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Damages in Equity—A Study of Lord Cairns' Act

Published online by Cambridge University Press:  16 January 2009

J. A. Jolowicz
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When, if ever, may a court award damages to a plaintiff whose case sounds only in equity, not in law? In Hooper v. Rogers an award of damages in respect of a nuisance which had not yet resulted in any relevant damage was upheld by the Court of Appeal. In Wrotham Park Estate Co. Ltd. v. Parkside Homes Ltd. Brightman J. awarded substantial damages for breach of a restrictive covenant to the successors in title of the covenantee against the successors in title of the covenantor. In Wroth v. Tyler damages for the non-performance of a contract for the sale of a house were assessed by reference to the value of the house at the date of the hearing, not the date of breach. In none of these cases could the decisions have been justified on common law principles alone and all are in fact founded upon the Chancery Amendment Act 1858, commonly known as Lord Cairns' Act. Yet in Redland Bricks Ltd. v. Morris, while the Court of Appeal considered that an elaborate discussion of that Act was necessary and, indeed, differed in opinion as to the result of its application to the circumstances of the case, the House of Lords, through Lord Upjohn, dismissed the matter briefly and categorically with the observation that Lord Cairns' Act had nothing whatever to do with the principles of law applicable to the case. The time seems ripe for an examination of the meaning and present status of the Act.

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The Cambridge Law Journal , Volume 34 , Issue 2 , November 1975 , pp. 224 - 252
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Copyright © Cambridge Law Journal and Contributors 1975

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References

1 [1975] Ch. 43.

2 [1974] 1 W.L.R. 798.

3 [1974] Ch. 30.

4 21 & 22 Viet. c. 27.

5 [1967] 1 W.L.R. 967; [1970] A.C. 652.

6 [1970] A.C. at p. 665.

7 17 & 18 Vict. c. 125, s. 79.

8 Third Report of Her Majesty's Commissioners appointed to enquire into the Process, Practice and System of Pleading in the Court of Chancery, 1856.

9 Wicks v. Hunt (1859) Johns. 372; Rogers v. Challis (1859) 27 Beav. 175 are two of the earliest examples.

10 Much of the Act is concerned with the procedural aspects of the assessment of damages in the Court of Chancery.

11 P.D., Vol. CXLIX, 1161–1162 (15 April 1858); Vol. CL, 1445 (3 June 1858); ibid., 1689 (8 June 1858). The Act received the Royal Assent on 28 June and came into force on 1 November 1858.

12 Hunt v. Peake (1860) Johns. 705. See also Betts v. Neilson (1868) L.R. 3 Ch. App. 428; West Cumberland Iron & Steel Co. v. Kenyon (1877) 6 Ch.D. 733.

13 (1863) 8 L.T. 237; Cation v. Wyld (1863) 32 Beav. 266; Davenport v. Rylands (1865) L.R. 1 Eq. 302; Lockwood v. L.N.W.R. (1868) 19 L.T. 68; M'Rae v. London Brighton and South Coast Railway Co. (1868) 37 L.J.Ch. 267.

14 (1859) Johns. 372.

15 The Chancery Regulation Act 1862, 25 & 26 Viet. c. 42 (“Mr. Rolfs Act”). For an early explanation of the Act see Re Hooper (1862) 3 De G.J. & S. 348, 352–354, per Turner L.J.

16 Rogers v. Challis, supra; Wicks v. Hunt, supra; Cooper v. Hubbuck (1860) 30 Beav. 160; Dowling v. Betjeman (1862) 2 J. & H. 544; Jacomb v. Knight (1863) 3 De G.J. & S. 553; Jackson v. Duke of Newcastle (1864) 3 De G.J. & S. 275; Swaine v. G.N.R. (1864) 4 De G.J. & S. 211; Rede v. Oakes (1865) 2 De G.J. & S. 518; Curriers' Co. v. Corbett (1865) 4 De G.J. & S. 763; Durell v. Pritchard (1865) L.R. 1 Ch.App. 244; Scott v. Rayment (1868) L.R. 7 Eq. 112; Thomlinson v. Dixon (1866) 14 W.R. 528; Belts v. Galais (1870) L.R. 10 Eq. 392; Gaunt v. Finess (1872) L.R. 8 Ch.App. 8. In Johnson v. Wyatt (1863) 2 De G.J. & S. 18, Turner L.J. dealt with the question of damages, but held that the plaintiff was entitled to no remedy of any description. See also JLangmead v. Maple (1865) 18 C.B.(n.s.) 256; Anglo-Danubian Co. v. Rogerson (1867) L.R. 4 Eq. 3.

17 The “concessionary” nature of the award of damages in the Court of Chancery emerges most clearly in Howe v. Hunt (1862) 31 Beav. 420.

18 Schotsmans v. Lancashire & Yorkshire Railway Co. (1865) L.R. 1 Eq. 349. See also Hindley v. Emery (1865) L.R. 1 Eq. 52.

19 Soames v. Edge (1860) Johns. 669; Middleton v. Greenwood (1864) 2 De G.J. & S. 142; Kay v. Johnson (1864) 2 H. & M. 118; Corporation of London v. South-gate (1869) 1 W.R. 197; Wilson V. Northampton and Banbury Junction Railway Co. (1874) L.R. 9 Ch.App. 279; Elsmores v. Pirrie (1887) 57 L.T. 333.

20 See post, pp. 231. 239–242.

21 Ferguson v. Wilson (1866) L.R. 2 Ch.App. 77 (see esp. per Cairns L.J. at pp. 91–92); Norris v. Jackson (1860) 1 J. & H. 319; Lewers v. Earl of Shaftesbury (1866) L.R. 2 Eq. 270; Scott v. Rayment (1868) L.R. 7 Eq. 112.

22 46 & 47 Vict. c. 49.

23 A similar fusion of law and equity is effected by the Misrepresentation Act 1967, s. 2. Previously an “innocent misrepresentation” entitled the representee only to the equitable remedy of rescission, not the common law remedy of damages. In other words, an “innocent misrepresentation” inducing the representee to make a contract with the representor gave to the representee an equitable but not a common law cause of action. Now, however, the common law remedy of damages has been made available in respect of this equitable cause of action. See Gosling v. Anderson [1972] E.G.D. 709Google Scholar; Watts v. Spence [1975] 2 W.L.R. 1039.Google Scholar Fusion (or confusion) of law and equity may also have come, without the aid of Parliament, in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964]Google Scholar A.C. 465 (see Winfield and Jolowicz on Tort, 9th ed., p. 228) and in Seager v. Copydex Ltd. [1967] 1 W.L.R. 923Google Scholar; Seager v. Copydex Ltd. (No. 2) [1969] 1 W.L.R. 809Google Scholar (see North, “Breach of Confidence: Is There a New Tort?” (1972) 12Google Scholar J.S.P.T.L.(n.s.) 149. Cf. Jones, Gareth, “Restitution of Benefits Obtained in Breach of Another's Confidence” (1970) 86 L.Q.R. 463.Google Scholar)

24 1974, c. 22.

25 Act of 1883, s. 5 (6). The savings clause in the later Acts, each of which repealed its predecessor, was slightly different.

26 See the memorandum presented to Parliament in 1891 (C. 6420) cited in Carr, “The Statutes Revised” (1951) 67 L.Q.R. 482, 485–486Google Scholar; Robins v. Robins [1907] 2 K.B. 13, 17Google Scholar, per Joyce J.; Leeds Industrial Co-operative Society Ltd. v. Slack [1924] A.C. 851, 862Google Scholar, per Viscount Finlay.

27 The theoretical possibility that Lord Cairns' Act was accidentally repealed in 1974 will not be explored here.

28 Re Bursfield (1886) 32 Ch.D. 123; Hume v. Somerton (1890) 25 Q.B.D. 239. Occasionally statutes have been re-enacted after mistaken repeal: Carr “Revised Statutes” (1929) 45 L.Q.R. 168, 176Google Scholar and n. 3.

29 Re R. [1906] 1 Ch. 730,Google Scholarper Collins M.R.

30 (1889) 23 Q.B.D. 294, 299. The opinion of Baggallay L.J. in Sayers v. Collyer (1884) 28 Ch.D. 103, 107–108 that the court had power to award damages “as alternative relief” by virtue of the Judicature Acts themselves cannot be sustained.

31 Holland v. Worley (1884) 26 Ch.D. 578.

32 E.g., Sayers v. Collyer, supra; Cowper v. Laidler [1903] 2 Ch. 337Google Scholar, per Buckley J.

33 [1924] A.C. 851, 863.

34 In his dissenting speech in Leeds Industrial Co-operative Society Ltd. v. Slack [1924] A.C. at pp. 872–873Google Scholar Lord Sumner sought to use the repeal of Lord Cairns' Act in support of the restrictive interpretation of it which he favoured, but that is a different point.

35 (1863) 4 De G.J. & S. 114.

36 Ante, p. 227.

37 (1868) L.R. 7 Eq. 112; Hipgrave v. Case (1885) L.R. 28 Ch.D. 356; Lavery v Pursell (1888) 39 Ch.D. 508.

38 (1868) L.R. 7 Eq. at p. 116, per Giffard V.C.

39 (1889) 23 Q.B.D. 294; Flower v. Local Board of Low Leyton (1877) 5 Ch.D. 347. Cf. Pryce v. Hole (1890) 6 T.L.R. 195.

40 Att.-Gen. v. Hackney Local Board (1875) L.R. 20 Eq. 626; Flower v. Local Board of Low Leyton, supra.

41 (1889) 23 Q.B.D. at p. 298, per Lord Esher M.R.

42 Ibid., at p. 299, per Lord Esher M.R.

43 (1880) 14 Ch.D. 542; Warwick and Birmingham Canal Navigation Co. v Burman (1890) 63 L.T. 670.

44 [1974] Ch. 30: Bracewell v. Appleby [1975] 2 W.L.R. 282Google Scholar, post, p. 249. Cf. Horsier v. Zorro [1975] 2 W.L.R. 183.Google Scholar

45 (1874) L.R. 7 H.L. 158. Shortly stated, this rule denies to the disappointed purchaser of real estate the right to recover damages for loss of bargain where the sale goes off because of a defect in the vendor's title.

46 Megarry J. may have felt the elaborate citation of authority to have been necessary because of some prevailing misunderstanding of Lord Cairns' Act. See, e.g., the learned judge's quotation from Fry on Specific Performance, 6th ed., p. 602 and Kelsen v. Imperial Tobacco Co. Ltd. [1957] 2 Q.B. 334, 345Google Scholar, per McNair J. Another factor may have been the limited use that had been made of Lord Cairns' Act in the recent past.

47 It may be said that even the figure of £5,500, being based on the value of the defendant's house at the date of judgment, was insufficient: prices were still rising and the plaintiff could not buy another house immediately on leaving the Law Courts. Against this, however, must be set the fact that the equivalent in purchasing power of the contract price at the date of the contract would have been represented by a larger sum of money by the date when any new contract might actually have been made.

48 (1863) 3 De G.J. & S. 263.

49 See Redland Bricks Ltd. v. Morris [1970] A.C. 652Google Scholar, discussed post, pp. 242–245.

50 [1904] A.C. 179.

51 Ironically, one of the most vehement statements to this effect is to be found in the speech of Lord Upjohn in Redland Brick Ltd. v. Morris, supra, at pp. 664–666. Unfortunately his Lordship drew the wrong conclusion about its bearing upon the application of Lord Cairns' Act.

52 Jackson v. Duke of Newcastle (1864) 2 De G.J. & S. 275; Durell v. Pritchard (1865) L.R. 1 Ch.App. 244; Curriers' Company v. Corbett (1865) 4 De G.J. & S. 764; Rogers v. Whittingham (1866) L.R. 1 Ch.App. 442.

53 Shadwell v. Hutchinson (1831) 2 B. & Ald. 97; Battishill v. Reed (1856) 18 C.B. 696. If equitable damages are awarded in a case of this description the defendant's position for the future can be safeguarded by a suitable endorsement on the title deeds: Crawford v. Hornsea Steam Brick and Tile Co. Ltd. (1876) 45 L.J.Ch. 432.

54 (1873) L.R. 9 Ch.App. 212. The first sign of a return to the course adopted by Lord Westbury L.C. came in Senior v. Pawson (1866) L.R. 3 Eq. 330 where, however, Wood V.C. attached particular importance to the fact that during negotiations the plaintiff had indicated her willingness to accept financial compensation for the interference with her right to light. See further Viscountess Gort v. Clark (1868) 17 W.R. 569; Bowes v. Law (1870) L.R. 9 Eq. 636; Kilbey v. Haviland (1871) 19 W.R. 698. Cf. Gaunt v. Finess (1872) L.R. 8 Ch.App. 8.

55 E.g., Lady Stanley of Alderley v. Earl of Shrewsbury (1875) L.R. 19 Eq. 616; Mott v. Shoolbred (1875) L.R. 20 Eq. 22; National Provincial Plate Glass Insurance Co. v. Prudential Insurance Co. (1877) 6 Ch.D. 757; Kine v. Jolly [1905] 1 Ch. 480Google Scholar; [1907] A.C. 1; Rileys v. Halifax Corporation (1907) 97 L.T. 278Google Scholar; W. H. Bailey & Son Ltd. v. Holborn & Frascati Ltd. (1914) 110 L.T. 574Google Scholar; Price v. Hilditch [1930] 1 Ch. 500Google Scholar; Fishenden v. Higgs & Hill Ltd. (1935) 153 L.T. 128.Google ScholarCf. Charrington v. Simons & Co. Ltd. [1970] 1 W.L.R. 725.Google Scholar

56 [1974] 1 W.L.R. 798, 811.

57 A point expressly made by Lord Selborne L.C. in City of London Brewery Co. v. Tennanl (1873) L.R. 9 Ch.App. 212, 219 and by Hall V.C. in Lady Stanley of Alderley v. Earl of Shrewsbury (1875) L.R. 19 Eq. 616, 622.

58 E.g., Moore v. Hall (1878) 3 Q.B.D. 178; Osborne v. Bradley [1903] 2 Ch. 446.Google ScholarCf. Higgins v. Betts [1905] 2 Ch. 210Google Scholar, where the defendant preferred to submit to an injunction.

59 Kine v. Jolly, supra; Griffith v. Clay [1912] 2 Ch. 291Google Scholar; Wills v. May [1923] 1 Ch. 317.Google Scholar

60 Wrotham Park Estate Co. Ltd. v. Parkside Homes Ltd. [1974] 1 W.L.R. 798Google Scholar; Bracewell v. Appleby [1975] 2 W.L.R. 282.Google Scholar

61 (1878) 7 Ch.D. 551, 554, affd. (1879) 11 Ch.D. 146; Smith v. Smith (1875) L R. 20 Eq. 500.

62 See the cases cited ante, p. 236, n. 55. Cf. Cowper v. Laidler [1903] 2 Ch. 337Google Scholar where, in proceedings for a prohibitory injunction to restrain building which would interfere with the access of light to an old cottage, Buckley J. observed that the value of the cottage was what it would fetch having regard to its existing right to light. “It is not, I think, extortion or oppression that the plaintiff should decline to sell his property except for such price as having regard to the exigencies of the neighbouring property it will in fact command”: ibid., at pp. 342–343.

63 See Lane v. Newdigate (1804) 10 Ves.Jun. 192; Smith v. Smith (1875) L.R. 20 Eq. 500, 504, per Jessel M.R.; Jackson v. Normanby Brick Co. [1899] 1 Ch. 438.

64 (1890) 43 Ch.D. 316, 333.

65 [1895] 1 Ch. 287, 315–316. See e.g., Aynsley v. Glover (1874) L.R. 18 Eq. 544; (1875) L.R. 10 Ch.App. 283; Martin v. Price [1894] 1 Ch. 276; Cowper v. Laidler [1903] 2 Ch. 337Google Scholar; Saunby v. London (Ontario) Water Commissioners [1906] A.C. 110.Google Scholar The first reported decision substituting damages for a prohibitory injunction against the wishes of the plaintiff— Holland v. Worley (1884) 26 Ch.D. 578—came in for subsequent criticism: Greenwood v. Hornsey (1886) 33 Ch.D. 471; National Telephone Co. v. Baker [1893] 2 Ch. 186. The case had, however, been anticipated in Batt v. Earl of Derby (1874) Unrep., cited in Aynsley v. Glover, supra; Dicker v. Popham, Radford & Co. (1890) 63 L.T. 379.

66 See Jordeson v. Sutton Southcoates and Drypool Gas Co. [1899] 2 Ch. 217, 259, per Vaughan Williams L.J. and post, p. 245.

67 [1924] A.C. 851. See also the powerful dissenting judgment of Younger L.J. in the Court of Appeal [1923] 1 Ch. 431, 458—486.

68 [1924] A.C. at p. 859.

69 Damages for such injury would normally be recoverable at commo n law.

70 Damages for future injury being irrecoverable at commo n law, Viscount Finlay is here clearly referring to damages under Lord Cairns' Act, i.e., damages in equity.

71 [1924] A.C. at pp. 857–858.

72 Although it is now clear that a decree of specific performance may be granted even before any breach of contract has actually occurred (Marks v. Lilley [1959] 1 W.L.R. 749Google Scholar; Hasham v. Zenab [1960] A.C. 316Google Scholar; R.E.M. (1960) 76 L.Q.R. 200) the suggestion that damages might be awarded in substitution for a decree in such circumstances has evidently not been mooted. There seems to be no reason of principle why this should not be done in an appropriate case.

73 A prohibitory but not a mandatory injunction may issue almost “as of course.”

74 Aynsley v. Glover (1875) L.R. 18 Eq. 544, 558, per Jessel M.R.; Smith v. Smith (1875) L.R. 20 Eq. 500, 505, per Jessel M.R.; Holland v. Worley (1884) 26 Ch.D. 578, 584, per Pearson J.

75 See Holland v. Worley, supra, at p. 584, per Pearson J.

76 Ante, p. 236.

77 Sayers v. Collyer (1884) 28 Ch.D. 103, 110. In the same case the Court of Appeal affirmed that Lord Cairns' Act may be invoked even—perhaps especially—if the damages are nominal. Cf. Woollerton and Wilson Ltd. v. Richard Costain Ltd. [1970] 1 W.L.R. 411, 413Google Scholar, per Stamp J.

78 In City of London Brewery Co. v. Tennant (1873) L.R. 9 Ch.App 212.

79 [1975] Ch. 43.

80 Ripon (Earl) v. Hobart (1834) 3 My. & K. 169; Fletcher v. Bealey (1885) 28 Ch.D. 688; Lemos v. Kennedy Leigh Developments (1961) 105 S.J. 178.Google Scholar

81 [1975] Ch. at p. 48, emphasis added.

82 [1970] A.C. 652.

83 Ibid., at p. 665.

84 Ibid.

85 Betts v. Neilson (1868) L.R. 3 Ch.App. 429, 441; Cotton v. Wyld (1863) 32 Beav. 266; Lady Stanley of Alderley v. Earl of Shrewsbury (1875) L.R. 19 Eq. 616.

86 In fairness to Lord Upjohn it should be said that he was not the first judge to overlook Lord Chelmsford L.C.'s ruling on this matter: Armstrong v. Sheppard & Short Ltd. [1959] 2 Q.B. 382, 397–398Google Scholar, per Lord Evershed M.R.; Sefton (Earl) v. Tophams Ltd. [1965] Ch. 1140, 1186Google Scholar, per Sellers L.J.

87 [1970] A.C. at pp. 666–667.

88 Att.-Gen. v. Staffordshire County Council [1905] 1 Ch. 336, 342–343Google Scholar, per Joyce J.; Fishenden v. Higgs and Hill Ltd. (1935) 153 L.T. 128, 142Google Scholar, per Maugham L.J.

89 [1970] A.C. at p. 665.

90 A point which forms an essential part of the reasoning of Viscount Finlay in Leeds Industrial Co-operative Society Ltd. v. Slack, ante, p. 239.

91 Lord Upjohn evidently thought it irrelevant that the purpose of the prohibitory injunction was exactly the same as that of the mandatory injunction granted by the county court judge, namely to prevent future subsidences on the plaintiff's land and thus that, under the old practice, a single injunction, negative in form, would have sufficed.

92 Ante, p. 240.

93 [1975] Ch. 43, ante, p. 241.

94 See Cassell & Co. Ltd. v. Broome [1972] A.C. 1027, 1084–1085Google Scholar, per Lord Reid.

95 [1895] 1 Ch. 287. It was on the application of this to the facts that the Court of Appeal divided in Morris' case [1967] 1 W.L.R. 967.

96 [1895] 1 Ch. at pp. 322–323.

97 It is in this situation that the plaintiff may properly be said to have a prima facie right to an injunction, notwithstanding the general discretionary character of all equitable remedies: Pride of Derby and Derbyshire Angling Association v. British Celanese Ltd. [1953]Google Scholar Ch. 149, 181, per Evershed M.R.

98 This follows from the famous statement of Lord Cairns L.C. in Doherty v. Allman (1878) 3 App.Cas. 709, 719–720. See e.g., Elliston v. Reacher (1908) 77 L.J.Ch. 617.Google Scholar

99 [1970] 1 W.L.R. 41.

1 Charrington v. Simons & Co. Ltd. [1971] 1 W.L.R. 598.Google Scholar The device of granting an injunction and suspending its operation is, of course, an entirely proper one where the court concludes that a continuing interference with the plaintiff's right must be brought to an end and also that the defendant should be allowed time: Stollmeyer v. Petroleum Development Co. Ltd. [1918] A.C. 498Google Scholar n.; Pride of Derby and Derbyshire Angling Association v. British Celanese Ltd., supra. An alternative method of achieving a similar result is for the court to make a declaration of the plaintiff's right but to withhold the injunction, giving the plaintiff liberty to apply for an injunction if the interference is not brought to an end within a certain time: Stollmeyer v. Trinidad Lake Petroleum Ltd. [1918] A.C. 485.Google Scholar Where, however, as in Woollerton and Wilson Ltd. v. Richard Costain Ltd., the court's intention is that the plaintiff shall not actually benefit from the award of specific relief, then neither device should be used. An award of damages (substantial or nominal) under Lord Cairns' Act will meet the case much more satisfactorily. See Sharp v. Harrison [1922] 1 Ch. 502.Google Scholar

2 Ante, p. 240.

3 Aynsley v. Glover (1874) L.R. 18 Eq. 544, 555.

4 Fishenden v. Higgs and Hill Ltd. (1935) 152 L.T. 128, 141.Google Scholar

5 Ante, p. 242.

6 For the most important example, where damages were substituted for a prohibitory injunction quia timet, see Slack v. Leeds Industrial Co-operative Society Ltd. [1924] 2 Ch. 475Google Scholar and the judgment of Romer J. at first instance: [1923] 1 Ch. 431.

7 Sobey v. Sainsbury [1913] 2 Ch. 513.Google Scholar

8 Hogg v. Scott (1874) L.R. 18 Eq. 444; Fullwood v. Fullwood (1878) 9 Ch.D. 176; Duke of Northumberland v. Bowman (1887) 56 L.T. 773; Meredith v. Wilson (1893) 69 L.T. 336; Martin v. Price [1894] 1 Ch. 276.

9 Johnson v. Wyatt (1863) 2 De G.J. & S. 18; Alexander v. Mansions Pty. Ltd. (1900) 16 T.L.R. 431Google Scholar; Osborne v. Bradley [1903] 2 Ch. 446Google Scholar; W. H. Bailey & Son Ltd. v. Holborn & Frascati Ltd. (1914) 110 L.T. 574.Google Scholar

10 [1975] 2 W.L.R. 282.

11 [1975] 2 W.L.R. at p. 290.

12 For an early discussion of the problem and its bearing on the grant of equitable redress, see Dent v. Auction Mart Co. (1866) L.R. 2 Eq. 238.

13 [1904] A.C. 179.

14 Ibid., at p. 208, per Lord Lindley.

15 Ibid, at p. 193.

16 Note the observation of Earl Halsbury L.C. ([1904] A.C. at p. 185), “What may be called the uncertainty of the test may also be described as its elasticity.” The flexibility of remedy afforded by Lord Cairns' Act matches the elasticity of the test of liability.

17 [1974] Ch. 30, ante, p. 233.

18 An interesting and, it is submitted, wise use of Lord Cairns' Act was made by the British Columbia Court of Appeal in Rombough v. Crestbrook Timber (1966) 55 W.W.R. 577Google Scholar, a case of nuisance by smoke. In order to avoid bringing the defendants' operations to an end, the court granted a limited form of injunction only and compensated the plaintiff once and for all by an award of damages under Lord Cairns' Act in respect of the residual nuisance which would continue.