HISTORY OF EQUITY

Equity is a body of rules developed and applied by the Court of chancery. This court
was presided over by the Chancellor and the rules were developed under his authority.
The origins of equity lie in the deficiencies of the Common Law. The Common law had
gaps where a remedy was not available or where a remedy was available but was not
appropriate to the particular loss of a plaintiff. The Chancellor was responsible amongst
other things, for the issue of writs and all actions had to be commenced by the issue of
a royal writ.

The writ system brought the species of rigidity into the Common Law administration. If
there was no writ appropriate to a claim there could be no action and thus no remedy.
Hence, the rule “no right could be recognized at Common Law unless a writ
existed which provided a remedy for its breach.” At this point no limitations were
placed on the number or variety of writs which could be issued during the reign of Henry
II and the enactment of Provision of Oxford 1258.

FACTORS

However, a number of factors contributed to the ridgid starting with the writ system
process. A problem arose where the clerks who prepared the writs were duplicating
writs which limited the variety of writs which could be obtained. Notably, during this time
most writs were centered on land, and as such there was a limit on the variety of writs
available to a victim sought relief. Suffice to say such a victim would have to endure the
wrong without a relief.

The Barons who derived some revenue or income from the cases submitted to the
King‟s Court of whom they were Lords were jealous of the overwhelming power of the
King to issue new writs via his Chancery. They sought to put limitation on the growing
jurisdiction of the King. They realized that they could curtail the number of cases which
went to the King‟s Court by circumscribing the number of writs which could be issued by
the Chancery. Hence, the Provisions of Oxford 1258 was enacted to ensure that no
new writ could come into general use without the leave of the King and his Magnum
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Concilium. According to Potter in Historical Introduction to the Common Law,
“the stream of the Common Law was confined within the banks and only by
twists and turns did it gradually widen.”

Another contributing factor was the judges confinement to recognize only existing writs
except where the King and his council had given the appropriate authorization. Notably,
the judges wee medieval conservatism and did not want to recognize new writs. Thus,
it excluded a wide field for which remedies could be provided for and thus made the
Common Law defective. Also the biases of the writ system procedure was a
contributing factor where a plaintiff may have a Common Law remedy but was
prevented from enforcing it because of power or influence of the other party. Such as,
false witness for denial of claim excuses delaying trial and bribery of jurors.

Additionally, the Common Law was preoccupied with formalities and where the
formalities were not satisfied as in the case of contracts Common law would not
recognize or grant remedies irrespective of the merits of the case. Around the 14 th and
15th Century, the Common Law had become so ridged that claimants were becoming
dissatisfied and deprived of relief.

During this time Parliament was recognized as the only source of new law. The judges
merely declared the law and in cases where relief had to be granted outside of the law
and preexisting writs it was left up to Parliament and the King‟s Council. The
stubbornness of the judges to create new writs prevented the development of the
Common law and left Parliament and the King‟s Council to fill the gaps in the law and to
award relief to victims.

The Chancellor was very important, he was second to the King and was not only
responsible for issuing royal writs but also he was the head of the Common Law and
ensured that it worked in an acceptable way. The Chancellors were ecclesiastics rather
than lawyers and were referred to as the keepers of the King‟s conscience. Early
decisions tended to be habitual and based on the ideas, beliefs and conscience
(discretion) of each particular Chancellor. Thus, equity varied with the length of the

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Chancellor’s foot. In other words, the decision in any particular case would be
relatively unpredictable and uncertain. This may have been an acceptable approach in
single isolated cases but the uncertainty meant that the rights of individuals were
impossible to access.

Thus, after a writ was issued by the Chancellor it was sent to the Common Law judge
who then determined its validity hence, another contributing factor to the rigidity.
However, if the writ was found to be valid it will proceed to be decided on but where
found invalid conflict arose between the judges and the Chancellors. Suffice to say the
judge‟s attitude was strengthened by the Provisions of Oxford 1258 which almost
paralyzed the Common Law and caused great public inconvenience.

Hence, the Statute of Westminster II, 1258 was enacted to relax the restriction placed
on the Chancellor to issue mew writs to meet new situations. The latter statute allowed
for the Chancery to make new writs where there were not existing ones or allowed for
the complaints to wait the next Parliamentary session. This statute was enshrined with
many principles of contract and tort which played a significant role in the development of
action on case thereafter.

However, Plucknett disagreed in 31 Columbia Law Review 778 and said that the
“case” has an independent origin. Landon‟s view attacks the latter contention and
holds that the action on the case pre existed the Statute, but its development and
historical change into trespass on the case was facilitated by the statute in Consimili
Casu. This statute sought to give judges wider elbow room to extend the scope of
Common Law remedies. However, the judges did not seize this opportunity which
would have made the Common Law less ridged and continued to take a narrow
approach.

Thus, victims of a wrong who could be remedies resorted to the King who had the
power to grant relief as an act of grace where no remedy was given or no remedy was
available to them. These petitions were addressed to the King asking for relief for the
love of God and in the way of charity. The petitions appealed to the conscience or

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morality which shows the discretionary character of the jurisdiction of the King‟s Court.
As the number of petitions increased they were delegated to a committee of which the
Chancellor was the head.

The Chancellor being an ecclesiastic accompanied the form of the petition which were
framed in the name of God and of charity thus, he was well suited for this job. Having
being already responsible for the issuing of royal writs he was familiar with the problems
of the complaints. “What is more, the King‟s prerogative exercised through the
Chancellor was not defined and was co-extensive only with the necessity that
evoked.” Snell’s General Principles of Equity, 26th Ed. All these factors led to the
emphasis placed in the Chancery Court of conscience as opposed to an external act of
wrongdoing, which was the yardstick of the Common Law.

In the latter part of the 14th Century a Court of Chancery emerged and before this time
the King in Council was exercising its prerogative to do justice among his subjects. For
a long time the scope of the chancellor‟s jurisdiction was vague because the outcome
could not be determined and relief was not justly available. By the end of the 15 th
century equity started to develop the maxim “once a mortgage always a mortgage” to
shield the poor mortgagor form the oppressive conduct of the mortgagee. The
Chancery cared for the weaker party and the mortgagor was accorded the right to
redeem his mortgaged property if through accident, fraud or other misfortune he could
not repay by the redemption date. In the cases of How v Vigures and Courtman v
Conyers it was shown a mortgagor had a right to redeem after the date of redemption
had elapsed on the grounds that the mortgagee had fraudulently absented himself on
the appointed day to avoid receiving payment. Equity enforced contracts on principles
widely different from those of the Common Law by reinforcing promise not under seal if
there was proper parole evidence.

Equity also granted relief against fraud, accident, undue influence and mistake in
conveyance and contracts. The lack of precedents and skillful draftsmanship at this
time necessitated intervention of some sort and equity offered relief to give effect to the
intention of the parties to a transaction. Underlying the reliefs granted by the Chancellor
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was the idea of conscience and morality which was used to temper the strict terms of
legal transactions.

During this period the courts of the Common law were not structured to do much
detailed in-depth investigation into the rights and liabilities of many parties however, the
Chancery was fit for this task because of its many staff and procedure for vetting
document and accounts. The Common Law rule affecting personal representative were
modified hence, the personal representative was considered as being in a fiduciary
relationship and therefore accountable to the beneficiary. As seen in Smith v Hopton,
“rules affecting the order of payment of debts and legacies were developed by
equity, making personally primarily liable for the payments of debts of the
deceased.”

The writ of account had a limited scope; it could only encompass guardians in socage,
bailiffs, receivers and merchants. The Chancery extended its scope to embrace
partnership and administration of estates and so this equitable remedy became
preferable to that of Common Law. The Common Law action in dentine was not
satisfactory and petitions were made to the Chancery for recovery of chattels.

Chose in action became assignable in equity though the Common Law refused to
permit such transfer of proprietary rights over an object which was not capable of
physical possession.

USES

Equity crossed out any conduct which failed to meet its standards of fair dealing,
especially where there was a loss to another such as where land was given to X with
the understanding to hold the same to the use and benefit of Y. (Trustee and
Beneficiary). Equity found that it was a conduct of unfair dealings for the trustee to
convert the property to his own use and benefit, though the common law suffered him to
exercise any rights which the estate conferred on him. The system of Uses was used
too many advantages in circumstances where one was not allowed to hold land, one
could use this system to have restrict the hold the land on their behalf.
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At Common Law the one in whom the estate was vested (trustee) took everything
including the beneficial interest to the prejudice of the beneficiary. Equity intervened to
enforce the trustee to hold the property for the benefit of the beneficiary. The uses
system did not attract the burdensome feudal incidents to which the holders of a legal
estate were subject. The Statute of Uses was enacted to abolish the Use system and
provided that “where any person or persons shall be seized of any lands or other
hereditament to the use, confidence or trust of another, that person having such
use, confidence or trust fee simple, feetail, for a term of life or for years or
otherwise shall stand and be seized deemed and adjudged in lawful seisin estate
and possession of the same lands and hereditament in such like estate as they
had or shall have in use.”

However, the statute did not succeed in suppressing all uses because it was only where
the feoffee had the seisin to the use of another person that the statute applied. It also
did not affect a use held for a term of years, since then there would be no seisin. Also it
was not applicable where the feoffee was charged with active duties and the Chancellor
construed this to exclude from the operation of the statute which imposed the duty to
sell the land and collect rents and profits and pay them to the beneficiary.

The structure where the trustee held the property for the beneficiary that come from the
Use system was used in the 16th century to circumvent the unfavourable effects of the
Statute of Uses. Lord Hardwicke in Hopkins v Hopkins remarked that by the strict
construction put on the Statute of Uses such as a statute made upon great
considerations introduces in a solemn and pompous manner, by this strict construction,
has had no other effect than to add at most three words to the conveyance.

At Common Law the property of a married woman belonged to the husband and equity
considered this to be unfair and harsh on the woman; and in the 16 th and 17th century
the Chancellor intervened and developed a rule which allowed a trustee to hold such a
property on trust for the woman; who thereby could exercise rights of ownership over
property so held on her behalf. NOTE: It was not until the 19th century that married
women gained complete freedom from the husband with respect to their property rights.
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Equity was not satisfied with the remedy at Common law for contract and only awarded
specific performance instead of leaving the injured party to his remedy in damages.
Injunctions was also developed to protect proprietary rights and to prevent the
commission and continuance of tort and wastes. As insisted by Sir Thomas, injunctions
should be issued form the Chancery to prevent the unconscientiously use of legal rights
and thus common injunction was developed.

NOTE: The attitude of the Medieval Chancellors derived their inspiration from natural
laws or divine ordinance which they considered supreme to any law made by man and
served as corrective and ideal. This was expounded by Lord Archbishop Molton who
said “Every law to be in accordance with the law of God and the law of God is that an
executor who fraudulently misapplied the goods and does not make restitution would be
damned in hell and to remedy this is to accord with conscience as I understand it.”

At this period there were no settled principles. Reliefs were granted or withheld not in
accordance with any precedent; they were grounded on their effect on the individual‟s
sense of right or wrong. Essence of the relief was “suppression or prevention of
wrong was not the object of the Chancellors.” They aimed at purging the
conscience of the wrongdoer who they would compel to do everything possible that
would expiate the wrong. (Restore them to their place) It was an effort by equitable
relief to purge the conscience of the wrong doer. The nature of equity at this time was
summed up in Seldon’s aphorism: “Equity is a roguish thing, for law we have a
measure.” Equity is according to the conscience of the Chancellor and as that is
longer or narrower so is equity” The Chancellors seeked the truth of the case and so
mispleadings and defects were over looked thus their jurisdiction was purely
discretionary.

COMMON INJUNCTION

Noted that Sir Thomas Moore insisted that injunctions should issue form the Chancery
to prevent the unconsciencetious use of legal rights. In an action at law a defendant
might have a defence valid in equity but this is of no avail in the Common Law court.

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With concerns of an adverse judgment the defendant would go to the court of equity,
whose jurisdiction cannot prevent the court of law from passing judgment in the matter,
would grant an injunction to restraint the plaintiff form proceeding with the action. These
cases raised conflict between the Chancery and the Common Law Courts. In Meath v
Rydley and reiterated in Courtney v Gravil it was ruled that the Common Law courts
could prohibit the Chancery from interfering in any matter properly triable at Common
Law. C.J. Coke threatened imprisonment to anyone that did not abide with an
injunction. The Chancery argued that the injunction in no way affected the Common
Law Courts. They were aimed at the wrongful conduct of litigants who sought to insist
on their strict legal rights in spite of its unconscionable consequences. The controversy
was referred to Bacon the then Attorney General who resolved the conflict in favour or
the Chancery. The decision in effect settled the rule that in event of conflict between
equity and Common Law, equity should prevail. (1st time equity was supreme). The
period 1673 to 1827 – common law lawyers.

This period is described as the Golden Age of Equity and began with Lord Nottingham
and ended with Lord Eldon. Equity was transformed from a jurisdiction founded on the
individual conscience of the Chancellor into a system of well defined and settled
principles. This systemization of equity was influenced by the appointment of lawyers
as Chancellors and their decisions were influenced by their regard for precedent.
These Golden Age Chancellors found that discretion exercised over matters submitted
to them rendered the law uncertain and made litigation unduly expensive. They also
deterred from exercising discretion to avoid appeals to House of Lords. A collection of
literature and cases appeared over the period and it provided materials for the
development of equity by non-ecclesiastical Chancellors to whom precedent was the life
of the law. It then became possible not merely to refer to a decision but to demonstrate
the grounds for a particular decision. The boundaries and the relation between law and
equity gradually became ascertainable.

RIDGITY INTRODUCED TO EQUITY

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Lord Nottingham 1673-1682, was described as the father of equity. He was responsible
for settling down the principles upon which equity operated, thus moving away from the
era of idiosyncratic, unpredictable decisions. He laid out the boundaries within which
equity functioned. In his judgments there is constant application of the maxim “Equity
follows the law.” Lord Nottingham was also instrumental in developing the law of trust.
Precedents were to Lord Nottingham good masters but bad servants, and he
disregarded them when they were found to be unsatisfactory. It was therefore not a
binding. Where the law was harsh equity would disregarded it. Precedent was
considered as mere evidence and they were used by the court of equity discreetly.
After Lord Nottingham time no one could condemn equity as varying as the length of the
Chancellor‟s foot. He considered equity as a flexible system which could be molded
when necessary into a satisfactory rule. He had as an object “to reduce it to certain
rules and principles. That man might study it as a science and not think the
administration of it had anything arbitrary in it.” Sir Matthew Hale, Keaton &
Sheridan. Thus, equity was being secularized no longer depending on a particular
Chancellors conscience. Now based on principles however, flexible they may be.

Lord Hardwicke 1736-1756, was responsible for laying down the general principles
upon which equity operated. He further developed the principles of equity and many of
his decisions demonstrated the fine balance that had to be held between certainty and
the flexibility needed to allow both ‘justice’ in a particular case and also the evolution of
the law. He often emphasized the function of equity to provide a remedy in the case of
unconscientious conduct. His hesitation to overrule precedent which produced hardship
and anomalies introduced rigidity. His judgments are replete with the proposition that
the Court of Chancery is a Court of Conscience. In Scroogs v Scroogs he says “This
is a court of conscience, I shall give my opinion in this case according to my
conscience.” Thus, the equity jurisdiction still remained flexible. The statement should
be considered in light of the peculiar facts of the case. In the case an estate was settled
on children appointed by a trustee. The father fraudulently misrepresented the plaintiff
to the trustee as being extravagant and that the plaintiff had threatened to sell the
reversion. The father managed to persuade the trustees to disinherit the plaintiff 1st son
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and appoint the youngest son. The fathers‟ actions were based on a passed event
where he was sued by the 1st son on suspicion of misappropriation of an estate the son
owned. The plaintiff had evidence to support his good character as a son but the father
did not. Lord Hardwicke was merely exercising discretion within a defined set of rules of
equity which were comprehensible and flexible. He was of the view that the court of
chancery “has undoubted jurisdiction to relieve against every kind of fraud.”

Lord Eldon 1801-1805 &1807-1827, was the consolidator, who worked on the
application of the rules and principles of equity which he inherited form the other two
lords. His Chancellorship covered the whole period of Napoleonic war because he was
appointed twice. He was of a conservative attitude which manifested in his
administration of justice. It was his primary concern to see to it that the principles so far
established were not duly tempered with. “Great alterations don‟t improve our law
or our lawyers.” “Country men should resist temptation to make principles and
precedent bends to the hardship of a particular case.” He stressed that decisions
must be based on precedent and he consolidated the principles previously developed.
“The doctrine of this court, ought to be well settled and made as uniform almost
as those of Common law, laying down fixed principles, but taking care to be
applied according to the circumstances of each case.” He was devolved to the
settlement of principles, vesting these principles with that right of certainty necessary for
the guidance of legal advisers and litigants thus, saving them the unnecessary expense
in terms of time and money.

“I cannot agree that the doctrines of this court are to be changed with every
succeeding judge. Nothing will inflict on me a greater pain, in quitting this place,
than the recollection that I had done anything to justify the reproach that the
equity of this place varies like the Chancellor‟s foot.” Gee v Pritchard, Jessel
M.R. Judge of Chancery, “This is not as I have often said a court of conscience
but a court of law.” NOTE: There would be cases where there is no precedent which
would justify discretion in the chancery without appearing to be acting arbitrary. During
Lord Eldon time equitable doctrine had become settled, ridged and technical. The

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predominance of conscience had been watered down. They were no longer
ascertainable by reference to the measurement of the Chancellor‟s foot varying with the
personal opinion or sense of justice of a particular Chancellor. Precedent is now
regarded not as flexible or persuasive but binding authority. Thus, the rules of equity
suffered the fate of rule of law and became stereo typed. NOTE: Equity did not
become sterile because after Lord Eldon new rules evolved for doctrine of restrictive
covenant, promissory estoppels and proprietary rights of licensee.

JUDICATURE ACT 1873 – 75

It is clear that although equity started life as mere supplement to the common law it

developed into a separate system. Equity was administered by the Courts of Chancery

which were separate from the common law courts. This caused many problems For

example, it was often necessary to use both the common law courts and the court of

equity in the same dispute. The two courts becoming partners and not rivals in the work

of administering justice caused hardship, embarrassment and intolerable inconvenience

to litigants. A complete relief might necessitate two distinct actions in both courts. In

Marquis of Waterford the case was litigated for 14 years up to the HOL where it was

discovered to the dismay and discomfort of the plaintiff that the action should have been

initiated in the other court. Thus, the Judicature Act was enacted so that “No suitor

could be defeated because he commenced his suit in the wrong court, and
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sending the suitor form equity to law and from law to equity, to begin his suit

over again in order to obtain redress, will no longer be possible.” Hence the

Judicature act was enacted to solve the problem of duplicity in respect of claiming

damages in either the common law court or equity thus remedying the anomalities

inherent in the common law.

The legislation provided for the creation of one single Supreme Court to replace the

separate courts that existed previously. All the courts of that time was replaced with one

court, divided, for convenience only, into three Divisions of the High Court. Thus, doing

away with the multiplicity of actions in legal proceedings and there was no need for

common injunctions to restrain an action from commencing in the wrong court. In

practice, matters were allocated to the most appropriate Division but in fact any Division

could have adjudicated on any matter and both common law and equitable remedies

could be awarded by any Division. The Judicature Act section 25 (11) specifically

provided that if there was a conflict between the rules of the common law and the rules

of equity, equity shall prevail. There is no doubt that this legislation merged the

administration of the two systems of law. There is however, some debate as to whether

the two systems of law themselves have been fused into one. Ashburner, in

Principles of Equity, expressed his view by saying that “two streams of jurisdiction,

though they run in the same channel, run side by side and do not mingle their

waters.”

Once must first attempt to answer the essential question of what is fusion. Evershed,

L.J, in “Equity after Fusion: Federal or Confederate” has stated that “when one

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speak of fusion you may mean one of two things. You may mean that the

component parts disappear altogether in the new entity that is created; or you

may mean that they have combined or coalesced for particular purposes or have

become subject to some single control, though retaining their separate and

original individualities.” Suffice to say he has elluded to the notion that fusion can be

viewed in two ways and has left this thought open. However, in Modern Equity, 16th

edn., p.21 it was stated that “It is important, to be clear as to what is meant by the

claim that law and equity are fused. If it means that there is now no distinction or

difference between legal rights and remedies and equitable rights and remedies,

it cannot be supported.” Hence, the distinction still remains between equitable and

common law remedies as there still remains important differences between common

law and equitable rights.

There is however judicial and academic statements to the effect that there is a fused

system of law. The prevailing view appears to be that, although the two systems

operate closely together, they are not fused. However, Tinsley v Milligan takes a

different view and claims that there is fusion, on the question as whether an equitable

interest could be asserted in spite of an element of illegality in its acquisition. Lord

Browne-Wilkinson explained that legal and equitable interests had different incidents

for historical reasons, but that fusion resulted in the adoption of a single rule as to

the circumstances in which the court would enforce interests acquired under an

illegal transaction. Thus the rule is the same whether the claim is to a legal or

equitable title, and can be fully stated without reference to its origin. Also in Coulthard

v Disco Mix Club Ltd, in the context of limitation periods, it was held that there is no
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distinction between an action for fraud at common law and an action in equity for

deliberate and dishonest breach of fiduciary duty based on the same facts, which is the

equitable counterpart of the common law claim. Thus, it was said in this case that it

would have been a blot on our jurisprudence if those self-same facts gave rise to a time

bar in the common law courts but none in the court of equity.

AGREEMENT FOR SALE OR LEASE NOT UNDER SEAL

As stated by Sir George Jessel in Walsh v Lonsdale, “There are not two estates as

there were formerly, …… There is only one court, and equity rules prevail in it.”

However, this case is misleading as it gives the notion that there is conflict with respect

to contracts for the sale of lease of land. Equity does follow the law to some extent on

whether there is a contract or not but they do differ in the granting of remedy but this

aspect of the waters have run side by side and have not conflicted. Thus, there is no

conflict in the area of specific performance which was granted in this case, bonafide

purchaser and third parties. The effect of the Judicature Act is best shown by this case.

In this case the landlord agreed in writing to grant the tenant a lease of a mill for seven

years. The agreement provided that the rent was payable in advance if demanded. No

grant by deed of the lease as required for a lease exceeding three years at law was

ever made. The tenant entered and paid rent quarterly, not in advance. He became in

arrears and the landlord demanded a year‟s rent in advance. It was not paid, and the

landlord distrained. The tenant brought this action for illegal distress. The action failed.

The distress would have been illegal at law, because no seven-year lease had been

granted, and the yearly legal tenancy which arose because of the entering into

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possession and payment of rent did not include the provision for payment of rent in

advance. In equity however the agreement for the lease was as good as a lease. The

tenant was liable to pay a year‟s rent in advance and the distress was lawful.

Also the distinction between legal interest and equitable interest is maintained as seen

in Schalit v Joseph Nadler Ltd, it was held that a beneficiary could not demand that

the trustee turn over the trust to them but could request an account of the trust activities.

In Boyer v Warbey the question arose whether covenants in a lease bound assignees,

not only where the lease was by deed but also where it was a valid written lease. In the

COA it was held that whatever the position before 1875, this was not an area where

distinctions based on formalities were now acceptable, and that the covenant should

bind. It was further suggested that the same result would follow if there was merely a

contract for a lease which was enforceable in equity. Whether it was law or equity that

regarded the lease as effective, the rule as to the running of covenants should be the

same. In a limited sense this is fusion in that the reasons why a particular lease is

effective are ignored in favour of a uniform consequential rule.

LIABILITY OF PERSONAL REPRESENTATIVE

At common law, an executor is strictly liable for loss/destruction of the deceased‟s

assets. The beneficiary could have sued the executor even if he was diligent in

managing the property. Loss assets must therefore be paid for. On the other hand, in

equity, fault is required in order to impose liability. Negligence may constitute such

fault. In his action, the executor, if he can prove that he acted diligently, would not have

to suffer the burden of providing restitution for the loss suffered. This is another vivid
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demonstration of the view that fusion does exist. In Job v Job, the testator, a

watchmaker died, and his executor delivered part of the testator‟s stock to the value of

160 pounds to his son, also a watchmaker and jeweler, for the purpose of being sold in

the ordinary course of trade. The testator‟s son became bankrupt. It was held that

whichever way the case was viewed the executor was not guilty of willful default and

was therefore not liable with the loss. The common law rule, under which the executor

was strictly liable gave way to the principle of equity by virtue of Section 25 (11) of the

Judicature Act.

DUTY OF CARE

It is being argued that the fusion of law and equity conduces to the development of the

law. The proponents of this view claim that we owe the development in Hedley Byrne

v Heller. The right to obtain damages was extended at common law to negligent

misrepresentations by this case and the position has been substantially altered by the

Misrepresentation Act 1967 which, as well as extending the right to damages to

negligent misrepresentations, also allows under s2 (2) that damages may be awarded in

lieu of rescission wherever the court thinks it would be equitable to do so, which means

that damages can be awarded in lieu of rescission even in cases of innocent

misrepresentation.

MORTGAGOR’S POWER OF SALE

In Cuckmere Brick Co Ltd v Mutual Finance Ltd, the issue was whether the
mortgagor‟s were entitled to receive damages against the mortgagee who had (1) sold
the property without advertising the fact that the property had planning permission for

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flats and (2) refused the mortgagor‟s request that the sale be postponed. It should be
recalled from Coroneo v Australian Provincial Assurance Assoc Ltd, that the power
of sale: is an equitable power which is inserted to enable the mortgagee to convey a
title which is not only good at common law but is good in equity to defeat the equitable
rights of the mortgagee. … The operation of the equitable power is simply this, that if it
is exercised in a way that a Court of Equity regards as unexceptionable, that court will
not treat the title of the purchaser as being encumbered by any equity of redemption in
the mortgagor.
However, the more contentious issue in Cuckmere Brick is whether an award of
damages was the appropriate remedy: since the breach of an equitable duty should,
without more, only attract an equitable remedy.

VARIATION OF DEEDS

At common law, a contract under seal can only be discharged by a deed or by

performance; it cannot be discharged by an agreement for consideration which will
survive at equity. The common law position is based on a mere technicality however,
equity looks at the substance and not the form. Under such circumstances there could
be said to have been fusion, since a conflict between the two principles existed.

In Spence v Healey, the plaintiff was successful in his suit to enforce a covenant by the
defendant to pay him, though the plaintiff agreed and accepted certain good, machinery
fixtures and chattels from the defendant in discharge of the covenant. The common law
stance is that a promise once sealed can only be varied or changed by deed or seal.
Equity had a different attitude and did not prevent a contract under seal to be
discharged by an agreement for a valuable consideration, and a party to such a contract
could be restricted from suing at law on the varied covenant.

In Berry v Berry, where by a deed of separation, a husband agreed to pay his wife 12
pounds, and 216 pounds annually during their joint lives. The parties entered into a

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written agreement, which was not under seal, and it was said under this agreement that
the husband could not continue the payments to his wife under the separation deed,
due to inadequate funds; thereupon it was agreed that the husband should pay a lesser
sum of 9 pounds as long as his earnings did not increase. The wife after accepting
several payments, claimed for the specified payments in the deed of separation. The
wife brought action, claiming for arrears of the allowance under the deed. It was held
that the written variation would be enforced in equity and the equitable rule since 1875
prevails over common law rule, which does not accept variation of a deed by contract
not under seal. The common law position on variation of deeds is exceptionally different
to that of equity, as at common law, one cannot accept a lesser sum for a greater sum,
and this principle was established in Pinnel’s case, where Lord Coke said: “that
payment of a lesser sum on the [due] day in satisfaction of a greater, cannot be
any satisfaction of the whole, because it appears to the judges that by no
possibility, a lesser sum can be satisfaction to the plaintiff for a greater sum.”

PROMISSORY ESTOPPEL

Berry v Berry did not hold that deeds or other contractual obligations could be varied or
discharged by a promise which was not supported by consideration. However, High
Trees Case was used to establish the principle in Combe v Combe that where a party
makes a promise to another by words or conduct that had an effect on the intention of
the legal relations and the other party acted in accordance with that promise, the
promisor could not deny such legal relations and is subject to its obligations even
though the promise was not supported in point of law by any consideration. This is the
equitable position which is conflicting with the common law position in Pinnel’s case.

The common law position was established in Jordan v Money that to found an
estoppels at common law, the representation must relate to existing fact, past or
present, and that the representation must not be intention or law. Lord Denning
succeeded in distinguishing this case on the ground that “The promisor made it clear
that she did not intend to be legally bound, whereas in the cases to which he
referred the promisor did intend to be bound.”
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EQUITABLE REMEDY OF ACCOUNT OF PROFITS FOR BREACH OF CONTRACTS

An indication of fusion is a situation where the legal remedy of damages may be given
for breach of an equitable right. It must be noted however, that an equitable remedy for
breach of a legal right is explicable as the exercise of equity‟s concurrent jurisdiction
and is not an example of fusion. Suffice to say, the HOL went further in Att-Gen v
Blake, holding that the equitable remedy of account of profits could be awarded in
exceptional cases for breach of contract where the remedy on damages based on loss
was inadequate. Hence it was stated in Day v Mead, “Equity and common law are
now mingled or merged…. A full range of remedies should be available as
appropriate, no matter whether they originated in common law, equity or statute”

It is therefore evidently clear that the precedence accorded rules of equity over common
law by s25(11) of the Judicature Act would lead to fusion of principles in situations
where the full statement of the rules, conditions precedent to relief and the form of relief
itself produce conflict. The effect will be more pronounced where the two courts
administer inconsistent remedies; however these will be very few indeed. Thus, in this
regard given the conflict which arises, there can be said to be fusion of equity and
common law.

NO FUSION

The purpose of the Judicature Act was to avoid a multiplicity of actions from arising in

the courts. According to Lord Watson in Ind Coope & Co. v Emmerson, “the

Judicature Act was to enable the parties to a suit to obtain in that suit and without

necessity of resorting to another court all remedies to which they are entitled,

properly advanced by them so as to avoid a multiplicity of action.” This object

was attainable without the fusion of the principles of equity and law.

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The fusion argument only has a basis where there is a conflict between common law

and equity and the conflict rule Section 25 (11) in the Judicature Act rectifies this issue.

In fact the mere nine instances of conflict where fusion is said to arise is not strong

basis to conclude a general statement that the Judicature Act has fused common law

and equity. Thus, there are instances where the principle of equity and common law

differ, and they do not conflict, and hence will not result in fusion. This will arise where

a remedy is available at equity, but non at common law; where there is a common law

remedy, but none in equity; or where a remedy is obtainable both at equity and common

law.

In Swindle v Harrison, Hobhouse L.J. confirmed that common law damages were not

available for breach of fiduciary duty. It was still necessary to take account of the

distinction between common law and equity even after the Judicature Act reforms: “The

reason is, of course, that the origins of both common law and equitable rules are

always relevant to their scope, although we should endeavour now to identify the

underlying common principles.” In MCC Proceeds Inc v Lehman Brothers Int. it

was said that the substantive rule of law was not changed by the Judicature Acts.

These were intended to achieve procedural improvements in the administration of the

law and equity in all courts, not to transform equitable interests into legal titles or to

sweep away the rules of the common law.

DAMAGES FOR PART PERFORMANCE

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To enforce any contract affecting interest in land one must show written evidence to that

effect. Without such evidence no action can succeed at common law. In the courts of

equity, part performance can be invoked. (Distinguish form Walsh v Lonsdale).

In Lavery v Pursell, a contract affecting interest in land, required that all building
materials should be demolished and removed from the premises within two months;
however the memo evidencing it did not state the vendor‟s name. The memo was
therefore deemed unacceptable as written evidence by virtue of s 4 of the Statute of
Frauds. It was held in this case that the court‟s jurisdiction to award damages as a
substitute for specific performance was not extended to cases where specific
performance could not have been possibly directed; and since the contract could not at
the time of the hearing be enforced by specific performance, as the period envisaged
(conceived of as a possibility) by the contract had passed, the relief in damages was not
open to the plaintiff. To enforce any contract affecting interest in land, there should be
written evidence.

In Britain v Rossiter, the counsel for the plaintiff who had been dismissed without
notice from the defendants service as clerk and accountant under an employment
contract which was required to be evidenced in writing, argued that in equity part
performance is a substitute for written evidence, and since his client had partly
performed the contract he should be awarded damages for breach of contract. The
contention was based on a confusion of thought founded on fusion of principles.

In this case it was pointed out that the provisions of the Judicature Act enable the courts
of common law to deal with equitable rights and to give relief upon equitable grounds,
but they do not confer new rights;… and that the doctrine of part performance has
always been confined to questions relating to land; it has never been applied to
contracts of service, and it ought not now be extended to cases in which the Court of
Chancery never interfered. Thus the principles remain separate and distinct, and as
such, they cannot be said to be fusion.

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LICENSES

A license does not create any interest in land it merely makes an action lawful, which
without would be unlawful. A license to B to hunt on A‟s land and carry away the game
or to cut down timber and to carry it away is not a mere permission, but it constitutes a
grant to which the license is incidental. It is not a lease since it does not confer rights of
exclusive possession for a fixed period.

A license given gratuitously or for a valuable consideration can be revoked at any time,
even before the end of specific period envisaged by the license. If it is given for valuable
consideration the licensee can sue for damages for breach of contract, if, in breach of
the contractual license, the licensee is ejected. The licensee becomes a trespasser, if
he remains on the premises after the license is revoked and reasonable period has
lapsed. Reasonable force can be used to eject him.

But if the license is coupled with a grant of interest which has been created in the proper
manner prescribed by law for the creation of that interests to which the license is merely
ancillary, it is irrevocable. Even if the license is under a deed is bare, i.e. license without
any grant or not supported by consideration, is irrevocable. This is illustrated in Wood v
Leadbitter, where the plaintiff bought a ticket to a racecourse and this entitled him to
remain there and see the races. Before the end of the races he was ejected by an agent
of the licensor. An action was brought against the licensor who contended that he, as
the licensor, had a right to revoke the license and that the licensee became the
trespasser after the license had been revoked, and that he was entitled to use
reasonable force to eject the licensee.

The Court of Exchequer upheld this contention and dismissed the action of the licensee.
A contrary decision was reached in Hurst v Picture Theatres Ltd, where the plaintiff
purchased a ticket for a seat at a cinema show and was forcibly turned out of his seat
and expelled by the manager who mistakenly thought that the plaintiff had not paid for
his seat. The CA by majority decision observed, affirming the decision in Wood v
Leadbitter was no longer a good law. By the Judicature Act, according to the CA, rules

22
of equity prevail in all courts and Wood’s case was decided by the Common Law
Courts and since it was inconsistent with the decision in Frogley v Earl of Lovelace, it
cannot stand as good law.

Buckley L.J pointed out that a license coupled with an interest or grant (unlike a license
without a grant or interest) is irrevocable.

The HOL in Winter Garden Theatre (London) Ltd v Millennium Productions Ltd
accepted the view that Hurst’s’ case represents the true legal position since Judicature
Acts. It is not possible to construe the result of Hurst’s case as evidencing fusion of the
principle of equity and the common law rule on contractual license.

It was a case which falls under the concurrent jurisdiction of the courts of equity. The
remedy of injunction under the circumstances was merely supplementary. There is no
conflict. The principles do differ. The common law courts did not go beyond the award of
damages to authorize the licensor to eject the licensee. If that had been the case, the
award of injunction would have resulted in a clash. The case is therefore not different
from the situation in the case of tort of nuisance, in which the remedies given by the two
systems differ: injunction in equity and damages at common law. There is no conflict
and therefore no fusion.

There is no doubt that Wood’s decision turned on pleadings and it is justified on the
grounds that the old system of pleading was far more strict than the present system and
since his action was for the tort of assault and false imprisonment, he would not have
succeeded by joining a distinct cause of action in contract permitting him to be there
and that the contract was not subject to revocation as per Kennedy LJ in Hurst’s case.

INJUNCTIONS

The Judicature Act empowered the courts to grant injunctions whenever it was just and
equitable to do so. Injunctions, in their modern context, could now be awarded in any of
the courts. In Day v Brownrigg, Mr. and Mrs. Day, had a mansion called “Ashford
Lodge” for 60 years. All legal documents described the property as such. B then
changed the name of his house to accord with that of Day‟s. It caused the applicants
23
tremendous inconvenience and financial loss. An action for an injunction was brought
before the court. It was said by the trial judge that he could not imagine a more un-
neighbourly act which would have caused considerable damage. Brownrigg was
therefore restrained from using the name. On Appeal it was held that the Judicature Act
did not change the law; it merely empowered the court to grant injunctions where it was
fit and convenient to do so. The old law must be sought at first in an effort to
demonstrate injury and damage, and it is only where both elements are met could an
action for an injunction succeed in the courts of equity. Merely showing that by the
change of Brownrigg‟s house name, inconvenience was caused was not sufficient.
Injunctions would only be granted to guarantee the rights under both common and/or
equity. This shows that there was no fusion of common law and equity.

Also in North London Rly Co. v The Great Northern Rly Co., there was a contract
which consisted fo an arbitration clause. P succeeded in appointing an arbitrator
though there was no need for such an appointment. It was held that there was no need
to restrain the appointment of an arbitrator and the injunction was revoked.

MISREPRESENTATION

There was a remedy in Equity for innocent misrepresentation, but none at common law.
In the courts of equity, the contract could be rescinded. Under the common law, for one
to succeed, he had to show that misrepresentation was fraudulent, or that
misrepresentation was a term of the contract and that that term was breached. In the
common law courts, one cannot found a claim for innocent misrepresentation. In Smith
v Chadwick, the HOL strongly resisted the consequences resulting from the notion of
fusion, as opposed to Sir George Jessel in Redgrave v Hurd. In this case, Jessel M.R.
that the Judicature Act allowed for the award of damages for innocent
misrepresentation. The HOL decision, however, in Smith v Chadwick shows that this is
impossible. Hence it cannot be truly said that the difference between the common law
principle and the equitable rule has disappeared as contended by Jessel M.R.

24
Thus, where common law gave a remedy, and equity did not, there was no conflict; just
that common law and equity proceeded on two different principles. Note that the
conflict must be with the same subject matter for equity to prevail. The purpose of the
Judicature Act was to prevent a multiplicity of actions and the provisions itself is
predicated on the fact that the two systems should operate separately from the other,
except for where there is a conflict then equity will prevail. As per Lord Seldon, the
provision regarding conflict was merely a symbol of taking caution. It would not be right
to use the fact that fusion occurs in limited situations to lay down a general rule that
there is fusion.

“The two streams of jurisdiction … though they run in the same channel, run side
by side and do not mingle their waters … If Professor Ashburner‟s fluvial
metaphor is to be retained at all the waters of the confluent streams of law and
equity have surely mingled now.” The argument surrounding fusion between law and
equity is ongoing. However, it must be taken into consideration that in light of Headley
Byrne v Heller and Cuckmere Brick Co. Ltd, in which it is argued that, the fusion of
law and equity contributes to the development of the law; that there is no reference in
these cases to the conflict rule. Neither did the courts refer to the common law
principles and equitable rules which differed or conflicted.

The amalgamation of the courts with power given to every judge to apply both law and
equity facilitates the development of the law. Therefore, it cannot be said that this
development can be achieved only if the principles of Law and equity are fused. The
Judicature Acts did not fuse law and Equity has been emphasized by Jessel M.R. who
said, “but it was not any fusion or anything of the kind; it was the vesting in one
tribunal the administration of Law and Equity in every cause, action, or dispute
which should come before that tribunal:” According to Salt v Cooper “it is a fusion
of administration rather than of principles. As has been well said, the two streams
have met now run in the same channel, but their waters do not mix;” unlike
Professor Ashburner who claims that the confluent streams of law and equity have
surely mingled now.

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MAXIMS OF EQUITY

HE WHO SEEKS EQUITY MUST DO EQUITY

Equity will not automatically intervene whenever a certain situation arises. In general,
one can say that wherever certain facts are found and a common law right or interest
has been established, common law remedies will be available whether that produces a
fair result or not. By contrast, equitable remedies are discretionary and the court will not
grant them if it feels that the plaintiff is unworthy, notwithstanding that prima facie he
has established an equitable right or interest. This maxim shows clearly the quality of
discretion however, it must not be supposed that the discretion is entirely unfettered. In
Haywood v Cope it was stated that “the discretion of the Court must be exercised
according to fixed and settled rules; you cannot exercise a discretion by merely
considering what, as between the parties, would be fair to be done; what one
person may consider fair, another person may consider very unfair; you must
have some settled rule and principle upon which to determine how that discretion
is to be exercised. So the person who seeks an equitable remedy must be
prepared to act equitably, and the court may oblige him to do so.” NOTE: This
maxim refers to the plaintiff‟s future conduct.

CONSOLIDATION

If debtor takes out a loan for 100,000, he then used his property as security for that
loan. Subsequently, he acquires another loan from the same creditor, at a value of
200,000. He then uses his second property as security which later appreciates to
600,000. The debtor hasn‟t been paying his mortgage on the first loan as therefore the
property depreciated by 20,000. However, interest has accumulated on the loan and
the debtor will have to pay 400,000. The date of redemption comes and the debtor
anticipates to redeem the property for 600,000 which is the appreciated value. In order
for him to successfully redeem, he must do equity by paying off that which was owed
that is the 400,000. To be fair to the creditor, the debts have to be consolidated that is
the debts must be paid together in one payment. Craknell v Janson.

26
However, this rule of equity has been eroded by the provisions of the Conveyance Act
which have been enacted to allow the mortgagor redeem without the use of the method.
In Jamaica and Dominica, the statute has deprived the creditor of the right to insist that
the mortgagor pay off all of his debts before the mortgagor is able to redeem thus no
consolidation exist. In Dominica, Grenada and BVI if one does not clearly state that the
bank has the right to consolidate, that is insisting that all security owed before another
mortgage is granted. Where there is no such provision, consolidation as an equitable
doctrine would not apply. Trinidad and Tobago Statute affirms the rule of consolidation
in that the creditor has the right to insist that he be paid all the security owed before the
debtor can claim on a subsequent mortgage.

Equity requires that reasonable notice be given where a person pays off money before
the time the mortgage has been stipulated. He should not insist that upon prompt
payment, the bank for example should accept the payments. The bank would need
time to find other mortgagors. The bank should be instead treated fairly. In sum,
consolidation is a situation where there are two debts owed to the same creditor by the
same debtor, so that they will all be paid together.

ELECTION

The settler in his will, devises his property to A worth 100,000. In the same will, the
settler gives away A‟s property which is only worth 60,000 to another person (B). The
court reiterates that he who comes to equity must do equity. Here, one cannot
approbate and reprobate a will, the settler is put to an election, he must take either
under or against the will. If A decides to go against the will that is keep his property he
would keep the property of 100,000 provided that he compensate B, he would have to
pay 60,000. Thus in Bristow v Warde, “The doctrine of election never can be
applied, but where if the election is made contrary of the will, the interest, that
would pass by the will can be laid hold of, to compensate for what it is taken
away; therefore in all cases there must be some free disposable property given to
the person, which can be made a compensation for what the testator takes away.”

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MARSHALLING

Where there are two creditors C1 and C2 each having a loan secured with properties X
and Y. C1 has both funds X and Y as security for the loan advanced to D. The debtor
then gets another loan from C2, C2 only has security for property Y. Assuming the loan
on property X is 10,000 and on Y the value is 8,000. C1 is owed in respect of the two
properties, 8,000. At law, to regain the money owed, he can do so from either property
X or Y. If C1 sells property Y thereby depriving C2, in equity, the court will allow
marshalling, a situation where C1 is compelled to claim against property X first, and it is
only where a further outstanding balance of 2000 is owed could C1 resort to property Y.
This process is to ensure that C2 is not severely prejudiced.

However, if C1 has claimed against property Y first, then C2 will be given the right which
is vested in C1 to recover as against D in respect of property X. This process is called
marshalling. C2 can bring a personal action against D for that which is owed. The
doctrine is invoked to allow C2 to proceed against property X to realize the security,
although he has no legal right to that property. Marshalling implies that the debts are
brought together as not to prejudice C2. In Lanoy v Duke, " It is not then the
constant equity of this court that if a creditor has two funds, he shall take his
satisfaction out of that fund upon which another creditor has no lien.” "Suppose
a person, who has two real estates, mortgages both to one person, and
afterwards only one estate to a second mortgagee, who had no notice of the first;
the court, in order to relieve the second mortgage, have directed the first to take
his satisfaction out of the estate only which is not in mortgage to the second
mortgagee, if that is sufficient to satisfy the first mortgage, in order to make room
for the second mortgage, even though the estates descended to two different
persons."

NOTICE TO REDEEM

As illustrated in Johnson v Evans, when the contract date of redemption has lapsed
the mortgagor can only redeem in equity which can only allow him to do so where the

28
mortgagor has given a reasonable notice to the mortgagee. It is now a settled rule of
equity that, if it can be inferred from the transaction that the loan is intended to be of a
permanent character, the mortgagor is required to give six months notice of his intention
to redeem or pay six months interest in lieu of notice. This is explicable on the grounds
that since the mortgagor has lost his estate at law for non-payment at the appointed
time, and being capable of redeeming only in equity, he has to do equity by giving the
mortgagee a reasonable time for him to look for a new investment for his money.

ILLEGAL LOANS

Moneylenders are required to register their business. Any transaction into by one who
is not registered is rendered void. Where he is registered, all transactions made must
be recorded. Where contrary to statutory provisions, the moneylender is not registered,
but the moneylender has issued a loan to the debtor on condition of security.
Supposing the debtor goes to the unregistered moneylender and asks back for his
property, the court of equity will make an order to issue back the property to the creditor
on condition that the debtor pays what is owed. The debtor though arguing that the
court is enforcing an illegal transaction, will not succeed. Equity demands that he who
comes to equity must do equity.

Unenforceable money lending transactions is where the money lender is registered but
doesn‟t make the necessary recordings. Void transactions are where there are
unregistered money lenders. A distinction can be drawn between unenforceable and
void transactions. In Lodge vs. National Union Investment Co. Ltd., One B borrowed
money from M by mortgaging certain securities to him. M was an unregistered money
lender. Under the Money Lenders‟ Act, 1900 the contract was illegal and therefore void.
B sued M for return of the securities. The Court refused to make an order accept upon
the terms that B should repay the money which had been advanced to him. This
decision was based on the principle of the theory. In Cohen v Lester, it was noted that
an unrecorded loan granted by the registered money lender would allow the debtor can
redeem his security without any condition of payment. In Lodge case, in the case of
void transactions, the money lender must be paid so the debtor can get back his
29
property which was used as security. In Kasunmu v Baba Edge, the PC affirmed that
where there is an unenforceable transaction, the debtor is under no obligation to pay
even though on his part he receives back his property. NOTE Owusu argues that this is
unfair.

WIFE’S EQUITY TO SETTLEMENTS – This maxim used to be illustrated with the

practice of the chancery court whereby if a husband resorted to equity to reduce his
wife‟s estate into his possession he will be required as a condition of obtaining the
equitable relief to make adequate settlement upon the wife out of her property.

He who seeks equity must do equity. The maxim means that to obtain an equitable
relief the plaintiff must himself be prepared to do equity, that is a plaintiff must
recognized and submit to the right of his adversary, because, you must do unto your
neighbour what you wish him to do unto you.

HE WHO COMES TO EQUITY MUST COME WITH CLEAN HANDS

The rather striking language of this maxim means that a party seeking an equitable
remedy must not himself be guilty of unconscionable conduct. The court may therefore
consider the past conduct of the claimant. Most cases concern illegal or fraudulent
behavior on the part of the claimant, and it is not clear to what extent the maxim is
applicable outside such behavior. Certainly, in the context of the granting of injunctions,
which, like all equitable remedies, are discretionary, the principle has been broadly
stated as seen in Cross v Cross, “He who comes to equity must come with a clean
hand and any conduct of the plaintiff which would make a grant of specific
performance in equitable can prove a bar.”

In Deweese v Reinhard, “A court of equity acts only when and as conscience

commands and if the conduct of the plaintiff be offensive to the dictates of
natural justice then whatever may be the rights he possesses and whatever use
he may make of them in a court of law, he will hold remediless in a court of
equity.” In Jones v Lenthal, The rule as stated in Story‟s Equity Jurisprudence,
“Equity imperatively demands of suitors in courts fair dealing and righteous
30
conduct with reference to the matters concerning which they seek relief. He who
has acted in bad faith, resorted to trickery and deception, or been guilty of fraud
injustice or unfairness will appeal in vain to a court of conscience, even though in
his wrongdoing he may have kept himself strictly “within the law.”

Essentially, equity engages in an investigation of anything which may be condemned

and deemed wrongful in the minds of fair minded and honest community members.
Fairness is the measure of the conduct. In Overton v Bannister, an infant who was
entitled to receive a sum of money from trustees on attaining full age obtained the sum
from the trustees by fraudulently misrepresentating himself to be of full age. The
trustees in paying the sum to the beneficiary when he was not of age was in breach of
the trust and he would therefore otherwise have been liable to pay the sum over to the
beneficiary when he was of full age. The court held that the infant could not compel the
trustees to pay the sum over again on attaining full age. In Nelson v Stocker, “It is too
much to call upon the court to believe that this defendant could really have
thought himself to be of age at the date of the settlement, when he was under 18
years of age; and if he did not so think, the representation he made to the
solicitor was false and fraudulent infants are no more entitled than adults are to
gain benefits to themselves by fraud.”

In Re Turner, if there are three trustees, and judgment is given against one, solictor‟s
trustee then any of the three will be liable for the payment of judgment debt. However,
the solicitor trustee can go to court to ask for a contribution from the others. There
would not be entitlement to contribution if his wrong advice was the reason why the loss
was sustained. In Gascognie v Gascognie, the husband in realizing that his property
could have been sold in respect of a judgment in favour of his creditors conveyed the
property to his wife in order to avert the judgment. Thereafter, he went back to his wife
and asked for the property. The maxim requiring clean hands was invoked to negative
a trust in the husband, that is to prevent him from rebutting the presumption of
advancement where he had caused property to be vested in the wife with the object of
defrauding creditors.

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In Coatworth v Johnson, there was a contract for a lease, and P went into possession.
Subsequently the terms of the agreement were breached. Equity will regard as done
that which ought to be done however, his hands being unclean will not entitle him to
specific performance. There was a contract for a lease for 21 years but it was not
sealed. At law the contract not being sealed would render it void and thus, he became
a tenant at will. If the tenant can prove that he is entitled to specific performance, then
he could not be evicted over a 21 year period by the landlord. The tenant however,
committed several breaches of the agreement and when he brought an action to the
court, he was unsuccessful since his hands were not clean and thus specific
performance not available to him.

If forfeiture is grounded on non-payment of rent, at common law the tenant would order
eviction. However, where the matter was brought to the court of equity, before or even
after judgment is made the court will grant him relief form forfeiture. If the tenant after
the period for the payment of rent fails to make the necessary payment, but there is an
express forfeiture clause in the agreement, equity may still grant relief if he could pay
subsequently. In Gill v Lewis, one of the tenants was convicted of indecent assault of
two boys; this took place on the premises which he occupied. After having been subject
to forfeiture, one of the tenants paid the arrears and then claimed relief in equity. He
was not granted the relief given that the one who was convicted of indecent assault,
hands were not clean (obiter). However, in the special circumstances of the case,
where the judgment was granted against only the accused, and the other sought relief,
such was granted. The tenant had paid his rent in accordance with the tenancy
agreement, however, because he was convicted of a traffic offence, the landlord
claimed that he was not entitled to relief in equity. However, the court said that equity
doesn‟t expect a suitor shall have lead a blameless life. Here, the offence was wholly
unconnected with the subject matter of the claim for relief, hence relief was granted.

It appears that the uncleanness must relate directly to the matter in hand, otherwise
anyone might be denied a remedy simply because he was of bad character. This is
illustrated in the case of Dering v Earl of Winchelsea, where the Head of Winchelsea

32
brother‟s, who was one of the surety‟s misappropriated funds belonging to the
government. Three parties formed a partnership agreement and the Head was sued
and did pay as against the judgment by the government whose funds were
misappropriated. It was alleged that the Head, having known of his brother‟s unwise
spending of government funds should be denied contribution. It was held that there was
no connection between the iniquity which was committed and the subject matter of the
relief. As such, the Head‟s claim for contribution was awardable. It was said in this
case that “A man must come into a Court of Equity with clean hand; but when this
is said, it does not mean a general depravity: it must have an immediate and
necessary relation to the equity sued for, it must be a depravity in a legal as well
as a moral sense.” The maxim equally applies in this case, since equity did not expect
the suitor to be totally blameless.

This maxim has some affinity with the maxim ex turpi causa non oritio action (from an
immoral consideration an action does not arise) of the common law. The fact that the
plaintiff‟s past record is not clean regarding a transaction which is against public policy
would not bar a claim for an equitable relief: Lord St.John v lady St.John. In that
situation the court may find that one of the parties to the illegal transaction is not as
guilty as the other and that public policy will best be served by assisting him to get the
transaction set aside.

The distinction between the two maxims appears in the judgment of Robotham J A in
Hawley v Edwards and another. In this case the land to be sold was misrepresented
on the acres. The plaintiff who sought the specific performance must have been
prepared to do equity and pay the interest on the transaction. However, the defendants
must come to the court with clean hands and upon investigation it was found that their
hands were not clean and they were not entitled to the interest claimed. He who comes
into equity must come with clean hands differ from he who does equity must do equity in
that it looks to the past rather than to the future. The maxim appears to be more
stringent than the latter. For the unclean hands maxim does not generally permit relief
to be given on terms as it is done in the case of the latter. The clean hands maxim has

33
th effect of shutting the doors of equity in the face of a plaintiff or any suitor whose past
conduct in relation to the subject matter of the suit is found not to be up to the standards
of equity. In Antonie Book Law and Legal system it was stated that “it appears to
be one the best known maxims and explains that a person who expects a remedy
in equity must himself have a clear conscience and must have done no wrong
with respect to the matter before the courts.”

In Duchess of Argyll v Duke of Argyll it was said that “ A person coming to equity
for relief must come with clean hands; but the cleanliness required is to be
judged in relation to the relief that is sought.”

In Islanmis Republic of Iran v Pahlavi, the government of Iran sought a remedy in the
US courts. D alleged that the government of Iran had been responsible for the hostage
taking and as such, its hands were not clean. The relief sought was granted because it
had nothing to do with the claim for account and thus constructive trust and an
injunction was awarded.

There is an exception to the maxim where it does not apply where one is suing for
common law remedies, such as damages or declaration. It only applies in equity. In
Chapman v Michaelson it was held that the maxim is an equitable doctrine and was
not applicable to a situation where the plaintiff was seeking a declaration that a
mortgage which he had given was void, and that he could obtain a reconveyance of the
mortgaged property without repayment. Equally, where the plaintiff is claiming relief in
respect of a statutory remedy, the maxim does not apply.

In Re the Will of F.B. Gilbert, legislation was passed to vary the will in order to change
the terms so as to positively benefit the wife. She applied to the court for relief and
stated that she didn‟t have any money at all. However, in cross examination it was
found out that she had three bank accounts, all containing money (lied). The defence
lawyer claimed that the court should not exercise its jurisdiction to vary the will.
However, it was held that she was entitled to part of the estate of her deceased

34
husband even though she had lied in cross examination since in effect, the relief sought
was statutory and not equitable. As such, the equitable maxim did not apply.

INJUNCTIONS

The power of Equity to act in personam, against the defendant, allowed the
development of a range of remedies, more flexible than those of the Common Law, in
the form of various orders addressed to a party and backed up by the threat of
imprisonment for contempt if those orders were not obeyed. Such orders were imposed
on the individual and as such were discretionary, dependent in particular on whether the
conscience of the party was affected, and whether the plaintiff in turn deserved the
benefit of such an order. Such remedies may be final, representing the conclusion of
the litigation, or may be interlocutory holding actions pending trial, or may be ancillary,
procedural devices in support of the substantive proceedings.

An injunction is a court order directing a person to do or refrain from doing a specified

act. The power of the courts today to grant injunctions derives from the former
jurisdiction of the Court of Chancery, and it is clear that, despite the wide wording of the
Supreme Court Act 1981, referred to above, the jurisdiction may be exercised only on
settled legal principles. It was held in the 19th century that the Judicature Acts 1873-
1875 had not given the new Supreme Court any wider jurisdiction than that which had
previously been available in Chancery or by statute in the common law courts.

Injunctions come in a number of forms: they may be prohibitory, that is to say forbidding
certain conduct or ordering the defendant to cease certain conduct, or they may more

35
occasionally be mandatory, ordering certain conduct, often ordering the undoing of
something which interferes with another‟s rights, or they expected to cause the plaintiff
loss. They may be perpetual, that is final and permanent or they may be interim,
granted temporarily to restrain the defendant‟s conduct pending a full hearing of the
matter. They may even, in cases of emergency, be granted ex parte, that is without the
other party‟s case being heard, where there is not time to bring the matter even to an
interim hearing.

INJUNCTION FOR THE ENFORCEMENT OR PROTECTION OF A LEGAL OR

EQUITABLE RIGHT OR INTEREST

It will, in general, be necessary for a private individual to show some legal or equitable
right before the courts will grant an injunction to protect it. Where the plaintiff does not
have some right recognized in either law or equity the court cannot protect something it
does not recognize. In Day v Brownrigg, the claimant lived in a house that had been
called “Ashford Lodge” for 60 years. The defendant lived in a smaller neighboring
house called “Ashford Villa”. The D‟s started to call his house “Ashford Lodge” and the
claimant sought an injunction to restrain him from doing so. The COA took the view that
there was no violation of a legal or equitable right of the claimant so that no injunction
would be granted. Also in Panton v Trustees of British Pregnancy Advisory
Committee, the court would not grant an injunction to a husband to prevent his wife
having a legal abortion because he had no recognized right that was being infringed.

TYPES OF INJUNCTIONS

PROHIBITORY INJUNCTION

The most common and natural form of an injunction as the name implies is that it is
prohibitory or restrictive. It restrains a person from continuing or doing a defined act. In
Allen v Greenwood, the plaintiffs brought an action for injunction to restrain the
defendants from causing a nuisance by diminution of the access of light to the
greenhouse. The judge held that there was no nuisance and dismissed the action.
However, on appeal it was held that the measure of light to which right was acquired
36
under the Prescription Act was the light required for the beneficial use of the building for
any ordinary purpose for which it was adapted. The plaintiffs had acquired a
prescriptive right to light which was not restricted to light for the purpose of illumination
but which entitled them to all the benefits of the light including the rays of the sun. The
injunction was granted to restrain the defendants activities. Also in Sky Petroleum Ltd.
v VIP Ltd., On a motion for an injunction to restrain the defendants from withholding
supplies of which they were the only suppliers, pending trial of an action to determine
matters in dispute concerning the contract. It was held that to grant an injunction, in the
terms sought, would be to order specific performance of a contract to sell and purchase
non-specific or unascertained chattels, and that such an order would normally be
refused because damages would be a sufficient remedy. That in the unusual
circumstances in which the defendants were the only source of supply available to the
plaintiffs and the sole means by which the plaintiffs could continue their business
damages would not be a sufficient remedy and an injunction would be granted.

MANADATORY

These will be granted with particular discretion because they impose a duty of positive
action on the defendant and often require constant supervision. Thus, in Redland
Bricks v Morris, the HOL discharged the injunction. In this case the defendant‟s clay
diggings had caused a land slip which had removed a part of the plaintiff‟s land, which
was used as a market garden, rendering it useless to the plaintiff. An injunction had
been granted by the County Court, ordering the defendant to restore the land. The HOL
recognized the difference of approach between prohibitory and mandatory injunctions.
As Lord Upjohn said: “The grant of a mandatory injunction is, of course, entirely
discretionary, and unlike a negative injunction can never be as of course.”

This perhaps suggests that it is better for the defendant to go ahead and cause the
damage, because the court is unlikely to order him to act positively to undo the damage,
whereas if he is sued before the damage occurs a prohibitory injunction is very likely to
be granted to stop his future behavior. However, in this case the court was moved by
the fact that the defendants, though acting wrongly, were merely negligent: they
37
believed that their work would not cause damage, but it did. They had not set out
deliberately or maliciously to cause the damage, but it did. They had not set out
deliberately or maliciously to cause the damage. If they had, Lord Upjohn said that a
mandatory injunction might be granted, even if the cost of carrying it out was out of all
proportion to the damage caused. Here, however, the defendant had not acted
maliciously, so the cost to him of a mandatory injunction had to be considered. The
likely cost of restoring the plaintiff‟s land was 30,000, whereas the land was worth only
12,000, and the damaged part only about 1500. Also, the court felt that the injunction
granted by the County Court judge was virtually open-ended: the defendant did not
know exactly what he had to do. The court held that a mandatory injunction should be
in such terms that the defendant must know precisely what he must do to comply.

In Kelson v Imperial Tobacco, a mandatory injunction was granted to enforce the

removal of a sign which trespassed in the airspace above the claimant‟s premises,
causing no real damage to him, save in so far as he could have charged for the use of
the space.

COMPARE THE FOLLOWING

In Berstein v Sky Views and General Ltd., in which a plaintiff attempted to sue for
tresspass when ariel photographs were taken of his property. The case established that
a property owner does not have unqualified rights over the airspace above their land.
Griffith J stated: "I can find no support in authority for the view that a landowner's
rights in the air space above his property extend to an unlimited height." The case
established that the rights of a land owner has over his land extends only to a height
necessary for the ordinary use and enjoyment of his land.

Wrotham park Estate v Parkside Homes Ltd, the defendant had erected houses in
breach of a restrictive covenant which it had thought was unenforceable. Although
purchasers were now in occupation, the claimants sought a mandatory injunction for the
demolition of the houses. For various reasons, they had not sought interlocutory relief
to prevent the erection of the houses, but this was not fatal to the grant of a mandatory

38
injunction. The fact that the action was commenced before much building had been
done was a relevant but not a conclusive factor. The injunction was refused, as it would
result in the unpardonable waste of needed houses. Instead, damages were awarded
under Lord Cairns Act. Finally, it has been held that the court should be reluctant to
intervene in industrial disputes by the grant of a mandatory injunction.

In Harold Stephen and Co Ltd v Post Office, an industrial dispute had arisen whereby
postal workers were suspended. This resulted in the claimant company‟s mail being
held up and its business seriously disrupted. The company sought a mandatory
injunction against the Post Office to release its mail. The COA refused the injunction,
which would require the Post Office to take back the suspended workers, who would be
likely to continue the unlawful action. The injunction would, therefore, have the effect of
revoking the Post Office‟s disciplinary measures. “It can only be in very rare
circumstances and in the most extreme circumstances that this court should
interfere by way of mandatory injunction in the delicate mechanism of industrial
disputes and industrial negotiations.”

PERPETUAL AND INTERLOCUTORY

PERPETUAL

It is in the nature of an injunction, being an equitable remedy, that its grant is

discretionary. Even if a legal right is infringed the court may choose not to grant an
injunction. It will be granted only where the common law remedies are inadequate, and
in particular where damages would not be sufficient, in the sense that they will not
provide adequate compensation, either because the loss cannot be quantified in money
terms or perhaps where the damage is a continuing one which would require repeated
claims. Neither will equity grant an injunction where it would be pointless to do so, as
where the damaging conduct has already occurred and cannot be undone, as in a
breach of confidence. The court may also choose in appropriate cases to delay the
coming into effect of the injunction until the defendant has had time to remedy the
conduct complained of.

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DAMAGES AN INSUFFICIENT REMEDY

London and Blackwell Railway v Great northern Railway, According to Lindley LJ:
“the very first principle of injunction law is that prima facie you do not obtain
injunctions to restrain actionable wrongs for which damages are the proper
remedy.” So where injury can be adequately compensated by money, injunction will
not be granted; this may arise in a situation where the acts complained of had already
been executed and there is no intention of repeating it.

PROTECTION OF A RIGHT

It is a fundamental rule that the court will only grant an injunction at the suit of a private
individual to support a right. Thus in Day v Brownrigg, the court refused an order of
injunction to prevent the defendant from calling his house by the same name as that of
the plaintiff‟s adjoining house since the plaintiff did not have an exclusive right to the use
of that name.

BREACH OF STATUTORY DUTY

Where the statute imposes a negative duty and provides a remedy such as a fine for its
infringement, an injunction will not lie. In Australian conservation Foundation Inc. v
Commonwealth, it was noted that if there is a legislation forbidding the construction of
roads of certain width or in respect of constructing buildings contrary to the Town and
Country Planning Act, only the AG can bring the action. In the Victoria Case, it is
within the discretion of the AG to determine whether to proceed in an action where a
statute has been contravened thereby infringing a public right.

The Attorney-General has the discretion to proceed by way of injunction to protect

public rights if the statutory penalty is shown to be inadequate. In Gouriet v Union of
Post Office Workers, the claimant, a member of the public, sought an injunction to
restrain a threatened boycott of postal communications between Britian and South
Africa in breach of statute. The Attorney-General had refused consent to a relator
action, without giving reasons. It was unanimously held in the HOL that the court had
no jurisdiction to grant such an injunction, nor to control the exercise of the Attorney-
40
General‟s discretion in any way. However, if the statute merely re-enacts a pre-existing
common law liability and provides a special form of remedy, the court‟s jurisdiction to
restrain a breach is not thereby ousted. This remedy is discretionary and, therefore,
before a court may grant an injunction a real and substantial violation of some right
must exist.

DISCRETIONARY NATURE OF THE REMEDY

The principle is that the jurisdiction to grant injunction is purely discretionary. This
discretion which is execerised on laid down equitable principle. The factors taking into
account in granting an injunction are as follows:

1. Minor Damage – mere trival damage which can be easily quantified in terms of
money would not warrant the imposition of an injunction. Where however, it is
found that in not so doing, P would be enabled to be at an advantage, the court
may rule otherwise.

2. Cessation of annoyance – Where the wrong complained is temporary and is

not likely to occur in the future, will not warrant an injunction.

3. Compliance being difficult – Expense in respect of carrying out the order would
not alone prevent the imposition of an injunction.

4. Undertaking by defendant – where D has given an assurance that he would no

longer carry out certain acts, the court will not impose an injunction given the
undertaking.

5. Hardship on the defendant – The court may refuse injunction if it will cause
great hardship to the defendant.

6. Conduct of the plaintiff – If P didn‟t bring an action in due time that is allowed D
to build a wall which he foresaw would have restricted the income of flight and
did nothing/ he didn‟t act in with clean hands may affect P‟s right to an injunction.

JURISDICTION

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Passing off – where one is selling goods in a way that deceives the public into
believing that such belongs to him and not another, then it is clear that the court
may award an injunction.

Patents designs, copyrights and trademarks: - Patents, Designs, Copyrights:

injunction may be granted to restrain infringement of patents, designs, and
copyrights.

Trade secrets and breaches of confidence – Equity exercised original and

independent jurisdiction to grant injunction to restrain what the courts consider to
be wrong if it arises either, from infringement of a right or form breach of contract
or confidence.

Publication of libel – An injunction may be granted to restrain publication of

false statements designed to injure a man‟s personal character or reputation or to
bring his trade or business into disrepute.

Expulsion from clubs and societies – It will lie to restrain the wrongful
expulsion or exclusion of a member from an ordinarily constituted members Club,
where such intervention by equity will protect the members proprietary interest in
the assets of the club.

Trade or profession – But with trade or profession the court will specifically
enforce the member‟s contractual right to remain a member of the society despite
the absence of a proprietary interest in the member. This equitable jurisdiction
which has been exercised over friendly societies, a trade union or professional
institute cannot be ousted by their rules.

Breach of contract – Injunctions can be issued to prevent breach of negative

contracts – agreement in restraint of trade. Where there is a covenant or a term
of an agreement which is positive in form which is normally enforced by specific
performance, equity may prevent its breach by issuing injunction to ensure that
the defendant does not omit to do what he has promised to do.

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Contract of personal service – Injunction can be obtained to restrain breach of
a negative term in a contract of personal service where the term in question is
negative in form as well a in substance. Lumley v Wagner Compare this with
the case of Whitewood Chemical Co. v Hardman where the terms of the
contract by a company‟s manager to give the whole of his time to company‟s
business during a specified period was found to be absolutely positive in form
and therefore no injunction could be issued to restrain its breach. This
jurisdiction is subject to the qualification that the court will not grant an injunction
which will have the effect of straving the defendant, hence the defendant should
not be put in a situation where he has to work for the plaintiff or do no work at all.
So that where, e.g., the defendant bandleader contracted to perform for the
plaintiff‟s hotel for 2 years and that he would not during this term of 2 year play
for any other person or institution except with the plaintiff‟s written permission.
The court held that since it did not prevent the defendant from doing any work at
all but only playing music, he could be restrained from breaching the covenant.
The term which seeks to prevent a film actress from performing for any other
occupation. An injunction will lie to enforce it. An injunction will, therefore, lie to
enforce it, but this will not be so in respect of a term preventing her to engage in
any other occupation – since this will put him at the mercy of the plaintiff. In
Warner Bros v Nelson.

Breach of restrictive covenant – Equity will issue injunction to prevent

breaches of Restrictive Covenants not only against the original covenantor but
also against his successor in title.

Breach of trust and equitable obligation – Injunction will lie to prevent breach
of trust Breach of Partnership Terms: Partnership rights can be protected by
injunction which can issue to restrain breach of the terms thereof of the duties
arising under partnership general law preventing one partner from excluding
another from his right management of the business or to restrain an improper
exercise of power of expulsion.

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 Trespass – Injunction can issue to protect ones possessory right.

Waste – Injunction will lie to restrain voluntary waste the acts which alter the
nature of the property. It is immaterial that the acts complained of might increase
the value of the land.

Nuisance – One can prevent a private nuisance only when the injury cannot be
adequately redressed by damages. As for public nuisance it is required that the
plaintiff‟s injury transcends that suffered by the public and that the nuisance has
occasioned substantial damage. Otherwise a complainant can proceed by a
relator action.

INTERLOCUTORY OR INTERIM INJUNCTIONS

Interim Injunctions and interlocutory injunctions are used interchangeable. They are
granted at an interim stage, before the final determination of the rights of the case, and
it follows that nothing should be done, and that an injunction should not be granted,

44
which will prejudice that final outcome, or permanently damage the position of the
parties at this early stage. Therefore, when considering whether to grant an interim
injunction the court must first be satisfied, in the words of Lord Diplock in American
Cyanamid v Ethicon, that there is a serious question to be tried.

If there is, then the court must be satisfied that the balance of convenience is in favour
of granting an injunction. The plaintiff will also be required to give an undertaking to pay
damages to the defendant for any loss he suffers from the grant of the interim injunction
if it turns out, as the full trial, that the plaintiff is not entitled to restrain the defendant‟s
conduct in this way.

However, before the American Cyanamid v Ethicon case the principle used to
determine the application of an interlocutory injunction required the applicant showing
inter alia, a strong prima facie case or probability of success in the substantive suit.
This rule was stated in the case of J.T. Stratford & Son Ltd. v. Lindley. This test was
upheld in the case of Hoffman-la roche v Secretary of State. Such cases did not allow
the court much discretion in deciding cases, as once the P can show a strong prima
facie case, he/she would be successful at obtaining an injunction.

Before, the American Cyanamid case the principles which guided the courts in
determing applications for interlocutory injunction are as follows:

1. Prima facie case, Probability of success and Triable issue

2. Balance of convenience

3. Irrepairable damage – damage cannot be remedied by a mere award of damage.

4. Status quo

5. Undertaking as to damage – if D has given an undertaking, the court may be

more willing to enforce the agreement.

American Cyanamid v Ethican Ltd. – C registered a patent in the UK for the use of a
special new kind of sutures. E were the remain suppliers of the kind of sutures then in

45
use. C introduced their product into the UK market and within 3 years had captured
15% market share. In order to compete with C, E proposed to introduce their version of
C‟s product. C brought a quia timet action against E to restrain the threatened
infringement of their patent and gave notice of a motion for an interlocutory injunction.
At hearing evidence was advanced by both parties on the issue of whether the
introduction of E‟s product would infringe C‟s patent.

The judge held that „on the availability of evidence C had made out a strong prima facie
case against E and that on the balance of convenience an interlocutory injunction, on an
undertaking in damages by C, should be granted to maintain the status quo of the
parties pending the trial of the action.‟ The COA reversed the decision holding that C
had not established a prima facie case and there was a well-established rule of law that
„a court is precluded from granting an interlocutory injunction or considering the balance
of convenience between the parties unless…satisfied on the balance of probabilities
that, at the trial, the plaintiff would succeed in establishing his right to a permanent
injunction. C appealed.

It was held by the HOL that there were no grounds for interfering with the judges
assessment of the balance of convenience or with the discretion he had exercised in
granting the injunction. Their Lordship reasoned that:

1. There is no such rule of law as that referred to by the CA. The court could grant
an interlocutory injunction as long as it was satisfied that the claim as not
frivolous or vexatious that is that there was a serious issue to be tried.

2. The claim showed that there were serious questions to be tried and that it was
therefore necessary for the balance of convenience to be considered. In
considering the balance of convenience the judge had rightly taken into account
the fact that:

(a) While E had not yet entered its new product into, C was establishing a
growing market with its sutures in competition with E‟s old sutures.

46
 (b) If E were allowed to enter its new sutures on the market that even if C were
successful in proving an infringement, C would already have lost its chance to
continue increasing its market share.

Some special factors also should be taken into account in determining the balance of
convenience were identified by Lord Diplock, and have subsequently been itemized in
Fellowes v Fisher. Thus, in deciding whether to grant an interim injunction, then, it
appears that the court should consider the interests of the two parties and whether they
could be adequately compensated by damages if either an injunction is not granted and
the plaintiff ultimately wins the case, or an injunction is granted by the plaintiff ultimately
loses. Where this question is evenly balanced, then the court may look at all other
relevant factors, including the strength of the parties‟ cases, if one is much stronger than
the other, to see where the balance of convenience lies. If this too produces an even
balance, then the general approach should be to maintain the status quo. This analysis
is, however, subject to the presence of special factors in the particular cases. The
result of this approach has, however, been that cases are nearly always decided on the
balance of convenience, with little if any consideration of the merits of the plaintiff‟s
case.

However, in 1975, Lord Diplock in the case of American Cyanamid altered the
previous practice by holding that a plaintiff seeking an interlocutory injunction need no
longer establish a prima facie case. The test for a prima facie case contradicts the very
rationale of an interlocutory injunction i.e. to preserve the status quo until trial, rather
than pre-judging the case, which the prima facie test purported to do. Lord Diplock held
that, in cases like American Cyanamid, which is one of a complex nature, the court
needs to have more discretion as allowed by the prima facie test. The court ought to be
vested with the capacity to analyze various factors prior to concluding on the matter;
always bearing in mind, however, that one ought not to judge the case at this early
stage. In addition he stated that there was a serious question to be tried, in which case
the grant or refusal of the injunction should be governed by the balance of convenience.

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The new principles purported by Lord Diplock in accordance with Jill Martin’s article
were, as follows: (1) the court must be satisfied that the plaintiff‟s case is not frivolous or
vexatious and that there is a serious question to be tried; (2) if so, the governing
consideration is the balance of convenience; (3) a significant factor in assessing the
balance of convenience is the inadequacy of damages to each party; (4) if the balance
of convenience does not clearly favour either party, the preservation of the status quo
will be decisive; (5) only as a last resort should the relative strength of each party‟s case
be taken into account in tipping the balance; (6) finally, „other special factors‟ may have
to be considered in individual cases. She further added with referring to Lord Diplock‟s
view that the new formulation in American Cynamid was „designed to circumvent a
necessity of deciding disputed facts or determining points of law without hearing
sufficient argument.” This was done in light of the view that the court‟s discretion
would be unduly fettered if the injunction could only be granted if the plaintiff could show
that he was more than 50 per cent likely to succeed at the trial, bearing in mind that
difficult points of law and conflicts of evidence, which was incomplete and untested by
cross-examination, could not be resolved at the interlocutory stage.

ANALYSIS

To say that the principles were settled would be to presuppose the existence of settled
principles. In American Cyanamid case on the Ratio Deciendi it was established that
where there is a triable issue, the courts are not required to resolve the conflict, it should
not be merely accorded a requirement of prima facie case. Instead the court ought to
go to the balance of convenience. The matter ought not to be resolved at this
interlocutory stage, instead, the inconvenience and the damage suffered should take
into account and the court should decide accordingly. The case doesn‟t apply in
respect of ex parte application because the instant case was an action of motion in
notice. Where the matter is straightforward, open and close case, a prima facie case is
established, then given that there is not triable issue, American Cyanamid should not be
regarded.

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The balance of convenience led to a decisive conclusion in American Cyanamid.
Suffice to say where the balance was even, American Cyanamid would not apply.
Instead, probability of success as a test will in fact be applied. Lord Diplock states that
one should not in fact resolve the matter, but the court should go back to the affidavit of
the parties, and give judgment to the person who has more uncontradicted evidence. In
these circumstances, Owusu states that the probability of success test should be
applied. The HOL did not allude to Stratford case and Hoffman Le-Roche case, Lord
Diplock himself, a few months before American Cyanamid decided that a prima facie
case was required to be established.

The only place in the judgment where one can say changed the law was the statement
of Lord Diplock which made it clear that in interlocutory injunction cases, one must not
apply the prima facie/probability of success tests. Here however, it can be argued that
this case dealt with a triable issue, and as such, the statement of Lord Diplock was
obiter. However, to the extent that there was a triable issue, it was correct that, given
the lack of time, and the length of the court to resolve the matter at this time, prima facie
case was not the best test to apply. On this matter, the HOL was correct that at this
stage there was no need to apply the prima facie or probability of success tests.

In American Cyanamid, the P has a strong prima facie case and D‟s defense was also
strong, hence resulting in a triable issue. In effect, Lord Diplock was contradicting
himself when he said that in cases where a triable issue arises, one must go back to the
affidavits and the more uncontradicted evidence will allow the party in whose favour it
titled to succeed. This is akin to the probability of success test. Thus, the law remains
that once there was a triable issue, one must go to the balance of convenience test and
give judgment accordingly. The ratio decidendi in question did not change the law.

Since this case, there has been much debate with regarding its position in the law and
whether it has actually succeeded in getting rid of the previous rule of establishing a
prima facie case. Lord Denning and others, have held the view that the principles in this
case are nowhere near applicable to the application of interlocutory injunctions, further
illustrated by the statement of the latter where he stated in the case of Cambridge
49
Nutrition Ltd. v British Broadcasting Corp. that the Cyanamid principles „must never
be used as a rule of thumb, let alone as a straightjacket.‟

Lord Denning believed that the ‘special factors’ referred to by Lord Diplock could take
a case outside the Cyanamid principles, so that the previous approach requiring a prima
facie case would apply. This view was buttressed in the case of Bryaston Finance Ltd
v De Vires, held that the presence of a „special factor‟ justified the return to the prima
facie approach. On the other hand, the case Hubbard v Pitt, held that „special factors‟
were just merely matters which could affect the balance of convenience and could never
justify a return to the prima facie. With this, subsequent cases have developed what
may be deemed as exceptions to the Cyanamid approach and circumstances where it
will not be applied.

The principles in the American Cyananmid have since been accepted that they will not
apply where there is no likelihood of a trial, in cases of libel, where there is a delay,
where public bodies are concerned, trade disputes, mandatory interlocutory injunctions
and restraining enforcement of an allegedly invalid law.

(1) Libel: established in the case of Bonnard v Perryman, an interlocutory injunction to

restrain a libel will not be granted save in the clearest cases, if a jury were to find
that there was no libel, the court would set aside its verdict as unreasonable.
Hence, not even a prima facie case would suffice to warrant an injunction. This
principle is based on the overriding public interest in freedom of speech. It has been
said on many occasions that the Bonnard principle has not been affected by
Cyanamid. This is because the application of Cyanamid would often lead to the
grant of an injunction, thereby putting an unwarranted restriction on freedom of
speech. This is not an exception to Cyanamid in the sense that the plaintiff must
have a prima facie case, as not even that will suffice. The Bonnard principle may,
perhaps be regarded as a “special factor”, namely that the public interest in freedom
of speech will be overriding save in the clearest case. Consequently, it would
probably be fair to conclude that in such situations, the court would not be applying
the rule in American Cyanamid but the prima facie rule
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(2) Public bodies: in the case of Smith v Inner London Education Authority, the
Court of Appeal held: although the Cyanamid principles applied, the fact that the
defendant was a public body performing public duties was „a special factor‟. Hence,
in this case the balance of convenience must be looked at more widely and the
interests of the public to whom the duties were owed must be taken into account and
in those situations an interlocutory injunction would more likely than not be awarded.
This principle was accepted in the case of R v. Secretary of State for Transport,
ex p. Factortame.
(3) Restraining enforcement of an allegedly invalid law: the Factortame case
involved a claim to restrain the enforcement of the U.K. Merchant Shipping Act on
the basis that it was incompatible with European Community law. It was held that an
injunction should not be granted in such a case unless there was firm ground for the
challenge. The interesting feature of the case is the different approaches of Lords
Goff and Jauncey. Lord Jauncey regarded Cyanamid as inappropriate to the issues
and that the injunction could not be granted (save in quite exceptional
circumstances) unless there was a strong prima facie case of invalidity. Lord Goff,
on the other hand, regarded Cyanamid approach as applicable. However, when
applying the balance of convenience test, the public interest in the enforcement of
an apparently valid law was so great that it could only be outweighed if the challenge
to its validity was prima facie so firmly based as to justify such an exceptional
course. It is submitted by Jill Martin that „Lord Goff is merely paying lip service to
Cyanamid in that case, as on either view; a claimant who does not have a strong
prima facie case will not succeed in getting an injunction.
(4) The Cyanamid principles working unfairly in trade disputes. This was
highlighted in the case of N.W.L. Ltd. v. Wood. It is believed that in view of the fact
that injunction applications in industrial disputes rarely went to a final trial, and if so,
the union would be immune from tortuous liability if it could demonstrate that it acted
in contemplation or in furtherance of a trade dispute, the grant of an interlocutory
injunction to the employer on the basis of an arguable case and the balance of
convenience would be unjust. The case of N.W.L ltd v Woods ultimately held that

51
 justice would not be served applying Cyanamid where it was unlikely that the matter
would not proceed beyond the interlocutory stage. This view was also held by the
court of appeal in Cayne v. Global Natural Resources, where it was agreed that
Cyanamid case did not apply where an interlocutory injunction would effectively end
the action.
(5) Where trail is likely to be delayed: the belief was that it would be wrong to grant
an injunction on the strength of a mere arguable case that the covenant is not void
under the restraint of trade doctrine where the likelihood is that the trial will not take
place until the period of restraint has expired. Such was the case in Lansing Linde
Ltd. v. Kerr, where the period of restraint was one year, but the trial would not come
on for at least nine months. It was held that in such circumstances the employer
would have to have a prima facie case and not merely an arguable one, otherwise
the injunction would in effect finally decide the dispute against the employee. This
was again regarded as an aspect of the balance of convenience, but in reality a
plaintiff without a prima facie case will not succeed.
(6)The Cyanamid principles do not apply to the application of mandatory
interlocutory injunctions. General test in such instances is that the court must feel a
‘high degree of assurance’ that the plaintiff will succeed at the trial. In the case of
Locabail International Finance Ltd. v. Agroexport, the Court of Appeal held that
mandatory interlocutory injunctions should only be granted in special circumstances;
viz., where the matter ought to be decided at once; where the act to be ordered was a
simple one which could easily be remedied. The „high degree of assurance‟ test was
approved, and regarded as unaffected by Cyanamid case.

Hence, it can be concluded that the House of Lords in American Cyanamid did not
succeed in getting rid of the prima facie nor probability of success rule, even if it was so
desired as neither were settled. Even though it was said by Lord Diplock that „there
may be many other special factors to be taken into consideration when determining the
grant or refusal of an interlocutory injunction, the fact still remains that in those
circumstances, a claimant who does not have a strong prima facie case will not
succeed. Consequently, the words of Lord Denning are best suited as an affirmation of
52
the above mentioned view as he stated, „I think I may say that nowadays all
practitioners and judges are so familiar with the Cyanamid case that it is never cited at
length. It is taken as read. And the judges grant or refuse interlocutory injunctions in
the light of it but they come to just the same results as if the waters had never been
troubled.‟

The difference interpretations of American Cyanamid

Sampson Owusu‟s view: The case established that the test for whether to grant an
injunction or not was not whether a prima facie case had been established but whether
there was a ‘serious question to be tried’ and a probability of success. Mr. Owusu
contests the argument that the test in American Cyanamid can be discarded just
because cases since then have not applied it. He argues that the decision in American
Cyanamid was not inconsistent with previous law. He argues that the prima facie case
rule in Stratford v Lindley and the serious question to be tried test in American
Cyanamid were compatible. According to Owusu the ratio of the House of Lords in the
case sets American Cyanamid apart as a special / unique case since the circumstances
of which required it to be decided on the basis of a „serious question to be tried‟.

According to him it is the arbitrary use of the concept of prima facie case which causes
confusion. He suggests that the concept be substituted by the term ‘clear case’. He
defines a clear case as one in which the strong case put forward by the Plaintiff is met
by an equally strong defence by the Defendant so that there is a „serious question to be
tried‟ and the court has to decide whether to grant the injunction on the basis of the
balance of convenience. The American Cyanamid case provided a classic example of
this clear case.

He argues that in all other cases, where there is not a clear case the ordinary test of
prima facie case applies. He identifies three situations in which there would be no clear
case and the court could apply the old prima facie rule:

53
 a. in an ex parte application where D is not present to present his case
b. D is present at the application but does not offer a defence
c. the balance of convenience is even.

He distinguished the two criteria: the prima facie rule is more stringent requiring that the
Plaintiff be almost certain to win at trial while the serious question to be tried, test
merely requires that the Plaintiff have a probability of success. The latter applies where
there is a clear case and the former applies where there is none.

In his reasoning the House of Lords did not make a prima facie case the last factor to be
considered in assessing the balance of convenience. The court should take „the relative
strength of each party‟s case‟ into account when tipping the balance the House of Lords
was requiring that the court rule in favour of the party with more of the undisputed
evidence (the party with the probability of success, not the party with a prima facie case)
i.e. the party almost certain to win at trial.

An application of the test in American Cyanamid could not possibly lead to a reversion
to the prima facie rule in Stratford v Lindley.

Jill Martin’s view: Martin argues that the decision in American Cyanamid
revolutionised the principles applicable to the grant of an injunction. She argues
that the House of Lords after holding that there was no rule requiring the Plaintiff
to establish a prima facie case, formulated a test designed to circumvent the need
to decide disputed facts or determine questions of law without hearing sufficient
argument. She points out that Lord Diplock himself had upheld the rule in
Stratford v Lindley in a previous case yet neither that nor Stratford‟s case was
referred to in the ruling in American Cyanamid.
Martin argues that the decision American Cyanamid is confusing. Judges in subsequent
cases have interpreted the ruling differently. On the one hand there are those cases in
which the special factors to be taken into account were regarded as aspects of the
balance of convenience. On the other hand there are those cases which have regarded
the special factors as a consideration in themselves. The distinction is important if the
54
special factors are considered as aspects of the balance of convenience then the test
would always be that established in American Cyanamid. Moreover, if the special
factors are a consideration in themselves then it would be possible for these factors to
take a case outside the application of the American Cyanamid test.

Martin asserts that the correct approach is the former: to consider the special factors as
merely aspects of the balance of convenience rather than as factors justifying a
departure from the American Cyanamid test. She suggests that the American
Cyanamid case itself was an example of special factors being used to tip the balance of
convenience.

Martin goes on to argue that there are exceptional cases where the American Cyanamid
test would not be appropriate. These include:

a. trial was unlikely, for example, where the ii would resolve the issue.
For example, in Cambridge Nutrition Ltd v British Broadcasting Corp, the
Plaintiff, the manufacturers of a low calorie diet, sought an injunction to restrain
the broadcast of a documentary until after the publication of a government report
about such diets. The grant of the injunction would have removed any need for
trial.

b. trial was likely to be delayed, cases involving restraint of a restrictive covenant

or restraint of a breach of confidence.
In Lansing Linde Ltd v Kerr where an employer imposed a restrictive covenant
on an employee to prevent him working a particular way for one year after his
employment ceased and the trial would not take place for at least nine months, it
was held that the employer had to establish a prima facie case for the injunction
to be granted.

where there was no arguable defence and the Plaintiff has such a strong
case that his chances of success are overwhelming

55
 In such a situation an injunction will be granted without any weighing of the
balance of convenience.

Lord Diplock‟s view: In accordance with Lord Diplock, the case established, there was
no such rule that the court was not entitled to take any account of the balance of
convenience unless it was first satisfied that the Plaintiff had a good chance of being
successful. He argued that terms such as „probability‟, „prima facie case‟, and „a strong
prima facie case‟ only cause confusion. What was necessary was for the court to
identify a serious question to be tried then have a pre-trial hearing not a trial in which it
considers the balance of convenience and if necessary any other relevant factors.

56
Mareva Injunction

Form and nature of Mareva Injunction

Mareva is an order which restrains the defendant from moving assets from the jurisdiction of the
court, or otherwise dealing with, assets within the court‟s jurisdiction in such a way as to render
the execution of the ultimate judgment futile. In other words, its object is to prevent D from
making the judgment futile. Speed is the essence of the relief, thus it usually takes the form of
an ex parte order. Mareva injunction is usually combined with Anton Piller or a disclosure order.
Mareva is ex parte because if D is aware, the object would be defeated and D would go to the
bank and transfer all his assets.

The order should be directed to affect a specified property, where possible, if the value of that
property will be equivalent to the value of the subject matter of the suit. Such a course will
enable the courts to determine whether a particular disposition is in breach of the order. This
may not be possible where the order is general in scope, such as where it is made to affect all
the property of the defendant. An order of such general character may cause substantial
prejudice and hardship to the defendant and third parties.

Where the plaintiff is not in a position to identify sufficiently the assets belonging to the
defendant, the order may be made to affect all such assets of the defendant save in so far as
they are not in excess in value of the subject matter of the plaintiffs claim. In Z Ltd v A – Z, in a
massive fraud scheme the defendants had defrauded the plaintiff of 2,000,000. These funds
had been paid into several bank accounts and used to acquire other fixed assets. The plaintiff
upon discovering the fraud, successfully obtained an Anton Piller and Mareva Injunction against
the defendants. This action continued mainly at the request of five charted banks who wished
elucidation of their responsiblilities under a Mareva Injunction.

Lord Denning stated the principle that as soon as the bank is given notice of the Mareva
Injunction, it must freeze the defendant‟s bank account. It must not allow any drawings to be
made on it neither by cheque drawn before the injunction nor by those drawn after it. If the bank
allowed the drawings it would be obstructing justice (allowing D to dispose of assets) as
prescribed by the court which granted the Mareva Injunction and would be held in contempt of
57
court. Once the assets are covered by the Mareva injunction the D must not have access to it
to dispose of it. Must be held pending further order.

The order may also make a provision for the ordinary living or business expenses of the
defendant. In A.J. Bekhar & Co. Ltd v Bilton. The order may direct that an appropriate weekly
or other periodic maximum amount should be set aside for the living expenses of the defendant.
In P.C.W (Underwriting Agencies) Ltd v Dixon. Note too, that the order would be directed to
affect specified property of the D.

The order must be couched in clear terms, so that the defendant and third parties affected by it
may be able to ascertain with a measure of certainty what they are required to do or not to do.
Where appropriate the order may contain a provision that “so far as concerns assets in the hand
of third parties, the generality of the order should only apply to such assets in so far as they are
identified or referred to specifically, but not otherwise,” as expressed in Z Ltd v A – Z.

In the case of a bank, as a third party, the order should specify the transactions which are
affected by the order, bank card transactions other particular transactions other particular
transactions or assets of the defendant.

Purpose

The object of Mareva order is to preserve the assets of the defendant so as to make them
available for the purposes of execution of any judgment which may be given against him. Note,
that „‟Mareva is interlocutory; it is not final; it is ancillary to a substantive pecuniary claim for debt
or damages.”

Nippon Yusen Kaisha v Karageorgis called for the exercise of such jurisdiction. The plaintiffs,
Japanese ship-owners, entered into charter-parties with the defendants, two Greek gentlemen,
who absconded without paying the hire. The plaintiffs feared that they would not be paid. They
learnt that the defendants had some money in their London bank account, which the plaintiffs
suspected might be transferred to Switzerland or some other country. An application was made
for an order to stop the funds being removed outside the jurisdiction of the court. The court
granted the order.

58
Similarly, in Mareva v International Bulkcarriers, there was a charterparty under which the
defendants contracted to pay the hire half-monthly in advance. The defendants paid only the
first two half-monthly hiring fees and stopped. The plaintiffs discovered that the defendants had
been paid some money into their London account by the Government of India as freight for a
voyage. That was money which should be used by the defendants, as time-charters to pay the
hire. But they had not paid it as they should have done. An injunction was sought to freeze the
money which was paid into their London account. The court granted the order. It was expressed
that “if it appears that the debt is due and owing – and there is danger that the debtor may
dispose of his assets so as to defeat it before judgment – the court has jurisdiction in a proper
case to grant an interlocutory injunction so as to prevent him disposing of those assets.”

On the contrary, Listen v Stubb had established that “you cannot get an injunction to restrain a
man who is alleged to be a debtor from parting with his property.” Further, that “the only remedy
for a creditor in that case is to obtain his judgment and take out execution.”

Conditions

From the early cases the following conditions can be deduced. The Mareva Injunction was
limited to:

(a) cases in commercial court;

(b) which were actions of debt;

(c) where the defendant was a foreigner outside the jurisdiction, and

(d) where there was a reasonable apprehension, of the danger that assets within the jurisdiction
would be removed outside the jurisdiction.

However, these conditions have been eliminated by subsequent cases. The important question
to be answered is whether Mareva has shed all these conditions. In Barclays-Johnson v Yuill,
“It seems that the Mareva doctrine has shed all the possible limitations of its origin. It is now
quite a general doctrine, free from any possible requirements of foreigner, commerce or
anything else; and in a proper case it depends only upon the existence of the defendant‟s

59
assets being removed from the jurisdiction with a consequent danger of the plaintiff being
deprived of the fruits of the judgment that he is seeking.”

The current position appears in the judgment of Lord Denning. The conditions which should be
observed in an application for Mareva injunction were outlined by Lord Denning M.R. in Rasu
Maritima S.A. v Perusahaan, established that: A plaintiff has what appears to be an
indisputable claim against a defendant resident outside the jurisdiction, but with assets within
the jurisdiction which he could easily remove, and which the court is satisfied are liable to be
removed unless the injunction is granted. The plaintiff is then in the following difficulty. First he
needs leave to serve the defendant outside the jurisdiction, and the defendant is then given time
to enter an appearance from the date when he is served, all of which usually takes several
weeks or even months. Secondly, it is only then that the plaintiff can apply for summary
judgment… with a view to levying execution on the defendant‟s assets here. Thirdly, however,
on being apprised of the proceedings, the defendant is liable to remove his assets, thereby
precluding the plaintiff in advance from enjoying the fruits of a judgment which appears
irresistible on the evidence before the court. The defendant can then largely ignore the
plaintiff‟s claim in the courts of this country and snap his fingers at any judgment which may be
given against him. It has always been my understanding that the purpose and scope of the
exercise of this jurisdiction is to deal with cases of this nature. To exercise it ex parte in such
cases presents little danger or inconvenience to the defendant. He is at liberty to apply to have
the injunction discharged at any time at short notice.

(1) the plaintiff must have a good arguable case. This was laid down in Etablissement Esefka
International Anstalt v Central Bank of Nigeria, where an injunction was refused in this case
because there were many doubts in the alleged forgery and the court found that here was “so
much defence to be raised.” It was expressed that “a good arguable case is no doubt the
minimum which the plaintiff must show in order to cross what the judge rightly described as the
threshold for the exercise of the jurisdiction. However, the court must consider the evidence as
a whole in deciding whether or not to exercise this statutory jurisdiction.” Note the mere fact that
he is abroad is not sufficient.

The strength of the case required of the plaintiff is affected by the hardship or inconvenience
which is likely to be endured by the defendant. Thus, where the hardship or inconvenience is
likely to be substantial the plaintiffs burden of proving probability of success on the merits is
correspondingly increased.
60
2) The injunction is not only limited to money, but in the case of goods, caution is required if the
injunction would bring the defendant‟s business to a standstill.

3) The court should favour the grant if it would be likely to compel the defendant to provide
security.

4) The plaintiff must make full and frank disclosure of all material matters. In Columbia Picture
Industries Inc. v Robinson. The duty of disclosure discussed under Anton Piller injunction
equally exists under this head. In Third Chandris Shipping Corporation v Unimarie S.A., a
freezing injunction must not be stretched too far lest it be endangered. The plaintiff should
make full and frank disclosure of all matters in his knowledge which are material for the judge to
know.

5) The claimant should give particulars of his claim and its amount, and in ex parte application,
the claimant should fairly state the points which may be made by the defendant to defeat his
claim.

6) He should give grounds for believing that the defendant has assets in the jurisdiction. In
Bankers Trust Co. v Shapira,

7) The plaintiff should give an undertaking as to damages not only to the defendant but also to
third parties who may be affected by the order.

8) The plaintiff should be required to cause a writ to be issued forthwith or within a period
appointed by the court. In Z Ltd v A – Z,

9) The jurisdiction is not only exercisable where there is a risk of removal of assets from the
jurisdiction of the courts but also where it is feared that assets from the jurisdiction will be
disposed of or otherwise dealt with in a way that would frustrate execution of judgment.

10) He should give grounds for believing that there is a risk of their removal before the claim is
satisfied, and a danger of default if the assets are removed. As illustrated in Etablissement
case, the mere fact that the defendant is abroad is insufficient.

61
Under this head circumstantial evidence is relied upon to prove that the defendant is likely to
remove the assets from the jurisdiction or otherwise deal with it. The courts have such evidence
in the following situations:

(a) evidence that a caution which has been lodged against the sale of a property has been
“suspiciously” removed from the register and the property sold;

(b) evidence that when the defendant has previously been in financial difficulties he had “fled”
the country and gone to America;

(c) evidence that the husband of the defendant was deliberately staying out of England to avoid
his creditors and the obvious assumption that his wife would sooner or later leave to rejoin him
(with their assets);

(d) the silence of the defendants in not adducing affidavit or other evidence (e.g. balance
sheets) to prove their financial standing;

(e) evidence that the defendant is a “one ship company”;

(f) a refusal by the defendants to disclose to the court details of any property owned by them,
which in Prince Abdul Rahman v Abu Taha led Lord Denning to the suspicion that the
properties were probably in the names of nominees so as to prevent creditors from getting their
hands on them.

There is an overriding requirement to show that there is a justiciable claim. In Siskina (Owners
of Cargo Lately Laen on Board) v Distos Compania Naviera S.A., a right to obtain an
interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent on
there being a pre-exisiting cause of action against the defendant arising out of an invasion,
actual or threatened, by him of a legal or equitable right of the plaintiff for the enforcement of
which the defendant is amenable to the jurisdiction of the court. The right to obtain an
interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is
granted to preserve the status quo pending the ascertainment by the court of the rights of the
parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which
may or may not include a final injunction.

Parties

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Foreign defendants: The early cases involved maritime claims with defendants resident
outside the jurisdiction. Nippon Yusen Kaisha and Mareva v Int’l Bulkcarriers, conclusively
establish that the order can be made against foreign defendants.

Local or resident defendants: In Chartered Bank v Daklouch, (give facts) The CA held that
the order can be made against a defendant even where he is resident (though not permanently
settled) within the jurisdiction

In Barclay-Johnson v Yuill, the defendant was a national, who, at the time, of hearing, was
believed to be cruising in a yacht in the Mediterranean and could not be reached by his
solicitors. The plaintiff succeeded in his application for a Mareva Order against him for freezing
the proceeds of sale of land which had been paid into his (defendant‟s) account in an English
bank.

According to Megarry V.C. “there is no bar to Mareva Injunction that the defendant is not a
foreigner, or is not foreign-based, in any sense of those terms; that it is essential that there
should be a real risk of the defendant‟s assets being removed from the jurisdiction in such a way
as to stultify any judgment that the plaintiff may obtain; and that in determining whether there is
such a risk, questions of the defendant‟s nationality, domicile, place of residence and many
other matters may be material…”

Lord Denning made it clear in Prince Abdul Rahman v Taha that a locally based
defendant could fall prey to Mareva Injunction. In this case, “a Mareva Injunction can be
granted against a man even though he is based in this country if the circumstances are
such that there is a danger of his absconding, or a danger of the assets being removed
out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so
that there is a danger that the P, if he gets judgment, will not be able to get it satisfied.”
P discovered that there was no money in the account of the D against which he had
successfully obtained a Mareva injunction. He realized that the D was using funds in his
wife‟s account. P claimed an injunction to freeze the wife‟s account. The wife objected
claiming that the account contained only her own money and sought to have the order
discharged. The COURT did not accept the argument that once a third party has laid
claim to an asset covered by an order of a Mareva injunction the court must realize it,
unless the claim cannot conceivable be sustained.
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Joining a third party: Where the order will affect the property of one who is not a party to the
suit, or where there is doubt as to whether the assets belong to the defendant or to one who is
not a party to the suit, any such person can be joined as a party to the application for the
interlocutory injunction.

The court may set down the issue of ownership to be tried in advance. In S.C.F. Finance Co.
Ltd v Masri, the plaintiff discovered that there was no money in the account of the defendant
against which he had successfully obtained a Mareva Injunction. The plaintiff later realized that
the defendant was using funds in his wife‟s account. The plaintiff objected claiming that the
account contained only her own money and sought to have the order discharged. The court did
not accept the argument that once a third party has laid claim to an asset covered by an order of
a Mareva injunction the court must release it, unless the claim cannot conceivably be sustained.

The CA was of the view that if the courts were to act on the mere claim of the third party the
efficacy of the jurisdiction would be greatly undermined. It was held that the alleged claim of the
third party was a factor that could affect the exercise of the discretion to grant or refuse the
order, and that no order would be made unless the court was convinced that there were
sufficient grounds for doing so. The third party can be indemnified for any wrong suffered in the
execution of the order. Where the right to the asset is put in doubt which cannot be resolved
without further inquiry, the issue should be set down for trial in advance.

Subject Matter or Assets

The assets where are sought to be frozen by the order need not be the subject of the
substantive suit. In Rasu Maritima case,

Note: Mareva initially started as a remedy which could only be obtained in commercial courts. Is
this still a condition?

Debts (creditor and debtor)

The jurisdiction can be invoked by a creditor against a debtor. (Note Mareva case and Nippon
Yusen Kaisha case.)

Personal Injuries

It was granted in a personal injury claim in Allen v Jambo Holdings Ltd.

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Matrimonial Property

It was successfully invoked in a matrimonial case of Emmanuel v Emmanuel and Ghoth v

Ghoth.

Ships

A Mareva injunction was issued to restrain a ship from leaving the jurisdiction of the court in The
Rena K.

Aeroplane

A Nigerian aeroplane was retained at an English airport in Allen v lambo Holdings.

Chattels (Motor Vehicles)

An order was made against the defendant to deliver up chattels, such as motor vehicles which
were thought to have been acquired with profits made by the defendant from violating the
plaintiffs copyright in C.B.S. United Kingdom Ltd v Lambert.

Goodwill

In Darashal v U.F.A. C. U.K. Ltd, the D was restrained from any acts which would have effect
of dissipating the goodwill of the plaintiff.

Life Insurance

A contingent beneficial interest in a life insurance policy was affected by a Mareva injunction in
T.D.K. Tape Distributor (U.K.) Ltd v Videochoice Ltd. (give facts)

Foreign assets

Initially, it was designed to affect assets within the jurisdiction of the court. The conditions which
were imposed at the initial stages of the development of Mareva injunction clearly showed that
the doctrine was not envisaged to affect foreign based assets. This formed the basis of the
decision in Ashtiani v Kashi. Here, the plaintiff obtained a Mareva injunction freezing the
assets of the defendant within the jurisdiction. Thereafter he made an application for discovery
of the nature, value and whereabouts of the defendant‟s assets wheresoever situated. The
65
application was refused. The Mareva Injunction which had been previously granted was
restricted to assets located within the jurisdiction. The discovery sought by the plaintiff was
ancillary to the Mareva injunction and it could therefore not be granted since the Mareva order
did not affect assets located outside the jurisdiction; as Mareva was given to affect assets within
the court‟s jurisdiction.

The CA‟s reasoning in Ashtiani v Kashi did not deny the existence of jurisdiction to grant a
Mareva injunction in respect of assets located outside the court‟s jurisdiction to grant a Mareva
injunction in respect of assets located outside the court‟s jurisdiction. For the remedy of
discovery which was sought in Ashtiani case, was not a principal relief of Mareva injunction,
which had already been granted and was restricted to local assets. Since the discovery was a
relief which was ancillary to the main remedy of Mareva it could not be extended outside the
limits of the main remedy. The CA, however, observed that a fairly settled and entrenched
practice inclined against such worldwide injunction.

The guidelines for application of Mareva order that the plaintiff furnish grounds for believing that
the defendant has assets within the jurisdiction and that there was a risk of the assets being
removed from the jurisdiction before the determination of the substantive suit indicated that the
jurisdiction was limited to assets within the jurisdiction of the courts.

In Intraco Ltd v Notis Shipping Corporation, the Bhoja Trader, the CA refused a Mareva
injunction sought to prevent the defendant from disposing of the proceeds of a letter of credit
because the fruits of the letter of credit could be realized only in Greece, a foreign country. This
case seems to affirm the view that Mareva injunction cannot go beyond the jurisdiction of the
courts.

Two of the main policy reasons against the award of worldwide Mareva injunction appear in the
CA decision of Ashtiani v Kashi:

1) It would have an oppressive effect on the defendant as it may result in freezing his assets all
over the world.

2) Problems of enforcing an injunctive order outside: the jurisdiction of the courts where the
assets of the defendant can be found militates against the award of worldwide injunction. It
becomes a complex issue where acts sought to be enjoined may not only be lawful, but may
66
also be required under a contract to be performed by the defendant in the country where the
assets are located.

3) The order operates in personam. The defendant will therefore be personally liable for its
enforcement overseas. But there is no effective way of ensuring compliance. The defendant can
flout the order with impunity as he may never return to the jurisdiction of the court to account for
his disobedience. If he did so return there will be no means of getting what he did in
disobedience of the order undone.

Note, that Mareva has been enforced and used worldwide in certain territories e.g. Australia,
Hong Kong.

Suggested answers to these objections

(a) as to the first objection, it can be said that such extraterritorial jurisdiction has existed in
other countries and its exercise in these other countries has not been found to be objectionable.

(b) The issue of oppression to the defendant resolves itself into matters of discretion. Whether
the enforcement of extraterritorial injunction will be oppressive on the defendant or not is a
question of degree. It should therefore not operate to impose an absolute bar against the award
of worldwide Mareva injunction. It is a discretionary and not a jurisdictional matter, and should
therefore be considered with other discretionary factors. Thus if the hardship to the defendant
does not overwhelm the advantages to the plaintiff, it should be granted. On the other hand, if
the prejudice the defendant would suffer would exceed the benefit to the plaintiff, it should be
refused. The problem becomes acute when third parties are affected by the order. This problem
received attention of the courts in Babanaft International Co. S.A. v Bassante.

Here, a judgment for 15 million was awarded against the defendants, two Lebanese nationals.
They were involved in a business which they carried on in a secretive manner through a
network of family companies. Their assets in Britain were not adequate to meet the 15 million
dollar judgment debt which they owed to the plaintiff. They failed to pay the judgment debt. The
plaintiffs application for a Mareva injunction was granted. It was held that the Mareva injunction
can be granted to affect assets outside the jurisdiction of the court. Salient features of
Babanaft’s cases are:

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(1) that the Mareva Order was obtained after the final judgment in the substantive suit had been
given.

(2) it was granted to bind the defendant alone. It was not to be binding on third parties except
where the order was enforceable by the courts of the countries where the assets were located.

Note: the distinction in Babanaft was that judgment had already been given in personam;
hence it wasn‟t binding on third parties and was only given to affect D. The worldwide Mareva
was served in this case.

Worldwide Mareva was also granted in Republic of Haiti v Duvalier. Here, there was an
alleged embezzlement of 120 million by the former president and members of his family. The
action was commenced in France where the family was resident, and a Mareva injunction
covering the assets of Duvalier‟s family wheresoever situated was sought in Britain. The order in
Duvalier‟s case was given when there was no suit for any claim justiciable in England.
Duvalier‟s case is indistinguishable on the following grounds:

(1) That int‟l co-operation was highly demanded in this case

(2) That Mareva Order issued in Duvalier‟s case contained a proviso that “unless and to the
extent that it is enforced by the courts of the States in which any of the defendant‟s
assets are located.” This is the proviso which was introduced by Babanaft’s case,
where it was directed that such a proviso should be contained in Mareva orders
designed to affect properties abroad.

(3) The case involved vast sums of money

(4) There was plain and admitted evidence of the defendant‟s intention to move their assets out
of the reach of all courts of law.

(5) It was considered a rare and exceptional case. The Mareva injunction issued in Duvalier‟s
case was a “most unusual measure … such as should be very rarely granted.”

But the court recognized that such a worldwide order should be granted only in rare

cases, such as where there is a need for int‟l co-operation. It appears then that the

worldwide order will be readily granted:

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(1) if the substantive suit has been determined

(2) where the plaintiff has a tracing or other proprietary claim. Note, in Derby & Co. Ltd v
Weldon some other conditions were introduced. That is:

(3) He must show that the defendant‟s assets within the jurisdiction are not sufficient to meet his
claim;

(4) the defendant would not be exposed to a multiplicity of actions; there will be no misuse of his
information obtained in the process of executing the order;

(5) the third parties will be adequately protected.

There does not appear to be any difference between the conditions for domestic and worldwide
Mareva injunctions. Except that in the case of worldwide injunction there is no need for plaintiff
to prove that the defendant has assets within the jurisdiction of the court.

Effect on third parties

Where one is not a party to the substantive suit in relation to which a Mareva injunction has
been obtained, the question as to whether such innocent third parties or banks are required by
law to observe the terms of the order was addressed by Lord Denning in Z Ltd. v A – Z. Here,
the plaintiff was a foreign company with an office in London. It was defrauded in large sums of
money, which the company was induced by means of telexes to transfer to London apparently
for the purchase of goods which in fact were never supplied. These monies which were
obtained through this fraudulent means were paid into various bank accounts in London. Where
the fraud was discovered, the plaintiff, in an effort to recover them, applied for a Mareva
injunction to freeze the monies paid in the London accounts until judgment.

Does a bank served with the Mareva injunction have the right to freeze the customer‟s account?
The bank is not a party to the suit. The court has not made any order on the bank. The
customer, i.e. the defendant, has not given the bank the permission to freeze his assets in the
bank. Does the bank have any right to freeze the account? In Z Ltd v A-Z, the CA was
presented with this issue in the form of a request for an advisory opinion.

According to Lord Denning in Z Ltd: “As soon as the judge makes his order for a Mareva
injunction restraining the defendant from disposing of his assets, the order takes effect at the

69
very moment that it is pronounced… Even though the order has not then been drawn up, even
though it has not been served on the defendant, it has immediate effect on every asset of the
defendant covered by the injunction. Every person who has knowledge of it must do what he
reasonably can to preserve the asset. He must not assist in any way in the disposal of it.
Otherwise he is guilty of contempt of court.” (Note: this is in rem)

Consequently, a bank which honours any cheque presented after the order has come to its
knowledge will be guilty of aiding and abetting the contempt of the defendant. A bank should
therefore not allow any drawings to be made on the account, neither by cheques drawn before
the injunction nor by those drawn after it. The principle is that if one becomes aware of the
order, he will be obstructing the course of justice if he does anything to facilitate the disposal of
the asset covered by the court‟s order. A charge of contempt of court can be leveled against
him, if one is so found to be obstructing the course of justice.

To avoid undue hardship to third parties who may be required to observe the terms of the order,
it was held in Z Ltd v A-Z that the order should set out in detail and with as much certainty as
possible what the third parties are required to do or not do. The order may be in wide terms as
at that stage the plaintiff may not be able to determine what assets the defendant has or where
they are situated. But the third party should be informed of the account or the identity of the
particular asset.

If the plaintiff cannot identify the bank account or other asset with precision, he may request the
bank or other innocent third party to conduct search so as to see whether any asset of the
defendant is held by it or any of its branches. The bank may not disclose the result of the search
so as not to breach its duty of confidence to its customer. If, however, the banks find that the
defendant has an account, it should freeze it for its own protection, so that it would no0t be in
contempt of court.

A third party or a bank which is required to perform any act in pursuance of the order has to be
indemnified by the plaintiff for all expenses incurred in respect of the order.

Lord Denning in this case conceived the remedy of Mareva injunction as “operating in rem”. But
this concept of “in rem” must be understood in the limited sense in which it was used in Z Ltd v
A-Z. Lord Denning was dealing with the position of a third party who finds himself in a situation

70
where he can personally make the order ineffective. The order is good against him in the sense
that, he has a duty to observe it. That is the sense in which it can be said to “operate in rem”. It
is not in rem because:

1) it does not give a charge in favour of any particular creditor, though it enables the assets to
be preserved for the benefit of the creditor. This limitation was explicitly recognized in Z Ltd v A-
Z; where this statement was made by Lord Denning.

2) A bank may debit the frozen account for payment on behalf of the defendant of an irrevocable
letter of credit, a bank guarantee, a credit card or a cheque backed by a cheque card.

3) A bank which holds funds which are the subject of a Mareva injunction can obtain a variation
order so as to entitle it to exercise any right of set-off it has in connection with any facility it has
granted the defendant before it was notified of the order. In Oceanica Castelana Armadora
S.A. of Panama v Mineralimporrexport, the bank was allowed to exercise its right of set-off in
respect of interest due from the customer before and after the notice of the order.

4) A Mareva injunction can be varied so as to allow the defendant to pay a debt in the ordinary
course of business to a third party. In K\S A\S Admiral Shipping v Portlink Ferries Ltd, the
plaintiff suspected that the defendant against whom they had obtained a Mareva order was
about to go out of business. They therefore applied for an order that the defendants should not
pay its trade creditors in a way that would reduce the frozen assets below a level that would
satisfy any judgment the plaintiff would obtain. The application was rejected. The doctrine is not
to allow a person claiming unliquidated damages to be a secured creditor.

5) Where the defendant seeks variation of an order so as to enable him to pay a debt he owes
an unsecured creditor or any third party, such as legal costs, according to A v C (No 2), he has
to disclose his other assets and show why he does not want to use any other asset other than
the particular asset which is subject to Mareva injunction.

6) An asset which was secured to a creditor but subsequently caught by a Mareva injunction
does not lose its character as a secured property. The Mareva order does not give the plaintiff
any proprietary interest in the asset caught by the order. The order does not prevail against the
interest of the second creditor. The charterers in Cretanor Maritime Co. Ltd v Irish Marine
Management Ltd, executed a debenture in favour of an Irish bank in 1975. The debenture was
in the form of a floating charge. In 1976 a dispute arose between the owners of the ship and

71
charterer‟s assets. After the dispute between the owners of the ship and charterers had been
referred to an arbitrator, the owners applied for and obtained a Mareva injunction restraining the
charterers horn removing any assets up to value of $700,000 out of the jurisdiction of the court.
The receiver applied to the court and got the injunction discharged so that they could remove
the assets subject to the debenture removed from the jurisdiction of the court. The court was of
the view that Mr. Mullion to whom the debenture was assigned was not precluded from seeking
the discharge of the injunction. Buckley L.J was of the view that a Mareva injunction did not
have the effect of a pre-trial attachment. He asserted “under such an injunction the plaintiff has
no rights against the assets. He may later acquire such rights if he obtains judgment and can
thereafter successfully levy execution on diem, but until then his only rights are against the
defendant personally.”

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 WORKSHEET 4 A

EQUITABLE REMEDIES: SPECIFIC PERFORMANCE

PRORIETARY ESTOPPEL

(ACQUIESCENCE)

The doctrine of acquiescence allows a person who develops another‟s land in the glare or with
the landowner‟s knowledge to lay claim to or recover the land together with the developments
on the land which he effected. This is possible only if the landowner makes a promise of a grant
of the land to the person or if the owner stands by and does not assert his title to the land. The
doctrine can be invoked not only where the land owner makes an express promise of a grant of
the land, but also where he stands by and his silence encourages the person to develop the
land.

Lecturer’s Note: What we are considering here is a case where there is no written agreement
[for sale of land]; it is a mere promise or representation at best. “Can the person just sit on the
tree of his land and then descend at the time of the harvest and take the crops, [claiming
ownership of the farm]?”-Owusu’s article. What should the courts of equity do? The person
developing the land; is it conscionable for the law to allow the title owner to take the property
with all its improvements? The courts say that in certain circumstances specific performance will
be granted.

Lord Westbury L.C. vividly illustrated the scenario where the landowner made a promise of
his land in Dilwyn v. Llewellyn (1862) 45 ER, 1285 at p. 1286 a case where the father
gave the land to the son who spent $14, 000 on the property to build a house. The father
signed an unsealed memo purporting to convey the land to the son, but, the father in his will
devised all his property on trust for other objects. The question arose whether the son could
succeed. The courts said yes, the son succeeded in getting a conveyance of the fee simple
interest. Lord Westbury said: “if A puts D into possession of a piece of land and tells him “I give
it to you that you may build a house on it”, and D on the strength of that promise, with the
knowledge of A, expends a large sum of money in building a house accordingly I cannot doubt
that the donee acquires a right from the subsequent transaction to call on the donor to perform
that contract and complete the imperfect donation that was made.”

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In the case of Ramsden v. Dyson (1866) LR 1 H.L. at 140-141 it Cranworth LC said “if a
stranger begins to build on my land, supposedly to be his own, and I perceiving his mistake,
abstain from setting him right, and leave him to persevere in his error, the courts of equity will
not allow me to assert my title to the land on which he has expended money on the supposition
that the land was his own.”

 There should be a representation on which the stranger relies to his detriment; i.e. an
encouragement or assurance or any other conduct on the landowner‟s part which leads
the stranger to believe that he has or will have title or some interest in the land.
`The doctrine in another manifestation of the maxim equity acts in personam. It is
based on fraud, for {according to Fry J in Willmott v. Barber (1880)} “it requires very
strong evidence to induce the court of equity to deprive a man of his legal right…it has been
said that by acquiescence which will deprive a man of his legal right must amount to fraud, and
in my view that is an abbreviated statement of a very true proposition. A man is not to be
deprived of his legal rights unless he has acted in such a way as would make it fraudulent for
him to set up those rights.

By this doctrine the courts of equity:

(a) Have created an inroad into the equitable maxim “equity does not aid a volunteer”;
(b) Circumvented the requirements of the Statute of Frauds, to perfect an imperfect gift by
awarding specific performance where there is no consideration and/ or written evidence
to buttress a claim for an interest in land;
(c) Side-stepped the statutory requirement for testamentary disposition; and
(d) Also parted from the general rule that estoppel can only operate as a shield but not as
a sword.

THE FIVE CONDITIONS (PROBANDA)

Note that these five probanda and no longer the governing tests for establishing proprietary
estoppel.

The conditions for the operation of the doctrine of acquiescence can be found in
Willmot v. Barber (1880) 15 Ch. D. 96, where Fry J deduced the following principles from
the authorities:

1. The plaintiff must have made a mistake as to his legal rights;

74
 2. The plaintiff must have expended some money or must have done some act (not
necessarily upon the defendant‟s land) or suffered some detriment on the faith of his
mistaken belief;
3. The defendant, the possessor of the legal right must know of the existence of his own
right which is inconsistent with the right claimed by the plaintiff. If he is ignorant of it,
he is in the same position as the plaintiff, and the doctrine of acquiescence is founded
upon knowledge of your legal rights;
4. The defendant, the possessor of the legal right, must know of the plaintiff‟s mistaken
belief of his rights. If he does not, there will be nothing which he calls upon him to
assert his own rights; and
5. The defendant, the possessor of the legal right, must have encouraged the plaintiff in
his expenditure of money or in other acts which he has done, either directly or by
abstaining from asserting his legal right.

To invoke the doctrine successfully one has to establish all the conditions above-stated.

KNOWLEDGE AND MISTAKEN BELIEF OF THE DEVELOPER/

REPRESENTEE
In incurring the expenditure, or altering his position for the worse, the developer/ representee
should have been labouring under the mistake that he owned or that he would obtain sufficient
interest in the subject matter of the litigation to justify the expenditure on that property. If an
adverse claim is made before the representee incurs any expenditure, the court of equity will
not come to his aid.

In Pilling v. Armatage (1806) 33 ER 31, 33, Lord Grant MR said that it should be a “case
which supposes as total absence of the title on one side, implying therefore, that the act must
be done of necessity under the influence of mistake; and undoubtedly it may be expected, that
the party should advertise to the other, that he is acting under a mistake. But I do not know
any case, in which a lessee,…making any improvement upon the estate in his possession,
though with complete knowledge of the landlord, has been held entitled as against the landlord
to have his lease prolonged, until he shall obtain reimbursement for the improvements he has
made; for [he] has title, of which he knows the duration. He is not under a mistake as to the
nature of his title.”

If the developer/ representee has full knowledge of all the relevant facts and the true state of
affairs relating to the land, the doctrine would not apply in his favour.

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In Derrick v. Mohammed (1960) 2 WLR 352, the defendant could not rely on the doctrine
as he knew he was encroaching on land which he did not own, even though he did not know
that it actually belonged to the plaintiff‟s predecessor in title.

CONSTRUCTIVE KNOWLEDGE

Constructive knowledge on the part of the developer/ representee is not sufficient to defeat a
claim based on the doctrine of acquiescence. In Wilmott v. Barber (1880) Fry J said: “it
appears to me that the plaintiff has proved that he was mistaken as to his legal rights. It is said
that he was affected with notice of the contents of Barber‟s lease, because he knew he held
under a lease. It is not necessary for me to decide the point, though it may well be that as
between him and Barber the plaintiff is affected with notice of the contents of the lease. But, in
my judgement when the plaintiff is seeking relief, not on a contract, but on the footing of a
mistake of fact, the mistake is not the less a ground for relief because he had the means of
knowledge.”

Owusu submits that Fry J‟s dictum is not valid in principle and is inconsistent with the decision
of Rennie v. Youngs (1858) 44 ER 939, which should be preferred.

Since the defence is founded in equity, the developer/ representee seeking to invoke it must
have acted in a reasonable manner as would awaken the concern and anxiety of the Chancellor
to sustain the defence based on proprietary estoppel.

RELAINCE/ DETRIMENT/ CHANGE OF POSITION TO THE

DEVELOPER/ REPRESENTEE

The developer/ representee must establish that he has in some way acted to his detriment or
altered his position for the worse on the faith of the representation. In Jones v. Stones
[1999] 1 WLR 1739, the defendant, placed a green oil tank on and across a stone wall, which
divided his property from the plaintiff‟s adjacent property. On the same stone wall, the
defendant placed and maintained six flower pots. Acquiescence was pleaded in defence to the
plaintiffs‟ claim for an injunction against the defendant. The pleas of proprietary estoppel failed

76
because the defendant failed to establish that he had suffered any detriment by being allowed
to maintain the flower pots and the green oil tank on the wall which the plaintiffs owned.

The „detriment requirement‟ was emphasized in Greasley v. Cooke [1980] 1 WLR 1306,
1313, per Dunn L.J. : “There is no doubt that for proprietary estoppel to arise the person
claiming it must have incurred expenditure or otherwise have prejudiced himself or acted to his
detriment. In said case, the defendant became a widower‟s house-maid for 10 years. After the
death of AG., the defendant cohabited with AG‟s son, who died in 1975. She continued to serve
and lived in the house and nursed a AG‟s mentally ill daughter without wages. She was
encouraged by her later concubine and his brother, the plaintiff, to believe that she could
regard the property as her home for the rest of her life.

The COA held that she could not be ejected, and that she could stay in the house as
long as she wished.

It appears that her reliance detriment too the form of foregoing wages and perhaps the loss of
opportunity of another job.

In this case, Lord Denning, disputed the requirement of expenditure and detriment on which
Dunn LJ insisted. Hanbury & Martin’s Modern Equity suggests that Lord Denning‟s
comments on the expenditure and detriment should be considered as relating to the burden of
proof, which shifts once it is proved that there was reliance.

The expenditure and detriment can take any form. It does not have to take the form of
monetary expenditure or other quantifiable financial loss provided it is substantial and was
incurred or suffered on the faith of some representation. It may prejudicially affect the temporal
interests of the representee.

The test is whether it is unconscionable in all the circumstances for the assurance to be
disregarded or withdrawn. In Skinner v. Daniel Reeves et al (1981) 16 Barb. LR 21,
Husbands J rejected the proposition that the doctrine only applies in situations where “money
is expended on a wall structure such as a bungalow as the case was in Inwards v. Baker .
He was of the view that the doctrine also applies to a chattel house because in may cases to
hold true to the above proposition would be inequitable, and that today many chattel houses
are substantial buildings with characteristics and facilities similar to those of wall structures.
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KNOWLDEGE OF THE OWNER/ REPRESENTEE OF HIS RIGHT AND
AWARNESS OF THE MISTAKEN BELIEF OF THE DEVELOPER/
REPRESENTEE

(THE OLD RULE)

It cannot be said that the owner encouraged the representee where he does not know of his
interests in the property, and that the developer‟s acts were incompatible with his rights, as, the
element of fraud invoking the chancellor‟s intervention is knowledge.

The lack of such knowledge on the owner‟s/ representor‟s part was one of the grounds on
which the defendant plea of acquiescence failed in Derrick v. Mohammed (1960) 2 WIR
353. The defendant‟s building on his plot 15 partly encroached on plot 14 belonging to the
plaintiff, who went and occupied plot 13 in a mistaken belief that his plot was 13 instead of 14.
The plaintiff was ignorant of the fact that the defendant‟s building was encroaching on a plot
which he owned. The defendant knew that he was encroaching on land that did not belong to
him, but did not know that the encroachment was on the plaintiff‟s land, who succeeded in an
action to recover the land with the improvement developed by the defendant.

In Barclays Bank Plc. v. Zaroovabli [1997] Ch. 321, the plaintiff held a charge over which
the defendant P was a tenant. The tenancy was created in violation of the charge which
prohibited the landlords from granting any lease without the plaintiff‟s prior consent. But the
plaintiff‟s charge was not registered at the time the tenancy was created. The unregistered
charge therefore only had effect in equity and was nothing binding on the tenant, who was
protected by the Rent Act as a statutory tenant on the expiry of the six month renewable
tenancy he had.

The plaintiff could not recover proceedings to enforce the charge, because the equitable charge
could not prevail over the defendant‟s tenancy. The tenant resisted the claim for possession on
an alternative argument based on proprietary estoppel. It was argued that the tenant had spent
a considerable sum of money on the property in belief that she had the status of irremovability
as a statutory tenant.

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This was countered by the fact that the tenant‟s belief was not formed in reliance on anything
the plaintiff had done or said. It was contended that mere knowledge of a tenant‟s existence
and a standing-by on the bank‟s part could not be enough.

Silence
If estoppel is to be founded on silence, the party sought to be estopped must know of the acts
constituting the detriment to the other party. In the above case, the bank had no knowledge
that Mrs. P was incurring expenditure in the mistaken belief that she was entitled to remain in
occupation under the Rent Acts.

Scott V.C. referring to Oliver J’s decision Taylor Fashions Ltd v. Liverpool Victoria
Trustees Co. Ltd, held: If (contrary to my view) the provisions of the Land Registration Act,
1925, enable the bank to enforce its registered charge free from Mrs. P‟s rights under her
statutory tenancy, the bank‟s failure to inform Mrs. P of the precariousness of her position is
not, in my opinion sufficient to justify describing as unconscionable its decision so to enforce its
charge. The bank did not accept Mrs. P as its tenant. She incurred the expenditure on which
she relies with no encouragement from the band. The bank did not know she was incurring this
expenditure.

(THE NEW RULE)

There has been a modification of the above requirement in Taylor Fashions v. Liverpool
Victoria Trustee’ s Co [1982] 2 WLR 576 to the effect that the doctrine is not restricted to
cases where the defendant knew his rights or the mistaken belief of the other. According to this
new rule, the question “is simply whether, in all the circumstances of the case, it was
unconscionable for the defendants to seek to take advantage of the mistake, which at the
material time. Every body shared”.

This dictum can be used to buttress the decision in Skinner v. Daniel, Reeves et al (1981).
Here, the first and second claimant and the defendant all grew up on the land, living in the
houses of their respective parents. The first claimant rebuilt her mother‟s home on the land and
the second claimant erected her house on the land. All these building projects were carried out
without let or hindrance by whomever at the time was entitled to the legal estate. Husbands J
concluded that the claimants were licensees. That they all expended money for erection of
houses on the land and as such they had a licence as well as an equity. That this equity can
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best be satisfied by holding that each claimant can remain on the land as long as she desired to
use it as her home.

The new rule in Taylor Fashions Case is gaining currency and was adopted in
Amalgamated Investment and Property Co Ltd. (in liquidation) v. Texas Commerce
International Bank Ltd. [1981- 3 ALL ER 577, and also in Re Basham [1986] 1 WLR
1498. In this case, the deceased led his step-daughter to believe that he would leave all his
property to her. She and her husband served the deceased by cooking, cleaning, carpeting,
gardening, etc. No will was made, but she was given everything by Nugee QC sitting as deputy
High Court judge, who was not persuaded by the defendants‟ argument that proprietary
estoppel was restricted to beliefs relating to an existing right rather than a future right, e.g. one
arising under a will.

Nugee QC was of Oliver J’s view in making an enquiry “which is directed to ascertaining
whether, in particular individual circumstances, it would be unconscionable for a party to be
permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another
to assume to his detriment”.

The court also rejected the proposition that proprietary estoppel must be related to particular
property and cannot extend to property as indefinite and fluctuating as a person‟s estate when
he dies. Hayton did not think that the “facts were extreme enough to justify converting a
mere spes into a property interest or to perfect an imperfect future testamentary gift. To justify
such there should be really unconscionable behaviour on deceased part.”

There is no doubt that the courts have been nibbling at the requirements of this
doctrine.

In Hackett v. Inverugie Investment Ltd. (1982) 32 WIR 3, a majority judgement in the

Bahamas COA applied the new rule enunciated in Taylor Fashions Ltd. v. Liverpool Victoria
Trustees Co. Ltd. In this case, Alliance Services and Commercial Corp. (Alliance) had a
mortgage for the security of Canadian $695, 000 which was advanced to Myra Industries Ltd.
(Myra) to complete the building of 144 apartments, which became known as the Silver Sands
Hotel, comprising two main buildings. Myra needed further financial assistance to complete the
buildings. Hackett offered to take 99 year leases on thirty apartments in the development at a
premium of $300, 000. After Negotiation with Alliance, Mr. Tower, the Alliance president, wrote

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a letter on Alliance‟s behalf to Myra on June 2, 1970, to extend the time for repayment of the
mortgage loan.

One of the conditions stated in the letter for the extension of time for mortgage repayment was
that the payment of $300, 000 for the purchase of the lease of thirty apartments by Hackett
must be paid to Alliance‟s attorneys. Alliance did not alert Hackett about the need to obtain its
consent for the purchase of the lease. The lease was granted and H paid a premium the
premium which was disbursed to complete development. H spent a further sum of 90,000 to
furnish the apartments.

The validity of the lease was challenged for the lack of written consent for the mortgage. The
question was whether the mortgagee, alliance, knew that H was about, and during that time
encouraged him to continue, either actively or passively by abstaining from asserting [its] own
incumbent right.

The trial court gave no affirmative answer to this issue as there was no evidence that Alliance
knew that H had entered into the lease and that H was spending money on the development.
The fourth and fifth conditions of probanda were not met by the plaintiff/ appellant. The claim
founded on proprietary estoppel therefore failed in the trial court.

Luckhoo P, COA, in a dissenting judgement upheld the trial court‟s decision. The majority,
Smith and Da Costa JJA, viewed the facts differently. In the majority‟s view, Alliance, through
Mr. Tower knew of the sale to H and that Alliance‟s written consent was necessary for the sale
to H.

It was said: “Alliance must have realized that no-one would lay out the sum of $300, 000
unless he thought he was getting a valid lease. It must therefore have been obvious to it that
Hackett was under a mistaken belief that he could obtain a valid lease without Alliance‟s written
consent. Alliance stood by and allowed the existing method of financing the construction of
buildings to continue. At no time did alliance tell Myra not to grant any more leases. And, what
is more, Alliance assumed that the method of financing construction would continue. So far as
Hackett was concerned, once Alliance realized his mistake, Alliance was under a duty to
disabuse Hackett and prevent him from expending his money on a valid lease. For Alliance to
stand by and allow Hackett to lay out his money, and then take the benefit of that expenditure
would in my opinion amount to fraud in a court of equity.”
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The issue involved a question of fact. Owusu suggest that the majority should therefore have
allowed the trial court‟s ruling on such matters touching on the weighing of evidence to prevail.

Smith and Da Costa JJA felt that, even if they were wrong, the facts of the case could be
subsumed under the new principle enunciated in Taylor Fashions Ltd. v. Liverpool Victoria
Trustees Co. Ltd. In Da Costa J.A.’s judgement: if one applies the test adumbrated in a
number of recent authorities, i.e. .in the circumstances has it become unconscionable for the
possessor of the legal right to rely on his legal right; I think there can be one answer in this
case and that is, that Alliance is estopped from alleging that it was not bound by the lease
granted by Myra to Hackett.

In the case of unilateral mistake or passive encouragement evident in Hackett v. Inverugie

Investments Ltd. The five probanda have not been modified and should as the trial court held in
the said case, be established as a condition precedent to a successful claim based on
proprietary estoppel.

One may even wonder if the distinction between passive and active encouragement on which
Taylor Fashions is justified is valid. The essence of the distinction is that it is unnecessary to
insist on proof of knowledge on the part of the owner/ representor of either the mistaken belief
of the developer/ representee or the awareness of the owner/ representor‟s rights, if the
owner/ representor actively encouraged the developer/ representee‟s expectation. The test
under such circumstances of active encouragement is whether it is unconscionable for the
owner/ representor to insist on his strict legal rights. For as Megarry and Wade rightly
puts it:

It is unlikely that O’s conduct will be regarded as unconscionable unless he was

aware of:

(i) his proprietary rights;

(ii) C‟s expenditure or other detrimental acts; and
(iii) C‟s mistaken belief that he had or would acquire an interest in or over O‟s land.

Secondly, if there is a genuine ignorance on the owner/ representor‟s part and a mistaken belief
on the developer/ representee‟s part, the equities are equal. It would be fair to demand a
greater deal of diligence on the developer/ representee‟s part than the owner/ representor, who
should not be made to bear the consequences of the mistake of the developer/ representee.
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REPRESENTATION/ ENCOURAGEMENT
The developer/ representee‟s belief must have been induced by and sustained by the owner/
representor or his agent or predecessor in title. There should therefore be some form of
encouragement. The developer will not succeed unless he is able to show that his activities
were acquiesced in by the owner either by some language, conduct, silence or inaction which
encouraged him to act as he did.

In Jones v. Stones [1999] 1 WLR 1739. The COA found that the green oil tank might have
been placed and maintained on the plaintiffs‟ stone wall, for about six months before the action
was instituted. There was no evidence that the inaction of the plaintiffs in respect of the flower
pots or the oil tank caused the defendant to believe that he could maintain the tank on the wall.
He was rather of the view that it would not give cause for complaint by the plaintiffs.

The defence of proprietary estoppel could not be established because the defendant did not
show anything which the plaintiffs did or did not do led to encouraged him to believe that he
had the right to maintain the tank in the position on the wall where he placed it.

Encouragement or Representation by Silence of the Owner while

his Property is being Developed.
If the owner restrains from alerting the developer of his mistaken belief and by his silence
suffers the developer to make improvements to the property, the owner will be estopped from
denying the impression his silence created. For as Dann v. Spurrier (1802) 32 ER 94, 95 ,
per Lord Eldon stated: “the circumstances of looking on is in many cases as strong as using
terms of encouragement”.

In McClurg v. Rogers et al (1976) Barb. LR 35, an action to enforce the payment of a loan
secured with property of the claimant‟s father-in-law, it became evident that the claimant‟s
father-in-law permitted him to build his house on a portion of the property which had been
given to his brother-in-law as a security for a loan. The land was built on by the claimant‟s
father-in-law with materials the claimant supplied. The claimant‟s evidence of a gift of the land

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by the late father-in-law was not accepted by the court as there was no written evidence. But
the court found that the expenditure of money on the land under an expectation created or
encouraged by the land owner, the father-in-law, that he (son-in-law) would be able to live
there, gave rise to the equity conferring on the claimant a licence.

In Clare v. Kellarie (1970) 16 WIR 40 the plaintiff was the defendant‟s sister-in-law. The
defendant wads the tenant of premises which the plaintiff acquired by assignment. The plaintiff
assured the defendant that he and his family would continue to occupy the premises until he
died. The defendant erected a new building on the land without the plaintiff‟s express
permission; who was duly informed. She visited the building site regularly and neither said nor
did anything to stop the activities of the defendant, her brother, on her premises. Soon after
completion of the new building, the plaintiff procured and registered a 25-year lease of the
property, and thereafter sought to recover possession of the property from the defendant. She
was unsuccessful because she allowed the defendant to incur expenditure under an expectation
she encouraged that he would be able to live on the premises until his death. That, according to
the court, gave rise to an equity which should be protected so as not to frustrate his
expectation.

EFFECT OF THE DOCTRINE

When the “equity” of proprietary estoppel is established, the court identifies the “maximum
extent of the equity” followed by an analysis of the “minimum equity to do justice” and then
finally “look at the circumstances in each to decide in what way the equity can be satisfied”.
The expectation induced by the representation or promise is the maximum equity. The
minimum equity takes the form of the detriment suffered by relying on the representation.

There is therefore a wide range of relief within which the court can exercise its discretion to
tailor an order to satisfy the equity, subject to one limitation; that the relief cannot confer on
the developer/ representee a greater interest in law than was within their induced
representation.

The minimum equity to do justice, or to satisfy the estoppel, leads to an award which remedies
the loss or detriment the plaintiff, developer/ representee suffered. This does not necessarily
constitute of making good his expectations, unless the circumstances dictate otherwise.

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(Therefore) Proprietary estoppel can operate as a shield or as a sword. The court can use the
doctrine to:

(A) CONFER A TITILE

The court can order the property to be conveyed to the developer representee so as to give
effect to the equity. This is undoubtedly an inroad into the doctrine of consideration and the
maxim “equity does not aid a volunteer”. In Stiles v. Cowper (1748) 26 ER 1198, an order
for the execution of a lease was made. In Pilmer v. Wellington Corp. (1844) 9 App. Case
699 the courts granted the representee/ developer a licence of an indefinite term. In Inwards
v. Baker [1965] 2 QB 29, it was held that “the father allowed an expectation to be created in
the son‟s mind that his bungalow was to be his home. It was to be his home for life or, at all
events, his home as long as he wished it to remain his home”. The court in Duke of Beaufort
v. Patrick (1853) 51 ER, granted specific performance to the representee on the condition
that he offered to pay compensation to the representor.

(B) INJUNCTION
The owner/ representor may by an order of injunction be prevented from disturbing the rights
of possession acquired by the developer/ representee under the doctrine of proprietary
estoppel.

(C) CHARGE FOR EXPENDITURE

The representee may have a charge on the property for his expenditure for the value of the
improvements he effected. Thus, the representor may be allowed recovery of possession
conditionally upon paying compensation to the representee for the expenses he incurred.

In Raffaele v. Raffaele [1962] WAR 29, a land was promised but the remedy granted by
the court sounded in an award for the payment of the market value of the house, and there
was no declaration of a charge. In Virginia Moncur v. marget Palacious 1986
(Unreported)- Bahamas H Ct. Malone Snr. J found that the defendant‟s expectation which
the plaintiff encouraged, was that the defendant would inherit the house on the plaintiff‟s
death. That was the maximum equity to do justice. The maximum equity to do justice was
found to be the recovery of the sum of $14, 201. 59, the money the defendant spent on the
house. The Court in Bahamas considered that the most appropriate way in which effect might
be given to the equity was an order for possession against the defendant conditional upon the
plaintiff repaying the defendant $14, 201. 59 within a limited time, and that if the plaintiff failed
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to make the repayment within the time prescribed, the house should be sold and the
proceedings distributed.

ESTOPPEL CREATING AN INTEREST IN LAND

The “effect of the estoppel on the true owner may be that his own title to the property
(whether land or goods) is held to be limited or extinguished or new rights and interest created
therein”. {Crabb v. Arun DC [1974] 3 ALL ER 865, 876 (B), per Lord Denning MR}.Such
interest arising under proprietary estoppel should, depending on its nature, be capable of being
disposed of inter vivos or by will to a third party. It is a valuable interest.

An interest acquired under proprietary estoppel binds third parties. In Inwards v. Baker, B
wanted to build a bungalow. His father advised and encouraged him to build on [his father‟s]
land. The bungalow was so built largely through the son‟s own labour and expense. He lived
there till his father‟s death. But it was later discovered that his father had devised the land to
trustees for sale who brought proceedings to recover possession from the son.

The COA held that the son could not be disturbed. The contention that a purchaser from the
father could get his son out was rejected by the court. For according to Lord Denning, “any
purchaser who took with notice would clearly be bound by equity. So here, too, the present
plaintiffs, the successors in title of the father, are clearly themselves bound by his equity”.

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 Constructive Trust

Before the new model constructive trusts which Lord Denning named as such for the first time
in EveS v EveS, constructive trusts WERE known to the rules of Equity. Keech v Sandiford
1726 established definitively that a constructive trust arose in the following known categories.
(See Owusu‟s handout on the topic at page 1 halfway down the page)

Within comparatively recent times, and I mean recent times e.g

Bannister v Bannister(1948 )

Pettit v Pettit (1970 A C 770)

and Gissing v Gissing (1971 A C 886)

(these latter two judgments were delivered the same day, both by the House of
Lords) and

in Heseltine v Heseltine (1971 1 W L R 342,

and again in Hussey v Palmer (1972) I W L R 1286,

and in Cooke v Head No 1 (1972) 1W L R 518

and in Binions v Evans (1972 Ch 359),

and in Eves v Eves (1975)

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the Court has had to get very busy and preoccupied with resolving a number of cases touching
on the constructive trust particularly as it affected what might be described as domestic family
situations.

Concurrently the court had to examine as well whether the facts could give rise to a resulting
trust, and quite often some cases could be disposed of by a finding of resulting trust but of the
3 judges in the Court of Appeal, one might hold that it was a resulting trust while the others
might hold a constructive trust to have been created.

As examinees you have a similar task, but you are often better at it than the
Judges…seriously you ARE!

And the cases mentioned are not by any means an exhaustive list, but representative only of
the frequency and recency of the emergence of a social problem which followed the cessation
of the 1939-1945 war and the consequential change in gender relations with women going out
to work to assist in the war effort, working for example in the munitions factories and other
businesses, with their husbands fighting in the war.

A combination of new much easier divorce laws in 1937, (prior to that time almost direct
evidence of adultery had to be given, and much contrived and collusive evidence was the order
of the day.) and the proliferation of unions other than marriage unions, also fuelled
some of the cases, most famously that of EveS v EveS, but the cases covered a
gamut of domestic family relationships as examination of the facts of the cases will
show.

Now the law of Trusts which traces its origins way way back to feudal times (remember the
Statute of Uses 1535 from Semester One…well the USE was the original name for what we call
in modern times a Trust) has always been a useful weapon in the armoury of equitable
remedies especially when and if Equity infers or IMPOSES a trust in and from circumstances
where there was no FORMAL Trust Deed.

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In other words once Equity began to extend the Trust concept beyond the formality of a Trust
Deed, and could CONSTRUCT a trust out of any set of circumstances , but obviously in a
proper case, then the Resulting and Constructive Trusts began to be sticks with which
unjust and unconscionable defendants could be beaten.

Now don‟t be confused, Equity had developed the concept of the resulting trust way back in
Dyer v Dyer 1778, and we know how that works from Mr. Owusu‟s document and from Jill
Martin‟s Hanbury.

The resulting trust as enunciated in Dyer v Dyer and extended by the doctrine of

(a) contribution and

(b) substantial contribution

(c) indirect or indirect and most important of all

(d) Common intention…..the controlling factor in this area!

thus becomes a most useful and flexible device through which the Equity minded courts and
Judges could solve some of the domestic and family disputes which touched and concerned
arrangements “made” when the parties were not even thinking about their respective legal
positions.

The resulting trust worked and covered any number of such situations, but it did not cover ALL
such problems, and so we have seen the Courts turning to another doctrine of trusts to deal
with some domestic problems NOT covered by the resulting trust. This other doctrine is the
Constructive Trust.

One of our problems as students of the law (and all good lawyers are forever students of the
law),but more so for undergraduate students of the law is that the Judges sometimes use the
expressions interchangeably, often through sheer carelessness or God forbid, but it is possible,
sheer ignorance, but that is also a digression of sorts.

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We now have to move to the Constructive Trust and to how that concept has also been
extended to domestic family problems, and how Lord Denning almost got away with creating
an even more extreme extension of the doctrine called the constructive trust of a new
model.

It is an interesting story, a tad bit challenging, but you will understand where Denning‟s heart
was going. He liked to dispense justice and fairness, but sometimes he had to be held in check,
since he was something of an agent provocateur. He caused his fellow lawyers to look at the
law through different eyes.

The constructive trust was originally applicable in the 4 categories set out on page 1 of the
Owusu handout, and enunciated in the case of Keech v Sandiford in 1726.

Properly understood, conceptually it could and does have wider scope than the resulting trust,
although the two might often overlap. because here the Court is constructing or imposing or
imputing a trust, while in the resulting trust the language used is that of inferring …..from the
intention of the parties.

Consider this statement from Hanbury page 301 where Jill Martin (of the Bland Lecture on
Cyanamid comes of Age…..Injunctions)…writes:

“A constructive trust is one which arises by operation of law, and not by reason of the
intention of the parties, express or implied. English law provides no clear cut and all
embracing definition of a constructive trust.”

She further states that: Lord Millett opined in one case that “the language of constructive
has become such a fertile source of confusion that it would be better if it were
abandoned ……and that the term should perhaps be confined to a situation in which
it would be unconscionable for one party to deny the other’s beneficial proprietary
interest in a particular and identified property.”

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And again at page 308 of Hanbury she goes on: “Constructive trusts can arise over a variety of
situations. No claim is made that those discussed cover the whole field; they are merely
illustrations.”

She then sets out categories of constructive trusts and discusses the law on some of these
categories.

So that we discover that in reading about The New Constructive Trust and the
Rights of the Defacto Spouse, we are confining our study to a particular species of
constructive trust which has direct sociological and cultural significance to the
region, but not by any means confined thereto; where there are many defacto
spousal situations! With those guide posts set up let us move on.

Origin of the Constructive Trust of as new Model

It was Lord Denning who coined the expression, but when doing so, he referred to a statement
by Lord Diplock made in Gissing v Gissing: Here is the statement by Denning, it is found in the
case of Eves v Eves:

“The problem in this case is a familiar one. It often happens that a man and a woman set up
home together and have children. They cannot marry because one or the other is already
married. But they intend to marry as soon as they are free to do so. She takes his name, they
live as husband and wife. They are known as man and wife.They are known to the neighbours
as man and wife. They get a house; but it is put in his name alone. Then before they get
married the relationship breaks down. In strict law she has no claim on him whatever. She is
not his wife. He is not bound to provide a roof over her head. He can turn her out into the
street…………Such is the strict law. And a few years ago even equity would not have
helped her. But things have altered now. Equity is not past the age of child bearing.
One of her latest progeny is a constructive of a new model. Lord Diplock brought it
into the world and we have nourished it. In Gissing v Gissing Lord Diplock said”: and
the Learned Master of the Rolls proceeded to quote Lord Diplock (the passage is well known
)and then to say …….“We have followed this advice in several cases notably Binion v Evans,
Cooke v Head and Hussey v Palmer…….”

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Now note Lord Denning‟s further statement as to how this doctrine applies. He repeated his
earlier statement in Cooke v Head:

“Whenever two parties by their joint efforts acquire property to be used for their joint benefit,
the courts may impose or impute a constructive or resulting trust. The legal owner is bound to
hold the property on trust for them both. This trust does not need to be in writing. It can be
enforced by an order for sale, but in a proper case the sale can be postponed indefinitely. It
applies to husband and wife, to engaged couples, and to man and mistress and may be to other
couples too”

The penultimate word in this extract differs from the one originally used in Head v Cooke. The
word used there was relationships which is perhaps of wider import.

Note too that Lord Denning is basing his decision on the constructive trust idea, but that his
fellow Justices of Appeal seem to be taking the view that this is a case of a resulting trust based
on acquisition, indirect substantial contribution and evidence of common intention

Brightman J …(note not L.J) gave the other leading judgment and he dealt with the indicia
of resulting trusts in his judgment. Not once does the expression constructive trust fall from his
lips. He is dealing all the time with the arrangement struck at the acquisition, and the discussion
about whose name was to go on the title deeds and why age only prevented the woman‟s
name going on the title deeds…clear evidence from which common intention, the controlling
factor (see Owusu‟s handout) could be inferred.

Browne L J was the other Judge and his short 16 line Judgment is instructive. Note his
language carefully, very carefully and you will see where he has gone on the reason why the
plaintiff female should succeed. He says:

“I agree that this appeal should be allowed and an order made in the form proposed by
Lord Denning. I have had the advantage of reading the judgment which Brightman J is about
to deliver and I agree also with what he is going to say about the basis on which we should
decide that Janet Eves is entitled to a share in the beneficial interest in the house.
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So that we have Lord Denning, on his own, talking about a constructive trust of a new
model in a case in which like his fellow Judges, he could have made a decision on the basis of
the resulting trust, but preferred to ground his decision on the constructive trust of a
new model, as he now christened it!

Notice too how he ascribes paternity to Lord Diplock and how he asserts that the Court of
Appeal has merely nourished it. The question is: Is Lord Denning correct in his statement that
there is or was such an extension of the Constructive Trust? Go back to the chronology of the
cases noted at the head of this document and you will see how Lord Denning was using the
Gissing v Gissing judgment to push his idea of the constructive trust, although it was only in
Eves v Eves that he actually christened it.

We are getting somewhere on this interesting journey…so hold on…. you may soon loosen
your seat belts …. as we are coming into land safely soon. Let us look first at some of the
cases used by Lord Denning and then at how the post-Denning Court of Appeal has
handled the constructive trust of a new model, and whether indeed it is still in good shape!

Cases:

In Cooke v Head which pre-dated Eves v Eves and in which Lord Denning was presiding in
the Court of Appeal…

Sandra Cooke and Dennis Head met in 1962. She was 20. Head was already married, and they
hoped that Mrs. Head would file for divorce and they would get married. In this hope, they
found a piece of land and decided to build a bungalow on it. Head was going to do some of the
work himself and the owner of the land, a builder was going to do the remainder.

Head paid the deposit and raised a mortgage and the conveyance was in Head‟s name. Cooke
did not contribute any cash to the purchase price, but she did a lot of work. By the way, Head
disputed the work done by Cooke. He said she had gone to the site as a spectator and listen to
this…had played with a cat…a BLUE cat…Lord Have Mercy!!!

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On the basis of Miss Cooke‟s evidence and Mr. Head‟s aunt and his sister (hmm…talking about
the girls sticking together…)The Judge found as a fact that Miss Cooke had done the following
“quite unusual amount of work for a woman”:

a Using a sledge hammer to demolish some old buildings

b Filling a wheelbarrow with rubble and hardcore and wheeling it up a bank

c Working the cement mixer which was out of order

d Painting and so forth

Cooke also helped with mortgage instalments, and put money into a money savings box which
Head made and although he put in more than she, (he had his own business), and it was put in
Cooke‟s name so that Mrs. Head would not find out. Of this 150 sterling was used to buy
furniture and 294 was used to pay instalments, but just before the completion of the bungalow
they separated and Head occupied the house alone with another woman. Then he decide to sell
the house and Cooke said he should pay the proceeds into a joint account and he did not
agree. So she issued a writ asking the Judge that to order that Head should not sell without
providing for her share.

The case was about how to divide the net proceeds of the sale amounting to 1946 pounds.

The Judge thought that Cooke was entitled to a one-twelth share, it would appear on the basis
it would appear of their MONEY contributions, but Lord Denning did not like that approach,
and once again he turned to Lord Diplock, his shorter colleague:

(Denning was a six footer and Diplock about 5‟5” I met them both on different occasions..
brag,brag brag)

“Lord Diplock in Gissing v Gissing intimated that it is quite legitimate to infer that „the wife
should be entitled to a share which was not to be quantified immediately on the acquisition

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of the home but should be left to be determined when the mortgage was repaid or the property
disposed of‟. Likewise with a mistress”

After agreeing with Counsel for Head that among the things to be taken into account should
be:

the amount of the direct cash contributions AND

the amount of work each had done on the property;

the part which each had taken in planning and the design of the house

and the steps by which the transactions were carried out

and the method of paying the mortgage instalments

and statements made to third parties ( in this case to the aunt and sister on the “share”)

Lord Denning came to the conclusion that the appropriate share of the property to be awarded
to the wife should be more than one-twelth, and that she should have a one-third share of the
property. Both the other Judges of the Court of Appeal, agreed, with Lord Justice Karminski
making two important points.

One was that the principles to be applied in these man and mistresses cases when they intend
to set up a home together as man and wife are no different from the principles applicable in
the cases of husband and wife who have built up a home together.

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He also spoke about the duty of the Court to decide the correct proportions and quoted Diplock
in Gissing v Gissing where Diplock said

“…on the basis of what would be fair having regard to the total contributions ,
direct and indirect which each spouse has made by that date. Where this was the
most likely inference from their conduct it would be for the Court to give effect to
that common intention of the parties by determining what in all the circumstances
was a fair share”

He too agreed with the higher share: “in my view I too think one-twelfth was far below the real
value of what she contributed to this home in cash and by way of labour……”

In Hussey v Palmer the facts were the usual family domestic scene with a variation on the
main theme. Mrs Hussey was well over 70. She had an old house which she sold for some 1100
pounds sterling. Her daughter was married to the defendant Mr. Palmer, and when she sold the
house, the Palmers invited her to move in with them, but since there was not much room, they
built on a bedroom as an extension for the old lady. She paid for it directly to the builder, some
607 pounds, and as is usual nobody discussed anything about repayment. For a few months all
was well, but then mother and daughter started to have problems and Mrs. Hussey moved out.

Mrs Hussey then wrote saying she was hard up and wanted to know if her son in law would let
her have about one and a half pounds per week to help her make ends met. He did not even
reply and she asked for her money back and sued on legal aid when she did not get it.

Lord Denning and LordJustice Phillmore both thought that a trust was created, with the latter
thinking that it was a resulting trust and Lord Denning himself saying it did not matter whether
it was resulting or constructive, because according to him “this is a matter of words more than
anything else”

Mrs. Hussey got back her 607 sterling and Lord Denning did a tour de force in his short
judgement on Equity. Having disregarded the distinction between resulting and constructive
trusts he went on to make his famous statement about this trust, whether it was called one
name or the other it was his opinion that:

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“By whatever name it is described, it is a trust imposed by law whenever justice and good
conscience require it”

Now this was in 1972 BEFORE EveS v EveS in 1975 and he had not yet christened it the new
model constructive trust, but now you realize that one could have seen it a mile off with 20/20
hindsight vision.

Lord Denning referred to a number of cases without going into them in detail and also included
the proprietary estoppel cases in his judgment………………..

Binion v Evans:

This case is important to us as students preparing for an examination because we came across
it in relation to Licences, and so we can kill two birds with one stone.

Mr Evans and his father and grandfather before him worked for the Tredegar Estate. A cottage
was provided and the family always had the same cottage. Mr Evans married in 1922 and he
and his wife lived there paying no rent and no rates, and when Mr Evans died in 1965, his
widow was allowed under a written agreement to live there for the duration of her life. She was
then 76. Two years after, the cottage was sold to the Binions at a reduced price and specifically
subject to the tenancy of No 3 by Mrs. Evans.

But within 6 months the Binions sought to get rid of Mrs. Evans. They argued that she was a
tenant will and her tenancy had been determined by the Notice and she was now a trespasser.

The Court of first instance held that the plaintiffs hold the property “on trust” to permit the
defendant to reside there during her lifetime, and the plaintiffs appealed to the C of A.

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Lord Denning held that the widow had not a tenancy neither at will nor for life nor any type of
leasehold interest, since there was no “definite term of years.” But he held that she had a
“contractual right to reside in the house for the remainder of her life or as long as she pleases.”

She had an equitable interest because according to Lord Denning “a right to occupy for life
arising under a contract gives rise to an equitable interest”

Equally and more importantly for our purposes if she had no right at the start, then she
certainly acquired one, when the property was sold. According to the Learned Master of the
Rolls, the cottage was specifically sold subject to the agreement a copy of which was supplied
to the purchasers who paid less because of the widow‟s right to stay there..

“In these circumstances, this Court will impose on the purchaser a constructive trust for her
benefit for the simple reason that it would be utterly inequitable for the purchaser to turn the
widower out contrary to the stipulation subject to which he took the premises.”

You must read the last 3 paragraphs of Lord Denning‟s judgment in which he shows that a
contractual licence will prevail against a purchaser when “the situation gives rise to a
constructive trust.”

(This case with most of the other cases can be read on the http://www.bailli.org/ this
site is a most comprehensive site and is a virtual law library)

Binions v Evans seems like a good case for the intervention of equity by way of the
constructive trust without any violence being done to the doctrine.

But one cannot ignore the fact that Denning had unleashed a “mini monster” who like the
Chancellor‟s foot encouraged uncertainty in an area of the law namely property rights where
precision of determination of interest required certainty.

. Turn now to Owusu‟s hand out on Constructive trusts and study the following paragraph on
page 5 you will have devoured pages 1-4 already and reflect on the import of his statement

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“The House of Lords have not allowed the constructive trust to operate like an
unruly horse. To bridle it the following conditions which have been accepted as the
established characteristic of resulting trusts have been required.”

Please now note the following conditions “which have been required.” We met them on the
resulting trusts worksheet…..

Referabilty …to the acquisition of the Property

Common Intention…determined from conduct or words

Reliance/detriment … acceptance of the common intention AND acts performed in reliance

upon the common intention

Now you MUST read :

Hanbury pages 338-343…really about 4 pages

And then pages 12, 13, 14 of Owusu‟s handout ….at least!

Note in particular Lord Bridge delivering the Judgment in the case of Lloyds Bank v
Rosset….it is a useful commentary on the constructive trust of a new
model…compare it with some of Denning‟s judgments on the facts…and draw the necessary
conclusions. It is referred to in page 339 in Hanbury!

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