Remedies evolve from the procedures that courts apply. Common law courts historically divided their decision-making functions between judge and jury; the judge defined the questions for the jury to answer, which the jury then decided. This system is still generally regarded as an acceptable method of determining criminal liability; however, randomly selected ad hoc bodies, such as juries, cannot supervise the performance of contracts, ensure compliance with injunctions, or take complex accounts. Judges, assisted by court officers, are better equipped to order these kinds of remedies, all of which require the cooperation, however reluctant, of the defendant. Equitable remedies grew out of the practice of chancellors, sitting without a jury but assisted by clerks and masters, exercising continuing supervision of matters that were sufficiently complex to require more than the parties having a ‘day in court’. One example is the very old case of Hewett v Hewett where the Court had to determine which timber on a property the plaintiff would be allowed to cut down. This matter had to be decided from time to time, for the rest of his life

Put simply, a breach of trust occurs whenever the trustee fails to perform one of the duties or obligations discussed in earlier chapters. This chapter is not, therefore, principally concerned with how a breach of trust occurs. Instead, the focus is on the consequences of a breach of trust. There are many different duties that can be breached by a trustee; the consequences that attend a breach will depend on the nature of the breach. A breach of trust does not automatically mean that the trustee must compensate the trust, in the sense that breach of a common law obligation exposes the defendant to liability for damages. First, the breach may be of a minor or merely technical nature, or may not call for relief in monetary terms. Secondly, no matter how poorly the trustee has performed his obligations, if he has not been dishonest he may be protected by a valid exculpation given by the trust instrument. Finally, it must always be borne in mind that equity’s remedies are discretionary. Courts try to give effect to the terms of the trust and will utilise the appropriate remedy to achieve that aim.

The word ‘rescission’ is ambiguous, and its various meanings must be carefully distinguished. Here, we will be discussing rescission in the sense of the process for setting aside a voidable contract and restoring the parties to their pre-contractual position. This is distinct from rescission (sometimes known as ‘repudiation’) for breach of contract, where the innocent party to a breach of contract exercises her right to terminate the contract and sue for damages or restitution of benefits conferred under the contract. The principal difference between rescission of a voidable contract and rescission for breach of a valid contract is that the former operates retrospectively, restoring both parties to their pre-contractual position, whereas rescission for breach operates prospectively, entitling both parties to enforce their accrued rights under the contract but removing any obligation to carry out the terms of the contract in the future.

Express trusts are a form of wealth management. Ownership and management of the property is split from the enjoyment of the property. In its simplest terms, the trustee manages the property but not for his own benefit. Express trusts emerged from medieval ‘uses’ of land and have been recognised and enforced in common law systems for over 700 years. They are no longer limited to land; any form of property can be held on trust. Today, the express trust is used for a wide variety of purposes, both private and commercial, where it is necessary or desirable to split management from benefit. These include: • Managing family wealth under a family trust; • Managing property for those unable to do so themselves, such as children or those under disabilities; • Group investment trusts, such as unit trusts; • Trading trusts; • Trusts set up under wills; • Superannuation trusts, which operate for the benefit of large numbers of members; and • Trusts used as security for borrowings. Many kinds of trusts are now largely regulated by statute but all are based on the equitable principles for supervising the administration of trusts.

In certain situations, equity orders the defendant to make payments to the plaintiff as a remedy for the wrong done. These are orders for the defendant to account for profits made, or pay equitable compensation to the plaintiff. These remedies impose a personal obligation on the wrongdoer to pay and do not per se attach to property. This is their disadvantage compared to proprietary remedies in the case of the defendant’s insolvency. The remedies perform substantially different tasks. We will now look at each remedy in turn.

One distinguishing feature of equitable remedies is their discretionary nature. Common law remedies accrue as of right once the plaintiff has made out her cause of action. However, equitable relief is not automatic. Equity acts to correct the defendant’s conscience and sometimes this may not lead to full recovery, or indeed any recovery, for the plaintiff. Because the court weighs factors from both the plaintiff’s and defendant’s perspectives ‘that tend towards the justice or injustice of granting the remedy that is sought’, there is some unpredictability involved in equitable remedies. There is a set of well-identified grounds that inform the court’s exercise of discretion. Because these grounds are used to reduce or deny the plaintiff’s remedy, they are often referred to as ‘equitable defences’. They are merely factors relevant to the exercise of remedial discretion. They include the doctrines of laches and acquiescence, unclean hands, and hardship to the defendant. These are by no means the only cases in which equity will deny a plaintiff a remedy. Another highly relevant matter, which is discussed in this chapter, is the effect of the order on third parties.

Much equitable doctrine concerning contract law is now covered in contract law or property law subjects. Our coverage will therefore be brief. Equitable intervention into contract law takes one of four forms: (a) Equity enforces some promises which are unenforceable at common law. It may also modify or even prevent the enforcement of promises which would otherwise be enforceable at common law. These results are principally achieved by estoppel doctrines. (b) Equity sets aside contracts where the consent of a party to the contract has been impaired or vitiated by factors such as mistake, misrepresentation, undue influence or unconscionability. (c) Equity intervenes in some cases where the contract is substantively unfair; for example, where it contains a penalty clause or a clause authorising forfeiture of property. (d) Equity provides remedies unavailable at common law (or, in the case of rescission, available on restrictive conditions) which: • enforce contracts (for example, specific performance or injunctions); • set aside contracts where consent has been vitiated (rescission); • correct contracts where they do not reflect the mutual intention of the parties (rectification).

Equity developed an armory of personal remedies, such as specific performance and injunctions, directed at the person of the defendant. Their principal function is to enforce personal rights, such as performance of a contract. However, over time equity proved willing to award personal relief almost routinely, not only against owners of property but also against third parties who had received the property. This regular award of equitable personal relief was eventually perceived as having created a proprietary interest in favour of the party entitled to the relief. For example, if A signs a contract to purchase land from B, but B refuses to complete the contract, equity will grant the remedy of specific performance against B, and B will have to transfer the land to A. This happened so routinely that eventually A was treated in equity as if he held a property interest in the land once the contract was signed. Similarly, the regular awards of personal relief against trustees in breach of trust eventually gave rise to a proprietary interest in the beneficiary. All equitable property rights are sourced in a personal obligation enforced in equity.

A constructive trust is imposed by operation of law when it would be inequitable, by reference to established equitable principles, for the defendant to deny the obligations of trusteeship. The award of a constructive trust usually involves the court ordering the defendant to hold property to which he has title on trust for the plaintiff. But, in some situations, the constructive trust is awarded as a personal remedy; the defendant is held accountable as if he were a trustee. Someone who knowingly assists a trustee or other fiduciary to commit a breach of duty will be accountable as a constructive trustee. As constructive trustee, he must account to the beneficiary for loss caused by the breach. The constructive trust is an ‘as if’ trust – the defendant is treated by equity as if he were an express trustee, even though he is not. The trustee legislation of all States and Territories defines the words ‘trust’ and ‘trustee’ to include a constructive trust and constructive trustee, unless the context otherwise requires. This means that constructive trustees can exercise the statutory powers contained in the legislation.

Tracing is not a remedy. It is the process of identifying a new asset as the substitute for the old. Its relevance to equity and trusts can be illustrated by the following example. Suppose a trustee misappropriates $10 000 and pays it into his personal account, which had previously been $20 000 in credit. He later withdraws $25 000 to buy a car. Tracing enables the beneficiaries to identify how the chose in action representing the trust money came to be substituted by a car. The tracing rules also determine how much of the beneficiaries’ money remains in the trustee’s bank account and how much is represented by an interest in the car. What is traced is not the trust property. The beneficiaries’ equitable title to the money will be lost once the car has been bought. It is the value of the beneficiaries’ property in the hand of a recipient that is traced. Tracing is distinguishable from following and claiming.

The equitable obligation of confidence is used to protect information from unauthorised misuse or exploitation by others. The action now has two significant aspects; it is traditionally used to protect commercially valuable information such as trade secrets, and it is increasingly used to protect personally private information. Whether the same considerations apply to these two aspects of the action is an open question. Though the obligation of confidence is one of the oldest in equitable jurisdiction, it has only recently been called upon to protect interests previously thought to be ineffectively protected. The long hiatus between the action’s origins and its current development is partly due to the unusual position confidentiality has occupied. Whereas many equitable responsibilities, such as trust or fiduciary obligations, have no direct common law counterparts, confidentiality can be regulated by regimes other than equity. Up until the mid-twentieth century most cases concerning the equitable obligation of confidence also involved a breach of an obligation of confidence not sourced in equity

Enforceability of an express trust depends on proof of certainty in three matters: intention to create a trust, subject-matter, and objects. In addition to satisfying the certainty requirements and not infringing public policy prohibitions on creating trusts, an express trust must have been validly created (or constituted). That is, the trust must be properly declared, and title to the trust property must be properly vested in the trustee. Additionally, some trusts must comply with statutory formalities. Unless they meet these requirements they will be unenforceable or void, depending on the statutory provision in question.