Understanding Equitable Remedies

Introduction

**Equitable remedies** developed through the Court of Chancery and are founded on **fairness and justice**. Unlike the common law remedy of **damages** — which is available **as of right** to a successful claimant — equitable remedies are always **discretionary** and, as a general rule, will only be granted where damages would **not be an adequate remedy**. This chapter surveys the principal equitable remedies examined in SQE1 Trusts: **specific performance**, **injunctions**, **orders to account** and **account of profits**, **equitable compensation**, **declarations**, **equitable liens**, **tracing and following**, **estoppel**, **rectification**, **rescission**, and **subrogation and marshalling**. It also explains the **limitation and laches** rules that govern when equitable relief may be barred by delay.

Assessment focus

For SQE1 FLK1 (Trusts) you must be able to **identify the appropriate equitable remedy** for a client scenario and explain **why** it is preferred over common law damages. The two most heavily examined remedies are **specific performance** (typically the sale of **unique property** such as land, where damages are inadequate) and **injunctions** (prohibitory injunctions to **restrain** a threatened act; mandatory injunctions to **compel** an act). You should also be able to distinguish **equitable compensation** (a personal monetary remedy for breach of trust or fiduciary duty) from an **account of profits** (a gain-based remedy requiring the wrongdoer to **disgorge** profits regardless of the claimant's loss). Remember that **all** equitable remedies are **discretionary** and may be refused for **delay (laches)**, acquiescence or other inequitable conduct. This is a closed-book assessment — learn the trigger facts for each remedy from memory.

Study tips

1) Remember the **golden rule**: equitable remedies are **discretionary** and granted only where **damages would be inadequate**. 2) **Specific performance** — best for **unique** subject matter (land is always treated as unique); **not** available for contracts of **personal service**, where performance needs **constant supervision**, or for purely **negative** obligations. 3) **Injunctions** — the modern statutory jurisdiction is **s.37 Senior Courts Act 1981** ('just and convenient'); prohibitory **restrains**, mandatory **compels**; **freezing orders** preserve assets and **search orders** preserve evidence. 4) Distinguish **account of profits** (gain-based — defendant **disgorges** profit) from **equitable compensation** (loss-based — restores the trust/claimant). 5) **Limitation**: **no** limitation period for recovering trust property (or its proceeds) from a trustee or for fraudulent breach of trust (**s.21(1) Limitation Act 1980**); otherwise a **six-year** period applies to actions by a beneficiary for breach of trust (**s.21(3) LA 1980**). Delay short of the limitation period may still bar relief under the doctrine of **laches**.