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Oxford Journal of Legal Studies


We do this at common law but that in equity

Andrew Burrows Subject: Legal systems. Other related subjects: Equity Keywords: Common law; Equitable remedies; Equity; Remedies *O.J.L.S. 1 Abstract --This article argues that lawyers are not doing enough to eradicate the needless differences in terminology used, and the substantive inconsistencies, between common law and equity. In developing this argument, three categories within English private law are recognized. First, where common law and equity co-exist coherently, and where the historical labels of common law and equity remain useful terminology. Second, where common law and equity co-exist coherently but there is nothing to be gained by adherence to those labels which could, and should, be excised at a stroke. And third, where common law and equity do not co-exist coherently and a change in the law, albeit often only a small change, is needed to produce a principled product. As a general illustration of what the third category comprises, and what fusion requires, one wide-ranging and practically very important area within the third category is focused on, namely monetary remedies for civil wrongs.

1. Taking Fusion Seriously

All students of English civil law are aware of, and indeed become accustomed to, the distinction between common law and equity. But the distinction is puzzling. My personal puzzlement started 25 years ago, when attending a lecture for Oxford undergraduates on consideration and promissory estoppel. Having dealt in detail with the doctrine of consideration, the lecturer went on to say, But the position is different in equity. He then described how equity holds promises binding, without the need for consideration, under proprietary and promissory estoppel. I remember thinking, What is this mysterious creature equity? How can one have two inconsistent doctrines operating side by side? The mist did not clear--and in some respects developed into a thick fog--when I turned to the well-known 1976 Law Quarterly Review case-note controversy on Crabb v Arun DC1 between Professor Patrick Atiyah2 and Peter Millett QC (now Lord Millett).3 Patrick Atiyah posed, in the title of his note, what he termed the riddle created by Crabb v Arun DC : When is an Enforceable Agreement not a Contract? Answer: When it is an Equity. The gist of Atiyah's *O.J.L.S. 2 argument was that both consideration and estoppel are concerned with the same problem of which agreements or promises should be held binding and that it is needlessly complex to have two such doctrines when one alone would suffice. Peter Millett disagreed. Replying to what he referred to as Professor Atiyah's interesting, if intemperate, note,4 he said that both law and equity seek the same result but do not necessarily draw the line in the same place The apparent similarity of the results achieved is deceptive. The claims [in contract and estoppel] are different, require different facts to be proved, and have different consequences.5 I began to think that the explanation for all this was in a crucial lecture or tutorial in the contract course that I had missed or that it was buried in the pages in the texts that I had somehow overlooked. However, it later became clear that my puzzlement was shared by others. When in my own lectures on remedies for breach of contract we turn from contract damages--a common law remedy--to specific performance and injunctions--equitable remedies--I sometimes ask the students, What is meant by the labels equitable and common law? Almost invariably the answer will come back that equitable remedies are concerned to achieve fairness and justice between the parties. To which my standard response is, Does that mean that all those rules and principles on damages that we have so far been examining are designed to achieve un fairness and in justice between the parties? The flustered student may try again, digging himself or herself into a deeper hole, by saying that equitable remedies are discretionary whereas common law remedies are not. However, that does not seem correct either; at the very least, it is


highly misleading. Study of the law on damages and specific performance reveals that both rest on a system of rules and principles. It surely cannot seriously be suggested that the law is less certain--that a judge has more discretion--in deciding whether specific performance should be ordered than in deciding, in relation to damages, whether a loss is too remote or whether an intervening cause has broken the chain of causation or whether the claimant has failed in its duty to mitigate its loss. All these decisions involve the application of weak judicial discretion.6 By the time I had finished studying law at Oxford I was satisfied that I knew what was meant by common law and equity. This, I had learned, was historical labelling, going back to the division in the courts, before the Supreme Court of Judicature Acts 1873-5, between the common law courts and the Court of Chancery. To describe a rule or principle as common law was to say that it had its historical roots in the law administered in the common law courts prior to 1873. To describe a rule or principle as equitable was to say that it had its historical roots in the law administered in the Court of Chancery prior to 1873. The effect of the Supreme Court of Judicature Acts 1873-5 was to merge the *O.J.L.S. 3 common law courts and the Court of Chancery into one Supreme Court administering both common law and equity. Then I took up my first lecturing job at the University of Manchester. There was a course there called Equity and I was required to give seminars. One of the questions on the faculty seminar sheet was the following: Are equity and common law fused? This was not a question we had ever considered in the Oxford trusts course. Certainly, as a new tutor, I was unsure about the answer. Indeed I was not even sure I understood the question. It gave me some confidence to discover, when I went off to the John Rylands law library to try to find the answer, that many writers also seemed confused.7 However, there was one book that stood out. Not that the authors made the question any easier for me to understand but rather because of the vehemence with which they expressed the view that equity and common law are certainly not fused. The book was Equity, Doctrines and Remedies , now in its third edition, written by Meagher, Gummow and Lehane. This text condemned the belief that common law and equity are merged as the fusion fallacy. An impression of the vehemence of the authors' views can be gained by citing just a couple of passages from their book. Those who commit the fusion fallacy announce or assume the creation by the Judicature system of a new body of law containing elements of law and equity but in character quite different from its components. The fallacy is committed explicitly, covertly, and on occasion with apparent inadvertence. But the state of mind of the culprit cannot lessen the evil of the offence.8 And then a few paragraphs further on: [The fusion fallacy] involves the conclusion that the new system was not devised to administer law and equity concurrently but to fuse them into a new body of principles comprising rules neither of law nor of equity but of some new jurisprudence conceived by accident, born by misadventure and nourished by sour but high-minded wet-nurses.9 Lest it be thought that colourful turns of phrase are confined to those who are anti-fusion, let me balance matters up somewhat by referring to Kit Barker's argument in favour of rationalizing the role of the bona fide purchase defence to restitution by fusing common law and equity. With some apology to Lord Atkin, Barker writes that rationality is obstructed by the unruly poltergeist which *O.J.L.S. 4 we know as the law/equity divide. These days, even the irreligious are tempted to conclude that only an exorcism of this troublesome ghost will allow us to set our house in order.10 It is, clear, therefore, that the fusion of law and equity is a topic that provokes strong reactions. But the question remains of what, exactly, is meant by fusion. One way of answering this is to give a short description of the essence of first, the anti-fusion school of thought; and, second, the fusion school of thought. According to the anti-fusion school of thought, the Supreme Court of Judicature Acts 1873-5 fused the administration of the courts but did not fuse the substantive law. Com-


mon law and equity sit alongside one another. Moreover, they can happily sit alongside one another. Clashes or conflicts or inconsistencies between them are very rare. Where they exist, and, in so far as they are not resolved by the more specific provisions of the 1873-5 Acts, they are resolved by the general provision in section 11 of the 1873 Act which lays down that equity shall prevail.11 This is not to say that common law or equity is frozen in the position it was in before 1873. Rather common law and equity can independently develop incrementally. But one should not develop the law by reasoning from common law to equity or vice versa. To do so would cut across the historical underpinnings of the two areas; and a harmonized rule or principle that has features of both common law and equity but cannot be said clearly to be one or the other, would be unacceptable. In contrast, the fusion school of thought argues that the fusion of the administration of the courts brought about by the 1873-5 Acts, while not dictating the fusion of the substantive law, rendered this, for the first time, a realistic possibility. While there are areas where common law and equity can happily sit alongside one another, there are many examples of inconsistencies between them. It is important to remove the inconsistencies thereby producing a coherent or harmonized law. In developing the law it is legitimate for the courts to reason from common law to equity and vice versa. A harmonized rule or principle that has features of both common law and equity is at the very least acceptable and, depending on the rule or principle in question, may represent the best way for the law to develop. It is submitted that the latter view is to be strongly preferred. There are numerous instances of inconsistencies between common law and equity; and to support fusion seems self-evident, resting, as it does, on not being slaves to history and on recognizing the importance of coherence in the law and of like cases being treated alike. However, my aim in this article is not to put the detailed case for fusion. Rather I want to take the debate a stage further and to argue that, on the assumption that fusion is a good thing, we as academics, *O.J.L.S. 5 judges, legislators and practitioners are simply not doing enough to eradicate the needless differences in terminology used, and the substantive inconsistencies, between common law and equity. In other words, to use a rather hackneyed phrase, I am calling on all lawyers to take fusion seriously.

2. Three Categories
For the purposes of developing the argument that we should take fusion seriously, I shall put to one side immediately--as outside my examination--any areas where the law has already reached the advanced position that common law and equity cannot be distinguished at all, and where there is therefore no fusion work left to be done.12 The rest of English private law, which is the vast bulk of it, can then be conveniently divided into three categories. As shall be seen, my main focus will be on the third of these categories. The first category is where common law and equity co-exist coherently and where the historical labels of common law and equity remain the best or, at least, useful terminology. I particularly have in mind here that greatest invention of equity, the trust. It is very hard--albeit not impossible as is shown by the approach in some other jurisdictions13 --to describe the trust without at some stage relying on, and referring to, the split between legal and equitable title. Similarly, the general priority rule that a bona fide purchaser for value of a legal interest without notice takes free of a prior equitable interest in the same property is very hard to replicate without using the law and equity labels.14 The second category is where common law and equity co-exist coherently but, in contrast to the first category, there is nothing to be gained by adherence to those historical labels. If we are to take fusion seriously, the labels common law and equity in the areas of the law covered by this category should be abandoned at a stroke. Take, for example, the law on mistake in contract. In explaining the law we almost invariably distinguish between the position at common law and the *O.J.L.S. 6 position in equity.15 However, there is no reason why we could not say--and this would make the


law more immediately comprehensible--that there are, for example, some shared or common mistakes that are so serious as to render a contract void: and some mistakes that are less serious and render a contract voidable or even voidable on terms. In other words, the rational picture immediately presented is one of more serious mistakes having more serious consequences and of less serious mistakes having less serious consequences. There is nothing to be gained by here referring to the language of common law and equity. Or what about the law on threats or pressure inducing a contract? In describing the law, we distinguish between common law duress and actual undue influence in equity.16 So, for example, Professor Sir Guenter Trietel in his majesterial text, The Law of Contract , writes, A contract is voidable at common law if it was made under duress.17 And then a few pages on, Equity gives relief on the ground of undue influence where an agreement has been obtained by certain kinds of improper pressure which were thought not to amount to duress at common law.18 Again nothing here turns on the distinction between common law and equity. One simply has different types of threats or pressure. Duress at common law traditionally comprised merely threats to the person but has since been expanded to include duress of goods and economic duress. Actual undue influence, in so far as concerned with threats or pressure as opposed to influencing another, covers other types of threat or pressure with many of the cases concerning threats to prosecute, sue or publish information about the claimant.19 The law can be perfectly well described by saying that all these various types of pressure or threat inducing a contract render the contract voidable. There is nothing to be gained by here referring to actual undue influence as opposed to duress or, more generally, there is nothing to be gained by here referring to common law and equity.20 The third category is more complex. It comprises probably most of our civil law. In this category, in contrast to both of the first two categories, common law and equity do not co-exist coherently. If we are to take fusion seriously, what is *O.J.L.S. 7 needed is a change in the law, albeit often only a small change, so as to produce a principled product which may combine elements of law and equity. There are many obvious examples within this third category: for example, the law on set-off,21 tracing,22 illegal contracts,23 compound interest,24 the restitution of money that has been paid by a third party to the defendant without the owner's consent,25 and limitation of actions.26 In relation to each of these, there are clashes between the common law and equitable approaches. As a general illustration of what this third category comprises, and what fusion requires, I want to examine in the rest of this article one wide-ranging and practically very important area, namely monetary remedies for civil wrongs.

3. A General Illustration of the Third Category: Monetary Remedies for Civil Wrongs
The basic picture in relation to monetary remedies for civil wrongs is of a separation of common law and equitable wrongs, with equitable wrongs generally triggering different monetary remedies than common law wrongs. An anti-fusionist might say that the two types of wrong do, and should, co-exist happily because they operate independently from each other. The better view is that this would be to accept superficial coherence. In reality, if one strips away the clothing of historical labels, one sees that in common law and in equity one is dealing *O.J.L.S. 8 with the same essential facts, ideas and concepts and yet treating them differently. And in this area, as in other areas within category three, taking fusion seriously requires some adjustments, albeit minor, to the present law. The argument will be developed under six heads: (i) identification of the wrong; (ii) compensation and its restrictions; (iii) restitution for wrongs; (iv) punishment; (v) anticipated wrongs, and (vi) general defences.

A. Identification of the Wrong

Professor Peter Birks has pertinently observed that there is a fundamental distinction in English civil law between wrongs and, to use his phrase, not-wrongs.27 A wrong is a


breach of duty and, in my view, we can be sure that the law is treating conduct as a breach of duty if compensation is available for loss caused by that conduct.28 In contrast, not-wrongs do not trigger compensation for loss caused. Therefore, the receipt of money paid by, for example, mistake or under undue influence or under duress or as a result of non-disclosure does not normally in itself constitute a wrong.29 Restitution reversing the benefit subtracted from the claimant is available but compensation for loss normally is not. Then we know that there are two main types of common law wrong; breach of contract and torts. Applying the same test, of whether compensation is available for loss caused, we can say that there are four types of conduct which are treated, in equity, as wrongs: breach of fiduciary duty, breach of confidence, dishonestly procuring or assisting a breach of fiduciary duty (the wrong recognized by the Privy Council in Royal Brunei Airlines v Tan ),30 and those forms of estoppel that constitute causes of action, in particular proprietary estoppel.31 Of these equitable wrongs, the most wide-ranging and important--and the most difficult to pin down--is breach of fiduciary duty. In line with Millett LJ's approach in Bristol & West Building Society v Mothew ,32 which concerned a claim against a firm of solicitors, the core idea is that, in some circumstances, a duty of loyalty may be imposed. It is submitted that an even more illuminating way of thinking about a fiduciary duty is that it is a duty to look after another's interests. That duty, depending on the context, may be strict or may be one to use reasonable care. *O.J.L.S. 9 It is outside the main theme of this article to add to the ever-increasing corpus of writings on the meaning of breach of fiduciary duty.33 However, I do want to make one observation, which seems particularly important. Once one realizes that a fiduciary duty is a duty to look after another's interests, it becomes plain that what may not be a wrong when committed by a non-fiduciary may be a wrong when committed by a fiduciary. Hence undue influence or non-disclosure, while not in themselves wrongs, may be wrongs where committed by a fiduciary because they may then constitute a breach of the duty to look after another's interests.34 This explains why compensation was awarded for a fiduciary's--a solicitor's--negligent misrepresentation in Nocton v Lord Ashburton35 50 years before the development of the tort of negligent misstatement, outside a fiduciary relationship, in Hedley Byrne & Co. Ltd v Heller and Partners Ltd.36 The central point for the theme of this article is that both common law and equity recognize what, at root, is exactly the same phenomenon, namely wrongs or breaches of duty triggering compensation. While, as I have argued elsewhere, there may be good sense in treating breach of contract separately from torts,37 there is no rational reason for having another category of wrongs, labelled equitable wrongs. All equitable wrongs should be treated as examples of breach of contract or torts.

B. Compensation and its Restrictions

It is trite law that the primary remedy for the common law wrongs is compensatory damages. Such damages are always available for a breach of contract or tort and are measured by the claimant's loss; that is, they basically aim to put the claimant into as good a position as if no wrong had occurred.38 We also know that there are restrictions on compensatory damages, in particular, remoteness, intervening cause, the so-called duty to mitigate, and contributory negligence. These restrictions generally apply whether the claim is brought in contract or tort albeit that the content of the restriction may vary both as between contract and tort and in some instances as between different types of tort.39 In order to compare compensatory damages for common law wrongs with compensation for equitable wrongs there are two features of the restrictions on compensatory damages at common law that are particularly noteworthy. *O.J.L.S. 10 The first is that the courts have a wide discretion in deciding the losses to be compensated by damages for common law wrongs. Sometimes, as with intervening cause, there is no test laid down at all. Typical is Glidewell LJ's statement in the accoun-


tant's negligence case of Galoo Ltd v Bright Grahame Murray.40 He said, [H]ow does the court decide whether the breach of duty was the cause of the loss or merely the occasion for the loss? The answer in the end is, By the application of the court's common sense. Even where there is a test, it is open-ended; reasonable foreseeability or reasonable contemplation, as regards remoteness; whether reasonable steps have been taken, as regards the duty to mitigate; and a reduction of damages to such extent as the court thinks just and equitable--as laid down in the Law Reform (Contributory Negligence) Act 1945--in relation to contributory negligence. The second feature of the restrictions on compensatory damages is that, because it involves dishonesty, the tort of deceit has been treated differently from most other torts and breach of contract. So, as laid down by the House of Lords in Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd ,41 a wider remoteness test than reasonable foreseeability applies to the tort of deceit. And, as recently laid down by a majority of the Court of Appeal in Standard Chartered Bank v Pakistan National Shipping Co (No. 4) ,42 contributory negligence of the claimant does not apply to reduce damages for the tort of deceit. With these two features of restrictions on compensatory damages in mind, we can now switch across to compensation and its restrictions for equitable wrongs. Here we find that an important remedy, albeit one that, surprisingly, has only taken off in England in the last decade, is the remedy called equitable compensation.43 Although there has been some doubt about this, the basic aim of equitable compensation, as its name suggests, is to compensate a loss. In other words, it is concerned to put the claimant into as good a position as if no wrong had occurred. It therefore has exactly the same aim as compensatory damages. This is why the House of Lords in the much-discussed case of Target Holdings Ltd v Redfern44 was, in my view, correct to say that there could be no *O.J.L.S. 11 equitable compensation where the loss in question would have been suffered even if there had been no breach of duty by the defendant solicitors; that is, the breach of fiduciary duty had caused the claimant no loss. Of course, and just as at common law, what is a loss, and hence what is the precise aim of the compensation, will vary according to the duty broken. If the duty broken was a failure to invest on behalf of a trust fund, the aim of the compensation will be to put the claimants--the beneficiaries--into as good a position as if there had been that investment. If the duty broken was stealing money from the trust fund, the aim of the compensation will be to put the beneficiaries into as good a position as if that money had not been stolen, that is, it will be to restore the money. But, with respect, the suggestion in Bristol & West Building Society v Mothew45 that equitable compensation may sometimes have a special more restrictive restorative aim than compensatory damages should be resisted: it confuses the aim of the remedy--compensation--with the application of that aim to different duties broken. When we turn to restrictions on equitable compensation, we find conflict in the cases both in England and elsewhere. Although there are shades of opinion in between, there are two main opposing views. On the one hand, there are those who consider that restrictions on compensatory damages, such as remoteness, intervening cause and contributory negligence, do not apply to equitable compensation. That was the opinion of Lord Browne-Wilkinson giving the leading speech in Target Holdings v Redfern. In emphasizing that a trustee would be liable for breach of trust even if the immediate cause of the loss was a third party, his Lordship said, Thus the common law rules of remoteness of damage and causation do not apply.46 The opposing view is that the restrictions of remoteness, intervening cause and so on apply in the same way to equitable compensation as to compensatory damages. This derives some support from the judgment of Millett LJ in the Mothew case. He said, Although the remedy which equity makes available for breach of the equitable duty of skill and care is equitable compensation rather than damages, this is merely the product of history and in this context it is in my opinion a distinction without a difference. Equitable compensation for breach of the duty of skill and care resembles common law dam-


ages in that it is awarded by way of compensation to the plaintiff for his loss. There is no reason in principle why the common law rules of causation, remoteness *O.J.L.S. 12 of damage and measure of damages should not be applied by analogy in such a case.47 This second approach should be supported. We have already seen the discretion given to the courts at common law in applying restrictions on compensatory damages; and at the way in which the tort of deceit, because involving dishonesty, gives rise to a different approach. In the light of that discretion at common law,48 and the scope for some variation turning on the duty in question, there is no good reason for equity going its own separate way. On the contrary, compensatory damages and equitable compensation should be regarded as identical: identical in aim--compensation--and identical in relation to the application of restrictions.

C. Restitution for Wrongs

Restitution for wrongs has been extensively written about in recent years.49 The treatment here can therefore be very brief. We are concerned with the monetary reversal of benefits acquired by a wrong. At both common law and equity, the courts have for a long time been awarding restitution for certain types of wrong. After Attorney-General v Blake50 we must now add breach of contract to the list, albeit only in exceptional cases. Unfortunately that truth has often been obfuscated by there being differently labelled common law and equitable remedies designed to achieve the same end of awarding restitution. The common law remedies are an action for money had and received and restitutionary damages; while the equitable remedy is an account of profits. As the Law Commission has pointed out, it would be much simpler to recognize fusion and to have one remedy--most obviously restitutionary damages--in place of the three.51

D. Punishment
As laid down in the leading case of Rookes v Barnard ,52 the present law allows the award of punitive or exemplary damages (unless statutorily authorized) in two restricted categories only: where the wrong comprised oppressive, arbitrary *O.J.L.S. 13 or unconstitutional action by a servant of government or was committed cynically to make a profit. Punitive damages have also only ever been awarded for torts; and, although the so-called cause of action test laid down in AB v South West Water Services Authority53 (punitive damages only to be awarded for a tort for which they had been awarded pre1964) was, thankfully, removed recently by the House of Lords in Kuddus v Chief Constable of Leicestershire ,54 it remains unclear whether punitive damages can be awarded for equitable wrongs. This uncertainty, and the needlessly restrictive categories, renders the present law on punitive damages unsatisfactory. It is unprincipled and has no sound basis in policy. Moreover, it contrasts with the position in, for example, Canada and New Zealand where punitive damages can be awarded for equitable wrongs.55 Not surprisingly, the Law Commission has recommended legislation which would effect a principled reform.56 According to this, the courts would have the power to award punitive damages for torts and equitable wrongs according to the same principled basic test of whether there was an outrageous and deliberate disregard of the claimant's rights. Again, if we are to take fusion seriously, this recommendation of the Law Commission should be supported.

E. Anticipated Wrongs
In relation to anticipated wrongs, we must introduce yet another type of monetary remedy (to add to common law damages, equitable compensation, the award of money had and received, and an account of profits): so-called equitable damages. Common law damages give relief only for an accrued wrong--a wrong that has already occurred--albeit that the relief given can extend to future as well as past consequences. In contrast, equitable damages--which are damages awarded in substitution for (or in addition to) an injunction or specific performance under section 50 of the Supreme Court Act 1981, formerly Lord Cairns' Act57 --can be awarded, albeit exceptionally, for anticipated as well as accrued wrongs.58 So, for example, where a defendant has to trespass across the


claimant's land to reach his home, common law damages may be awarded for the pretrial trespassing; but equitable damages in substitution for an injunction may go further and be awarded for the anticipated post-trial trespassing. For the purposes of this article, there are two important points to make about equitable damages. First, it is clear that equitable damages can be awarded for *O.J.L.S. 14 common law, as well as equitable, wrongs. Indeed they have most commonly been awarded in respect of anticipated proprietary torts, such as nuisance and trespass to land.59 Second, in Johnson v Agnew60 the House of Lords laid down that the principles for assessing damages should not differ as between common law and equitable damages. It follows from these two points that it would involve only a small step forward to rid ourselves of the concept of equitable damages and to recognize simply that damages61 may be awarded not only for accrued wrongs but also, exceptionally, for anticipated wrongs.

F. General Defences
The last refuge of those who seek to fight against the fusion of common law and equitable monetary remedies is to argue that equitable remedies are subject to discretionary general defences that simply do not apply to common law remedies. For example, David Capper writes, Another reason to reject full merger of common law and equity is that otherwise equitable defences (clean hands, hardship, delay) might be available against common law claims in contract and tort.62 Anticipating this argument in the context of restitution for wrongs, although what is said is of general application, the Law Commission has countered as follows63 : Equitable remedies share with common law remedies that they are awarded, or refused, in accordance with well-established rules and principles. Moreover, there are common law doctrines--such as those of illegality or public policy64 --which mirror in nature, if not in scope, the so-called discretionary defences in equity. The counter-argument is, therefore, that it is simply false to imagine that there are irreconcilable differences between common law and equitable defences. Perhaps an even more important point is that there is a tendency to exaggerate the distinctions between common law and equitable defences by comparing defences to equitable specific remedies, such as specific performance and injunctions, with those applying to common law damages. This is not to compare like with like. The true position is that a defence may operate to rule out specific performance or an injunction while not ruling out damages, whether equitable *O.J.L.S. 15 or common law. For example, in Patel v Ali65 specific performance was refused of a contract to sell a house because of hardship. Compliance would have required the defendant, who was disabled and spoke little English, to move away from her friends who helped her on a daily basis. Nevertheless, damages for breach of contract were awarded against her and although, on the face of it, common law damages they could equally well have been regarded as equitable damages given in substitution for specific performance. The real question is whether there are defences that would apply to rule out equitable monetary remedies that would not apply to rule out common law monetary remedies.66 I would argue that, in general terms, the answer to this is no. This is not to suggest that one can say, here and now, that the scope of equity's discretionary defences is identical to the defences applying at common law.67 Rather it is submitted that the distinctions, to the extent that they exist, are small, that there is a tendency to exaggerate them by not comparing like with like, and that rationally they should be eliminated altogether.

G. Conclusion
The conclusion on monetary remedies is that, while we are not there yet, it would require only a small step forward to assimilate common law and equitable monetary remedies for common law and equitable wrongs. The rational unified picture (the dream of at


least this fusionist) is of one underlying concept-a civil wrong; one monetary remedy-call it damages; three measures of damages (compensatory, with a single set of restrictions; restitutionary, stripping away gains; and punitive, designed to punish); available for anticipated, as well as accrued, wrongs; and subject to a unified range of defences. Although some may regard that as a nightmare, it is my belief that most lawyers will regard it as a noble, and attainable, dream.

4. Overall Conclusion
In this article, I have argued that the time has come to push the fusion debate a stage further; and that in taking fusion seriously it is helpful to recognize three categories within English private law. In some areas--falling within a first category--common law and equity co-exist coherently and the historical labels remain useful. In others--falling within the second category--there is coherence in spite of the labels, which are unhelpful and could, and should, be excised at *O.J.L.S. 16 a stroke. For what is probably the largest part of the law, falling within category three, steps still need to be taken, albeit often small, before we can say, as surely we should be able to say, at the start of the 21st century, We do this at common law and we do the same in equity. St Hugh's College, Oxford. This is a lightly-edited version of an inaugural lecture delivered in the University of Oxford on March 1, 2001. Norton Rose Professor of Commercial Law, St Hugh's College Oxford. O.J.L.S. 2002, 22(1), 1-16 1. [1976] Ch 179. 2. (1976) 92 LQR 174. 3. (1976) 92 LQR 342. I understand that this was Lord Millett's first foray into academic writing. 4. Ibid at 342. 5. Ibid at 346. 6. For the concept of weak discretion, see R. M. Dworkin, Taking Rights Seriously (1977) at 31-39. 7. For general discussions of fusion, see, e.g. W. N. Hohfeld The Relations between Equity and Law (1913) Michigan LR 537; Lord Evershed MR Reflections on the Fusion of Law and Equity after 75 Years (1954) 70 LQR 326; P. V. Baker The Future of Equity (1977) 93 LQR 529; T. V. Watkin The Spirit of the Seventies (1977) 6 Anglo-American LR 119; P. Sparkes Walsh v Lonsdale: The Non-Fusion Fallacy (1988) 8 OJLS 350; P. M. Perell, The Fusion of Law and Equity (1990); J. Martin Fusion, Fallacy and Confusion; A Comparative Study (1994) Conveyancer 13; A. Mason, The Place of Equity and Equitable Remedies in the Contemporary Common Law World (1994) 110 LQR 238; J. Getzler, Patterns of Fusion in P. Birks (ed.) The Classification of Obligations (1997) at 157-192; H. G. Hanbury and J. E. Martin, Modern Equity (16th edn, 2001) at 20-26; R. A. Pearce and J. Stevens, The Law of Trusts and Equitable Obligations (2nd edn, 1998) at 11-17. 8. R. P. Meagher, W. M. C. Gummow and J. R. F. Lehane, Equity, Doctrines and Remedies (3rd edn, 1992) at para 221. 9.


Ibid, para 225. 10. K. Barker, After Change of Position: Good Faith Exchange in the Modern Law of Restitution in P. Birks (ed.) Laundering and Tracing (1995) at 191, 215. 11. This is now contained in Supreme Court Act 1981, s 49 (1) which reads as follows: Subject to the provisions of this or any other Act, every court exercising jurisdiction in England or Wales in any civil cause or matter shall continue to administer law and equity on the basis that, wherever there is any conflict or variance between the rules of equity and the rules of the common law with reference to the same matter, the rules of equity shall prevail. 12. A possible example of this is the personal restitution of payments made by mistake, including the change of position defence (that defence being established in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548). But even in that area, so long as one continues to refer to the standard remedy as the action for money had and received, rather than talking of the restitution of value received, one tends to think of there being a common law claim subject to an equitable defence. One might have thought that the reform of civil liability in statutes would yield many examples of full fusion where common law and equity cannot be distinguished. This is true of statutes which create an entirely new scheme (e.g. the unfair dismissal legislation now contained in the Employment Rights Act 1996). But most statutes concerned with civil liability tie in with the existing common law/equity divide (e.g. the Fatal Accidents Act 1976; the Limitation Act 1980; Law of Property Act 1925, s 41; and the Copyright, Designs and Patents Act 1988, s 229(2), which distinguishes between claims for damages and for an account of profits). 13. e.g. Scotland, South Africa, India, Malaysia. Those jurisdictions have a system of trust law which does not depend on the existence of equitable title. 14. This point can be expanded to say that the general rules of priority in relation to property (set out, e.g. in R. M. Goode, Commercial Law (2nd edn, 1995) at 706) cannot easily be replicated without using the law and equity labels. See also MCC Proceeds Inc. v Lehman Bros. International (Europe) [1998] 4 All ER 675 (equitable owner of share certificates unable to sue a bona fide purchaser in the tort of conversion). The case is helpfully discussed by K. Barker Equitable Title and Common Law Conversion: The Limits of the Fusionist Ideal (1998) RLR 15. 15. J. Beatson, Anson's Law of Contract (27th edn, 1998), Ch. 8; G. C. Cheshire, C. H. S. Fifoot and M. P. Furmston's Law of Contract (13th edn, 1996), Ch. 8; Sir G. Treitel, The Law of Contract (10th edn, 1999), Ch. 8; E. McKendrick, Contract Law (4th edn, 2000), Ch. 14. For a leading judicial analysis, see the judgement of Steyn J. in Associated Japanese Bank (International) Ltd v Credit du Nord S.A. [1989] 1 WLR 255. 16. J. Beatson, Anson's Law of Contract (27th edn, 1998), Ch. 7; E. McKendrick, Contract Law (4th edn, 2000) at 351-360. 17. (10th edn, 1999) at 375. 18. Ibid, at 378. 19. e.g. Williams v Bayley (1866) LR 1 HL 200; Kaufman v Gerson [1904] 1 KB 591; Mutual Finance Ltd v John Wetton and Sons Ltd [1937] 2 KB 389.


20. For a similar view, see P. Birks and C. N. Yin, On the Nature of Undue Influence in J. Beatson and D. Friedmann (eds), Good Faith and Fault in Contract Law (1995) at 57, 63: [A]ll cases of pressure should be treated as duress. It is unfortunate if this must still be expressed as transferring them from equity to common law. It is time that in this field we overcame the old jurisdictional duality. It would be better to say simply that pressure should be litigated as pressure, or as duress if that synonym is preferred. See also D. Capper, Undue Influence and Unconscionability: A Rationalisation (1998) 114 LQR 479, 484. 21. For the distinction between common law set-off (including abatement of price) and equitable set-off see, e.g. Axel Johnson Petroleum A.B. v M.G. Mineral Group A.G., The Jo Lind [1992] 2 All ER 163. It was in the context of contrasting common law abatement and equitable set-off that Lord Denning MR in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc., The Nanfri [1978] 1 QB 927 made a famous call for fusion. He said, at 974, Over 100 years have passed since the Judicature Act 1873. During that time the streams of common law and equity have flown together and combined so as to be indistinguishable the one from the other. We have no longer to ask ourselves: what would the courts of common law or the courts of equity have done before the Judicature Act? We have to ask ourselves: what should we do now so as to ensure fair dealing between the parties? 22. For the distinction between tracing at common law and tracing in equity see, e.g. Agip (Africa Ltd v Jackson [1991] Ch 547. For calls for a fused law of tracing, see the obiter dicta of Lords Steyn and Millett in Foskett v McKeown [2000] 3 All ER 97, 108, 121. 23. In Tinsley v Milligan [1994] 1 AC 340 the House of Lords considered the traditionally different approach, at common law and equity, to the enforcement of proprietary interests acquired under an illegal transaction. The majority developed a fused reliance principle. Lord Browne-Wilkinson giving the leading speech referred to fusion at 86 and at 91 said, [A]s the law has developed the equitable principle has become elided into the common law rule. In my judgement, the time has come to decide clearly that the rule is the same whether a plaintiff founds himself on a legal or equitable title: he is entitled to recover if he is not forced to plead or rely on the illegality. Unfortunately that reliance principle seems unsatisfactory: for criticism of it see Law Commission Consultation Paper No. 154, Illegal Transactions: The Effect of Illegality on Contracts and Trusts at paras 7.23-7.26, 8.4-8.12. 24. In Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 the two dissentient Law Lords (Lords Goff and Woolf) called for the equitable jurisdiction to award compound interest to be extended to allow such interest to be awarded in a common law restitutionary claim for money paid under a void interest rate swap transaction. The majority held that extending the power to award compound interest was a matter for the Legislature not the courts. 25. At common law, restitutionary liablity is strict, subject to defences such as change of position: Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548. In equity, knowing receipt has traditionally been required. For a call for a fused approach see, e.g. Lord Nicholls, Knowing Receipt: The Need for a New Landmark in W. R. Cornish, R. Nolan, J. O'Sullivan and G. Virgo (eds), Restitution: Past, Present and Future (1998) at 231-245. 26. For the difficulty of assimilating the equitable doctrine of laches into the general law on limitation of actions, see Law Commission Consultation Paper No. 151, Limitation of Actions , paras 13.159-13.176; and now Report No. 270, paras 4.268-4.278.


27. e.g. P. Birks, Misnomer in W. R. Cornish, R. Nolan, J. O'Sullivan, G. Virgo (eds), Restitution: Past, Present and Future (1998) at 1, 8-9. 28. A. Burrows, The Law of Restitution at 378. 29. See, e.g. Banque Keyser Ullmann SA v Skandia (UK) Insurance Co Ltd [1990] 1 QB 665, esp. at 777-81. For the best interpretation of Mahoney v Purnell [1996] 3 All ER 61 (as awarding compensation for breach of fiduciary duty not undue influence itself), see P. Birks, Unjust Factors and Wrongs: Pecuniary Rescission for Undue Influence [1997] RLR 72. 30. [1995] 2 AC 378. Extra-judicially Lord Nicholls has written that dishonest assistance and receipt are aspects of the single wrong of dishonest participation by a third party in a breach of trust: Knowing Receipt: The Need for a New Landmark in W. R. Cornish et al. (eds), Restitution: Past, Present and Future at 230, 243-244. Perhaps, therefore, we should talk of the Tan wrong as dishonestly procuring or participating in a breach of fiduciary duty. 31. For a recent discussion by the Court of Appeal of which types of estoppel are causes of action, see Baird Textile Holdings Ltd v Marks and Spencer plc , CA, 28 February, 2001. 32. [1998] Ch 1. 33. See, e.g. P. D. Finn, Fiduciary Obligations (1977); J. C. Shepherd, The Law of Fiduciaries (1981); J. C. Shepherd, Towards a Unifying Concept of Fiduciary Relationships (1981) 97 LQR 51; P. D. Finn, The Fiduciary Principle in T. G. Youdan (ed.), Equity, Fiduciaries and Trusts (1989), Ch. 1; R. Flannigan, The Fiduciary Obligation (1989) 9 OJLS 285; J. Glover, Commercial Equity: Fiduciary Relationships (1995); D. Hayton, Fiduciaries in Context: An Overview in P. Birks (ed.), Privacy and Loyalty (1997), Ch. 11; L. Hoyano, The Flight to Fiduciary Haven in P. Birks (ed.), Privacy and Loyalty (1997), Ch. 8. 34. See Mahoney v Purnell [1996] 3 All E.R. 61; above n 30. 35. [1914] AC 932. 36. [1964] AC 465. 37. A. Burrows, Dividing the Law of Obligations in Understanding the Law of Obligations (1998) at 1-15. 38. The classic authorities are Robinson v Harman (1848) 1 Exch. 850, 855; Livingstone v Rawyards Coal Co (1880) 5 App. Cas. 25, 39. 39. Birks (ed.), English Private Law (2000), paras. 18.30-18.69, 18.79-18.98. 40. [1994] 1 WLR 1360, 1374-1375. 41. [1997] AC 254. See also Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158. In Royscot Trust Ltd v Rogerson [1991] 2 QB 297 it was held that the wider remoteness test for de-


ceit also applies to damages awarded under Misrepresentation Act 1967, s 2(1), which uses the language of fraud. In the Smith New Court case at [1997] AC 254, 267, 283, it was left open whether Royscot was correctly decided on this point. 42. [2000] 3 WLR 1692. 43. See, generally, I. E. Davidson, The Equitable Remedy of Compensation (1982) 13 MULR 349; L. Aitken, Developments in Equitable Compensation: Opportunity or Danger? (1993) 67 ALJ 596; J. D. Davies, Equitable Compensation: Causation, Foreseeability and Remoteness in D. W. M. Waters (ed.), Equity, Fiduciaries and Trusts (1993) at 297; C. Rickett and T. Gardner, Compensating for Loss in Equity: the Evolution of a Remedy (1994) 24 VUWLR 19; J. Berryman, Equitable Compensation for Breach by Fact-Based Fiduciaries (1999) 37 Alberta LR 95; C. Rickett, Compensating for Loss in Equity-Choosing the Right Horse for Each Course in P. Birks and F. D. Rose (eds), Restitution and Equity (2000) at 173-191; J. Getzler, Equitable Compensation and the Regulation of Fiduciary Relationships, ibid., at 235-257. 44. [1996] AC 421. For the view that the House of Lords was wrong and that the trustee's liability was to account for his trusteeship and could not be equated to compensation, see P. Birks, Equity in the Modern Law: An Exercise in Taxonomy (1996) 26 UWALR 1, 4548; P. J. Millett, Equity's Place in the Law of Commerce (1998) 114 LQR 214, 2242-27. 45. [1998] Ch 1, 18 (per Millett LJ). See also P. J. Millett, (1998) 114 LQR 214, 224-227; and the judgement of Evans LJ in Swindle v Harrison [1997] 4 All ER 705. 46. [1996] AC 421, 434. See also Swindle v Harrison [1997] 4 All ER 705, 733-734 (per Mummery LJ). This was also the approach of the minority, led by McLachlin J., in the influential Canadian case of Canson Enterprises v Boughton (1991) 85 DLR (4th) 129. For the view that the common law rules on intervening cause do not apply to equitable compensation, see also Maguire v Makaronis (1997) 188 CLR 449; O'Halloran v R. T. Thomas & Family Pty. Ltd (1998) 45 NSWLR 262. In Nationwide Building Soc. v Balmor Radmore [1999] PNLR. 606 it was held that contributory negligence does not apply to equitable compensation at least where the breach of fiduciary duty was consciously disloyal. 47. [1998] Ch 1, 17. See also Swindle v Harrison [1997] 4 All ER 705, 713-718 (per Evans LJ). This was also the approach of the majority, led by La Forest J., in Canson Enterprises v Boughton (1991) 85 DLR (4th) 129. See also Hodgkinson v Simms (1995) 117 DLR (4th) 161 (remoteness); Bank of New Zealand v New Zealand Guardian Trust Ltd [1991] 1 NZLR 664 (causation and remoteness); Day v Mead [1987] 2 NZLR 443 (contributory negligence). 48. One might also add that a further element of discretion has been added to common law damages by South Australia Asset Management Corp. v York Montague Ltd [1997] AC 191, in which the House of Lords held that compensatory damages are irrecoverable for losses falling outside the scope of the duty undertaken. The impact of that decision has yet to be fully worked through and understood: see P. Birks (ed.), English Private Law (2000) at paras 18.137-18.141. 49. R. Goff and G. Jones, The Law of Restitution (5th edn, 1998), Chs 33, 36, at 518-523; P. Birks, An Introduction to the Law of Restitution (revised edn, 1989) at 39-44, Ch. 10; A. S. Burrows, Remedies for Torts and Breach of Contract (2nd edn, 1994), Ch. 6; J. Beatson, The Use and Abuse of Unjust Enrichment (1991) at 206-243; M. Jackman, Restitu-


tion for Wrongs [1989] CLJ 302; P. Birks, Civil Wrongs: A New World (Butterworth Lectures 1990-1991) at 94-98; Aggravated, Exemplary and Restitutionary Damages , Law Com No 247 (1997), Part III. 50. [2001] 1 AC 268. 51. Law Com. No. 247 (1997), paras. 3.82-3.84. 52. [1964] AC 1129. 53. [1993] QB 507. 54. [2001] 2 WLR 1789. 55. Norberg v Wynrib (1992) 92 DLR (4th ) 440, 505-507 (breach of fiduciary duty); Cook v Evatt (No. 2) [1992] 1 NZLR 676 (breach of fiduciary duty); Aquaculture Corp. v New Zealand Green Mussel Co. Ltd. [1990] 3 NZLR. 299 (breach of confidence). 56. Law Com No 247 (1997), Part V, esp. paras 5.46-5.77. 57. Chancery Amendment Act 1858, s 2. 58. See, e.g. Leeds Industrial Co-operative Society Ltd v Slack [1924] AC 851; Hooper v Rogers [1975] Ch 43 (anticipated nuisance); Bracewell v Appleby [1975] Ch 408, Jaggard v Sawyer [1995] 1 WLR 269 (anticipated trespass). For equitable damages for an anticipated breach of contract (that has not been accepted so as to found an action for breach of contract) see Oakacre Ltd v Claire Cleaners (Holdings) Ltd [1982] Ch 197. A court will presumably need to be satisfied to a very high degree of likelihood that the wrong will occur before it will award damages for that anticipated wrong. 59. Ibid. For equitable damages being awarded for equitable wrongs, see, e.g. Saltman Engineering Co. Ltd. v Campbell Engineering Ltd. [1963] 3 All ER 413n; Seager v Copydex Ltd [1967] 1 WLR 923 (both breach of confidence cases). 60. [1980] AC 367. 61. Whether compensatory, restitutionary or, exceptionally, punitive. For equitable restitutionary damages being awarded for an anticipated wrong, see Bracewell v Appleby [1975] Ch 408. 62. D. Capper, Damages for Breach of the Equitable Duty of Confidence (1994) Legal Studies 313, 316-317. 63. Law Com No 247, para 3.84. 64. For an attempted subsuming of the equitable cleans hands maxim within the common law reliance illegality principle, see Tinsley v Milligan [1994] 1 AC 340: see above, n 24. One can add that the common law doctrines of mistake and frustration and limitation of actions mirror the equitable doctrines of mistake, impossibility, hardship and laches. See A. S. Burrows, Remedies for Torts and Breach of Contract (2nd edn, 1994) at 372-379.


65. [1984] Ch 283. An injunction was refused because of acquiescence but equitable damages awarded in, e.g. Shaw v Applegate [1977] 1 WLR 970. 66. The distinction between monetary remedies and specific remedies breaks down where the remedy is both monetary and specific, as with the award of the agreed price. 67. e.g. the present law governing the interrelationship between the doctrine of laches and statutory limitation periods and, more generally, the application of the Limitation Act 1980 to equitable remedies is notoriously unclear, complex and unsatisfactory. See J. Beatson, Limitation Periods and Specific Performance in Lomnicka and Morse (eds), Contemporary Issues in Commercial Law (1997) at 9-23; Law Commission Consultation Paper No. 151, Limitation of Actions (1998) paras 9.12-9.22, 13.157-13.159.
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