We Do This at Common Law but That in Equity

Author(s): Andrew Burrows

Source: Oxford Journal of Legal Studies , Spring, 2002, Vol. 22, No. 1 (Spring, 2002), pp.
1-16
Published by: Oxford University Press

Stable URL: https://www.jstor.org/stable/3600632

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Oxford Journal of Legal Studies, Vol. 22, No. 1 (2002), pp. 1-16

We Do This At Common Law But

That In Equity*
ANDREW BURROWS'

Abstract-This article argues that lawyers are not doing enough to eradic
needless differences in terminology used, and the substantive inconsistencies,
common law and equity. In developing this argument, three categories within
private law are recognized. First, where common law and equity co-exist cohe
and where the historical labels of common law and equity remain useful term
Second, where common law and equity co-exist coherently but there is no
be gained by adherence to those labels which could, and should, be excis
stroke. And third, where common law and equity do not co-exist coherent
change in the law, albeit often only a small change, is needed to produce a pr
product. As a general illustration of what the third category comprises, an
fusion requires, one wide-ranging and practically very important area wi
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 ac
to, the distinction between common law and equity. But the distinc
puzzling. My personal puzzlement started 25 years ago, when attendin
for Oxford undergraduates on consideration and promissory estopp
dealt in detail with the doctrine of consideration, the lecturer went
'But the position is different in equity'. He then described how equ
promises binding, without the need for consideration, under proprie
promissory estoppel. I remember thinking, 'What is this mysterious
equity? How can one have two inconsistent doctrines operating side
The mist did not clear-and in some respects developed into a thick
I turned to the well-known 1976 Law Quarterly Review case-note con
on Crabb v Arun DC2 between Professor Patrick Atiyah3 and Peter M
(now Lord Millett).4 Patrick Atiyah posed, in the title of his note,
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

* 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.
1 Norton Rose Professor of Commercial Law, St Hugh's College Oxford.
2 [1976] Ch 179.
3 (1976) 92 LQR 174.
4 (1976) 92 LQR 342. I understand that this was Lord Millett's first foray into academic writing.
@ 2002 Oxford University Press

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2 Oxford Journal of Legal Studies VOL. 22
argument was that both consideration and estoppel are con
problem of which agreements or promises should be held b
needlessly complex to have two such doctrines when one
Peter Millett disagreed. Replying to what he referred to a
'interesting, if intemperate, note',' he said that 'both law
same result ... but do not necessarily draw the line in th
apparent similarity of the results achieved ... is ... decept
contract and estoppel] are different, require different fa
have different consequences'.6
I began to think that the explanation for all this was in
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 becam
clear that my puzzlement was shared by others. When in my own lectures o
remedies for breach of contract we turn from contract damages-a commo
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 unfairness
and injustice 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 per-
formance 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.7
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

5 Ibid at 342.
6 Ibid at 346.
For the concept of 'weak discretion', see R. M. Dworkin, Taking Rights Seriously (1977) at 31-39.

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SPRING 2002 We Do This At Common Law But That In Equity 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.8
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.9

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.

Lest it be thought that colourful turns of phra

anti-fusion, let me balance matters up somewh
argument in favour of rationalizing the role of
to restitution by fusing common law and equi
Atkin, Barker writes that rationality is obstructed

8 For general discussions of fusion, see, e.g. W. N. Hohfeld 'The

Michigan LR 537; Lord Evershed MR 'Reflections on the Fusion o
LQR 326; P. V. Baker 'The Future of Equity' (1977) 93 LQR 529; T.
(1977) 6 Anglo-American LR 119; P. Sparkes 'Walsh v Lonsdale: Th
P. M. Perell, The Fusion of Law and Equity (1990); J. Martin 'Fus
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.
9 R. P. Meagher, W. M. C. Gummow and J. R. F. Lehane, Equity, Doctrines and Remedies (3rd edn, 1992) at
para 221.
10 Ibid, para 225.

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 4 Oxford Journal of Legal Studies VOL. 22

we know as the law/equity divide. These days, even the

to conclude that only an exorcism of this troublesome g
our house in order'."
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. Common 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'.12 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 ad-
ministration 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,

" K. Barker, 'After Change of Position: Good Faith Exchange in the Modem Law of Restitution' in P. Birks
(ed.) Laundering and Tracing (1995) at 191, 215.
12 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'.

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SPRING 2002 We Do This At Common Law But That In Equity 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.13 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 jurisdictions'4-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.15
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 w
almost invariably distinguish between the position at common law and the

13 A possible example of this is the personal restitution of payments made by mistake, including the change
position defence (that defence being established in Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548). But eve
that area, so long as one continues to refer to the standard remedy as the action for money had and recei
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 yi
many examples of full fusion where common law and equity cannot be distinguished. This is true of statutes wh
create an entirely new scheme (e.g. the unfair dismissal legislation now contained in the Employment Rights A
1996). But most statutes concerned with civil liability tie in with the existing common law/equity divide (e.g.
Fatal Accidents Act 1976; the Limitation Act 1980; Law of Property Act 1925, s 41; and the Copyright, Des
and Patents Act 1988, s 229(2), which distinguishes between claims for damages and for an account of profits).
14 e.g. Scotland, South Africa, India, Malaysia. Those jurisdictions have a system of trust law which does
depend on the existence of equitable title.
15 This point can be expanded to say that the general rules of priority in relation to property (set out, e.g.
R. M. Goode, Commercial Law (2nd edn, 1995) at 706) cannot easily be replicated without using the law an
equity labels. See also MCC Proceeds Inc. v Lehman Bros. International (Europe) [1998] 4 All ER 675 (equit
owner of share certificates unable to sue a bona fide purchaser in the tort of conversion). The case is helpf
discussed by K. Barker 'Equitable Title and Common Law Conversion: The Limits of the Fusionist Ideal' (19
RLR 15.

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 6 Oxford Journal of Legal Studies VOL. 22
position in equity.16 However, there is no reason why w
this would make the law more immediately comprehensibl
example, some shared or common mistakes that are so se
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
mediately presented is one of more serious mistakes having more serious
sequences and of less serious mistakes having less serious consequences.
is nothing to be gained by here referring to the language of common law
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." 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'."18 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'.19 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.20 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.21
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

16 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.
17 J. Beatson, Anson's Law of Contract (27th edn, 1998), Ch. 7; E. McKendrick, Contract Law (4th edn, 2000)
at 351-360.
18 (10th edn, 1999) at 375.
19 Ibid, at 378.
20 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.
21 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.

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 SPRING 2002 We Do This At Common Law But That In Equity 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,22 tracing,23 illegal contracts,24 compound interest,25 the restitution
of money that has been paid by a third party to the defendant without the
owner's consent,26 and limitation of actions.27 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

22 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?'
23 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.
24 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.
25 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.
26 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.
27 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.

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 8 Oxford Journal of Legal Studies VOL. 22
with the same essential facts, ideas and concepts and yet treati
And in this area, as in other areas within category three, takin
requires some adjustments, albeit minor, to the present law
be developed under six heads: (i) identification of the wron
and its restrictions; (iii) restitution for wrongs; (iv) punish
wrongs, and (vi) general defences.

A. Identification of the Wrong

Professor Peter Birks has pertinently observed that there
distinction in English civil law between wrongs and, to us
wrongs'.28 A wrong is a breach of duty and, in my view, we ca
law is treating conduct as a breach of duty if compensation
caused by that conduct.29 In contrast, not-wrongs do not t
for loss caused. Therefore, the receipt of money paid by, f
or under undue influence or under duress or as a result of non-disclosure does
not normally in itself constitute a wrong.30 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;
of contract and torts. Applying the same test, of whether compensati
available for loss caused, we can say that there are four types of conduct
are treated, in equity, as wrongs: breach of fiduciary duty, breach of confid
dishonestly procuring or assisting a breach of fiduciary duty (the wrong rec
by the Privy Council in Royal BruneiAirlines v Tan),31 and those forms of e
that constitute causes of action, in particular proprietary estoppel.32
Of these equitable wrongs, the most wide-ranging and important-an
most difficult to pin down-is breach of fiduciary duty. In line with Millett
approach in Bristol & West Building Society v Mothew,33 which concerned a
against a firm of solicitors, the core idea is that, in some circumstances,
of loyalty may be imposed. It is submitted that an even more illuminati
of thinking about a fiduciary duty is that it is a duty to look after ano
interests. That duty, depending on the context, may be strict or may be
use reasonable care.

28 e.g. P. Birks, 'Misnomer' in W. R. Cornish, R. Nolan, J. O'Sullivan, G. Virgo (eds), Restitution: Past, Presen
and Future (1998) at 1, 8-9.
29 A. Burrows, The Law of Restitution at 378.
30 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.
31 [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.
32 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.
33 [1998] Ch 1.

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SPRING 2002 We Do This At Common Law But That In Equity 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.34 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.35 This explains why compensation was awarded for a fiduciary's-a
solicitor's-negligent misrepresentation in Nocton v Lord Ashburton36 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.37
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,38
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.39 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 re-
strictions 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.40
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.

34 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.
35 See Mahoney v Purnell [1996] 3 All E.R. 61; above n 30.
36 [1914] AC 932.
37 [1964] AC 465.
38 A. Burrows, 'Dividing the Law of Obligations' in Understanding the Law of Obligations (1998) at 1-15.
39 The classic authorities are Robinson v Harman (1848) 1 Exch. 850, 855; Livingstone v Rawyards Coal Co
(1880) 5 App. Cas. 25, 39.
40 Birks (ed.), English Private Law (2000), paras. 18.30-18.69, 18.79-18.98.

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 10 Oxford Journal of Legal Studies VOL. 22

The first is that the courts have a wide discretion in dec

compensated by damages for common law wrongs. Some
tervening cause, there is no test laid down at all. Typica
statement in the accountant's negligence case of Galoo L
Murray.41 He said, '[H]ow does the court decide whether t
the cause of the loss or merely the occasion for the loss?
end is, "By the application of the court's common sense"
a test, it is open-ended; reasonable foreseeability or reaso
as regards remoteness; whether reasonable steps have been
duty to mitigate; and a reduction of damages 'to such exte
just and equitable'-as laid down in the Law Reform (Con
Act 1945-in relation to contributory negligence.
The second feature of the restrictions on compensator
because it involves dishonesty, the tort of deceit has bee
from most other torts and breach of contract. So, as laid
Lords in Smith New Court Securities Ltd v Scrimgeour Vicke
Ltd,42 a wider remoteness test than reasonable foreseeabil
of deceit. And, as recently laid down by a majority of th
Standard Chartered Bank v Pakistan National Shipping Co (No
negligence of the claimant does not apply to reduce dam
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'.44 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 Redfern45 was, in my view, correct to say that there could be no

41 [1994] 1 WLR 1360, 1374-1375.

42 [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 deceit 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.
43 [2000] 3 WLR 1692.
44 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.
45 [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, 45-48; P. J. Millett, 'Equity's Place in the Law of Commerce'
(1998) 114 LQR 214, 2242-27.

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SPRING 2002 We Do This At Common Law But That In Equity 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 Mothew46 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 o
damage and causation do not apply'.47
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 produc
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 damages 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

46 [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.
47 [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 Enterprise
v Boughton (1991) 85 DLR (4th) 129. For the view that the common law rules on intervening cause do not app
to equitable compensation, see also Maguire v Makaronis (1997) 188 CLR 449; O'Halloran v R. T Thomas
Family Pry. Ltd (1998) 45 NSWLR 262. In Nationwide Building Soc. v Balmor Radmore [1999] PNLR. 606 it wa
held that contributory negligence does not apply to equitable compensation at least where the breach of fiduciar
duty was consciously disloyal.

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 12 Oxford Journal of Legal Studies VOL. 22
of damage and measure of damages should not be applied by
case.48

This second approach should be supported. We have already

given to the courts at common law in applying restriction
damages; and at the way in which the tort of deceit, because inv
gives rise to a different approach. In the light of that disc
law,49 and the scope for some variation turning on the duty in q
good reason for equity going its own separate way. On the contr
damages and equitable compensation should be regarded as
in aim-compensation-and identical in relation to the applicat

C. Restitution for Wrongs

Restitution for wrongs has been extensively written about in re

treatment here can therefore be very brief. We are concerned w
reversal of benefits acquired by a wrong. At both common
courts have for a long time been awarding restitution for certa
After Attorney-General v Blake51 we must now add breach of c
albeit only in exceptional cases. Unfortunately that truth
fuscated by there being differently labelled common law and
designed to achieve the same end of awarding restitution.
remedies are an action for money had and received and resti
while the equitable remedy is an account of profits. As th
has pointed out, it would be much simpler to recognize fusi
remedy-most obviously restitutionary damages-in place of t

D. Punishment

As laid down in the leading case of Rookes v Barnard,53 the present law a
the award of punitive or exemplary damages (unless statutorily authorized
two restricted categories only: where the wrong comprised oppressive, arbitrar

41 [1998] Ch 1, 17. See also Swindle v Harrison [1997] 4 All ER 705, 713-718 (per Evans LJ). This was
the approach of the majority, led by La Forest J., in Canson Enterprises v Boughton (1991) 85 DLR (4th) 129
also Hodgkinson v Simms (1995) 117 DLR (4th) 161 (remoteness); Bank of New Zealand v New Zealand G
Trust Ltd [1991] 1 NZLR 664 (causation and remoteness); Day v Mead [1987] 2 NZLR 443 (contributory
negligence).
49 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.
50 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, 'Restitution 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.
51 [2001] 1 AC 268.
52 Law Com. No. 247 (1997), paras. 3.82-3.84.
53 [1964] AC 1129.

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SPRING 2002 We Do This At Common Law But That In Equity 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 Authority54 (punitive damages only to be awarded for a tort for
which they had been awarded pre-1964) was, thankfully, removed recently by
the House of Lords in Kuddus v Chief Constable of Leicestershire,55 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.56
Not surprisingly, the Law Commission has recommended legislation which
would effect a principled reform." 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' Act"5-can
be awarded, albeit exceptionally, for anticipated as well as accrued wrongs.59 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 pre-trial 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

54 [1993] QB 507.
55 [2001] 2 WLR 1789.
56 Norberg v Wynrib (1992) 92 DLR (4") 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).
57 Law Com No 247 (1997), Part V, esp. paras 5.46-5.77.
58 Chancery Amendment Act 1858, s 2.
59 See, e.g. Leeds Industrial Co-operative Soliety 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.

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 14 Oxford Journal of Legal Studies VOL. 22
common law, as well as equitable, wrongs. Indeed they hav
been awarded in respect of anticipated proprietary torts, su
trespass to land.60 Second, in Johnson v Agnew61 the House
that the principles for assessing damages should not differ a
law and equitable damages.
It follows from these two points that it would involve only a
to rid ourselves of the concept of equitable damages and to reco
damages62 may be awarded not only for accrued wrongs but als
anticipated wrongs.

F. General Defences

The last refuge of those who seek to fight against the fusion of common law
equitable monetary remedies is to argue that equitable remedies are subje
discretionary general defences that simply do not apply to common law remed
For example, David Capper writes, 'Another reason to reject full merger
common law and equity is that otherwise equitable defences (clean h
hardship, delay) might be available against common law claims in ... con
and tort'.63
Anticipating this argument in the context of restitution for wrongs, althou
what is said is of general application, the Law Commission has countered
follows64:

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 policy65-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 in-
junctions, 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

60 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).
61 [1980] AC 367.
62 Whether compensatory, restitutionary or, exceptionally, punitive. For equitable restitutionary damages being
awarded for an anticipated wrong, see Bracewell v Appleby [1975] Ch 408.
63 D. Capper, 'Damages for Breach of the Equitable Duty of Confidence' (1994) Legal Studies 313, 316-317.
64 Law Com No 247, para 3.84.
65 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.

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SPRING 2002 We Do This At Common Law But That In Equity 15

or common law. For example, in Patel v Ali66 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.67 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.68 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

would require only a small step forward to assimilate common law and e
monetary remedies for common law and equitable wrongs. The rational
picture (the dream of at least this fusionist) is of one underlying concep
wrong; one monetary remedy-call it damages; three measures of dama
(compensatory, with a single set of restrictions; restitutionary, strippin
gains; and punitive, designed to punish); available for anticipated, as w
accrued, wrongs; and subject to a unified range of defences. Although so
regard that as a nightmare, it is my belief that most lawyers will regar
noble, and attainable, dream.

4. Overall Conclusion

In this article, I have argued that the time has come to push the fusion d
a stage further; and that in taking fusion seriously it is helpful to recognize t
categories within English private law. In some areas-falling within a
category-common law and equity co-exist coherently and the historical
remain useful. In others-falling within the second category-there is cohe
in spite of the labels, which are unhelpful and could, and should, be excis

66 [1984] Ch 283. An injunction was refused because of acquiescence but equitable damages awarded i
Shaw v Applegate [1977] 1 WLR 970.
67 The distinction between monetary remedies and specific remedies breaks down where the remedy
monetary and specific, as with the award of the agreed price.
68 e.g. the present law governing the interrelationship between the doctrine of laches and statutory lim
periods and, more generally, the application of the Limitation Act 1980 to equitable remedies is not
unclear, complex and unsatisfactory. See J. Beatson, 'Limitation Periods and Specific Performance' in L
and Morse (eds), Contemporary Issues in Commercial Law (1997) at 9-23; Law Commission Consultatio
No. 151, Limitation of Actions (1998) paras 9.12-9.22, 13.157-13.159.

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16 Oxford Journal of Legal Studies VOL. 22
a stroke. For what is probably the largest part of the law, falli
three, steps still need to be taken, albeit often small, before we
we should be able to say, at the start of the 21st century, 'We
law and we do the same in equity'.

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