Equitable Damages

In NSW s68 of the Supreme Court Act 1970 give authority and jurisdiction for the Supreme Court to award equitable damages.

Wentworth v Woollahra Municipal Council (1982) - supports the view that the existence of a discretionary defence does not bar a claim for equitable damages.

Johnson v Agnew (1980) - illustrates the courts understanding that legislation didn’t provide a new basis for assessing damages. Advantage of this is that damages could be awarded in circumstances where they couldn’t otherwise e.g. breach of restrictive contract to which the plaintiff wasn’t a party.

Actions for a Fixed Sum

Concerned with 2 categories: Liquidated damages & Actions for debt

Liquidated damages, fixed sum which parties have agreed upon as being the amount due to the plaintiff upon breach. Clauses can be set out to make such sums unenforceable. Unenforceable amounts are referred to as penalties.

Right to recover fixed sum will be restricted to a claim for damages because defendant has prevented occurrence of event on which the obligation to pay depends. Authority to this - Alpha Trading Ltd v DunnshawPatten Ltd

An action to recover a contractual debt due is not a claim for breach of contract; therefore, claim is not subject to judicial discretion based on equitable consideration.

Advantages of this type of clause come from Boucat Pay Co Ltd v The Commonwealth (1927). Case states an agreed damage clause serves its function by being an “admitted pre-assessment”. Unless the defendant denies that the contract has been breached the clauses fixes the amount recoverable by plaintiff without litigation. This is subject to statute and also if the sum is not a genuine assessment of the loss suffered by the plaintiff then it is unenforceable.

O’Dea v Allstates Leasing System (WA) Pty Ltd (1983) - explains that clauses stipulating payment of a specific sum upon breach must be examined to see whether they are liquidated damages or a penalty.

Distinction Between Damages and Penalty

The feature that separates damages from penalties comes from Dunlop Pneumatic Tyre v New Garage & Motor (1915). The clause will be a penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that might occur from the breach.

-    Factors considerable in determining damages clause or penalty are Time and Basis classification, Description by the parties, Effect of termination, Magnitude of Payment, Nature of defendants obligation (must consider whether the damages clause comes into operation on the failure to pay a sum of money) and circumstances in which sum is payable.

Penalty must be payable on breach for the sum to be classified under the distinction, however, it need not be payable exclusively on breach. Bridge v Campbell Discount Co Ltd (1962) gives authority.

-    These factors ensure that the onus of proof is on the defendant.
-    Enforceable liquidated damages clause entitles plaintiff to recover the sum stipulated without need to prove any loss, Pigram v Attorney General for the State of NSW (1975) gives authority.

Effect of Penalty Clause

When damages are claimed under the general law, is the amount fixed by the penalty is relevant to the assessment of the claim in showing the intention of the parties?