Origins of Equity

Equity:
- Derived from the Latin term “aequitas”, which means equality, even or fair.
- Best described as fairness, natural justice and conscience.
- Represents a body of rules which exist by the side of law, and supersedes it in cases of
conflict.
The period from the Norman Conquest to the reign of Henry III in the 13 th century witnessed
the birth and rapid growth of the common law, which was administered by the King’s justices
and in the common law courts.
Although common law continued to develop, its defects prevented it from developing fast
enough to do justice in all cases.
- The writ system: ‘No writ, no remedy’
- A writ is a document setting out the details of a claim.
- The system was too formal, and beset with technicalities that a plaintiff with a
cause of action which did not fit one of the existing writs would have no
remedy. Only claims which fit into an existing remedy would be allowed.
- The Provisions of Oxford 1258 forbade the issuance of new writs without the
consent of the King in Council, which restrained the Chancellor from issuing
new types of writ of his own initiative.
- The writs were expensive and not everyone could afford it.
- Judges spent too much time examining the validity of the writ compared to the
merits of the claim.
- The jury system
- The juries were easily intimidated or bribed by the defendants.
- The rich defendants were the most corrupt.
- Inadequate remedy
- Damages were the only common law relief available, and it proved to be
inadequate.
- A plaintiff was often unable to obtain a remedy in the common law courts even
when they should have had one for him, owing to the strength of the
defendant, who would defy the court or intimidate the jury or to the disturbed
state of the country.
- Formalities
- Common law paid too much attention to formalities, and was too concerned
with procedures.
- Doctrine of stare decisis
- A strict application of the doctrine caused common law to become too rigid.
- Judges were restricted from expanding their knowledge.

Where an aggrieved plaintiff is dissatisfied with the common law courts and its failure to
uphold justice, their only option was to present a petition to do the King asking him to do
justice, which were often referred to the Lord Chancellor and were heard in his office.
In 1474, the Court of Chancery headed by the Chancellor came into existence as an institution
independent of the King and his Council, where equity was administered according to the
Chancellor’s discretion.
- The Chancellor was referred to as the ‘keeper of the King’s conscience’ and was
second only to the King.
- The Chancellor was a religious person whose knowledge was based on canon law and
did not possess a legal background, thus his decisions was based on beliefs, ideas and
conscience.
Equity developed through the Court of Chancery as a reaction to the rigours and inadequacies
of the common law.
- The writ system was abolished by the Chancellor to overcome the unnecessary
formalities.
- The jury system was abolished and the parties were heard by the Chancellor himself.
- He issued subpoenas compelling the attendance of the defendant whom he
examined on oath.
- Under equity, there were more available reliefs, as well as monetary compensation.
- He acted in personam by issuing decrees of specific performance and
injunction where damages would be inadequate.
- Instead of following the rigid formalities of the common law, the Chancellor followed
his conscience in order to reach a decision.
- The doctrine of stare decisis was not strictly applied as the Chancellor made decisions
based on conscience rather than precedent.
- In the absence of fixed principles, decisions made depended upon the
Chancellor’s idea of right and wrong.
Conflict between Equity and Common Law:
- The Court of Chancery became known due its flexibility, superior procedures and its
more appropriate remedies. However, conflict arose in the 16 th century when the
Chancellor began extending his jurisdiction (started interfering with the Common Law
system).
- The conflict centred on common injunctions issued by the Chancellor.
Where a judgment by a judge of the common law courts was technically good, the
Chancellor was entitled to set it aside with the use of a common injunction where the
judgment had been obtained by oppression, wrong and bad conscience.
- Earl of Oxford’s case: There was no contract stating that the deed had been
paid off, even though it had in fact been paid. The common law court gave a
verdict in favour of the party receiving the money.
However, it was alleged that the judgment was obtained through fraud. The
Court of Chancery issued a common injunction to prevent that party from
enforcing the judgment. The dispute was referred to the King who asked the
Attorney-General to make a ruling. It was decided that in cases of conflict
between equity and common law, equity shall prevail.
 - During the 16th century up to the 18th century, equity experienced its downfall when
lawyers began to be appointed as Chancellors. This lessened the idea of right and
wrong because the Chancellors were from legal backgrounds and no longer had any
religious background.
- Lord Nottingham (1673-82): Known as Father of Modern Equity, who
systemized equity and developed the law of trusts.
- Lord Hardwicke (1736-56): Further developed equity by achieving a balance
between certainty and flexibility. He was responsible for laying down the
general principles upon which equity operated.
- Lord Eldon (1801-27): Stressed that decisions must be based on precedents,
and consolidated principles previously developed.

- The Chancellors greatly contributed to the downfall of equity:

- They were corrupt: Chancellors were being paid to give the remedy the
aggrieved party wanted.
- They were inefficient: Only one Chancellor existed at a time with one Master
of Rolls, which was considered insufficient as there were too many cases. This
caused them to work inefficiently.

- Despite the downfall, in the 19th century, equity became a system of law that was
almost as fixed as the common law.
Fusion of Equity and Common Law:
- The existence of two separate court systems caused many procedural difficulties.
- Overlapping decisions: Decisions made in equity and common law differed
from one another.
- Parties did not know where to initiate their cases.

- The Supreme Court of Judicature Act 1873-75 was enacted to enable Equity and
Common Law to be administered under the newly established Supreme Court of
Judicature.
- The SCJ replaced the Court of Chancery and the Common Law Courts with a
High Court comprising of three divisions: Queens Bench, Family Division, and
Chancery.
- Cases were allocated according to their general subject matter, but both
common law and equitable remedies could be awarded under any division.
- The SCJ was a court of complete jurisdiction. (Pugh v Heath)

- It was foreseen that a court which applied both rules would face a conflict, thus the
SCJA sought to prevent this through its provisions.
- Sec 24 of SCJA: Common injunctions were abolished.
- Sec. 25(11) of SCJA: In the event of a conflict between the rules of equity and
common law, equity shall prevail.
 - Walsh v Lonsdale: Where at common law the plaintiff was not obliged to pay
rent in advance because of the lack of a deed, equity could ‘regard as done
that which ought to be done’ and hold that the agreement for a lease was as
good as a lease, thus imposing liability upon the plaintiff to pay rent in advance
as the rules of equity prevails.

- However there has been a continuous debate as to whether the two systems have
been fused into one.
- Orthodox view
- This view holds that common law and equity was only fused on the
administration or procedural level, and not on the substantive level.
- Although equity and common law are brought together under
one court system, they do not overtake or overrule one
another.
- Ashburner in Principles of Equity: “The two streams of jurisdiction,
though they run in the same channel, run side by side and do not
mingle their waters.”
- Lord Diplock in United Scientific Holdings v Burnley Borough Council:
“…to perpetuate a dichotomy between rules of equity and rules of
common law is conducive to erroneous conclusions…”
- Lord Justice Mummery: The SCJA was intended to achieve procedural
improvements in the administration of law and equity in all courts.

- Prevailing view
- This view holds that the intention of the legislature was to not fuse
common law and equity at all even though they operate closely
together.
- Attorney-General as asserted in Salt v Cooper: “The Bill was not one for
the fusion of law and equity. Law and equity would remain if the Bill
passed, but they would be administered concurrently, and no one
would be sent to get in one court the relief which another court had
refused to give.”
Maxims of Equity
- A set of general principles which serves as guidelines for judges to make decisions.
- Maxims are more flexible, responsive to the needs of the individual and more inclined
to take account of the parties’ conduct and worthiness.
- Maxims are not binding, thus judges have a choice whether or not to follow them.

- Equity follows the law

- Equity exists to supplement common law, not to override it.
- It does not destroy, but fulfils it.
- It comes in only where common law is too technical to redress a legal
wrong.
- Where possible, equity will ensure that its rules are in line with common law
principles.

- Equity regards as done that which ought to be done

- Equity looks on a party’s obligation as if the obligation had been performed.
- Equity acts on the conscience of the parties.
- What a party has undertaken to do, binds his conscience.
- As long as intention to perform the obligation can be proven, equity will regard
it as having been performed.
- Walsh v Lonsdale: An agreement for a lease is as good as a lease itself.

- Equity acts in personam (against a person)

- Equitable remedies generally operate against a person, thus judgment is made
against an individual.
- Useful in situations where an issue is beyond the court’s jurisdiction.
- Provided that the defendant is within the jurisdiction, it is no objection
that the property is outside it.
- Penn v Lord Baltimore: An order of specific performance was granted
to the plaintiff who brought a boundary dispute case to an English
court, even though the land was in Maryland, USA.
- Ewing v Orr Ewing: A man situated in Scotland died. The executors of
his estate, in England, claimed that they were not under an obligation
to administer the deceased’s estate in Scotland. The court held that the
executors could administer the estate in England, thus extending their
jurisdiction. As long as a person is English, the rules of equity apply.
- Limitations to the maxim:
- The defendant has to be within the jurisdiction of the court.
- The order must not conflict the laws of another country.
- The order must be able to be executed without intervention of a
foreign court, thus the court stands alone and cannot ask for the help
of foreign courts.
- Equity will not suffer a wrong without a remedy
- Ubi jus, ibi remedium: Where there is a right, there is a remedy.
- Equity will not allow the technical defects of common law, such as the lack of
remedies, to prevent worthy plaintiffs from obtaining redress.
- Equity has more remedies compared to common law.
- Wrongs which equity attempts to redress are not moral wrongs, but those
suitable for judicial enforcement.

- He comes to equity must come with clean hands

- A plaintiff seeking an equitable remedy must not be guilty of unconscionable
conduct.
- Refers to the past conduct of the plaintiff.
- The bad conduct of the claimant must be in connection with the rights
he wishes to enforce.
- Cleaver v Mutual Reserve Fund Life Assoc.: A woman who had murdered her
husband was denied the right to claim the pay-out under a life insurance
written in her favour, as she should not profit from her crime.
- D & C Builders v Rees: Where the defendant had taken an unfair advantage of
the plaintiff’s financial troubles, the defendant was ordered to pay the balance
of the sum owed.
- The court is not concerned with the plaintiff’s general character.
- Argll v Argll: The fact that the wife’s adultery had led to the divorce
proceedings was no ground for refusing her an injunction to restrain
her husband from publishing confidential material from their marriage.

- He who seeks equity must do equity

- A plaintiff who seeks equitable relief must be prepared to act fairly towards his
opponent.
- Refers to the plaintiff’s future conduct.
- An unworthy plaintiff will not be granted relief even if he had
established equitable rights.
- Chappell v Times Newspaper: Employees failed to get an injunction to restrain
their dismissal where they refused to undertake to withdraw from the strike
against their employer.

- Equality is equity
- Equity will not play favourites.
- In a dispute over property involving more than one party with a beneficial
interest, the property will be divided equally, unless there is evidence that the
property should be divided in a different manner.
- Midland Bank v Cooke: Where a husband and wife disputed over the
ownership of their matrimonial home, the court ordered for the house to be
sold and for the money to be divided equally.
- Equity will not permit a statute to be used as an instrument of fraud
- Equity will only ignore statutory requirements where it would be
unconscionable to allow a party to rely on a statutory requirement to another’s
detriment.
- A person is forbidden from relying on the absence of statutory requirements if
doing so would result in unfairness to another.
- Bannister v Bannister: B orally agreed to allow A to live in her house for as long
as she wished without paying rent. The agreement was not put into writing. B
then tried to evict A, claiming that A had not fulfilled the statutory
requirements of furnishing a tenancy agreement. The court held that the
agreement was enforceable, despite the absence of a written agreement as
required.

- Equity looks to the substance rather than the form

- The court is less concerned with precise formalities compared to the common
law.
- It finds that by insisting on formalities, the substance will be defeated.
- However, this does not imply that formalities are never required.
- Street v Mountford: The agreement was given the heading ‘license’ as the
landlord wanted to avoid the tenant from remaining in the property in
accordance with the statutory provisions of leases. The court held that
regardless of what the parties termed it as, the agreement was a lease which
entitled the tenant to full protection of the law.

- Equity imputes an intention to fulfil an obligation

- Where a plaintiff is obligated to do one thing but does another, his action may
be treated as close enough to what he was required to do.
- A plaintiff who has undertaken an obligation will, through his later conduct, be
considered as having fulfilled that obligation.
- Sowden v Sowden: The husband promised to pay £2000 to the trustees with
which they would buy a property to provide income for his wife in the event
of his death. However, the husband had bought a property after their marriage
for £2150. He then died. The wife was entitled to the property, as the husband
bought it in the performance of his obligation under their marriage settlement.
Equitable Doctrines
- A set of general principles which also serves as guidelines in helping judges reach a
decision.
- Doctrines have more weightage as compared to maxims. However, in the Chancery,
they are used interchangeably.
Conversion:
- Based on: ‘Equity looks on as done that which ought to be done’
- Equity carries out the obligation for the individual
- Introduced to stop unfairness in allowing trustees prejudicially to affect the interests
of beneficiaries by postponing sales or purchase of land.
- Assists the owner of the subject matter in distributing his property according
to his intentions.
- Doctrine operates only where someone is under an obligation to carry out a certain
act, and there is someone else in a position to compel the performance of such
obligation.
- Fletcher v Ashburner explained the doctrine as:
- Money directed to be used in the purchase of land shall be considered
as land.
- Land directed to be sold and turned into money shall be considered as
money.
- Applicable only where there is a duty to convert.
- Conversion is effective at the date of the instrument expressing the intention and the
date of the testator’s death.
- Sweetapple v Bindon: A testator bequeathed £300 to be used for the purchase of land
for her daughter and grandchildren. Her daughter died and no purchase of land was
made. Her daughter’s husband claimed to be tenant by courtesy of the fund of £300.
The court upheld the claim as although there was no purchase of land made, through
conversion, the money was regarded as realty.
- Exception as in Lawes v Bennett: Where there is only one option, the exercise of that
option even after the testator’s death, converts the property retrospectively to
personalty.
Election:
- Derives from the principle that a person may not take a benefit and reject an
associated burden or choose between parts of a single transaction.
- Birmingham v Kirwan: A person cannot accept and reject the same instrument.
- Doctrine operates when a testator has committed a mistake.
- There must be 3 parties involved.
- Conditions for election as in Re Edwards:
- Intention on the part of A to dispose certain property to someone (B)
- The property is not A’s property, but someone else’s property (C)
- The benefit should be given to the true owner of the property (C)
Satisfaction:
- Based on: ‘Equity imputes an intention to fulfil an obligation’.
- Where a person is under an obligation to do one thing, but does another, the
act may be held to satisfy the legal obligation.
- Talbott v Duke of Shrewsbury: Where a testator owes money to a person, and gives a
legacy to that person which is either equal or exceeds the amount of debt owed, there
is a presumption that the legacy extinguishes the debt.
- Doctrine is inapplicable where:
- The debt was incurred after A made his will
- The debt is not a specific sum
- The will made by A contains a specific direction to pay his debts
- Must be proven that an order to pay the debt was not made.
Performance:

- Operates much like the doctrine of satisfaction.

- Where a person is under an obligation to do an act, but does another instead of the
one he was bound to do, equity may still regard the performance of that act as
performance of the original obligation.
- Doctrine is applicable where:
- Agreement to purchase land: If the obligation has not been carried out, but
lands have been bought, it is presumed that they were bought in performance
or part performance of the obligation.
- Agreement to leave money: Where A has agreed to leave a sum of money
through a will to B. A suddenly died without have the opportunity to write the
will. B is then entitled to a portion of A’s personal estate.

Equitable Remedies
- Primarily aimed at providing for instances where, due to the inadequacies of its
remedies, common law was unable to give a fair and complete satisfaction to the
plaintiff.
Characteristics:
- They are discretionary, whereas the common law remedy of damages is available as
of right.
- They are granted where common law remedies would be inadequate or unavailable.
- They act in personam and failure to comply would be a contempt of court.
Injunction:
- An order from the court directing a person to do or to refrain from doing an act.
- Sec. 4, SRA: Specific relief is given is given
- By ordering a party to do the very act which he is obligated to do
- By preventing a party from an act which he is under an obligation to do
 - Types of injunctions:
- Prohibitory: Where a person is directed to refrain from doing an act.
- Mandatory: Where a person is ordered to perform an act.
- Perpetual: An order issued by the court after having heard arguments from
both sides (Sec. 51(2)) and will finally settle the dispute between the parties.
- Interim: An order to refrain or compel a person to do an act until a specified
date.

- Interlocutory: An order to refrain or compel a person to do an act only until

the trial of such case.
- Objective: To preserve the status quo of the parties involved until the
trial; it may be prohibitory, mandatory or quia timet.
- Where speed or secrecy is of the essence, it may be granted ex parte.
- The principles on issuing an interlocutory injunction as by HOL in
American Cynamid Co v Ethicon Ltd:
- i) The plaintiff must show that his claim has a legitimate
concern. He must adduce sufficient evidence to satisfy the
court that his claim has a real prospect of success at the trial.
The plaintiff need not establish a prima facie case.
- ii) Balance of convenience test: Where points of views from
both plaintiff and defendant are taken into consideration.
- The plaintiff’s financial standing must be considered
should the injunction be awarded, but the defendant
wins the case
- iii) Special factor: The plaintiff can raise any factors that will be
to the advantage of his reputation.
Specific performance:
- An order against a contracting party for him to carry out his obligation under the
contract.
- Granted where damages are not an adequate remedy:
- Sec. 11, SRA: Situations where damages may not be adequate:
- Contracts for the sale of land; stock and shares; rare chattels.
- Damages may be awarded in substitution for, or in addition to, specific performance:
- Sec 18, SRA: Any person suing for specific performance of a contract may also
ask for compensation for its breach.
Rescission: In situations where the contract is voidable because of a vitiating factor (coercion,
fraud, misrepresentation, undue influence, mistake), the contract will be set aside and the
parties will be restored to their pre-contractual positions.

Rectification: In situations where an instrument is not in accordance with the intention of the
contracting parties due to a common or unilateral mistake, the instrument may be corrected.