Integrating Equity and The Common Law: Sarah Worthington

INTEGRATING EQUITY AND
THE COMMON LAW
Sarah Worthington
Imagine a world where equity and the common law are integrated.
For common lawyers this is not simply a world where the common
law is more 'just' or 'fair' in the Aristotelian sense of 'equity'. It is a
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world where two bodies of law historically derived from the separ-
ate common-law courts and courts of Chancery are integrated. 1 It
is a world that no longer requires common lawyers to give perenni-
ally difficult explanations for a jurisdictional division that seems
intuitively illogical. The suggestion advanced in this essay is that
this fantasy could-and should-be the reality.
If the suggestion seems heretical, think back to how the existing
bifurcation is typically explained. The resort is inevitably to his-
tory/ not to policy. The story usually begins in the medieval period
in England. It was then that the King's Chancellors were given wide
powers to prevent injustices or remedy deficiencies where the com-
mon law (the universal law of the realm) was seen to operate
unfairly. This mitigating and discretionary jurisdiction of the
Chancellors eventually evolved into the body of principles, rules
and practices now called equity. In the early days, the Chancellors
and the common law judges of England operated from separate
courts; they adopted different practices and generated different out-
comes for litigants. This in itself is unique, but even after the admin-
istration of the two courts was fused in the late nineteenth century,3
1 There are three commonly used meanings of the word 'equity': the technical
legal-historical meaning adopted here; the broader concept of fact-sensitive justice
identified by Aristotle in the Nichomachean Ethics, 1137a-b; and the still more gen-
eral idea of simple fairness or aequum et bonum: F. Tudsbery, 'Equity and the
Common Law' (1913) 29 LQR 154.
2 F. W. Maitland, Equity: A Course of Lectures, 2nd edn., ed. John Brunyate
(Cambridge, 1936), 12-22.
3 Judicature Acts of 1873 and 1875 (UK). These Acts were adopted elsewhere at
different times, e.g., New South Wales did not adopt this strategy until 1972, the last
Australian state to do so: Law Reform (Law and Equity) Act 1972 (NSW).
224 Sarah Worthington
the substantive distinctions and divisions between equity and the
common law remained.
This bifurcation is undeniably messy. It means that a potential lit-
igant can, quite accurately, be told that at common law she would
be entitled to a money remedy, but that in equity (which trumps the
common-law rules 4 ) her claim will be denied. Her contract may be
binding at common law but voidable in equity, perhaps for some
material misrepresentation. Alternatively, her fortunes could go the
other way. She could be told that at common law she has no rem-
edy for an unwanted disclosure, but that equity's rules will assist
her. These statements articulate the modern law by describing its
history. The important conclusion for the potential litigant, surely,

is simply the contemporary status of her legal claim.
By contrast, civil law jurisdictions invariably advance unencum-
bered descriptions of their own regimes even though they too have
experienced an equally vibrant pattern of legal development and
refinement over the centuries. Indeed, they too began with 'equity'
in the form of priestly or royal dispensation from the rigours of for-
mal justice. The critical difference is that the evolutionary history in
civil law jurisdictions has not been confounded by separate juris-
dictional channels. The equitable ideas have been fully absorbed
into the general law. Civilian litigants never discover the regime's
developmental legal chronology unless they ask a history question;
they would never be told that the position was 'X a long time ago
(at common law), but Y now (in equity)'.
Although this historical regurgitation can be confusing, it is hardly
the prime reason for advocating the integration of equity and the
common law. The real problem with a bifurcated system is the
inevitable risk that like cases will not be treated alike. Segregated evo-
lutionary channels make this risk inescapable. Indeed, the risk
increases over time as each body of law evolves its own strategies and
practices and applies them to an ever expanding range of factual sit-
uations. With no internal checks on overall coherence within the
legal system, similar cases will be deemed for historical reasons to be
properly judged by one set of rules rather than another. The end
4 This result was the outcome of a spirited political battle for power between the
Chancellor, Lord Ellesmere, and the Lord Chief Justice, Sir Edward Coke, which
came to a head in the Earl of Oxford's Case (1615) 1 Ch Rep 1,21 ER 485, and led
to a Royal Decree by James I asserting the supremacy of equity over the common
law.
Integrating Equity and the Common Law 225
result is a degree of incoherence, especially at the margins and in hard
cases,s which does nothing to enhance the reputation of the law.
The only solution is to integrate equity and the common law. The
idea is not new. 6 Almost as soon as there were separate courts, there
were calls for integration. This is not surprising. No architect of a
national legal system would adopt dualism by choice. However,
there were equally strident calls for maintaining the division, calls
which have prevailed for the past seven hundred years. During the
intervening period the arguments from both sides have changed lit-
tle. If there is to be change now, then the weaknesses in these argu-
ments against integration need to be carefully exposed. Only then is
it worthwhile considering what an 'integrated' legal system might

look like. This essay is in two parts, addressing both issues.
The Prevailing Arguments Against Integration

The crux of the anti-integrationists' argument is that equity and the
common law are each so unique that integration is impossible.
Roscoe Pound expressed the differences this way: 'the strict law
insists on uniformity. Equity and natural law insist on good morals.
The strict law insists on form, equity and natural law on justice in
the ethical sense; the strict law insists on remedies, equity and the
natural law on duties; the strict law insists on rule, equity and the
natural law on reason.'?
5 The hardest cases are probably property cases. Equity and the common law treat
equitable and common law property in different ways. Some of these differences-
although not all-reflect difficult inconsistencies across the jurisdictional boundary.
6 E.g., J. Austin, Lectures on Jurisprudence (1st edn., London, 1863; 5th edn.,
1885), I, 38-9, suggesting that the distinction between the equitable and common
law jurisdictions was 'purely anomalous ... and utterly senseless, when tried by gen-
eral principles'. For the most recent forays into the area, see A. Burrows, 'We do this
at Common Law but that in Equity' (2002) 22 OJLS 1; and id., 'Fusing Common
Law and Equity: Remedies, Restitution and Reform', Hochelaga Lecture 2001
(Hong Kong, 2002). These lectures advance a strong case for change, although some
of the details of the proposed integration differ from those advocated here.
7 R. Pound, Jurisprudence (St Paul, Minn., 1959),47; also see The Spirit of the
Common Law (Boston, Mass., 1931). The most vocal anti-integrationists are surely
R. P. Meagher, W. M. C. Gummow and J. R. F. Lehane, Equity: Doctrines and
Remedies, 3rd edn. (Sydney, 1992); also see W. S. Holdsworth, 'Equity 1885-1935'
(1935) 51 LQR 142, 159-61. Anti-integration ideas are evident in many judgments,
e.g.: Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 (HL),
especially the judgments of the dissentients, Lords Goff and Woolf; Canson
Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 (Canadian SCt),
McLachlin J (minority).
This statement conjures visions of two regimes with irreconcil-
able motivations, contradictory rules and discordant outcomes.
Whatever their language, the anti-integrationists cannot be suggest-
ing jurisdictional divisions on this scale. Were this the case, we
would not have an operative national legal system. However, they
are suggesting divisions which are sufficiently dramatic to make
integration impossible. Where equity does operate, they insist that
its practices are so distinctive that they need to be marked out by an
impenetrable jurisdictional divide. Their reasons can usually be
reduced to two core concerns. First, it is said that equity's rationale
for intervention is conceptually different from the common law's:
equity is conscience-based and moral in a way that the common law

is not. Secondly, it is said that equity's intervention is irredeemably
discretionary in a way that the common law's is not. Each assertion
is doubted, but each merits careful examination.
Conceptual Differences: Is Equity a Peculiarly

Conscience-based Jurisdiction?
The first argument against integration is that equity's motivation
for intervention is conceptually distinct from the common law's, so
much so that meshing the two to form a sensible, integrated whole
is impossible. The focus is on equity's reasoning and its internal
rationalization of its interventionist practices. This argument cuts
deep. It might be readily conceded that subtly different imperatives
guide legal intervention (and the mechanisms of intervention)
in public as opposed to private law, and in contract as opposed to
tort or to unjust enrichment. The argument put by the anti-
integrationists operates on a more fundamental plane. It suggests
that the intrinsic motivations across the broad sweep of equitable
intervention are vitally different from those operating across the
broad sweep of common law intervention-so vitally different that
integration is impossible. Put graphically by Sir Anthony Mason,
'equitable doctrines and principles give expression to a set of values
different from those on which the common law [is] based'.8
How can we tell if this is the case? Three leads are commonly pur-
sued, but arguably none provides convincing proof of compelling
8 The Hon. Sir Anthony Mason, 'Equity's Role in the Twentieth Century'
(1997/8) 8 KCL] 1, 1.
conceptual divisions. First, the answer clearly does not turn on
whether equity's outcomes or its procedures or its remedies are
merely different from those of the common law. They are,9 but not
necessarily because of a distinctive process of conceptual reasoning.
In common law regimes every legal change must, finally, be imple-
mented either through equity, the common law or legislation.
Reforms implemented by one route rather than another inevitably
generate differences between common law and statutory rules, or
between common law and equitable rules. This is the inescapable
result of distinct reform channels. Moreover, the chosen route for
reform is inevitably the one offering least resistance and maximum
effectiveness. At different periods in history different mechanisms

have been preferred. The legislative route is the current favourite,
although the other routes are not moribund. The twentieth century
was a particularly vibrant period for the common law-it was then
that the common law devised and elaborated its rules on negligence,
negligent misstatement, economic duress and unjust enrichment.
Equity's period of ascendancy was earlier. In the nineteenth century
equity produced sophisticated rules dealing with fiduciary duties,
equitable charges and equitable tracing. Earlier still, almost all legal
change was delivered through equity. This was a time when the
common law was particularly hidebound by its own rigid writ sys-
tem, rules of practice and remedial formalism. There was little
opportunity or enthusiasm for common law reform because of the
power struggles between the king and parliament. 1o These struggles
made legislative reform equally difficult. Certain crucial common
law advances were implemented only by the adoption of intellectu-
ally unsatisfying fictions. Equity became an indispensable and con-
venient outlet for necessary legal advances. Equity judges were in
9 Although any significant procedural differences have now been eliminated.

10 These political upheavals came to a head in the seventeenth century. The demo-
cratic revolutionary forces of the Commonwealth posed a threat to equity so long as
it maintained its close associations with the monarch and with royal prerogative just-
ice. In fact in 1653, Pariiament, under Cromwell, passed a resolution to abolish
Chancery, which was called the 'greatest grievance in the nation'. However, equity
survived this challenge: the Bill incorporating this resolution was never enacted; nor,
indeed, was a later one, designed to reverse the supremacy of equity over the com-
mon law: W. S. Holdsworth, A History of English Law, 3rd edn. (London, 1945),
vol. I, p. 432. Also see R. L. Munger, 'A Glance at Equity' (1915-1916) 25 Yale Law
Journal 42, 56; D. M. Keriy, An Historical Sketch of the Equitable Jurisdiction of the
Court of Chancery (Cambridge, 1890), 159; R. A. Newman, Equity and Law: A
Comparative Study (New York, 1961),23-5,29-30.
truth engaged in judicial law-making while preserving the fac;ade of
a stable common law and a projected deference to the legislature.
However, history offers no evidence that different reform mech-
anisms were chosen for their ability to deliver conceptually differ-
ent reforms. In particular, conscience-based reforms do not appear
to have fallen naturally to equity, leaving other reforms to be
mediated through common law or statutory regimes. Nor is it true,
as the anti-integrationists would have it, that allegedly different
conceptual motivations make transfer of reforms across the
common law/equity divide impossible. The historical divide may
have hindered this process, but there is sufficient evidence of cross-
fertilization and integration to give the lie to the idea of two juris-

dictions motivated by radically inconsistent conceptual
underpinnings. Take equity's early distinctive procedural rules.
From the outset equity turned its back on established common law
practices and opted instead for more extensive evidence-gathering
rights and judge-made, not jury-made, determinations.H Far from
being relevant only to an equitable, conscience-based, jurisdiction,
these procedural strategies are now adopted quite generally.
Statutory intervention made sure of that. Both jurisdictions recog-
nized that justice cannot be dispensed if procedural rules impede
proper resolution of the case. This is not equity-specific, conscience-
based reasoning which is inapplicable elsewhere. The same sort of
cross-fertilization is evident in the statutory rules which now deliver
an expanded and integrated (albeit limited) legal regime to deal with
innocent misrepresentation 12 or with contracts for the benefit of
11 The common law courts required actions to be commenced by writ (written

order), and these had to be worded in one of a limited number of technical formats;
parties had to present formal pleadings (including a statement of the claim by the
claimant and a statement of defence from the defendant); witnesses presented their
evidence orally to a judge and jury; the judge decided questions of law, the jury ques-
tions of fact. Some of the injustices which Chancery was asked to rectify related to
these procedures: the formalities could be counter-productive; witnesses could be
intimidated and juries influenced. Chancery allowed actions to be commenced by
more informal petitions; it relied heavily on affidavit evidence (i.e. sworn, written
statements); it co-opted further evidence so as better to determine the issues by
inventing new processes of discovery (requiring parties to provide a list of all the rele-
vant documents in their possession, and to make those documents available for
inspection on request) and interrogatories (allowing parties to submit written ques-
tions to each other before the trial, and requiring written answers to be provided);
and it avoided juries, preferring instead to allow judges to decide issues of law and
of fact.
12 Misrepresentation Act 1967, s. 2.
third parties. 13 Indeed, this process of integration and cross-
fertilization is not limited to statutory incursions. The common law
has 'borrowed' from equity's rules on mistake, on penalties, and on
fraud on the power.
And if the borrowing seems largely one way, the problem is per-
haps too narrow a window on history. In a bifurcated system the
borrowing will inevitably be from the jurisdiction that has just
experienced a period of sustained vibrancy. For the past century the
balance has favoured common law borrowings from equity. Now,
however, after a period of rapid common law evolution, equity is
increasingly looking to borrow from the common law. This is espe-
cially evident in the controversial areas of money remedies for

rescission, or remoteness and foreseeability limitations which might
apply to remedies for breach of an 'equitable' duty of care. 14 The
possibility of such borrowings by equity is often decried, and worse
still is pejoratively tarred with the 'fusion fallacy' brush.15 But
equity has borrowed from the common law before. Indeed, it did
this from the outset. The parroted learning is that the common law
gives remedies sounding in money; equity gives remedies sounding
in action. But during the common law's more vibrant period in the
eleventh and twelfth centuries, it too administered a crude version
of equity's modern in personam remedies. 16 Only later, after the
common law's long period of stagnation, did the common law
attempts wither and die. Equity had adopted these practices, and
13 Contracts (Rights of Third Parties) Act 1999.

14 Although as to whether this duty is 'equitable', see pp. 243-7 below.
15 Although common-law borrowings from equity are not subjected to the same
taunts. The 'fusion fallacy' suggests that the running together of common-law and
equitable doctrines is impermissible: it is doctrinally unsound to allow a common
law defence to an equitable cause of action (e.g. contributory negligence to a claim
for breach of fiduciary duty), or to award a common law remedy for an equitable
wrong (e.g. damages for undue influence). The expression 'fusion fallacy' is applied
pejoratively to such instances of judicial incorrectness: see Meagher et ai., n. 7 above,
paras. 220-2.
16 See H. D. Hazeltine, 'The Early History of English Equity', in P. Vinogradoff
(ed.), Essays in Legal History (London, 1913), ch. 13, suggesting that in this early
period the common law had its own elementary versions of uses of land and chattels,
an idea which incorporated the notion of a trustee holding assets for another in cir-
cumstances paralleling bailment, receivers, and money had and received actions
(ibid., 264); the common law also had securities (mortgages of land), penalties,
specific performance and injunctions (prohibitory and quia timet). Also see
J. Getzler, 'Patterns of Fusion', in P. Birks (ed.), The Classification of Obligations
(Oxford, 1997), ch. 7.
had developed them into its own more sophisticated regimes. The
modern remedial differences do not mark an unbridgeable concep-
tual divide. Rather, they reflect the historical accidents of the evo-
lutionary legal reform process. 1 ?
The second lead which allegedly demonstrates equity's funda-
mentally different motivations for intervention is more subtle. The
suggestion is that equity's focus is the correction of the errant defen-
dant's conscience; the common law's is not, or at least it is not so
limited. The intended inference is that equity does not create rights
for successful claimants; it simply prevents defendants from enforc-
ing their existing common law rights where to do so would be
unconscionable. 18 Put another way, equity's function is not to do

justice, but to restrain injustice-it is reactive, not proactive. This
assertion can be interpreted in two ways. At the particular level, the
implication is that equity intervenes only if the defendant's con-
science warrants it; the common law is perhaps less fastidious.
Equity's test of conscience must presumably relate to the defend-
ant's knowledge or intention. Theoretically, such a boundary
between 'innocence' and an 'affected conscience' might be drawn
where the defendant deliberately intended the harm, or where he
actually knew of the relevant circumstances, or, more leniently,
where he should have known of them, or was negligent in not dis-
covering them, or even where he could reasonably have discovered
them. Somewhere along this graduated scale it might be possible to
say that the defendant's conscience is 'affected' and equity should
intervene. But in practice there is no such divide. Both equity and
the common law have strict-liability wrongs 19 and both have
wrongs where knowledge or intention or carefulness is crucial to
liability. The idea that one jurisdiction is defendant-focused and the
other is not is simply not supported by the facts.
Sometimes this idea that equity is a defendant-focused jurisdic-
tion is put another way. The common law is said to focus on the
claimant's rights, while equity focuses on the defendant's duties. 20
The implication is best understood by considering another example.
17 Getzler, ibid., 187 and n. 134; M. Lobban, 'Contractual Fraud in Law and
Equity, c1750-c1850' (1997) 17 OJLS 441.
18 Re Diplock [1948]1 Ch 465 (CA).
19 The common law's rules on conversion and equity's rules on fiduciary duties
illustrate this.
20 J. B. Ames, 'Law and Morals' (1908) 22 Harv L Rev 97,106.
It is also commonly said that the civil law focuses on rights while
the common law (meaning both law and equity) focuses on duties.
As the common law steadily develops, this statement can seem mis-
placed. However, its original import was clear. It was that the civil
law was known-it was codified-so that in any given circum-
stances a civilian claimant could readily insist that he had a particu-
lar legal right. His common law counterpart, by contrast, had to
wait until the relevant common law rule slowly emerged from
an established body of precedent before he could say with any
certainty that he had a legal right. Bodies of precedent solidified
only because courts consistently imposed duties on defendants in
particular circumstances. Given time, a general rule might become

established which indicated that in certain circumstances a defend-
ant would be obliged-he would have a duty-to act in a particu-
lar way. Of course, once the rule became established, it would then
be quite accurate to say that the claimant had a right to have the
defendant act in the way his established legal duty obliged him to
act. If the right/duty distinction is related to this developmental
process, then both the common law and equity must necessarily
focus on the defendant's duties. In a legal system based on preced-
ent, rights are nothing more than the flip side of established duties,
and new rights must necessarily be built on evolving new duties.
Because the common law must necessarily develop in this incre-
mental way (bar developments introduced by statute), only a mori-
bund common law jurisdiction could be described as 'rights-based'.
It follows that at different times in the common law's history it may
have seemed that the common law jurisdiction was 'rights-based'
and that equity was not, but it is in the nature of the common law
that this could only ever be a temporary state of affairs unless the
common law jurisdiction was conceded to have become completely
stagnant.
The third and final lead in this strand of the anti-integrationist
argument is the most general. It is reflected in the simple assertion
that equity's reasoning is moral-it is conscience-based-in a way
that the common law's is not. This assertion can operate at a num-
ber of different levels. At the most theoretical level, the assertion
plays into long-standing debates on the necessary relationship
between law and morality. A crude caricature would paint equity as
grounded in natural law and the common law as irredeemably pos-
itivist. It would see equity as insisting on some fundamental link
between conceptions of morality and justice and any legal interven-
tions made in the name of equity. The common law, on the other
hand, would be seen as imposing a set of mandatory rules backed
by the threat of legal sanctions less tightly tied to any prevailing
notion of morality. In truth, both are misleading extremes.
Certainly the alleged link between equity's rules and moral reason-
ing appears shaky. Of course, hard cases-whether at common law
or in equity-can inevitably seem to deliver 'immoral' results. But
certain equitable rules go well beyond this accidental and unin-
tended impact. Take equity's rules on fiduciary duties and duties of
confidence. These equitable rules seem specifically designed to
ignore resort to the defendant's conscience; they readily favour

the cunning and opportunistic claimant over the honest and good
faith defendant in a way that no common law rule seems prepared
to replicate. 21 There are other illustrations. The law-versus-
morality divide does not map neatly on to the common law/equity
divide.
At a more philosophical level, the assertion that equity uses dis-
tinctive moral reasoning can be taken as suggesting that there is a
moral input in the development of equity's rules which is absent
from the development of the common law's rules. Certainly the
common law has frequently denied its moral roots. The positivist
tendency has been justified as a necessary part of the struggle to
emancipate law from religion. 22 Equity, too, succumbed to this
pressure. It became rigid and rule-based at just the time it was try-
ing to establish its rules as part of the legal system of the country
and distance itself from the patronage of the king. Nevertheless,
even during this period, equity, unlike the common law, always
conceded its moral roots and its reformist strategies-it did not pre-
tend that it was laying down law which had existed from time
immemoria1. 23 Acknowledgement of moral roots on the one hand,
and denial on the other, may have exaggerated the differences
between common law and equity. It has undoubtedly hampered the
integration project. However, the truth suggested by history is that
21 Boardman v Phipps is the classic example, but many cases of equitable dis-
gorgement remedies and rescission potentially fall into this category. Claimants can
claim windfalls or exit from losing deals if the defendant cannot prove the claimant
is disentitled to do so-the presumptions operate in the claimant's favour.
22 Newman, n. 10 above, 35-6.
23 In re Hallett's Estate (1879) 13 Ch D 696 (Sir George Jessel MR).
every legal advance is underpinned by some moral imperative. Even
a rudimentary appreciation of the history of the common law sug-
gests that its rules are not simply the product of hierarchical dis-
cipline coupled with principled consistency; there is at least some
element of moral intuition. As Roscoe Pound put it: '. . . as he
looked back at it the historical jurist could say that morals were
potential law. That which started as a moral principle became an
equitable principle and then a rule of law.'24
The same process can be seen in modern legal developments.
Moral ideas slowly become incorporated into the legal fabric. This
is evident in the laws on racial, religious and age discrimination, the
laws on unfair dismissal in employment, and the laws on consumer

protection. But it is also evident at a more subtle level in arbitration
practices and judicial review rules which start out as extra-legal
practices and then slowly become integrated into the formal legal
fabric. Nothing in these developments suggests that equity is the
sole repository of moral reasoning in the law, or even that its claim
to this is significantly greater.
The assertion that equity adopts a unique form of moral reason-
ing can also be questioned at the practical level. Modern judges
must make both common law and equitable determinations in the
same court, often in the same case. It is hard to imagine how they
might consistently call upon fundamentally different forms of con-
ceptual reasoning in one context from those they employ in
another. This difficulty is not new. As early as the sixteenth century,
if not before, the Chancellor used to call on common law judges to
assist him in his determinations. 25 These 'common law' judges were
required to make 'equitable' determinations. Again, it is difficult to
see how some fundamental change in their reasoning practices
could be guaranteed.
Even the language of equity and common law judgments gives the
lie to any notion that conceptually different moral reasoning is
being relied upon. Too many leading judgments of outstanding
judges demonstrate that equity and the common law have often had
to grapple with similar problems and concepts, and that their goals
24 R. Pound, Law and Morals, 2nd edn. (London, 1926),31. Also see H. Coing,
'English Equity and the Denunciatio Evangelica of the Canon Law' (1955) 71 LQR
223.
25 Newman, n. 10 above, 40-1.
in doing so are much the same. 26 Lord Atkin's judgment in
Donoghue v Stevenson27 is most often cited. In 'inventing' the mod-
ern tort of negligence, Lord Atkin began with the Christian-and
unquestionably moral-precept, 'Thou shalt love thy neighbour as
thyself', and said that this became, at law, an obligation not to
injure your neighbour. 28 But there are numerous other examples of
common law judges explicitly resorting to moral reasoning. See, for
example, Lord Mansfield, deliberating on the recovery of money
had and received;29 or Sir Owen Dixon, deciding a case of conven-
tional-common law-estoppel. 30 Sometimes the reliance on doc-
trinal parallels disguises what must be a concession to parallels in
the underlying moral reasoning. So analogies have been drawn

between the rules on economic duress and undue influence,31 or
between the rules on judicial review and equitable fraud on the
power.32 Some judges go so far as to attack the issue head on,
asserting that there is nothing special about equity's concept of con-
science. 33 All these instances provide empirical support for the idea
26 Mason, n. 8 above, 3. Even Holdsworth, n. 7 above, who was a vehement anti-
integrationist, conceded the mingled influence; he goes so far (at p. 150) as to list the
common law and equity judges who have influenced equitable and common law
developments, and concedes that the cross-fertilization of ideas has been to the
advantage of both systems.
27 [1932] AC 562 (HL).
28 Ibid., 580. Interestingly, the decision was carried by Lord Atkin (a common
lawyer) and two Scots lawyers (with a Roman-Dutch legal tradition), in the face of
protests by two great Chancery lawyers who argued for no change to the law.
29 Moses v Macferlan (1760) 2 Burr 1005, 1012: the gist of the action is that 'the
defendant, upon the circumstances of the case, is obliged by the ties of natural just-
ice and equity to refund the money'. Also see Kelly v Solari (1841) 9 M&W 54, 59
(Baron Rolfe).
30 Thompson v Palmer (1933) 49 CLR 507 (Aust. H Ct); Grundt v Great Boulder
Pty Gold Mines Ltd (1937) 59 CLR 641, 674-5 (Aust. H Ct): the common law of
estoppel evolved by not permitting 'an unjust departure by a party from an assump-
tion of fact which he has caused another party trustee to adopt or accept ... [where
the party estopped has] played such a part in the adoption of the assumption that it
would be unfair or unjust if he were left free to ignore it.'
31 M. H. Ogilvie, 'Economic Duress in Contract: Departure, Detour or Dead
End?' (2000) 34 Can Bus L] 194. Cf. P. J. Millett, 'Equity's Place in the Law of
Commerce' (1998) 114 LQR 214, suggesting undue influence is a defendant-sided
fiduciary breach. Also see R. McKeand, 'Economic Duress: Wearing the Clothes of
Unconscionable Conduct' (2001) 17 ]CL 1.
32 D. Oliver, Common Values and the Public-Private Divide (London, 1999).
33 Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 (Canadian
SCt), 150-3 (La Forest J); Mouat v Clark Boyce [1992] 2 NZLR 559 (NZ CAl,
565-6 (Cooke P): 'How far the remedies or causes of action should be kept discrete
is debatable, but it would seem excessively legalistic to insist on concurrent duties.'
And where the duties are breached, he advocates a menu of remedies now that 'the
that equity has no special claim to motivations of morality or nat-
ural justice. Indeed, were this not the case then we would find our-
selves in the strange position where all moral or ethical elements of
the law were confined to the sort of cases which history allocated to
the Chancery jurisdiction.
In short, whatever perspective is taken, this anti-integrationist
argument about equity's peculiar brand of conceptual reasoning
seems unsupportable. There is no evidence that equity's modern
motivations are so conceptually distinct from the common law's
that integration is impossible. This is true whether the assertion is
viewed from the broadest perspective of equity's unique use of
moral reasoning, or from the more narrow perspective of equity's

focus on the defendant's conscience, or even from the perspective
that there must be some moral significance in the objective reality
that equity's rules, remedies and practices are simply different.
History suggests that it was not some profoundly different concep-
tual underpinnings which drove legal developments into the equit-
able jurisdiction. Rather, it was the common law's unduly limited
jurisdictional range and remedial response at a particularly critical
time in history. If the equity jurisdiction has not been created to
relieve the pressure for institutional change, then the common law
system would necessarily have provided the change itself. When the
common law was eventually released from its technical strictures, it
proved more than equal to the task. The entire reform process-
whatever the chosen avenue-has simply been directed at delivering
an increasingly sophisticated legal system. It seems unreal to sup-
pose that the direction chosen at common law was conceptually dif-
ferent from that chosen in equity. On the contrary, the limiting
conditions for intervention appear remarkably similar.
Is Equity's Intervention Peculiarly Discretionary?

The second argument against the integration project is more
important. It suggests that equity and the common law cannot be
common law and equity are mingled'. This remedial-menu idea was advanced ear-
lier in Aquaculture Corp v New Zealand Green Mussel Co Ltd [1990] 3 NZLR 299,
301: 'For all purposes now material, equity and common law are mingled or merged
... a full range of remedies should be available as appropriate, no matter whether
they originated in common law, equity or statute'; Day v Mead [1987] 2 NZLR 443
(NZ CAl, 450-1, 460-2. For criticisms of this approach, see Getzler, n. 16 above,
160, n. 14, and also n. 15.
integrated because equity's intervention is discretionary while the
common law's is as of right. The common law strives for pre-
dictability and treats cases as belonging to a generalized type; equity
strives for individual justice and treats cases as being unique. Such
antithetical approaches, it is suggested, cannot possibly be blended
or homogenized. 34 This is a very seductive idea. When lawyers are
asked to describe the important differences between the common
law and equity, this, and often only this, is inevitably trotted out. A
vivid picture emerges. In equity, a claimant can have specific per-
formance if the judge permits it; she can have an injunction, or a dis-
gorgement remedy for breach of fiduciary duty against her, if the
judge allows it. A common law claimant, on the other hand, has a

right to damages once his case is proved, whether it be that he has
suffered a breach of contract, had a tort committed against him, or
made out a claim for recovery of an unjust enrichment. The same
discretionary allegations are made in relation to defences and, his-
torically, even in relation to procedural practices. If this is true, then
the common law is about legal rights but equity is not. Equity is
simply concerned with discretionary judicial orders against defend-
ants.
This picture of discretionary equity is one which resonates with
the vision of equity as the 'conscience' of the law. Equity is seen as
able to demand good faith and deliver justice where the common
law finds it impossible to do so. It can achieve these ends by modi-
fying procedural rules, refashioning obligations, and reshaping
remedies-perhaps all at the whim of the judge deciding the case.
Equity is then seen as a jurisdiction which is context-specific, situa-
tional, personal---capricious, even. The common law, on the other
hand, is perceived as rational, analytical, objective and universal.
The truth or otherwise of this allegation is crucial to the possibil-
ity of integration. The law is about legal rights. More than this,
there is an intrinsic interrelationship between rights and remedies: a
claimant does not have a legal right unless the court will afford a
remedy for its invasion. If the court will not routinely intervene, and
intervene in a routine manner, then the claimant has, at most, a
moral right. An integrated body of law cannot be built on a combin-
ation of legal (common law) and moral (equitable) rights. That
would be a nonsense.
34 L. J. Emmerglick, 'A Century of the New Equity' (1945) 23 Texas Law Review
244.
Is equity discretionary in this unacceptable, non-legal way? At the
outset it probably was. Equity dealt with cases on an individual
basis; its remit was to address the shortcomings in the common law.
Indeed, it was its early propensity for individualistic responses that
led to the snub that equity varied with the length of the Chancellor's
foot. 35 This practice might have continued. Equity could have
exercised a simple discretionary power to disaffirm or vary settled
common law rules in deserving cases. Its jurisdiction would then
have been analogous to the power to grant a pardon, or make a
gift. 36 These types of powers are supported and even regulated by
the legal system, but they do not give rise to legal rights. No one has
the right to insist that someone confer a pardon, or make a gift. But

equity did not choose to operate like this. Instead, equity assumed
a legal role; it did, eventually, deliver rights. The early Chancellors
made determined and successful efforts to integrate equity within
the legal system. The result was 'law', not 'bounty'. In fact, the rules
of equity fast became as rigid and technical as the rules of the com-
mon law which they were supposed to moderate. By the time of the
Judicature Acts, even as imaginative an equity lawyer as Sir George
Jessel MR asserted that 'This Court is not, as I have often said, a
Court of Conscience, but a Court of Law.'37
Notwithstanding these changes, is it true that equity is still so dis-
cretionary that integration is impossible? It seems not. In fact, parts
of modern equity are arguably less discretionary than anything the
common law now has on offer. Equitable proprietary remedies are
certainly not awarded at the discretion of the judge. 38 The law of
insolvency would turn into a farce were it otherwise. Nor, it seems,
is there such a discretion in the award of equitable compensation to
35 F. Pollock (ed.), Table Talk of John Selden (London, 1927), 43, quoted in
Holdsworth, n. 10 above, 467-8.
36 The difference would have been that the decrees would have been requested by
the claimant but ordered against the defendant: the claimant, requesting a 'pardon'
or a protection from the Chancellor, would only get her wishes if the Chancellor saw
fit to interfere with the rights of the defendant.
37 Re National Funds Assurance Co (1878) 10 Ch D 118, 128.
38 See, e.g., the comments in Re Polly Peck International pic (in admin);
Marangos Hotel Ltd v Stone [1998] 3 All ER 812 (CA), 827 (Mummery LJ); and
Fortex Group Ltd (in rec and liq) and the Trustees Executors and Agency Co of New
Zealand Ltd v Macintosh [1998] 3 NZLR 171 (NZ CAl. This certainty does not yet
prevail in the arena of constructive trusts awarded in family/domestic disputes,
where the underlying principles still need further working out before any satisfactory
rules can be articulated, and even then, given the nature of the disputes, resolution
of the issues will always involve difficult issues of perception, or discretion.
remedy breach of trust, fiduciary obligation or confidence. If the
claimant wants such a remedy, then she must simply establish her
case. Of course, as at common law, issues of quantification may
remain difficult; assessment may require the judge to exercise judge-
ment.
In other circumstances, however, it must be conceded that there is
a clear discretionary element in equity's responses. This discretion is
seen at its most pronounced when the claimant wants an order from
the court to compel the defendant, personally, to act in a particular
fashion-perhaps to complete a job, or to repair damaged property.
Then the court's practice is to consider the defendant's circumstances
as well as the claimant's, and to decide-in its discretion-whether

or not to order the remedy which has been requested.
Nevertheless, this form of discretionary remedialism does not
mark equity out as different from, and incompatible with, the com-
mon law. In fact, the common law adopts precisely the same sort of
discretionary practices in almost every area of its operation.
Consider, for example, the common law's approach in criminal law
when assessing issues of provocation and self-defence; its decisions in
consumer contracts when assessing unfair terms; its decisions in con-
tract when assessing issues of common law estoppel; its decisions in
tort when assessing whether there is a duty of care, or whether the
defendant's negligence has contributed to his own damage; indeed,
consider its decisions across the spectrum of contract, tort and unjust
enrichment39 when quantifying compensation.40 All of these exam-
ples are instances of an individualized, discretionary practice in the
common law, a practice not seen in these instances as fundamentally
and irredeemably inconsistent with the common law edifice.
Indeed, there is undoubtedly a growing common law move to
adjudicate via (discretionary) standards rather than (bright-line)
rules. 41 Increased reliance on the notion of reasonableness is the
39 Note especially the issue of subjective devaluation of benefits.

40 See the Hon. A. M. Gleeson, 'Individualised Justice: The Holy Grail' (1995) 69
ALJ 421, where some of the examples listed are discussed. Also see Burrows,
Hochelaga Lecture, n. 6 above, suggesting that there may be as much, and possibly
more, discretion in relation to damages assessment than there is in relation to the
equitable remedies of specific performance and injunctions.
41 The trend is described by Atiyah as being from 'principles to pragmatism', by
Trietel as 'doctrine to discretion', and by Gleeson as a quest for 'individualised just-
ice'; see the references cited in A. Duggan, 'Is Equity Efficient?' (1997) 113 LQR 601,
629, nn. 94-6.
most obvious example of this, but the instances cited above add
force to the assertion. This trend may reflect an increased sophist-
ication in the law, or it may simply reflect economic rationalism. 42
Whatever the cause, both equity and the common law now com-
monly adopt these discretionary practices. They use discretion to
determine whether the defendant should be subjected to the obliga-
tion alleged, and whether the requested remedy is warranted. For
example, the common law exercises discretion in deciding whether
a contract exists or whether the defendant is subject to a duty of
care in tort; equity adopts the same practices in deciding whether
the defendant owes fiduciary duties or is subject to obligations of
confidentiality. In determining the appropriate remedies, the

common law frequently adopts a standard of reasonableness, and
exercises discretion in determining whether the standard has been
met; equity adopts standards of fairness and conscience, and exer-
cises discretion in determining whether those conditions have been
met.
These equitable and common law discretionary practices are not
incompatible with each other, nor with the concept of 'law'. They
provide no fuel for the anti-integrationist argument. To understand
this properly it is important to recognize that there are different
forms of discretion. A judge may have a discretion as to whether to
apply a particular rule or not. Alternatively, he may have a discre-
tion as to whether a particular rule does apply in the given circum-
stances. These two sentences need to be read carefully to see the
distinction in issue. The first sentence describes a discretion-or a
power-to apply or disapply a rule at will. The exercise need not be
based on any formal, rational underpinnings. This is perhaps how
the earliest Chancellors operated. This form of discretion is clearly
incompatible with the concept of law. If equity had continued to
operate in this way, then it would indeed be incompatible with the
common law because of its unacceptable and individualistic discre-
tionary practices. But not all discretions are of this type. The second
42 L. Kaplow, 'Rules Versus Standards: An Economic Analysis' (1992) 42 Duke

L] 557, 568-97; Duggan, n. 41 above, 629-32; I. Erlich and R. A. Posner, 'An
Economic Analysis of Legal Rulemaking' (1974) 3 ]LS 257, 273. Where the behav-
iour is homogeneous (i.e. frequent, with recurring characteristics), then the ex ante
costs of devising a rule are worthwhile in the long run, and so a rule-a mandatory
or rather inflexible rule-is most efficient; where conduct is heterogeneous (i.e. infre-
quent, or each instance is likely to be unique in important ways), then a standard-
a discretionary standard-is likely to be better so as to reduce fruitless ex ante costs.
sentence describes a discretion to determine whether, on particular
facts, a given rule is applicable. This discretion is compatible with
the concept of law; indeed, it is hard to conceive of any legal system
operating without such a discretion. It is this second acceptable,
indeed ubiquitous, form of discretion which is evident in both equit-
able and common law practices. It mirrors the Aristotelian distinc-
tion between bright-line rules and fact-sensitive (discretionary)
justice, and the fault lines are certainly not defined by the common
law/equity divide. 43 In fact, in the last thirty years commentators
have remarked that Chancery judges are less likely to do equity (in
the sense of fact-sensitive justice) than their common law counter-
parts because so much of equity relates to property issues where

certainty is said to be paramount. 44
The important point for the argument being put here is that both
the common law and equity employ discretion in adjudication. All
law is necessarily general45 so that it can meet the need for simplic-
ity, certainty, predictability and even-handedness;46 but all law is
also pressured by a countervailing need for judicial discretion to
counter the unfairness inherent in generality. There is nothing pecu-
liar or unique about equity's version of these discretionary prac-
tices; they do not militate against integration. Indeed, an integrated
43 A. Denning, 'The Need for a New Equity' [1952] 5 CLP 1, 9: the law has two
great objects, to preserve order and to do justice, and the difficult issue is how to
maintain the appropriate balance between the two. Also see Gleeson, n. 40 above,
430-1, who suggests that the effects have not been all positive, and that careful atten-
tion should be given to the appropriate balance. Increasing resort to fact-sensitive
justice is leading to increased court time needed to resolve each issue (inevitable in
individualized justice), increased resort to courts (because the law now intervenes in
more issues), and increased demand for access to justice (because of the above, and
because of current expectations). All of this has placed court systems under huge
strain, so that we are now seeing an increased resort to alternatives-mediation, con-
ciliation, arbitration.
44 Hill v CA Parsons Ltd [1971] 3 All ER 1345, 1359 (Lord Denning MR);
J. H. Baker, An Introduction to English Legal History, 3rd edn. (London, 1990),99.
45 Gleeson, n. 40 above, 424, notes that 'Moses was given only Ten
Commandments, and these were later reduced to two.'
46 For 'law' to attract popular endorsement, it must, at the very least, comprise a
body of settled rules or principles. The rules must be universal, objective, certain and
predictable. They can, of course, be moral-or utilitarian or pragmatic, or anything
else-but they must be general. They must be of universal application, intended to
be employed in an infinite variety of individual circumstances. Popular opinion
accepts that the result may not always be just in individual cases, but even this is seen
as fair. 'Legal justice' must command commitment to the institution, and that can-
not happen with excessively individuated decision-making. See Gleeson, n. 40 above,
431-2.
legal system would continue to refine and develop existing equitable
and common law discretionary inputs.
All of these arguments lead to one point. Despite the long-
standing views to the contrary, neither equity's moral foundations
nor its discretionary practices afford compelling grounds for the
suggestion that common law and equity are now irretrievably set on
a dualist path. Integration is possible. Integration is also desirable
in the interests of better justice. It facilitates the aim of treating like
cases alike. It also facilitates the sort of rational evolution of the law
that is only possible if courts can draw distinctions based on mean-
ingful differences rather than accidental jurisdictional divides. The
historical time warp in orthodox descriptions of the division needs

to be discarded in favour of a contemporary evaluation of the cur-
rent regime.
What would an Integrated System Look Like?

At least a century ago, Maitland said that '[t]he day will come when
lawyers will cease to inquire whether a given rule be a rule of equity
or a rule of common law: suffice it that it is a well-established rule
administered by the High Court of Justice.'47 The main aim of the
integration project is that like cases be treated alike; that unlike
cases be treated differently, but in appropriately different ways; and
that all these legal consequences be reasonably predictable. 48 This
last requirement concedes the possibility of a bounded discretion-
the Aristotelian notion of fact-sensitive justice49-but only when
the existence of discretion can be justified and explained. It is unde-
niable that this goal is made more difficult in a bifurcated common
law/equity system. If there is no good reason for the jurisdictional
division-and none ever seems to be advanced; the focus is invari-
ably on the (doubtful) reasons why integration is now impossible-
then we should work to remove this particular impediment to
delivering more perfect justice.
47 Maitland, n. 2 above, 20.

48 R. Pound, 'Mechanical Jurisprudence' (1908) 8 Columbia Law Review 605,
605.
49 As Lord Ellesmere said in his celebrated defence of the Chancery jurisdiction in
the Earl of Oxford's Case (1615) 1 Ch Rep 1,6; 21 ER 485: 'The cause why there
is a Chancery is for that men's actions are so diverse and infinite that it is impossible
to make any general law which may aptly meet with every particular act and not fail
in some circumstances.'
What would such an integrated system look like? A number of
models are commonly proposed. Some judges, especially in New
Zealand, advocate a model which eliminates the existing law/equity
divide, but also eliminates the existing right/remedy linkages. Their
suggestion is that rights and obligations should be established with-
out regard to law/equity distinctions, and that judges should then be
allowed to determine the most appropriate remedy in the particular
circumstances. Their choice could be made from the entire range of
remedial options currently offered by either equity or the common
law. 50 This may seem both simple and streamlined, but it ignores
the reality that rights can only be measured by the legal responses
they generate. A remedial menu operating according to judicial dis-

cretion does not, and cannot, adequately define legal rights.
Inevitably certain practices will become entrenched and certain
remedies will come to be invariably associated with the infringe-
ment of certain rights. Only then will the right be adequately
defined. The transition from remedial menu (otherwise known as
'strong discretionary remedialism'51) to legal rule marks the devel-
opment of a legal system from birth to maturity. Whatever difficul-
ties the bifurcated common law/equity system might have
generated, it seems unnecessary to discard all the existing learning
and revise the whole system by re-making every remedial choice.
Other common models for an integrated system suggest adopting
either equity or the common law as the dominant model for the new
regime, and then absorbing practices from the other jurisdiction
where these are consistent but not otherwise. The efforts of Lord
Denning52 and Lord Diplock53 have been characterized in this way:
it is suggested that Lord Diplock wanted the common law to override
equity, and Lord Denning wanted equitable techniques to take over
50 Aquaculture Corp v New Zealand Green Mussel Co Ltd [1990]3 NZLR 299,
301. For criticisms, see the references cited in Getzler, n. 16 above, 160, n. 14.
51 The advocates of this are listed in P. Birks, 'Three Kinds of Objection to
Discretionary Remedialism' (2000) 29 UWALR 1, 8. Birks himself is strongly
opposed to the notion.
52 Bridge v Campbell Discount Ltd [1962] AC 600, 632: 'Now ... equity and law
are one'; Federal Commerce and Navigation Ltd v Molena Alpha Inc [1978] QB
927, 974: 'We have no longer to ask ourselves: what would the courts of common
law or the courts of equity have done before the Judicature Act? We have to ask our-
selves: what should we do now so as to ensure fair dealing between the parties?'
53 United Scientific Holdings Ltd v Burnley BC [1978] AC 904, 924-5: 'the two
systems of substantive and adjectival law ... were fused .. .'.
the common law. 54 Whether or not this characterization is true, the
approach is unlikely to be satisfactory. Much of equity's intervention
is directed at discriminating between cases which the common law
regards as uniform. For example, the common law sees all breaches
of contract as warranting damages awards; equity sees a sub-group
of these cases as warranting specific performance. The common law
sees the issue of legal consent as determined by fairly crude rules on
fraud, deceit and duress; equity further attenuates these rules by
adding sub-categories of innocent misrepresentation and undue
influence. These refinements are worth preserving. Any integrated
model which puts pressure on the system to revert to broader, cruder
categories needs to be resisted. The various equitable rules need to be

integrated more subtly to produce a coherent picture which properly
reflects contemporary common law in all its sophistication. This
requires a considered evaluation of the scope and function of equit-
able intervention in all its various guises. The assorted equitable rules
should not necessarily be discarded (although perhaps some can); nor
should they necessarily be generalized beyond their current context
(although again, perhaps some can).
What is needed is a conscious decision to attack the discrepan-
cies, so that the integrated map of the law presents a coherent pic-
ture. As it is, there are instances of equity and the common law
doing the same things for the same reasons-there the results need
aligning. There are also instances of the two jurisdictions doing dif-
ferent things for the same reasons-there the results must either be
aligned or they must be confirmed as appropriately different in
ways which reflect some subtle difference in the reasons for inter-
vention. Finally, there are instances of the two jurisdictions doing
different things for different reasons-there it is necessary to ensure
that the boundaries defining the distinctions are justifiable and, if
they are justifiable, that they are appropriately drawn. Each of these
three problem areas needs some attention.
Doing the Same Thing for the Same Reasons

The first area where sensible integration is desperately needed is
where equity and the common law are doing the same things for the
54 A point made by Getzler, n. 16 above, 158. For criticisms of the strategy, see
P. V. Baker, 'The Future of Equity' (1977) 93 LQR 529; Meagher et aI., n. 7 above,
46-59, 64-70.
same reasons but delivering different results. In a coherent legal
regime, this is indefensible. The paradigm example is the 'common-
law' and 'equitable' duty of care. The anti-integrationists would
have it that there are two duties of care delivering two different
remedies. According to this vision, most members of the general
public owe common law duties of care to others if the circumstances
warrant it; fiduciaries, on the other hand, owe equitable, not
common law, duties of care to others. Breach of the common law
duty of care sounds in common law compensatory damages: assess-
ment is limited by concepts of causation and remoteness. Breach of
the equitable duty of care, however, sounds in equitable compensa-
tion: this is not limited by concepts of causation and remoteness,

but only by a broad 'but for' causation test. 55
On any sensible analysis, the common-law regime and the equit-
able regime are doing the same thing (imposing duties of care) for
the same reasons (to protect the vulnerable}.56 Both duties are
imposed by law, not agreed between the parties;57 both are moti-
vated by the perceived need to protect one party when the other
ought reasonably to perceive that care is necessary; the scope of the
duty depends on the context, not on whether the originating juris-
diction is common law or equity. Indeed, contrary to the anti-
integrationists' stance, it is context, nothing more, which suggests
that the duty of care owed by fiduciaries is something different from
the duty of care owed by others. The presumption is usually that
the duty imposed on fiduciaries is inevitably more onerous than the
analogous common law duty. The long-standing debate on the
unacceptably low standards of care demanded of company direc-
tors surely gives the lie to that idea. Moreover, the duty of care
owed by a fiduciary financial adviser and a non-fiduciary one, for
example, depends upon contextual factors unrelated to the cate-
55 J. Berryman, 'Equitable Compensation for Breach by Fact-Based Fiduciaries:

Tentative Thoughts on Clarifying Remedial Goals' (1999) 37 Alberta Law Review
95.
56 Henderson v Merrett Syndicates Ltd [1994] 3 WLR 761, 799 (Lord Browne-
Wilkinson): 'The liability of a fiduciary for the negligent transaction of his duties is
not a separate head of liability but the paradigm of the general duty to act with care
imposed by our law upon those who take it upon themselves to act or advise others.'
57 Although the terms of any contract can reduce the common law and equitable
demands. If the contract imposes a higher standard of care, then contract remedies
are available for breach (and this is so whether the duty is owed by a fiduciary or
not).
gorization of the defendant as a fiduciary or not. On the other hand,
it is also context-and here the fiduciary context can be critical-
which suggests that the duty of care owed by fiduciaries is often less
amenable to arguments of contributory negligence, although there
seems to be no reason why such arguments should be banned
entirely.58
If common law and equity are doing the same things for the same
reasons, then there seems to be no good reason why the remedies
should be different. The differences exist for historical reasons only.
The idea of a trustee's duty of care was slowly developed by equity
as settlors increasingly gave trustees wide-ranging management
powers. The story of the common law's development of its duty of

care is well-known. In the interests of treating like cases alike, the
two remedies (and the two duties, if there are two) should be
aligned. 59 The common law remedy is now the better choice. It is
the more sophisticated and highly developed; it has been progres-
sively refined over the past seventy years by virtue of being exam-
ined in numerous cases in wide-ranging contexts. Although the
equitable remedy-equitable compensation-is older, it has
remained relatively under-utilized and therefore underdeveloped. 60
This is because beneficiaries are often able to pursue more finan-
cially advantageous remedies against defaulting fiduciaries by
claiming breach of the fiduciary's duty of loyalty or breach of the
specific terms of the trust or other fiduciary engagement.
Some judges-although as yet no English ones-do advocate
complete integration of the legal and equitable regimes along the
lines recommended here. The 'common law' and 'equitable' tags
can then be dropped. The defendant would simply be subject to a
legal duty of care. 61 Other judges are not so adventurous. They
suggest that fiduciaries remain subject to an exclusively equitable
duty of care, but that quantification of the remedy should be
58 See Day v Mead [1987] 2 NZLR 443 (NZ CA). The issue is controversial.
59 G. Vos, 'Linking Chains of Causation: An Examination of New Approaches to
Causation in Equity and the Common Law' [2001] CLf 337.
60 I. E. Davidson, 'The Equitable Remedy of Compensation' (1982) 13 MULR
349.
61 Canson Enterprises v Boughton (1991) 85 DLR (4th) 129, 154 (La ForestJ for
the majority); Froese v Montreal Trust Co [1996] 137 DLR (4th) 725 (BCCA),
730-1; Day v Mead [1987] 2 NZLR 443 (NZ CA); Bank of New Zealand v New
Zealand Guardian Trust Ltd [1991] 1 NZLR 664 (NZ CA). Also see
S. Worthington, 'The Duty to Monitor: A Modern View of the Director's Duty of
Care', in F. Patfield (ed.), Perspectives on Company Law: 2 (London, 1997), ch. 11.
achieved according to common law practices, so that equitable
compensation will deliver the same measure of damages as common
law compensation. 62 The duty described does not appear to differ
in any way from the common law duty of care, and aligning the
remedies only reinforces the parallels. If this is true, then there is no
substantive reason for the continued use of the 'equitable' tag. It
does nothing but identify an historically interesting evolutionary
pathway. And, finally, there are the unshakeable anti-integrationists
who continue to insist that the duty of care imposed on fiduciaries
is equitable,63 that equitable compensation is not the same as com-
mon-law compensation, and that the distinctive remedy should
proceed down its own path of refinement and evolution. 64 This

brings us full circle. This practice seems indefensible unless the
equitable duty and its associated remedies are designed to achieve
distinctively different ends for distinctively different reasons. There
is no evidence that this is so.
62 Bristol & West Building Society v Mathew [1998] Ch 1 (CA), [1996] All ER
698,711 (Millett LJ); Permanent Building Society (in /iq) v Wheeler (1994) 14 ACSR
109, 155-8: Ipp J considered that there were concurrent common law and equitable
(non-fiduciary) duties of care. There is, it seems, no direct authority which unequivo-
cally supports this stance. Indeed, in order to solve the self-inflicted problems arising
from this finding that there were both tortious and equitable duties, Ipp J argued (at
161-7) that the remedies for each must be identical, notwithstanding the
conventionally accepted differences between common law damages and equitable
compensation.
63 Target Holdings v Redfern [1996] AC 421, 434 (Lord Browne-Wilkinson);
Canson Enterprises v Boughton (1991) 85 DLR (4th) 129, 154 (McLachlin J in the
minority). Also see D. Hayton, 'English Fiduciary Standards and Trust Law' [1999]
32 Vanderbilt Journal of Transnational Law 555,590, for the view that there is no
question of a trustee being liable for negligence at common law, citing China &
South Sea Bank Ltd v Tan [1990]1 AC 536, 543 (PC); Parker-Tweedale v Dunbar
Bank [1991] Ch 12 (CA) (re-mortgagee's duty being exclusively equitable).
64 The confusion is further increased by characterization of the fiduciary's duty as
a 'duty to account', described as such rather than as a 'duty of care' or a duty of some
other specific type. A fiduciary must 'account' in a wide variety of circumstances. To
lump all these circumstances together and say that the fiduciary has a 'duty to
account' loses sight of all the rational underpinnings of the claim. It is far better to
recognize clearly the difference between the duty, the remedy, and the mechanism for
delivery of the remedy. For example, a fiduciary is strictly liable for breach of the
terms of the fiduciary engagement (where the fiduciary acts without authority) and
is also liable to compensate for losses caused by the negligent performance of his
authorized functions. These statements explain why liability is imposed; further rules
are necessary to determine issues of quantification; and 'account' merely describes
the technical form in which the particular sum will be delivered, so that all beneficia-
ries receive their appropriate share of the damages award.
Despite these divisions, it has been suggested that the English
judiciary have already played a rather dramatic role (perhaps
unwittingly) in this particular integrationist project. In Hedley
Byrne & Co Ltd v Heller & Partners Ltd,65 the House of Lords
recognized that the common law duty of care was wide enough to
attract liability for pure economic loss in certain circumstances.
Meagher, Gummow and Lehane assert that this case is based on an
unforgivable fusion fallacy 66 involving a mistaken view of the sem-
inal equitable compensation case, Nocton v Lord Ashburton. 67
This bold integrationist step-if such it was-taken almost forty
years ago has caused few problems. It gives the lie to the idea that
integration is necessarily a dangerous and deplorable path.

Put shortly, if the underlying rationales are the same, then it is
important to scrutinize very closely the reasons for any difference in
the details. In the case of the duty of care, this means that the reme-
dies should be aligned. 68 Put another way, where equity and the com-
mon law have been doing the same things for the same reasons, then
rational integration demands that the same results should follow.
Doing Different Things for the Same Reasons

The second scenario which raises problems for the integration pro-
ject is where equity and the common law do different things, but
they do them for the same reason. Then it is necessary to think more
carefully. As matters stand, equity and the common law are motiv-
ated by the same imperatives, but deliver different results. Rational
integration need not insist that the results be the same, but any dif-
ferences must be defensible. Recall the way equity and the common
law seek to remedy breaches of contract. Equity discriminates
between contracts which are specifically enforceable and those
which are not. This form of discrimination is readily defensible and
easily accommodated in a coherent, integrated legal regime.
Integration does not demand that all contracts be specifically
65 [1964] AC 465 (HL). 66 Meagher et ai., n. 7 above, paras. 220-2.

67 [1914] AC 32.
68 See Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129,
155-6, McLachlin J, indicating her reason for rejecting the analogy with common
law negligence for fiduciaries: 'The better approach ... is to look to the policy behind
compensation for breach of fiduciary duty and determine what remedies will best
further that policy. In so far as the same goals are shared by tort and the breach of
fiduciary duty, remedies may coincide.'
enforceable, nor that all contracts give rise only to claims for dam-
ages. All that is needed is a simple, defensible rule to explain which
cases are to be treated differently and why.
Not all differences are so easily accommodated, however. One of
the difficult issues for integrationists is rescission, and all the related
equitable and common law rules. Rescission cases provide examples
of equity and the common law doing different things, but for the
same reason. Both equity and the common law are concerned with
contractual consent, but they reach different conclusions on the
issue. These different conclusions, if they are to remain different,
need to be rationalized if they are to playa proper part in a com-
prehensive, integrated legal system.

The idea underlying rescission is familiar. A contract does not
come into existence unless both parties intend to be bound by the
agreement. Certain factors prove conclusively that this intention is
lacking,69 and then no contract ever comes into existence (the pur-
ported contract is void). Other factors are not so conclusive. For
example, the defendant may have misrepresented crucial facts to the
claimant. Viewed objectively, the claimant has the necessary inten-
tion to contract; viewed subjectively, however, she mayor may not
have truly intended to be bound. In these more ambivalent circum-
stances, English law persists in its usual objective view, but only up
to a point. It presumes that the parties have reached agreement, but
it insists on that presumption only until the affected party takes
positive steps to overturn the transaction in reliance on its flawed
formation. The affected party is said to rescind, or avoid, the void-
able contract.
Only certain flaws in contract formation entitle an affected party
to rescind. The common law and equity recognize different flaws.
Predictably equity is more expansive. The common law recognizes
fraudulent misrepresentation70 and duress; equity recognizes undue
influence, innocent misrepresentation, breach of fiduciary duty and
certain mistakes. In short, the common law and equity do different
things, but for the same underlying reason. This gives rise to the
situation outlined at the very start of this essay, where a claimant
69 This is the case with mistakes as to the identity of the parties or the subject mat-
ter of the contract where either of these issues is material to the decision to contract.
See, e.g., Ingram v Little [1961]1 QB 31.
70 And there is now statutory recognition of negligent and innocent misrepresen-
tation.
can be told that her contract is binding at common law but voidable
in equity.
Indeed, the differences run even deeper than this. They affect the
response on intervention as well as the rule determining whether
intervention is possible. The common law does not permit a
claimant to rescind unless he can make out a legal ground for rescis-
sion, the subject matter of the contract is legal property, and he can
effect strict reinstatement (strict restitutio in integrum) to the
defendant. 71 Equity is prepared to compromise on everyone of
these matters. It recognizes a wider range of reasons for rescission,
the subject matter of the contract can be legal or equitable property,
and it adopts a more lenient view of what constitutes satisfactory

restitutio in integrum. 72
The differences in qualifying factors-the legally recognized
grounds for rescission-pose no great problem for the integration
project. Both common law and equity are simply articulating
grounds which might qualify the claimant's consent to be bound by
contract. Both will then allow the claimant to escape the rigours of
her obligations (provided certain conditions are met). The common
law instances clear-cut issues; over time equity has built on these to
develop a more attenuated, sophisticated vision of proper contrac-
tual intention. But it would require no great leap of faith to say, sim-
ply, that the modern law now recognizes a wide range of potential
flaws in contract formation. At this level there is no need to ascribe
a common law or equity tag. It adds nothing.
Where the integration project runs into difficulties is, again, in the
different common law and equitable remedies delivered in response
to these qualifying factors. There are two problems for the integra-
tion project. The first concerns the common law's and equity's pro-
prietary response to rescission; the second concerns the matter of
monetary remedies.
Consider first the proprietary consequences of rescission.
The orthodox view (although increasingly under attack) is that
rescission effects a re-vesting of title to the transferred property in
its original owners. Common law rescission effects a re-vesting of
71 This last condition means that it must be possible to put the parties back in
their pre-contractual positions by returning the property transferred under the con-
tract in its original state, although it is irrelevant whether the property retains its
original value: Armstrong v Jackson [1917] 2 KB 822 (KB), 828.
72 Requiring only 'practical justice': O'Sullivan v Management Agency and Music
Ltd [1985] QB 428.
common law title (where this is possible73 ); equitable reSCISSlOn
effects a re-vesting of equitable ownership. This distinction between
legal and equitable title is important. The consequences for a
claimant with legal title can be worse than those for a claimant with
equitable title. In particular, a claimant with legal title does not have
a right to specific restitution of his asset; 74 a claimant with equitable
title does. This is notwithstanding that the grounds for rescission at
law are allegedly more 'serious', and the subject matter (legal prop-
erty) perhaps more deserving of protection. This is one of the odd-
ities of the current law which needs to be addressed. The problem is
not peculiar to rescission, and has been the subject of much acade-
mic and judicial comment. Its resolution is important-indeed cru-

cial-but the issues cannot even begin to be addressed in this essay.
The more immediate problem is that of money remedies on rescis-
sion.75 The orthodox view is that there are none.7 6 If restitutio in
integrum (or returning the parties to their original positions) is not
possible according to the different standards demanded by common
law or equity,?7 then the claimant cannot escape the contract; if
73 If this is not possible---e.g. with land and shares, because re-vesting requires
changes to a register of ownership-then the property re-vests in equity only.
74 Although the court has a discretion to order specific restitution: Torts
(Interference with Goods) Act 1977, s. 3. The discretion is generally exercised where
money damages would be inadequate because the property is rare or unique.
75 Other commentators also favour pecuniary rescission: see especially
N. Y. Nahan, 'Rescission: A Case for Rejecting the Classical Model?' (1997) 27
WALR 66; P. Birks, 'Unjust Factors and Wrongs: Pecuniary Rescission for Undue
Influence (Mahoney v Purnell)' [1997] RLR 72. Also see R. B. Grantham and
C. F. Rickett, Enrichment and Restitution in New Zealand (Oxford, 2000), 364,
favouring pecuniary rescission but without giving reasons other than that the law
adopts this strategy in other areas; R. Nolan, 'Dispositions Involving Fiduciaries:
The Equity to Rescind and the Resulting Trust', in P. Birks (ed.), Restitution and
Equity, Volume I: Resulting Trusts and Equitable Compensation (London, 2000),
132. Indeed, the Misrepresentation Act 1967 effectively delivers pecuniary rescission
by introducing the possibility of damages for innocent misrepresentation; however,
this introduces its own complications because it is not clear whether quantification
should be effected on the same basis as with negligence and fraud, or on the more
principled basis of unjust enrichment. Modern case law favours the former.
76 Although this stance is weakening: see S. Worthington, 'Corporate
Governance: Remedying and Ratifying Directors' Breaches' (2000) 116 LQR 638.
77 These different standards can be justified on the basis that the common law can
only order compensation to remedy a legal wrong; it cannot effect an accounting
between the rescinding parties to reflect use of or damage to the underlying property;
equity cannot award money remedies other than on account, and an account
depends upon the claimant owning the underlying property. For some reason the
common law never analysed these cases as money had and received (or unjust enrich-
ment) cases.
restitutio in integrum can be effected, then the common law or
equity (whichever is acting) will effect it by proprietary means.
Rescission effected by the payment of money's worth in place of
specific restitution of the transferred asset is not an option. 78 This
can often seem most unfair. Consider a contract for the sale of a car
or a house where the sale has been induced by undue influence or
duress. If the underlying property has been lost or destroyed or
transferred, then the orthodox view is that the claimant cannot
rescind the contract.79 This means that parties can win or lose in the
rescission lottery by an accident of circumstances rather than on
any principled basis.
Arguably this state of affairs-this gap in remedial options-has

arisen as a result of an accident of history, rather than any deliber-
ate and principled strategy. Consider what underpins rescission.
The legal and equitable grounds for rescission are merely different
factors which explain why the contract need no longer govern the
relationship between the parties. With the contract out of the way,
it is clear that unwarranted property transfers have been effected by
the parties. If the contract is not supported by proper consent, then
it would be unjust of either party to retain the relevant benefits once
the underlying contract is dissolved. 80 Restitution is required. It
should not be to the point that the parties no longer retain the prop-
erty they received. This factor is quite unrelated to the presence of
consent at the outset, or to the categorization of the transfers as
unwarranted. The proprietary model of remedies, if it is the only
78 Unless the asset is money.

79 Clarke v Dickson (1858) EB & E 148,154-5; 120 ER 463, 466 (Compton J).
Furthermore, it seems that rescission is an all-or-nothing process-either the contract
is rescinded in its entirety, or it stands with full effect: TSB Bank pic v Camfield
[1995]1 WLR 430 (CA); contrast the partial rescission allowed in Vadasz v Pioneer
Concrete (SA) Pty Ltd (1995) 184 CLR 102 (Aust HCt), although later Australian
cases signal a retreat from this view (Maguire v Makaronis (1998) 188 CLR 449). If
rescission was not allowed, the claimant might have other common law remedies
(e.g. common law damages for deceit), or she could resort to equity. Equity could
effect a re-vesting of equitable title, and it could order an account in respect of deal-
ings with any underlying property, but it could not award damages. This meant that
equity could not provide a remedy at all unless it allowed proprietary rescission; it
therefore adopted a more liberal view of restitutio and used the remedy of account
to make adjustments in respect of profits and deterioration: Erlanger v New
Sombrero Phosphate Co (1878) 3 App Cas 1218 (HL), 1278 (Lord Blackburn).
80 This is supported by the Westdeutsche case, n. 7 above, and its successors,
although the controversy over the issue of restitution in respect of closed swaps sug-
gests the matter remains controversial for some.
option, forces commitment to a remedial linkage between consent
and retention of property, which must be unintended and certainly
seems unjustified.
If modern law is to present a rational and coherent picture, then
historical limitations cannot be allowed to stand in the way. The
fact that, historically, the common law made no overt commitment
to remedying unjust enrichment cannot be allowed to stand in the
way of rationalizing its modern recognition. Indeed, the reason the
common law remedy was exclusively proprietary was that the com-
mon law saw itself as unable to give money remedies other than for
wrongs. 81 If pecuniary restitution for unjust enrichment can be
ordered in circumstances of mistaken transfers, transfers under void

contracts, transfers under contracts terminated on a total failure of
consideration, and so forth, then it should be open to the parties
involved in voidable contracts. The common law rationale for resti-
tution for unjust enrichment is equally appropriate in the context of
rescission. Moreover, it must be the case that contracts avoided on
equitable grounds should be treated the same way. The important
point, surely, is that the equitable 'flaw' is, by process of legal evo-
lution, now a legally recognized ground for conceding that contrac-
tual consent is not real.
Whatever the logic of this argument for pecuniary rescission, it is
necessary to proceed with caution. The current remedial restrictions
may serve an essential protective purpose. The requirement for
restitutio in integrum limits the availability of rescission and
thereby protects both defendants and third-party donees. A rule
which allows rescission even though restitutio cannot be effected
removes that protection. Rescission-exiting from contracts-
would become easier. Nevertheless, to the extent that the require-
ment for restitutio protects defendants, it appears to be a rather
crude mechanism which operates on a random rather than a prin-
cipled basis. The disposal of the underlying property does not auto-
matically mark the end of the claimant's reasons for wanting a
remedy. Admittedly it may make assessment of the remedy more
difficult, but the modern law should be able to accommodate these
difficulties as long as it understands the impetus for the remedy.82
81 See n. 77 above.
82 Indeed, Part X of the Companies Act 1985 gives a statutory right to pecuniary
rescission in certain circumstances. This gives the lie to arguments that quantification
is too difficult.
The key, it seems, is to hold to the idea that the remedy is not
designed to punish the defendant for a wrong, nor, necessarily, to
preserve either party from all losses. 83 It is to unwind a transaction
which should not have taken place. Indeed, the difficulties in doing
this may be just as great when the underlying property is still avail-
able, but has been altered by one of the parties in ignorance of the
other's rights. Nonetheless, it may be that these rescission cases
demand short limitation periods, or some other strategy, so as
appropriately to balance the claimant's interest in recovery of
wealth against the defendant's interest in security of receipt.
This is not the only argument for caution. If pecuniary rescission
is allowed when the grounds for rescission are purely equitable,

then it may appear that the defendant is being made personally
liable for something which is not necessarily a legal wrong. 84 The
familiar equitable rule is that defendants are not personally liable
for disposing of property in which the claimant has an equitable
interest unless the defendant knows that the property is not his to
deal with.85 A defendant who has received property under a void-
able transfer does not necessarily, or even usually, have this know-
ledge. However, the suggestion that it would be unfair to adopt
remedial reforms which introduce personal remedies misconceives
the very different roles of pecuniary rescission and this equitable
rule. Pecuniary rescission merely effects restitution: it strips the
defendant of unwarranted benefits, and does so regardless of the
defendant's knowledge or innocence. The equitable rule aims to
'make the claimant whole'-to effect compensation-and does so
regardless of the defendant's circumstances or the context of the
loss. The second rule is much harsher than the first; that is why it
applies only when the defendant knows that he is dealing with
83 McKenzie v Royal Bank of Canada [1934] AC 468. The essential point is that
the claimant should not be unjustly enriched at the defendant's expense: Bouygues
Offshore v Ultisol Transport Contractors [1996] 2 Lloyd's Rep 153, 159. And vice
versa, presumably.
84 Whereas the common law grounds for rescission involve the legal wrongs of
deceit and duress.
85 These cases on knowing assistance and knowing receipt are now undoubtedly
controversial. See, e.g., Lord Nicholls, 'Knowing Receipt: The Need for a New
Landmark', in W. R. Cornish et al. (eds.), Restitution: Past, Present and Future
(Oxford, 1998),231. Much of the controversy comes down to the perceived incon-
sistencies between the equitable and common law rules.
another's property.S6 In short, the crude mechanism of restitutio in
integrum seems to be neither a necessary nor a desirable mechanism
for delivering essential protective ends.
All of this might be summarized by saying that the cause of action
and the appropriate remedy must be properly aligned if the law is
to advance in a principled fashion. This is not the case with the law
on rescission. When equitable rescission is compared with common
law rescission, it is clear that there are significant disjunctions in the
remedial outcomes which depend upon whether proprietary reme-
dies are awarded by equity or by the common law. In addition,
when the legal response to rescission is compared with the legal
response in related non-rescission circumstances, it is clear that

there is a remedial gap which could-and should-be filled by
adding the remedy of pecuniary rescission to the existing propri-
etary regime. Put another way, where equity and the common law
do different things for the same reason, the goal for the integra-
tionist project is rational coherence, not-or at least not necessar-
ily-remedial uniformity. The current law on rescission does not
offer this; the law on specific performance, mentioned earlier, does.
Doing Different Things for Different Reasons

The third and final problem area for the integration project involves
cases where equity and the common law do different things for dif-
ferent reasons. Fiduciaries provide a ready illustration. Trustees,S?
company directors and solicitors are all fiduciaries. Equity subjects
these individuals to obligations of loyalty. A fiduciary is required to
act altruistically, to put his principal's interests ahead of his own.
Unless he has the informed consent of his principal, he cannot enter
into transactions which involve a conflict between his personal
interests and his duty to his principal; in fact, he cannot profit in any
secret way from his position. In short, fiduciary obligations demand
self-denial. These obligations exclude the fiduciary's involvement in
certain commercial ventures which would otherwise be open to
86 See the discussion in Swindle v Harrison [1997] 4 All ER 705 (CA), 708-10
(Evans LJ).
87 Although trustees under resulting or constructive trusts do not necessarily
attract fiduciary duties: A. Burrows, 'Proprietary Restitution: Unmasking Unjust
Enrichment' (2001) 117 LQR 412, 428; Lord Millett, 'Restitution and Constructive
Trusts', in Cornish et ai., n. 85 above, 199-217.
him-unless, of course, he obtains the informed consent of his prin-
cipal. If a fiduciary fails to live up to these standards (and a fiduciary
can fail despite acting carefully and in perfect good faith) then
equity insists that the profits of the breach be paid over to the prin-
cipal. The fiduciary has to 'account'. The remedy is available
whether or not the principal has suffered a loss and whether or not
the principal expected to obtain the gain for herself. Because of this,
it is often said that the remedy delivers a windfall to the principal.
How is an integrationist to deal with this equitable duty and its
disgorgement remedy? It should be clear from the approach adopted
earlier that a coherent map of the law requires careful attention to
the factors which motivate legal intervention, both at the level of

ascribing responsibility and at the level of determining the appropri-
ate legal response. Both aspects contribute to the definition of legal
rights, and the goal is a coherent map of rights. If the motivation is
the same-if the principles being advanced by the law are the same-
then the law ought to respond in the same fashion. This is the only
way to create a rational and predictable pattern of legal intervention.
If the motivations are different, then the law ought to respond in an
appropriately different manner. Fiduciary law demonstrates that
this task needs to be approached with caution.
Law and economics scholars would have it that fiduciary rela-
tionships are contracts. As with contracts, the fiduciary is not bound
unless he consents to undertaking the task, and the precise terms of
the engagement can be adjusted, consensually, between the parties.
On the other hand, most restitution scholars would prefer to draw
the parallel with torts. The 'relationship'-the factual context-
prompts the law to subject individuals to fiduciary obligations; the
formal requirements of contract formation need not be met; and
fiduciary obligations are not necessarily owed to the party inviting
the fiduciary into the engagement. Accordingly, restitution scholars
group fiduciary breaches with common law 'wrongs' (although this
is a class which includes both torts and breaches of contract, so the
law and economics scholars may feel somewhat comforted).
Whatever this initial categorization, when it comes to determining
the appropriate legal response, neither law and economics scholars
nor unjust enrichment scholars would do away with the disgorge-
ment remedy. Both camps see its persuasive charms.
It would be convenient-indeed doctrinally elegant-if fiduciary
law could simply be absorbed into the learning on either contracts
or torts. Many commentators regard this as simply impossible. 88
The contract categorization can be discarded at the outset. The cur-
rent fiduciary rules cannot be easily integrated with contract rules
either at the level of ascription of responsibility or at the level of
quantification of remedies. This is not surprising. The policy moti-
vating legal intervention in contractual relationships is not easily
aligned with the policy motivating intervention in fiduciary rela-
tionships. To force the fiduciary regime into a contract model loses
sight of the important discriminators which indicate why fiduciary
obligations are imposed, why the class of individuals subjected to
them should be tightly constrained, and why the remedies fiduciary
law delivers are so unusual.

The tort option is not so easily discarded. The argument requires
one to step back a little. In different ways, both contract law and
tort law are grounded in liberal ideas of maximum personal auto-
nomy subject only to legal rules that protect others from harm
which ought not to be inflicted on them. The limits in the ascription
of responsibility and in the determination of the appropriate legal
response reflect this philosophy. Tort is distinctive because respon-
sibility is ascribed because of the context rather than because of any
individual consent to the regime. The constraints on personal
autonomy are justified in the interests of society, although the rules
are limited to delivering minimum acceptable social standards in the
interests of preserving maximum personal liberty. This idea of
preservation from socially unacceptable harm, remedied by com-
pensatory damages when the duty is breached, is the philosophy
behind all tort law. The remedy closely maps the imperative for the
legal rule. The paradigm twentieth-century tort is the tort of negli-
gence. It follows this simple remedial model, but it also illustrates
the modern law's ability to insist on increasingly discriminating
rules to determine responsibility, to limit the reach of that responsi-
bility, and to curb the scope of any compensatory remedy.
What, if anything, does all this have to do with fiduciaries? At one
level, fiduciary law is like tort law. It too is designed to reduce the
likelihood of harm. True, we rarely think of fiduciary law in this
way; the focus is usually on its demands for mandatory altruism.
Fiduciary law attempts to ensure committed management where
88 E. J. Weinrib, 'The Fiduciary Obligation' (1975) 25 U Toronto LJ 1; Getzler,

n. 16 above, 166-7 and the references cited there.
managers are given discretionary power to deal with assets or other-
wise act for or on behalf of others. The motivation for legal inter-
vention is not to ensure that the fiduciary delivers a pre-determined
management end-product, as it is with contract. By definition, no
such end-product is ever prescribed (and if it is, then contract law
will provide an appropriate remedy for deviation 89 ). Nor is it
designed to ensure that management responsibilities are simply car-
ried out with due care. The familiar duty of care (also part of tort
law) can ensure that. Fiduciary intervention is designed to ensure
that the manager's powers are directed exclusively towards gener-
ating benefit for the principal, and are not redirected towards gen-
erating wealth for the fiduciary, as can so easily happen where the

fiduciary has power and control and very little supervision. The
motivation is indeed to ensure that harm is not caused to the prin-
cipal by wrongly focused-disloyal-management. The rules on
ascription of responsibility reflect that aim. These rules are designed
to draw the fiduciary boundary as restrictively as possible, so that
there is no unnecessary interference with personal autonomy. The
fiduciary net should catch only those who need regulating, and
should restrict their personal autonomy only so far as is absolutely
necessary in the interests of ensuring loyal management. All of this
is familiar to the practice of tort lawyers. Indeed, the fact that
fiduciary rules for the ascription of responsibility are quite different
from the rules which identify those who should be made subject to
duties related to negligence, nuisance, trespass, conversion, libel
and so on is also routine. Tort law is not monolithic in the way that
contract law often appears to be. It is, by contrast, a series of
'islands of regulation' in a sea of unregulated personal freedom.
Fiduciary law could easily be delivered as a new and distinctive 'tort
island' without upsetting the natural order of tort law or altering
the current contours of fiduciary law.
However, there is one dramatic difference between fiduciary reg-
ulation and the broad sweep of tort regulation. The difference lies
in the remedies. Tort law routinely relies on compensatory dam-
ages-the damages needed to put the claimant in the position he
would have been in had the wrong not been committed. This will
89 Although the usual way of thinking about the duty of strict compliance (with
the trust deed or corporate constitution) is to think of it as an equitable duty, because
the strict rules of contract engagement may not always appear to have been met. As
contract rules become more liberal, this is less of an issue.
not work in the context of fiduciaries. The claimant does not want
to be in the position she would have been in had she not employed
a manager; she wants the manager to perform. And yet, because the
end point cannot be precisely defined, this obligation cannot be
enforced by contract. On its face, fiduciary imperatives cannot be
delivered by the compensatory remedial regimes of either contract
or tort. The adoption of a disgorgement regime is designed to plug
the gap. Disgorgement is an unusual remedy, but in the circum-
stances it is the only remedy which common sense suggests will have
any chance of encouraging adherence to fiduciary management
duties. The remedy does not aim to advance the claimant to any pre-
defined end point, as contract remedies do. Nor does it return the

claimant to her pre-fiduciary-management position, as tort reme-
dies do. Instead it returns the defendant to his pre-breach position-
it strips the fiduciary of the benefits of his breach. This remedy
ensures that the fiduciary's breach involves him in a wasted effort.
The profits of his enterprise must be disgorged. This, where nothing
else is objectively assessable, is likely to provide some encourage-
ment to the fiduciary to comply with his duties.
If all of this is accepted, then it is clear that integration cannot
absorb fiduciary law into existing contract or existing tort moulds.
This will not work either at the level of ascription of responsibility
or at the level of remedies. What could realistically be done, how-
ever, is to build a new 'tort'. This would recognize that the fiduciary
regime is directed at discouraging harm in certain common circum-
stances. But it also allows for unique mechanisms to define how
responsibility will be ascribed and breaches remedied. The remedies
do not fit the usual tort model, although they are motivated by the
usual tort imperatives. The remedial difference is based on neces-
sity, not on distinctive goals. Disgorgement is the only remedy likely
to achieve the desired ends.
The result would be a new 'tort' which did nothing more than
recognize that fiduciary law was motivated by a desire to avoid par-
ticular social harm and remedy it in the most appropriate way. All
the existing fiduciary learning would be utilized in constructing the
operating regime for the 'new' tort. This might be thought contrary
to the spirit of the integration project. But the aim is not to override
one set of learning; it is simply to construct a coherent whole.
Indeed, recognition of fiduciary law as a new tort, with its distinc-
tive remedial regime grounded in necessity despite its inconsistency
with the general tort practices, could have some welcome conse-
quences.
First, the fiduciary duty of loyalty (with its peculiar remedial con-
sequences) might be recognized as doctrinally distinct from other
common law and equitable wrongs such as deceit, negligence, fraud
and even fraud on the power, and as completely unrelated to other
forms of equitable intervention based on undue influence and mis-
representation, for example. A 'fiduciary' who breaches a legal duty
has not necessarily breached a fiduciary duty. The ascription of
responsibility and the ensuing imposition of remedies follow from
the particular breach, not from some all-embracing fiduciary tag.
And secondly, at the remedial end of the story, the function and

peculiarity of the disgorgement remedy might be better appreciated.
Disgorgement is not a general remedy available against any wrong-
doer who has profited from his wrong. It is a specific remedy
designed to achieve a particular end when no other remedy is avail-
able to meet the task. Any other attitude to the disgorgement
remedy is liable to completely overturn the existing definitions of
legal rights. The problems are already apparent in recent use of the
disgorgement option to remedy breach of contract. 90
Unfortunately this narrow vision of a new fiduciary tort does not
solve all the problems for the integrationist. As the law now stands,
the disgorgement remedy for breach of a fiduciary's duty of loyalty
is proprietary.91 This is not surprising. Equity's history is a history
of proprietary remedies.92 It began as a history of remedies which
obliged defendants to act, for example by paying over profits or
transferring assets. This equitable obligation to pay over profits or
to transfer an asset soon came to be regarded as an equitable pro-
prietary interest in favour of the intended transferee. This transition
from obligation to property is common-ubiquitous even-
in equity. The proprietary interests associated with express trusts
90 AG v Blake (HL) [2001] 1 AC 268 (HL). Also see S. Worthington and

R. Goode, 'Commercial Law: Confining the Remedial Boundaries', in D. Hayton
(ed.), Law's Future(s}: British Legal Developments in the 21st Century (Oxford,
2000), ch. 15. But contrast the remedial menu of damages suggested by various resti-
tution scholars, e.g. Burrows, Hochelaga Lectures, n. 6 above.
91 AG for Hong Kong v Reid [1994] 1 AC 324 (PC), and perhaps Boardman v
Phipps [1967] 2 AC 46 (HL).
92 Money remedies are rare, and when they are ordered they relate to an obliga-
tion to account in respect of the claimant's property, so they are conditional on the
claimant having a proprietary interest in property in the defendant's hands.
provide a familiar illustration. This response, because it is propri-
etary, gives the equitable claimant preferred protection in any com-
petition with other claimants for the defendant's limited assets-it
gives the equitable claimant preferred status on the defendant's
insolvency. It may also give the equitable claimant the added
benefits of tracing options, including tracing into secondary
profits. 93 None of these advantages are available to common law
claimants entitled merely to money remedies from their defaulting
defendants.
This raises a potential problem. Part of the integration project
must be to ensure that the most valuable legal rights are accorded
the strongest protection. There should be no disjunctions in the

scheme, no circumstances where the hierarchy of rights does not
correspond with the hierarchy of remedies. A coherent legal system
demands this. Decisions about prioritizing rights should not be
made by default, based simply on an historical jurisdictional segre-
gation. In particular, in the context of fiduciary disgorgement reme-
dies, it is a serious issue for the integrationists to determine whether
the underlying principles being advanced by fiduciary law justify
claimants being given proprietary disgorgement remedies. The
suggestion that fiduciary law is part of the law of tort, and that the
disgorgement remedy is justified simply because it is the only pos-
sible response in these very special circumstances, does not sit well
with precedents which accord the remedy an especially privileged
proprietary status. 94
This third problem area, illustrated by fiduciary law, can be
summed up very simply. The argument is that where equity and the
common law do different things for different reasons, then integra-
tionists need to look carefully at the principles underlying interven-
tion. If these are distinctive, then the form of intervention, and the
obligations it supports and the rights it generates, need to be given
separate space on the legal map. Often these distinctive islands
mark out an evolutionary advancement, a more attenuated and
sophisticated approach to an issue. However, what that distinctive
space should be can often be difficult to define. Rights are delin-
eated, and privileged, by the remedies they attract. The integrated
93 Foskett v McKeown [2001]1 AC 102 (HL).

94 V. Finch and S. Worthington, 'The Pari Passu Principle and Ranking
Restitutionary Rights', in F. Rose (ed.), Restitution and Insolvency (London, 2000),
ch.1.
legal map needs to present a coherent picture. Fiduciary law illus-
trates the possibilities and difficulties in attempting this.
An Integration Trap: Calling Different Things

by the Same Name
From what has been said so far it might seem that many of the cur-
rent common law and equitable strategies are clear cut and have
well-defined boundaries, so that the integrationist simply has to
determine their appropriate place on some integrated common law
map. Often this is the case, but not always. One of the more subtle
traps is that both bodies of law have a disturbing habit of calling

two or three different things by the same name. Equity provides
some striking examples. Consider equity's money remedy, equitable
compensation. It might seem reasonable to assume that this remedy
has only one measure and is appropriate in only one context. This
is not the case. 95 The term 'equitable compensation' is used to
describe the remedy awarded where a trustee fails to observe the
terms of the trust, or the remedy awarded where a fiduciary
breaches his 'equitable' duty of care (at least when the case is deter-
mined by an anti-integrationist judge), or the remedy (or monetary
adjustment) awarded where rescission is permitted in equity but
proper restitutio in integrum requires some monetary accommoda-
tion. In each of these contexts the rules for quantifying 'equitable
compensation' are different. The term does not mean the same thing
in different contexts.
Where the term describes the remedy for breach of trust, the clos-
est common law analogy is expectation damages for breach of con-
tract. The trust deed substitutes for the contract and requires the
trustee to manage the fund according to certain rules. If the trustee
acts outside these rules, without authority, then the remedy of equit-
able compensation requires the trustee to put the fund into the posi-
tion it should have been in without the breach (note that
the assessment is made on the basis that the trustee must restore the
fund to the position it would have been in, not restore the particu-
lar sum of money which was present in the fund at the time of
95 Bristol & West Building Society v Mothew [1998] Ch 1 (Millett LJ); Swindle v
Harrison [1997] 4 All ER 705 (Evans LJ). Also see Sir Peter Millett, 'Equity's Place
in the Law of Commerce' (1998) 114 LQR 214, 224-7.
breach). On the other hand, where the term describes the remedy
for a fiduciary's breach of the duty of care, the common law ana-
logy is compensatory damages for torts. Finally, where the term
describes the money repayments on rescission, the common law
analogy is restitution for unjust enrichment.
The same problem can arise when a claim is described rather than
a remedy. The term 'estoppel' illustrates this. Estoppel can be used
to describe, or justify, claims which are analogous to claims in con-
tract, tort or unjust enrichment. 96 Other examples could be given.
The warning for integrationists is the same in every case. It is not to
assume that all 'equitable compensation' cases, or all 'estoppel'
cases, for example, will map on to the same small terrain on the

integrated map. The issues have to be unravelled more carefully.
Conclusions
The thesis advanced in this essay is simple. Whatever the historical
justifications, there are no modern advantages in segregated, bifur-
cated common law and equity jurisdictions. The two bodies of
learning need to be integrated. There are no insurmountable imped-
iments to this. Equity is not doctrinally distinct from the law and
motivated by different policies. It is not a discretionary, individual-
ized, conscience-based regime that is totally incompatible with the
common law's rigid, universal, rights-based system. But the inte-
gration project is not simple. The task of integration needs to be
addressed carefully. It requires a detailed examination of the under-
lying motivations for common law and equitable intervention, and
a clear eye on the obligational and remedial coherence and ratio-
nality of the final map. Moreover, integration will not eliminate
judicial discretion; every legal regime necessarily incorporates this.
But if the integration project is successful, then like cases will more
readily be treated alike, and different cases will be treated differ-
ently in ways which reflect the relative significance of the right being
infringed. And, not least of course, we will no longer have to say to
wide-eyed civil lawyers, 'Well, at common law your rights would be
X, but in equity they are Y.'97
96 S. Worthington, 'Equitable Estoppel: Unpacking a Doctrine' (1999) 26 Journal

of Malaysian and Comparative Law 227.
97 See Burrows (2002), n. 6 above.

Integrating Equity and The Common Law: Sarah Worthington

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INTEGRATING EQUITY AND

THE COMMON LAW

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The Prevailing Arguments Against Integration

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Conceptual Differences: Is Equity a Peculiarly

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9 Although any significant procedural differences have now been eliminated.

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11 The common law courts required actions to be commenced by writ (written

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13 Contracts (Rights of Third Parties) Act 1999.

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Is Equity's Intervention Peculiarly Discretionary?

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39 Note especially the issue of subjective devaluation of benefits.

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42 L. Kaplow, 'Rules Versus Standards: An Economic Analysis' (1992) 42 Duke

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What would an Integrated System Look Like?

47 Maitland, n. 2 above, 20.

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Doing the Same Thing for the Same Reasons

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55 J. Berryman, 'Equitable Compensation for Breach by Fact-Based Fiduciaries:

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Doing Different Things for the Same Reasons

65 [1964] AC 465 (HL). 66 Meagher et ai., n. 7 above, paras. 220-2.

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78 Unless the asset is money.

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Doing Different Things for Different Reasons

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88 E. J. Weinrib, 'The Fiduciary Obligation' (1975) 25 U Toronto LJ 1; Getzler,

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90 AG v Blake (HL) [2001] 1 AC 268 (HL). Also see S. Worthington and

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93 Foskett v McKeown [2001]1 AC 102 (HL).

An Integration Trap: Calling Different Things

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