapter encompasses a court order replicating a preexisting right, not a response to civil wrongdoing. Restitutionary remedies responding to unjust enrichment differ from remedies responding to a wrong (breach of contract, tort, or equitable wrong). As noted in Ch 1, they do not fit easily into a division between the primary right and the secondary remedy. It is for this reason that the cause of action and the remedy overlap, and they are notoriously difficult to untangle. Discussions of restitutionary remedies inevitably turn into discussions of the cause of action.

This chapter deals with the availability of the other specific remedy: the injunction. As with specific performance, injunctions are a coercive remedy originating in equity. The court orders the defendant to do something (or to refrain from doing something) and the defendant must obey this order or be in contempt of court. Again, if the defendant does not comply, the court may use measures such as imprisonment, sequestration, and fines to encourage compliance with its order.

However, in contrast to specific performance, injunctions apply to many situations, not just contract or contract-like obligations, and they protect many private law rights, including rights in land, goods and other property, economic rights, the right to bodily integrity, the right to reputation, the right to privacy, and contractual rights. They may also be used in support of public law rights.

Every civil wrong has a number of requirements that must be satisfied before the plaintiff may obtain compensation for resulting harm. One requirement common to all wrongs is that the harm must be attributable to the defendant’s wrongful conduct. It may broadly be said that the defendant’s wrongful conduct must constitute a cause of the harm. This always involves an inquiry into whether there is a historical link in fact between the wrong and the harm, and usually also a value judgement on whether liability for the harm ought to be imposed upon the defendant.

With regard to wrongs actionable only on proof of damage (for example, negligence), the attribution of responsibility for harm is part of establishing liability rather than a matter of remedy. With regard to wrongs actionable per se, the attribution of responsibility for harm is a matter of remedy since nominal damages can be awarded in the absence of loss. In any event, it is customary to discuss attribution of responsibility in books on remedies, and this book follows that custom.