Equitable Compensation for Distress in Commercial Contexts

Despite equity’s longstanding jurisdiction to grant compensation for breaches of equitable obligations, there has been limited analysis of whether that jurisdiction extends to purely personal interests. In two relatively recent breach of confidence cases, Australian courts have awarded equitable compensation for distress. Drawing on those cases, this article seeks to challenge the traditional view that equitable compensation can only vindicate financial losses. It takes the example of ethical investment funds and considers the scenario where the trustees of those funds make profit-generating but unethical investments. It argues that in those circumstances, it would be doctrinally sound to award equitable compensation to beneficiaries who have suffered distress as a result of the unethical investments. That conclusion is arrived at by considering the principles underlying equity’s inherent jurisdiction to award equitable compensation for breaches of general equitable obligations. Based on an inductive approach to earlier cases, the article suggests that equity may award compensation wherever the affected interest is the subject matter of the equitable obligation said to have been breached, regardless of whether that interest is financial in nature.