damages are an inadequate remedy

Whether damages are an inadequate remedy or not is a question relevant in assessing whether a litigant is entitled to equitable remedies before a court exercising its jurisdiction in equity, which include injunctions. Where a claimant will be able to be fully compensated for loss suffered by an award of damages, Courts will not issue injunctions. This will be the case where the wrongful conduct has ceased and there is no prospect of recurrence.

Damages are unlikely to be an adequate remedy where:

1. The parties have entered into a contract which contains a restrictive covenant which is negative in nature;
2. Infringement of intellectual property rights is likely to continue;
3. It would be oppressive to grant an injunction against the respondent, especially in circumstances where the damage suffered by the claimant is small;
4. The wrongful conduct of the defendant cannot be compensated by money. It may be that the defendant has deliberately engaged in unlawful conduct to obtain an unfair advantage over the claimant or perhaps evade the jurisdiction of the Court;
5. The value of security cannot be readily ascertained;
6. The claimant’s loss is difficult to prove or quantify;
7. Particular items of loss may not be recoverable at law as damages or by an account of profits;
8. The claimant will not be able to recover damages from the defendant due to insolvency or some other factor; or
9. Damages suffered may be nominal, and the defendant would be unjustly enriched.

Damages will be considered an adequate remedy where the innocent party would reasonably be able to enter into a substitute contract for the same or similar products or services at a similar price. Damages would be measured by the difference between the price of the substitute contract and the contract with the party in breach. For instance, a sale of shares, commonly available goods and services in a competitive market are unlikely to warrant grant of an order. On the other hand, contracts for real property have historically been granted the remedy (as real property is unique). This basic principle is extended to other property rights such trade marks, patent rights and other items of property that are not readily available elsewhere and are unique.

A court will more likely to be persuaded where the remedy is appropriate in the circumstances and consideration of whether damages are likely to be an adequate remedy for the type of contract before the court. Ultimately it is whether the claimant should be confined to their remedy in damages. It will be for the claimant to show that damages are not an adequate remedy.