A classification of fusion after harris V digital pulse

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UNSW Law Journal Volume 29(2)




The fusion of law and equity might be variously characterised as fact, fallacy,1 or furphy.2 Whilst some Commonwealth countries have embraced the unification of the two jurisdictions,3 Australian jurisprudence has been more hostile to the concept. There can be no doubt that the influential thinking of Meagher, Gummow and Lehane, expressed in the various editions of Equity: Doctrine and Remedies,4 has contributed significantly to the Australian reserve.

‘Fusion’ is a term that embraces many meanings.5 In all its senses, it captures the notion that the boundaries between the jurisdictions of common law and equity are becoming less rigid. However, this theme gives rise to countless variations. At one extreme, the call is made to remove all unnecessary distinctions between the common law and equity. A more cautious view advocates the quiet integration of the doctrines. This article posits a broad classification of the suggested approaches.

The case in favour of fusion has been advocated as long as there have been two jurisdictions to fuse.6 Blackstone questioned the differences between the common law and equity.7 When the two jurisdictions were separately administered, fusion was at times embodied by co-operation between the Lord Chancellor and the common law judges.8 At other times, attempts at fusion more closely resembled the hostile takeover.9 Following the introduction of the judicature system, calls for fusion came almost immediately.10 Ever since, debate about the extent to which the two jurisdictions may validly work together has continued.11

This article seeks to contribute to this tradition, and attempts to untangle some of the concepts bound up in various notions of ‘fusion’. While ultimately in favour of principled fusion, the article focuses on the various paths by which fusion could be implemented, and the directions they might take the law. Today there are still those who call for a hostile takeover, while others advocate slow merger. This article distinguishes between the two approaches, labelling them ‘direct fusion’ and ‘indirect fusion’ respectively, and considers their differing ramifications.

A recent decision of the New South Wales Court of Appeal will serve as a foil for this discussion. In Harris v Digital Pulse Pty Ltd,12 a judge at first instance in the Supreme Court of New South Wales allowed an award of exemplary damages (a common law remedy) for breach of (an equitable) fiduciary duty.13 The Court of Appeal, comprising Spigelman CJ, Mason P and Heydon JA, allowed an appeal against the exemplary award, but did not do so on the basis that it is never permissible to award a common law remedy for an equitable wrong. That door was left open. In three judgements of great learning and analysis, the members of the Court of Appeal squarely addressed issues of fusion.

The question of whether exemplary damages ought to be available for equitable wrongs provides a useful vehicle for exposing the direct and indirect approaches to fusion. As well as being current, this vehicle neatly demonstrates the manner in which the interplay of equitable and common law doctrines will vary depending upon the characterisation of fusion.

This is not, however, a case note of Harris. They may be found elsewhere.14 Rather, this article makes use of the ideas underlying Harris to more closely examine the different manners in which common law and equity can interact. More specifically, this article examines fusion ‘close up’ by concentrating on a single proposition: that exemplary damages should never be available in equity.

Propositions of this character remind one that legal reasoning cannot always follow the path of formal logic. The mathematician knows that there are two simple paths to either proving or disproving a proposition of the form ‘there should be no instances of X in Y’. If a single counter-example is found – one X that should be in Y – the proposition is disproved, and the proof is complete. On the other hand, if the mathematician proves that there should be no instances of X at all, irrespective of Y, the proposition is also proved.

The lawyer must be more circumspect. A counter-example – a single instance where exemplary damages should be awarded in equity – cannot be found without the construction of a framework that admits the award of exemplary remedies in equity. Before such a framework can be constructed, the nature of exemplary damages must be understood, as well as the effects of the judicature system that separates common law and equity. That is the approach taken by this article. The other approach available to the mathematician, to argue that exemplary damages should not be available anywhere, is not taken. Rather, the place of exemplary damages in civil law is assumed.

Part II of this article surveys the nature and purposes of exemplary awards within civil law, and the circumstances in which they are available. Part III considers the judicature system, and examines the implications of this system on the problem. In the judicature system, law and equity are split. On one view, they should remain split. If this view is correct, it is likely that no counter-example can be found. Accordingly, a close examination is given to the circumstances under which law and equity might be fused. Two methods of effecting fusion – direct and indirect – are considered in Part IV. This part also considers whether there is anything in the nature of equity that would not allow the award of exemplary damages, and the manner in which the two approaches to fusion might interact with this principle. This part concludes by sketching out the path forward to fusion foreshadowed by Harris. Part V concludes the article.

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