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26 1 An Introduction to Equity Traditionally, compound interest was only available for claims brought in Equity, such as claims for breach of trust. 131 However, the House of Lords in Sempra Metals Ltd v IRC rec ognized that compound interest should be available for claims regardless of whether they arose at Common Law or in Equity. 132 (2) Traditionally, Common Law pecuniary remedies are compensatory, whereas those awarded in Equity are gain-based, in the sense that they are assessed by reference to the value of the gain made by the defendant rather than the loss suffered by the claimant. So, for example, where the defendant has breached a contract, the usual remedy will be compensatory damages, whereas where the defendant has breached a fiduciary duty, the typical remedy will be an account of profits, which is assessed by reference to the value of the gain made by the defendant as a result of the breach of duty. There is, however, grow ing evidence of the assimilation of these remedies. So, for example, the House of Lords has recognized that the remedy of an account of profits may exceptionally be available where the defendant has breached a contract. 133 Equally, compensatory damages can be awarded for the commission of equitable wrongs. 134 Further, there appears to be a growing assimilation of the principles relating to the award of compensatory remedies for equi table wrongdoing with those concerning Common Law wrongdoing, at least where the equitable wrong has occurred in a commercial context. 135 (3) The orthodox analysis of the law of rescission of contracts is that the rules differ depending on whether the jurisdiction to rescind is asserted at Common Law or in Equity. 136 The key difference in the application of these rules is that rescis sion at Common Law is effected by the election of the party seeking rescission of the contract, 137 whereas rescission in Equity is effected by a court order, with the court having a discretion to determine whether rescission is appropriate and, if it is, what the conditions for rescission should be. 138 A significant consequence of this has been that rescission at Common Law will be barred if the parties cannot be restored pre cisely to their pre-contractual position, whereas rescission can be effected in Equity by the court if the parties can be restored substantially to their pre-contractual positions. In fact, the Judicature Act 1873 itself might have operated to ensure that the equitable rules of rescission prevailed over those of the Common Law, so that all re scission should be effected by order of the court. This is because that Act provided that where there is a conflict or variance between the rules of Equity and the Common Law with reference to the same matter, the rules of Equity will prevail. 139 This might be in terpreted to mean that, where there is a concurrent jurisdiction to rescind in Equity and the Common Law, the equitable rules should apply to the extent that they conflict. This interpretation of the legislation was acknowledged by Carnwath LJ in Halpern v Halpern (No 2) , 140 a case concerning rescission of a contract for duress, in which it was recog nized that rescission for duress, which takes place at Common Law, should be subject © Oxford University Press

131 Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669. 132 [2007] UKHL 34, [2008] 1 AC 561. 133 Attorney-General v Blake [2001] 1 AC 268. 134 Target Holdings Ltd v Redferns [1996] AC 421; AIB Group (UK) plc v Redler [2014] UKSC 58, [2015] AC 1503. 135 Ibid. See further Section 18.2.2(ii), p. 569. 136 Erlanger v The New Sombrero Phosphate Co (1878) 3 App Cas 1218, 1278 (Lord Blackburn). 137 Car and Universal Finance Co Ltd v Caldwell [1965] 1 QB 525. See Section 1.4.1(iv).2, p. 11.

138 Spence v Crawford [1939] 3 All ER 271, 280 (Lord Thankerton). 139 Judicature Act 1873, s. 25(11). See now Senior Courts Act 1981, s. 49. 140 [2007] EWCA Civ 291, [2008] QB 88, [70].

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