History of equity


History of equity

The problem- claimants were often left without remedies or extremely harsh punishments. 'The growing strength of the substantive common law could also work injustice, because the judges preferred to suffer hardship in individual cases than to make exception to clear rules.'- Baker

The king had discretion to interfere in the courts to give justice. 

The solution- 'The function of equity was to fulfil the common law, not so much as to correct it but to perfect it.'- Lord Evershed.

The criticism- 'a rougish thing. For common law we have a measure... equity is according to the conscience of him that is Chancellor and as that is longer or narrower so is equity. Tis all one as if they should make the standard for the measure of a Chancellors foot.'- Seden. 

'That the court of law rigidly adheres to its own established rules, be the injustice arising from thence, ever so apparent, whereas the court of equity will not adhere to its own most established rules, if the least injustice arises from thence.'- Francis

The battle- between the Common law and the chancery. Earl of Oxfords Case 1615- Lord Ellesmere (chancellor)- 'mens actions are so diverse and infinite that it is impossible...

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History of equity

to make any general rule which may aptly meet with every particular and not fail in some circumstances. The office of Chancellor is to correct mens consciences for frauds, breaches of trusts, wrongs and oppresions of what nature so ever they be and to soften and mollify the extremely of the law.' This case established fundamental principles. Equity primacy- where equity and common law conflict equity will win. It is not saying that common law is wrong, just applying common law rights in a way with good conscience. 'In personum.' 

The aftermath- 'The criticism that equity was unprincipled and unpredictable began to be less true in the later seventeenth century, as the principles of equity began to become more fixed... the Chancellors began to say that although they had discretion, it should be exercised not according to conscience, but in accordance with precedent... The result of their work was to transform equity into a system of law almost as fixed and rigid as the rules of common law.'- Pettit.

 Re National Funds Assurance Co 1878- Jessel- 'The chancery division is not, as I have often said, a Court of Conscience, but a court of Law.'

CC v AB 2006- Eady J- 'Even among judges there is no doubt a wide range of opinion. It is all the more important, therefore, that the outcome of a particular case should not be determined by the judges personal views, or as it used to be said, by the 'length of the Chancellors foot.' 

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Fusion of law and equity

Background- 'Each division of the SC should be enabled to grant such relief or apply such remedy or combination of remedies as all the present courts combined would have jurisdiction to administer.'- First Report of the Judicature Commission 1869.

They recommended the creation of a single Supreme Court of Judicature, comprising the High Court and Court of Appeal. That new single court was to have all the jurisidiction then exercised by the separate superior courts of law, equity, probate, admirality and divorce. 

The statute- The Judicature Acts 1873-1873 s25(11). This abolished the Court of Chancery and gave jurisdictin to the High Court. See now Senior Courts Act 1981 s49(1)- 'wherever there is any conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rule of equity shall prevail.' Fused, can give both remedies. 

In terms of substantive law, this continues the settlement between law and equity established by the Earl of Oxfords Case 1615.

The debate- there is debate as to whether the Judicature Acts fused merely the administration of equity and common law (procedural fusion) or also fused the substantive rules of the jurisdictions (substantive fusion). In England the generally accepted view is that the effect was procedural.

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Procedural fusion

'The two streams of jurisdiction, though they in the same channel run side by side and do not mingle their waters.'- Ashburner. Substantively the two laws are separate. CL claim only CL remedy. E claim, E remedy. 

'It is difficult to concieve how the rules of equity could prevail over those of law if there were no longer any rules of equity or law, if the Judicature Acts had assimilated the two in order to create the successor to equity and law what conflict could there be?'- Neuberger. 

Salt v Cooper 1880- Jessel- 'It has sometimes been inaccurately called 'the fusion of law and equity' but it was not any fusion, it was the vesting in one tribunal of the administration of law and equity in every cause, action or dispute which should come before that tribunal.' 

MMC Proceeds v Lehman Brothers 1998- Mummery LJ- 'The Judicature Acts were intended to achieve procedural improvements in the administration of law and equity in all the law courts, not to transform equity interests into legal titles or sweep away altogether the rules of the Common law.' 

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Substantive fusion

Believing that it removed the distinction between the two. 

Boyer v Warbey 1953- Denning- 'I know that before the Judicature Act it was said that the doctrine of covenants running with the land only applied to covenants under seal and not to agreements under hand... but since then the fusion of law and equity the position is different. The distinction between agreements under hand and covenants under seal has largely been obliterated.' 

United Scientific Holdings v Burnley BC 1978- Diplock- 'this metaphor of two streams has in my view become both mischievous and deceptive. The innate conservatism of English lawyers made them slow to recognise that by the SC of Judicature Acts the two systems of substantive and adjectival law formally admistered by the Courts of Law and Chancery were fused.' 

Was this case the low watermark of modern English jurisprudence as claimed by Meagher, Gummow and Lehane? 

Tinsley v Milligan 1994- Browne Wilkinson- 'more than 100 years has elapsed since the fusion of the administration of law and equity. The reality of the matter is that, in 1993, English law has one single law of property made up of legal and equitable interests.' 

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Fusion fallacy

This is referring to the idea that after the Judicature Acts any substantive distinctions between common law and equitable claims, defences and remedies has been abolished. 

'The fusion fallacy involves the administration of a remedy, not previously available at law or in equity, or the modification of principles in one branch of the jurisidiction by concepts which are imported from the other. The fallacy is committed explicitly, covertly and on occasion with apparrent inadvertence. But the state of mind of the culprit cannot lessen the evil of the offence.'- Meagher, Gummow and Lehanes. 

Fusion by convergence- Could they be fused? 'The support of fusion seems self evident, resting as it does, on not being slaves to history and on recognising the importance of coherence in the law.- Burrows. 

This is a more moderate and principled version of the substantive fusion position. The argument is that as law evolves and develops, it is proper for judges to borrow ideas back and forth between law and equity. Particularly the case when two bodies of rules operate alongside each other in the same kind of dispute. Strong argument cases should be decided alike. Ensures fairness and coherence in the law. Historical differences in the origin of the claim is not a good enough argument to justify substantively different results. 

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Fusion by convergence

Argument is based on the claim that like cases should be decided alike. However are cases always alike? Borrowing principles back and forth across the old common law/equity divide may be problematic when judges do not consider the different policies served by those old rules. For example, do we really want contributory negligence to apply to cases where a trustee has breached her duties? And what would this mean for the trust? 

'It may be asked why not abolish at once all distinction between law and equity? I can best answer that by asking another question- Do you wish to abolish trusts? If trusts are to continue there must be a distinction between what we call a legal and an equitable estate.'- Lord Selbourne. 

'The substantive common law would continue to exist insofar as it did not conflict with equity. The twin streams of English substantive law were thus intended to continue to flow separately, even though the common law stream would narrow at those points where it overlapped, but did not mingle, with the flowing waters of equity.'- Neuberger. 

Lord Napier and Ettrick v Hunter 1993- Goff- 'No doubt our task nowadays is to see the two strands of authority, at law and in equity, moulded into a coherent whole, but for my part I cannot see why this amalgamation should lead to the rejection of equitable proprietary right.' 

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Continuing creativity?

'Equity is not to be presumed to be past the age of child bearing.'- Lord Neuberger. 

'Although there is no fiction in equity as there has been said to be at common law that the rules have existed from time immemorial and although it is perfectly well known that they may have been established from time to time- altered, improved, and refined from time to time. In many cases we know the names of the Chancellors who invented them. It is in principle doubtful whether a new right can now be created.'- Pettit. 

There is a debate also as to whether the courts, using their equity jurisdiction, can and or should created new rights and remedies. 

Re Diplock 1948- 'it is not sufficient that because we may think that the 'justice' of the present case requires it, we should invent such a jurisdiction for the first time.'

Cowcher v Cowcher 1972- 'so in the field of equity, the Chancellors foot has been measured or is capable of measurement. This does not mean that equity is past childbearing, simply that its progeny must be legitimate- by precedent out of principle.' 

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Continuing creativity?

Western Fish Products v Penwith 1981- 'the creation of new rights and remedies is a matter for Parliament, not the judges.' 

Re Polly Peck 1998- Norse- 'you cannot grant a proprietary right to A, who has not had one beforehand, without taking some proprietary right from B. No English court has had the power to do that, except with the authority of Parliament.' 

But- Neuberger- 'the first problem is that of too much ill thought out legislation, the second is avoidance of failing to legislate in contraversial and sensitive areas.' 

What makes equity distinct? 

The maxims of equity- general guidance to judges. Came from the Chancery. 'Without equity and its famous maxims... the common law would be an incomplete means to achieve justice'- Neuberger. 

Co-operative Insurance v Argll Stores 1997- Hoffmann- 'of course the grant or refusal of specific performance remains a matter for the judges discretion. There are no binding rules but this does not mean there cannot be settled principles.' 

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Equity's maxims

  • Equity acts in personam
  • Equity will not suffer a wrong to be without a remedy
  • Equity follows the law
  • He who seeks equity must do equity
  • He who comes to equity must come with clean hands
  • Equity is equality
  • Where the equities are equal the first in time prevails
  • Equity imputes an intention to fulfil an obligation
  • Equity regards as done that which ought to be done
  • Equity looks to substance rather than form
  • Delay defeats equity
  • Equity will not allow a statute to be used as an instrument of fraud
  • Equity will not assist a volunteer
  • Equity will not perfect an imperfect gift. 

Remedies- one of the most significant contributions of equity is the range of remedies it can offer. These remedies are discretionary rather than as of right. Whether a person is entitled to a particular remedy may turn on the application of one of the equitable maxims set out above.

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Equitable remedies are- specific performance, injunctions, rectification, rescission and subrogation. 

Distinct features of equity- 

  • equitable remedies operate in personam, not in rem.
  • All equitable principles pre-suppose the existence of common law rights of property or common law claims.
  • Equitable principles therefore act as secondary limits or glosses that qualify the way a person can enforce her primary common law rights.
  • Equity could be abolished and the common law would still exist as a functioning system. If the common law were abolished, equity would be abolished with it. 
  • Directly or indirectly, equitable doctrines are linked by principle that they aim to prevent the unconscionable enforcement of common law rights.
  • Common law remedies are absolute. Equitable relief can be conditional.
  • Equity has distinctive defences that do not apply to common law claims eg non clean hands.
  • Common law tends to operate through clearly defined rules that apply without close investigation of the facts. Equity often operates through more abstract principles. 
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  • Much common law relief is merely pecuniary. Much equitable relief is specific eg in the recovery misapplied trust assets and protecting trust property from the risk of insolvency. 
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