Compensating for Loss in Equity: The Evolution of a Remedy

Abstract

Equitable compensation, founded in the inherent jurisdiction of equity, is becoming a more regularly awarded remedy in New Zealand courts. This paper examines the features of this remedy, first by a comparison between it and the statutory remedy of equitable damages, and secondly by a comparison between it and the common law remedy of compensatory damages in tort law. The panoply of remedies available in equity has traditionally been thought to reflect a fundamental eschewal by that jurisdiction of any whole-hearted embrace of the notion of compensation for loss. However, this is now changing rather rapidly, particularly in New Zealand. The time is opportune, therefore, for an examination of the developments and for an assessment of some of the issues arising. In seeking to do this, the paper adopts the following structure. The first section outlines the development of both equitable compensation and equitable damages, revealing that although both appear to be equitable remedies founded on the principle of compensating for loss, there are nevertheless essential differences between them. The second section examines matters relating to the scope of operation of equitable compensation. The third section takes up a major focus of present judicial and academic attention in the area, the relationship between equitable compensation and compensation in tort law. This focus has arisen as courts grapple (largely in cases dealing with claims in equity for breach of fiduciary duty and breach of confidence, where the circumstances often sustain claims in negligence or deceit as well) with the process of bringing the remedy of equitable compensation to an acceptable level of maturity. It is perhaps a trite observation that there is under way in New Zealand's law of civil obligations a movement towards increased remedial flexibility. Equitable compensation has a place in this development, but in order to be a trusted and effective remedy its parameters need to be more clearly understood.