Common law damages cannot be awarded in respect of a purely equitable wrong such as breach of trust or breach of fiduciary duty. Instead, a compensatory remedy has developed in equity’s exclusive (or inherent) jurisdiction: equitable compensation. This remedy originated in cases involving breach of trust, although for many years it was not explicitly recognised as a compensatory remedy and was known instead as one of the forms of ‘account’ that a trustee must make when a breach of trust occurs. It is therefore necessary to have a brief look at the main forms of account, which are still used today.

Common law damages are awarded to compensate the innocent party for the breach of a common law wrong, and equitable compensation is awarded to compensate an innocent party for a purely equitable wrong.

The central concept of the first part of this chapter is that the object of equitable compensation is to restore the plaintiff to the position they would be in if not for the breach. It discusses the application of this central concept to the recoverability of non-pecuniary loss and the basic measure of equitable compensation. The former explores whether equitable compensation is even available for non-pecuniary loss (embarrassment and distress); the latter probes the reasoning which establishes that equitable compensation puts the plaintiff into as good a position pecuniarily as before the injury, thereby satisfying the object of equitable compensation.

The second part of the chapter explores whether the wrongdoer should be visited with the consequences of their conduct in the context of the various equitable wrongs explored – Breach of trust; Breach of fiduciary duty; and Breach of an equitable duty of care.

Equity’s personal monetary remedies are the account of profits and equitable compensation. Additionally, statutory damages are available in some cases, under versions of Lord Cairns’ Act discussed in chapter 3. The possibility of exemplary damages in equity will also be considered. As the name suggests, an account of profits is a profit-stripping remedy. It can be contrasted with the proprietary remedy of a constructive trust which can also achieve profit-stripping by reallocating beneficial ownership of property held by the defendant. Accounts of profits are only intended to redirect gains made by the wrongdoer; they are not intended to punish. Therefore allowances have to be made to the defendant for proven actual inputs, and may also be made for ‘value-adding’ inputs such as skill and expertise. However, equity proceeds from the assumption that all profits are recoverable; it is up to the defendant to prove otherwise. Accounts of profits are available for equitable wrongs such as breach of confidence, breach of trust, breach of fiduciary duty and third-party participation in a fiduciary breach.

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.