This week’s Victorian Reports publish a 2007 decision in which the Court of Appeal (Dodds-Streeton JA, Ashley and Cavanough JJA agreeing) exhaustively reviewed the relatively limited circumstances in which equitable damages will be awarded in place of an injunction.
Now, the Court of Appeal was dealing with a question of trespass to land but, having regard to the House of Lords’ remarks in Fisher v Brooker, may be worth bearing in mind in intellectual property cases as, generally, an IP owner seeks an injunction when their rights are being infringed.
[135] The appellant’s reliance on an alleged divergence of principle in the applicable authorities was, in my view, ill-founded. The relevant authorities evince no fundamental difference of principle. They uniformly uphold the established view that an injunction is the prima facie remedy for trespass and that the alternative remedy of damages will be ordered exceptionally, as indicated by the working rule in Shelfer or by such other relevant considerations as may apply in a particular case. The authorities do not dictate or authorise the balancing of potential detriment to the parties on the basis of equivalent entitlement, or indicate that trespass may be negatived by undertakings to minimise its potential
20 VR 311 at 336
effect on future use. The tests embodied in the working rule of Shelfer are cumulative, and assume a significant inequality of entitlement between the parties (as the injury to the plaintiff from the trespass must ordinarily be small and the harm occasioned by an injunction to the defendant must be so disproportionate as to constitute oppression). Oppression in that context imports consideration of, inter alia, specific detriment, including disproportionate harm to the defendant relative to injury to the plaintiff, the deliberate or unintended quality of the trespass and all other relevant circumstances.
[136] The authorities’ consistent recognition that damages in this context may properly be assessed by reference to the advantage or gain to the defendant where the injury to the plaintiff is small facilitates an award of damages where that is otherwise appropriate, but does not disturb the traditional primacy of injunctive relief.
[135] …. [The relevant authorities] uniformly uphold the established view that an injunction is the prima facie remedy for trespass and that the alternative remedy of damages will be ordered exceptionally, as indicated by the working rule in Shelfer or by such other relevant considerations as may apply in a particular case. The authorities do not dictate or authorise the balancing of potential detriment to the parties on the basis of equivalent entitlement, or indicate that trespass may be negatived by undertakings to minimise its potential effect on future use. The tests embodied in the working rule of Shelfer are cumulative, and assume a significant inequality of entitlement between the parties (as the injury to the plaintiff from the trespass must ordinarily be small and the harm occasioned by an injunction to the defendant must be so disproportionate as to constitute oppression). Oppression in that context imports consideration of, inter alia, specific detriment, including disproportionate harm to the defendant relative to injury to the plaintiff, the deliberate or unintended quality of the trespass and all other relevant circumstances.
[136] The authorities’ consistent recognition that damages in this context may properly be assessed by reference to the advantage or gain to the defendant where the injury to the plaintiff is small facilitates an award of damages where that is otherwise appropriate, but does not disturb the traditional primacy of injunctive relief. (my emphasis)
Her Honour had earlier quoted the good working rule in Shelfer which (in part) was:
In my opinion, it may be stated as a good working rule that —
(1) If the injury to the plaintiff’s legal rights is small,
(2) And is one which is capable of being estimated in money,
(3) And is one which can be adequately compensated by a small money payment,
(4) And the case is one in which it would be oppressive to the defendant to grant an injunction:
then damages in substitution for an injunction may be given.
Doods-Streeton JA did immediately point out how limited this all was:
[46] While the factors potentially relevant to the exercise of the discretion cannot be exhaustively stated, Shelfer, in my opinion, correctly accorded primary importance to identifying a small injury to the plaintiff, and disproportionate hardship constituting oppression, to the defendant.
[47] In determining whether a substitution of damages for in specie relief is just, the interests of the parties are not of broadly equivalent weight. It will not suffice that the hardship entailed to the defendant by an injunction marginally outweighs the relief that the plaintiff will obtain thereby. Rather, the courts have typically required a significantly disproportionate damage to the defendant, reflected in the criterion of oppression in the Shelfer working rule.
This might be another area where US law is different, following eBay v MercExchange.
Break Fast Investments Pty Ltd v PCH Melbourne Pty Ltd [2007] VSCA 311
