Has Common Law and Equity “Mingled their

Waters”?

George P. Kyprianides
LLB, LLM with Distinction
University of Reading
Advocate-Legal Consultant

Abstract:

This paper discusses the three different views surrounding this debate as well as all its

salient aspects. Consequently the Orthodox view, Radical View, and the Intermediate view

are scrutinised. This article endorses the intermediate view and the ‘finale’ set by Hanbury

and Martin that common law and equity are working more closely together, they are coming

closer, but have not yet fused.

Electronic copy available at: http://ssrn.com/abstract=2412935

Introduction

The Judicature Act of 1873-1875 certainly compound the administration of law and

equity by creating the Supreme Court of justice, exercising both common law and equity and

gave supremacy to equity in case of a conflict. However, there is a large debate, over hundred

years ago, as to whether law and equity really fused. P. Baker (1977)1 states that fusion

denotes that there is no distinction or difference between legal rights and remedies and

equitable rights and remedies and thus cannot be supported. Hanbury and Martin and Jill

Martin2 are in accord that law and equity have not ‘mingled their waters’ although there are

some examples which illustrate harmonization. Hanbury and Martin reach a more thorough

conclusion by stating that law and equity are working closely together, they are coming

closer, but they are not yet fused. We will first state the three differing views and assess

them, and then we will observe the main issues surrounding this debate such as remedies and

illegality.

Three differing views

Orthodox View

The orthodox view endorses that the effect of the Judicature Acts is procedural

only. Law and equity are administered under one roof and there are no alterations to the

substantive law. The orthodox view was set out in Salt v Cooper,3 as well as Rhone v

Stephens,4 where the House of Lords refused to alter the rules of either system with regard to

restrictive covenants in land in the name of equity which accentuates that equity was not

fused with law. Baker5 refers to the famous metaphor used by Ashburner to describe the two

separate bodies of law. Ashburner used the example of ‘two streams of jurisdiction’ which

1
P. Baker (1977) 93 L.Q.R. 529 at 532
2
Hanbury and Martin and Jill Martin Fusion, Fallacy and confusion (1994)
3
Salt v Cooper 1880-81 L.R. 16 Ch. D. 544
4
Rhone v Stephens [1994] 2 A.C. 310 [1994] 2 W.L.R. 429
5
P. Baker (1977) 93 L. Q. R 529 at 530
2

Electronic copy available at: http://ssrn.com/abstract=2412935

although they ‘run in the same channel’ they do not ‘mingle their waters’. This established

that legal rights and equitable rights remain detach albeit that they are administered in the

same court. The orthodox view probably cannot be sustained in the form articulated in the

nineteeth century. This is because it pays insufficient regard to the fact that equity and the

common law have been developing since 1875 and so in some areas, which will be discussed

below, have cross-fertilized each other.

Fusion Fallacy

The radical view or ‘fusion fallacy’ as stated, endorses the contention that the

Judicature Act has fused law and equity. Many great figures sustain this view, Jill Martin

refers to them as the ‘exponents of the fallacy’ and says that Lord Diplock and Lord Denning

are the most powerful supporters of the radical view. Lord Diplock regarded Ashburner’s

metaphor as ‘mischievous and deceptive’ in 1977.6 Other supporters of the radical view are

Sir George Jessel and Sir Richard Scott V. C.7 According to Baker8 this view is overstated.

This is because English law and legislature terms proceed to identify and enforce separate

legal and equitable rights in property. Additionally, the radical view also fails to justify why

the whole of the law relating to trusts is based on equity alone.

Intermediate View

The intermediate view states that Equity continues to develop, as does the common

law. The task of the courts according to Lord Goff in Nappier and Etterick v Hunter 9 is that

the two ‘strand of authority’ are ‘moulded into a coherent whole’. So this view invites us to

consider common law and equity as closely related, and where possible the courts should aim

to harmonize them, ironing out technical differences between the two systems. Nevertheless

this view believes that there is a still a separation between common law and equity.
6
Handbury and Martin, pg23.
7
In Medforth v Blake [2000] Ch. 86 at 102.
8
P. Baker (1977) 93 L. Q. R 529 at 530.
9
Nappier and Etterick v Hunter [1993] A.C. 713.
3
Remedies

Main issue

This is probably the main issue of the debate. Jill Martin10 believes that equitable

remedies such as injunctions and specific performance are available where the cause of action

has a common law origin, as in contract and tort. However, the common law remedy of

damages is not available where the cause of action is purely equitable. This is because the

common law did not recognize the rights of a beneficiary of a trust, so they were protected by

equity in its exclusive jurisdiction. The House of Lords in Johnson v Agnew11 did not tag

along the example set by Common wealth courts, in New Zealand, and postulated that

common law damages are not available by a breach of a restrictive covenant by a successor in

title.

Breach of Confidence

Moreover, there is a debate about breach of confidence. Jill Martin believes that

common law damages will be available if the breach of confidence constitutes a breach of

contract such as secret cases. But if it is a non- contractual breach of confidence then it will

have an equitable origin. In the UK damages have sometimes been assumed to be available

with little or no debate. Lord Goff has said in Attorney General v Guardian Newsapaper

Ltd.No. 212 that damages may be awarded for breach of confidence ‘through a beneficent

interpretation of the Chancery Amendment Act 1858. Common wealth courts went a step

further in Her Majesty’s Attorney-General v Mellington Newspapers Ltd13 and postulated that

law and equity are now mingled hence the full range of remedies should be available in

common law and equity. Likewise judgment was issued by the Canadian Supreme court in

10
Jill Martin, Fusion, fallacy and confusion, 1994.
11
Johnson v Agnew [1980] A.C. 367 at 400.
12
Attorney General v Guardian Newsapaper Ltd.No. 2 [1990] 1 AC109 at p.286.
13
Her Majesty’s Attorney-General v Mellington Newspapers Ltd [1988] 1 N.Z.L.R 129 at p.172.
4
LAC Minerals Ltd v International Corona Resources Ltd.14 This decision raised the following

issue: how can one assess damages once an award of common law damages was raised given

to an equitable case. This view is highlighted in Jill Martin’s article which has lead those who

endorse the view that common law and equitable origins should be ignored, to find

themselves asking whether the common law concept of contributory negligence or exemplary

damages should be awarded. Furthermore, there were many different views expressed in for

the concept of causation and remoteness15. Lord Diplock in United Scientific Holdings16

considered the merger of common law and equitable principles to be reasonable. In his view,

since equity was not developed in this area it could either develop in its own, or could follow

the common law principle.

‘Refreshing the mind’ of the Reader

To sum up all these points on remedies this article is in accord with the view

expressed by Jill Martin that the wide views expressed in particular in New Zealand courts

should not be endorsed in this area. This is because the proposition that the court has

discretion to select from a range of legal and equitable remedies those which meet the needs

of a case, without regard to the origin of the rights, has no foundation in the Judicature Acts.

Jill Martin states that if we ignore the origin of rights and remedies, then the next stage would

be to assert that any defense should be available without regard to the nature of the remedy.

The proposition that the equitable defense of hardship, applicable to injunctions and

specific performance, could defeat a claim for damages for breach of a contract is clearly

vulnerable.17 However, this does not indicate that equity should not be free to borrow from

the common law in developing its doctrines. As McLaclin J says in Canson enterprises ltd v

Boughton [1991]18 ‘we may take wisdom where we find it’. One could argue that this view

14
LAC Minerals Ltd v International Corona Resources Ltd [1989] 61 D.L.R (4th) 14.
15
Canson Enterprises; Day v Mead;
16
United Scientific Holdings [1978] A.C. 904
17
B.I.C.C. plc v Burndy Corp. [1985] Ch. 232, where Keer L.J considered that an equitable remedy could be
resisted only on equitable grounds.
18
Canson enterprises ltd v Boughton [1991] Found in the Fusion, fallacy and confusion section g.
5
promotes the ‘fusion fallacy’ and not many would disagree with it including Hanbury and

Martin; but it does not justify that the policy matters of common law and equity are the same.

Jill Martin accentuates cautiousness in borrowing the common law concepts of exemplary

damages, contributory negligence as well as mental distress. As for exemplary damages

though, they are restricted in the circumstances that are available and there is no indication in

England of any recreation in this aspect. Consequently, we should heed the words of Somers

J. in Aquaculture Corporation v New Zealand Green Mussel Co. Ltd,19 that ‘equity and

penalty are strangers’.

Duties of Mortgagees

In this area the ‘fusion of fallacy’ evident in Cuckmere Brick Co. v Mutual Finance

Ltd20 has been replaced by a return to orthodoxy.21 The Privy Council repeated the point in

Downsview Ltd v First City Corporation Ltd.22 Holding that the mortgagee and the receiver

owed no duty in negligence to the mortgagor and later mortgages to use reasonable care in

exercising their powers. The duties were imposed by equity. Martin,23 states that if the

equitable duties of mortgages were replaced or supplemented by a liability in negligence this

would have caused confusion and injustice. In CBS Songs Ltd v Amstrad Consumer

Electronics plc [1988] A.C,24 Lord Templeman noted that the House of Lords had warned

against the danger of extending negligence so as to supplant other torts, contractual duties,

statutory duties or equitable rules.

Estoppel

19
Aquaculture Corporation v New Zealand Green Mussel Co. Ltd. [1990] 3 N.Z.L.R. 299 at 302
20
Cuckmere Brick Co. v Mutual Finance Ltd [1971] Ch. 949.
21
Jill Martin, Fusion, fallacy and confusion, section ii duties of a mortgagee.
22
Downsview Ltd v First City Corporation Ltd [1993] 2 W.L.R. 86.
23
p.135
24
CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] A.C 1013 at p.1059
6
 This is an region the English law demonstrates flexibility. A good illustration is

Crabb v Arun.25 Common law in this area favors the unification of various categories of

estoppels, although not suggesting that their common law or equitable origins should be

ignored. Jill Martin26states that this does not justify that equity and common law are fused

but rather that there is unified doctrine free from historical anomalies. Hence this area

supports a more intermediate view as we can see that where it is possible law and equity

‘mingle their waters’.

Subrogation

Napier and Ettrick (Lord) v Hunter27 is an excellent illustration of the true

meaning and effect of fusion. In this case the nature of an insurer’s subrogation right was in

issue. Lord Goff examined the origins of subrogation at law and in equity and concluded that

the task of the courts is to ‘mould the two strands of authority into a coherent whole’. Jill

Martin postulates that the principles of equity were sufficiently flexible to impose a charge

rather than a constructive trust, which was neither necessary nor desirable. This case

confirms once more that the English courts seem to favor an intermediate view. When and

where possible the courts aim to harmonize law and equity, ironing out technical differences

between the two systems. Notwithstanding the fact that there is still a separation between

them.

Illegality

25
Crabb v Arun D.C. [1976] Ch. 179
26
Fusion Fallacy and confusion Section iii of Fusion Fallacy and confusion
27
[Napier and Ettrick (Lord) v Hunter 1993] A.C. 713
7
 This issue is focused around a recent case known as Tinsley v Milligan28. The ratio of

the House of Lords was that if someone can prove the legal arguments without revealing his

‘dirty hands’ then he/she will succeed. On the contrary, if in order for someone to prove

his/her legal argument releases his dirty hands then the claim will fail. This decision by the

House of Lords was hugely criticized for being unjust, but as far as law and equity are

concerned it did not draw a distinction in the context of illegality between them, as it was

stated by Lord-Browne Wilson. Jill Martin29 believes that this approach does not seek to

attribute any substantive effect to the Judicature Acts, but rather to facilitate the harmonious

developments of the common law and equitable rules on illegality.

Conclusion

This paper has discussed the three different views surrounding this debate as well

as all its salient aspectst. Hence, it can be said that the courts seem to favor the intermediate

view as far as possible. However, equity and common law have not yet fused and this is clear

when we observe the meaning given to fusion by Baker. So this article endorses the

intermediate view and the ‘finale’ set by Hanbury and Martin that common law and equity are

working more closely together, they are coming closer, but are not yet fused.

28
Tinsley v Milligan [1994] 1 A.C. 340
29
Ibid 10, section 5 of his article.
8