LLB20503 Maxims of Equity 1 2/11/2021

LEARNING OUTCOMES 2

 Tostudy and understand the various

maxims
TOPIC 2: MAXIMS  Tounderstand the applicability of these
maxims based on decided cases
OF EQUITY (1)
LLD 20503 EQUITY & TRUST
SEM 1 2021/2022

Introduction 3 FUNCTIONS OF MAXIMS 4

 A collection of legal truisms which are used as rules of

thumb to assist/strengthened the reasoning of a
judge/Court in arriving at a decisions.
 Might/not use by judges/lawyers in civil cases, whether in
matters involving equitable principles or others.
 Might use only one/more at one time, to support/reject an
argument; also interchangeably between one another.
 As guidelines & not fixed rules of law; illustrating the nature
of equity as being more flexible & responsive to the needs of
individual.
 Follow principles of natural justice; modelled upon Biblical
phrases
 Maxims are set of general principles which are said to govern the
way in which equity operates, illustrating the qualities of equity.
 In contrast to the common law, maxims are more flexible, responsive
to the needs of the individual and more inclined to take account of
the parties ‘ conduct and worthiness.
 None of the maxims is in the nature of a binding rule.
 The so-called “maxims of equity” are general principles which the
Chancery Courts, and the modern courts apply, in granting and
withholding equitable remedies.
 The maxims are broad principles, applied in the exercise of the
Court’s discretion.
LLB20503 Maxims of Equity 1
DEFINITION
 Definition: a set of general principles which formed the
basis of jurisdiction for the Chancery Court and said to
govern the way in which equity operates.
 Principles developed by early Lord Chancellors, when
exercising their extra-ordinary jurisdiction on behalf of
the King, to relax the rigidity of the CL.
 Applied only when the court feels it appropriate
 The maxims is NOT in the nature of a binding rule
 May overlap each other
The maxims
 4. He who seeks equity must do equity
 5. He who comes to equity must come with clean hands
 6. Equity is equality
 7. Equity looks / regards that as done which ought to be done
 8. Equity aids the vigilant and not the indolent; Delay defeats
equity
 9. Equity looks to the intent and substance rather than form
 10. Equity does not allow a statute to be made an instrument of
fraud
 11 and 12 Where the equities are equal, the first in time prevails,
where the equities are equal, the law prevails.
 13. Equity gives account of profit not damages
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5 The maxims 6
 Mason CJ & Hughes CJ in CORIN V PATTON (1990) 169 CLR 540 at 549: “…like
other maxims of equity, it is not a specific rule or principle of law. It is a summary
statement of a broad theme which underlies equitable concepts and
principles. Its precise scope is necessarily ill defined and somewhat uncertain.”
 Gopal Sri Ram in EASTERN PROPERTIES S/B v HAMPSTEAD CORPORATION S/B
[2007] 6 CLJ 538: “ It is beyond argument that equitable doctrines are not to be
dealt with in a rigid fashion. They are by their very nature flexible and meant to
be applied in such a fashion as produces a just result on the facts &
circumstances of each given case.”
 Many maxims but study only – 13.
 1. Equity acts in personam
 2. Equity follows the law
 3. Equity will not suffer a wrong to be without remedy
7 1. EQUITY ACTS IN PERSONAM 8
 It is the nature of equitable remedies that they generally operate
against the person. Judgment is made against individual.
 This maxim normally applies with regard to properties & interests held
abroad.
 This approach of equity relates back to the essential functioning of
equity as a correction of the universal law; equity acts in personam
so that it can better relieve the defects of an absolute rule.
 Origin of this maxim -goes back in history. The nature of equitable
remedies that they generally operate against the person of the
defendant, contempt - imprisonment
LLB20503 Maxims of Equity 1
1.Equity acts in Personam
 In personam = against the person; cf. with in rem
 Operate against the person of the defendant, binding the
conscience of the person.
 Use to establish jurisdiction of the court.
 Originally, the court of Chancery will not interfere with D’s property
but merely make a personal order against the D personally. E.g. to
perform D’s part of a contract, to refrain from doing something.
 It applies to property outside a jurisdiction provided that a D is within
the jurisdiction.
 Being enforceable by imprisonment for contempt.
Penn v Lord Baltimore [1750] 1 Ves.
Se 444
 Mr. Penn (owner of Pennsylvania) v. Lord Baltimore (owner of
Maryland)- North America
 Agreement to fix boundaries but not implemented
 Mr. Penn filed specific performance in Court of Chancery in England
 Lord Baltimore questioned jurisdiction of court
 Held: the court acts in personam against the conscience of the
person and thus within the jurisdiction of the court to decree the
performance of the agreement.
 “…the conscience of the party was bound by this agreement; and
being within the jurisdiction of this court, which acts in personam,
the court may properly decree it as an agreement…”
2/11/2021
9 Application 10
 Relevant in cases where the Plf had some equitable right against
the Def even though the property in question is situated abroad.
 Allows the unlimited jurisdiction of granting Mareva injunction
(freezing of Def’s asset situated abroad)
 Limitation on its usage :
 Only applicable if the Def is within jurisdiction of the court.
 Only if court order can be executed.
 Refusal to intervene in such situations are only where:
 - litigation may be in progress in a foreign court or
 -court’s order may come in conflict with the foreign law properly
governing the property under dispute.
11 Chellaram v Chellaram 1985 1 All 12
ER 1043
 Trust created in India of companies in Bermuda; but administered in
London
 Trustees – all born in India but lived different places, 4 had British
passports but only 2 lived in London
 Beneficiaries – never received benefits and file action in London
 Trustees argued that the proper law would be Indian law
 Held: the jurisdiction of the court to administer trust is in personam
jurisdiction and the court can enforce the personal obligations of
trustees irrespective of geographical boundaries.
LLB20503 Maxims of Equity 1
More cases
 EWING v ORR EWING NO 1 1883 9 App. Cas 34 Lord Selborne
said :
“..The courts of Equity in England are and always have been
courts of conscience, operating in personam and not in rem
and in the exercise of this personal jurisdiction they have been
accustomed to compel the performance of trusts and
contracts which were not locally within jurisdiction.”
 BRITISH SOUTH AFRICA COMPANY v COMPANHIA DE
MOCAMBIQUE 1893 AC 602 (mining lands in South Africa)
 RE VALIBHOY (trust in Jetpur, India; estates in S’pore &
Malaya)
Nature
 This maxim indicates the relationship between common law and equity.
 It however does not attempt to overrule common law judgments.
 Equity will, where possible, ensure that its own rule are in line with the
common law principles
 Useful in establishing the need to consider the matter first at common
law, then in equity.
 Equity respected every word of law and recognizes every right therein,
but would not enforce if they were unconscionable/defective.
 Cardozo CJ in his dissenting judgement in GRAF v HOPE BUILDING
CORPORATION 1930 254 NY 1 stated:- “Equity works as a supplement for
law and dose not supersede the prevailing law. Equity follows the law,
but not slavishly nor always.”
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13 2. Equity follows the law 14
 Derived from the Latin form : aequitas sequitur legem
 Subjected to various interpretations.
 Equity does not change the law but supplements it – refer to basic
purpose for introduction of equity; to overcome rigidity of CL.
 Equity respected & adopts & follows the rules of law in cases where
the rules of law may be applicable.
 However, equity would introduce means/remedies to correctly
redress situation whereby common law remedy (damages) could
not.
 In line with traditional role of equity was to ‘temper and mitigate the
harshness of common law, which implies that equity would
intervene and contradict the common law if justice required.
15 Application 16
 Equity ensure that its rights and remedies are in line with common
law. In most cases, equity would supplement rather than contradict
the common law.
 Where an act is legally wrong but incapable of being redressed
under common law due to inadequacy of its remedies or certain
technicalities / reasons, then only equity will intervene to ensure
justice is carried out.
 For example : in recognizing an equitable interest in land, there is
need to look at the legal estate and interest first.
LLB20503 Maxims of Equity 1
Case
 INWARDS V BAKER [1965] 2 QB 29 – F encouraged son to build a
house on his own land, promising to transfer the said land to the son.
Son lived for 30 years on the land with F’s consent & approval. F
died , but F’s will did not leave land to Son.
 Held: Personal representatives of father estate was estopped from
evicting son from the land – unconscionable conduct on their part.
 Principle: Equity will only intervene where common law remedy of
damages would be insufficient to provide justice to the state of
affairs.
 Legal estate & interest lies with father; and beneficial interest was
given to son.
3. Equity will not suffer a wrong to
be without remedy
 Indicates the comprehensive nature of equitable
remedies.
 Explains the basis of equity - no wrong goes without
redress, if it is capable of being remedied by a court of
justice.
 Equity will not allow the technical defects of the
common law to prevent worthy plaintiffs from obtaining
redress.
 This maxim is a restatement of the broad legal principle:
Ubi jus, ibi remedium: where there is a legal right, there is
a remedy
 To prevent failure of justice
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17 Case 18
 MUNAH v FATIMAH [1968] 1 MLJ 54 – Involves a question of legal
interest and beneficial interest over a land. The owner has agreed to
sell a piece of land to the P and to that effect received the full
payment for purchase of the land from the P. P was given
possession and usage of the land upon full payment made, with the
promise to transfer the land into the P’s name soon afterwards.
Owner died, beneficiaries refused to transfer the said land to P.
 Held : although beneficiaries owned the estate legally, P is
recognized as having the equitable owner of the said land after
completing her part of the contract and given possession of the
said land.
19 Nature 20
 Equity will not allow the technical defects of the
common law to prevent worthy plaintiffs from obtaining
redress.
 Referring to rights / wrongs which are suitable for judicial
enforcement but were not enforced at common law
due to some technical defects
 This maxim developed as common law had no new
remedies only monetary damages. Equitable remedies
such as injunctions or specific performance may be
given if damages is not appropriate.
LLB20503 Maxims of Equity 1
Application 21
 Usage as a mechanism of trust – where equity allows a
beneficiary to enforce a term of trust because it is not
fair & unconscionable to allow a trustee to default from
his earlier agreement with the settlor.
 In contract – for breach of contract ; court may grant
specific performance instead of damages.
 In injunctions – to ensure that D will not sell or dissolve his
asset in order to defeat the P’s judgement – Court can
order freezing of the assets under Mareva injunction.
 Examples: trust, specific performance, injunctions.
Case 23
 OTHMAN & ANOR v MEK [1972] 2 MLJ 158 - The appellants, legal
representatives of the late Haji Ahmad, claimed for a declaration
that the respondent, as registered proprietor of a half undivided
interest in two parcels of land held the same in trust for the
appellants.
 Ong Hock J: “duty of the courts to exercise the utmost diligence in
applying the maxim ubi jus ibi remedium, so that justice shall be
done, unless we are strictly constrained by law to uphold any
decision which results in injustice.”
 Held: Applying the maxim, Appellants entitled to the remedy since
they have the rights as they were a right owner to the said land.
Remedy – a the declaration of the title of the disputed land.
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22
Limitation on Application
4. He who seeks equity must do 24
equity
 A person who prays for an equitable relief or enforcement of
equitable rights must be ready to do equity, meaning, willing to
abide by the court’s direction to do what is fair and right to the
other party.
Implies that equitable remedies are discretionary and the court will

not grant them if it feels that the P is unworthy even though prima
facie he has established an equitable right and interest.
A person who seeks equitable relief must have perform his own

obligations under the transaction, or must be prepared to act
equitably if the court obliged him to do so.
 May be used interchangeably with the maxim ‘he who comes to
equity must come with clean hands’
LLB20503 Maxims of Equity 1
Nature
 A remedy will only be provided where you have acted
equitable in the transaction.
 This maxim is not a moral persuasion but an enforceable
Rule of Law.
 It does not require every plaintiff to have an
unblemished background in order to prevail, but the
court will refuse to assist anyone whose Cause of Action
is founded on his or her own misconduct toward the
other party
Cases
CHAPPELL v TIMES NEWSPAPER 1975 2 All ER 233 - Court of Appeal refused the Ps

prayer for an injunction to prevent the termination of their contracts of
employment because they themselves failed to established that they intended
to act equitably in relation to those contracts.
 The court held that by the Ps refusal to undertake to refrain from creating
disruptive action during an industrial dispute, had not shown themselves as
willing to perform their side of the contract of employment. Thus they could not
seek equitable relief when they were not prepared to act equitably.
 Facts: 6 newspaper employees who had been threatened that they would be
terminated unless they stopped their strike action applied for an injunction to
prevent their employers from carrying out the threat.
 Court held: To be rewarded such an injunction as remedy, the employees
should undertake to withdraw their strike action.
 The doctrine applied. Since they refused to do their part, the injunction was also
refused
2/11/2021
25 Application 26
 Focus on the FUTURE conduct of the party concerned to be fair.
 To receive equitable relief, the petitioning party must be willing to
complete all of its own obligations as well.
 A claimant who seeks for equitable relief must be prepared to act
fairly to the other party.
 Lord Eldon LC in DAVIS v DUKE OF MARLBOROUGH 1819 stated:- “The
principle of this court is not to give relief to those will not do
equity…”
 E.g. Sec. 37 of SRA : where Court in making judgement for rescission
of a contract, may require the claimant to pay compensation to
the other party ”as justice may require”.
27 Cases 28
 LODGE v NATIONAL UNION INVESTMENT CO. LTD 1907 1
Ch 300 -a case of illegal loan. P borrowed money from
D, an unregistered moneylender and mortgaged certain
securities for it. The contract was illegal and void under
the Money Lender’s Act 1900. P sued D for delivery up of
the securities.
 Parker J refused to make the order except upon P’s
repayment of the money which had been advanced to
him, for P was seeking equitable relief and must
therefore do was is right and fair.
LLB20503 Maxims of Equity 1
Cases
 KHOO HOCK LEONG v LIM ANG KEE 1888 4 KY 353 - The P
in this case wanted to recover land which legally
belongs to him. The D under bona fide belief that the
land belongs to no one, has cultivated and improved
the land. The Court recognized P’s legal right over the
land but instructed P to compensate the D for all
improvements made to the land, as the improvements
had enhanced the value of P’s land. Upon payment
then only P can take possession of the said land.
 This decision was based on the maxim ‘he who comes to
equity must do equity’.
5. He who comes to equity must
come with clean hands
 Closely related to maxim he who seeks equity must do equity.
 A.k.a. ‘he who has committed iniquity ; shall not have Equity.’
 Concerns with the PAST conduct of the applicant; pertaining to the
issue in dispute – not of his whole general character.
 Immoral conduct not recognized as legal wrong & not connected
to the matter in dispute – not taken into consideration.
 Court will refuse to give relief to a claimant who has by his prior
conduct in relation to the matter litigated, has acted in bad faith or
violated some equitable principles.
 Applies to claimant who had acted unjustly in the transaction which
he complains of.
2/11/2021
29 Cases 30
 YEOW SOH HWA v LOW LIM CHEW POH [2004] 4 MLJ 147 – D was a ground tenant of a
land, owned by one Khoo at RM70 per month. D then rented out the whole premises
at RM450 per month to one Lim. Subsequently, the owner transferred the land to her
daughter, who then sold it to P. P terminated the D’s tenancy and demanded vacant
possession of the premises, by notice. D argued that he had a tenancy coupled with
equity and the notice to quit was insufficient to terminate the tenancy.
 Held (Low Hop Bing J) :
 “The defendant who is coming to equity must do equity. The defendant in this case did
not measure up to the maxim of equity. The defendant actually abused and claimed
the aid of equity for his own profit at the expense and to the detriment of the plaintiff,
since the defendant and his family members had not occupied the premises since
1980 but had rented the premises at RM450 per month which was six and a half times
the ground rent of RM70 per month. Thus, the defendant could not now claim that he
was a tenant coupled with equity.”
31 Nature & Application 32
 Claimant must also show that his past record in the dealings is clean;
with perfect propriety of conduct i.e. must not himself be guilty of
unconscionable conduct.
 ‘Hands’ are regarded as ‘unclean’ if there is some element of
dishonesty, illegal or fraudulent behavior of the claimant which relates
to the matter in dispute.
 DERING v EARL OF WINCHELSEA 1787 1 Cox Eq Cas 318 Eyre LCB: “…A
man must come into a court of Equity with clean hands; 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 moral sense….”
 Both parties have ‘unclean’ hands, the court should consider only of
the applicant and the court is not concerned with balancing the clean
handedness as between the Plf and Def: SANG LEE INVESTMENT CO. LTD
v WING KWAI INVESTMENT CO LTD 1983 The Times April 14.
LLB20503 Maxims of Equity 1 2/11/2021

Cases 33 CASE 34

 PALANIAPPA CHETTIAR v ARUNASALAM CHETTIAR 1962 1 MLJ 143,

 1. CROSS v CROSS 1983 4 FLR 235; Wood J: “He who comes to
equity must come with a clean hand and any conduct of the
Plf which would make a grant of specific performance,
inequitable, can prove a bar ”
 2. ARGYLL v ARGYLL 1965 1 All ER 611 (immoral conduct of
wife – not legal wrong)
 3.GASCOIGNE v GASCOIGNE 1918 1 KB 223 (put property
under W’s name to avoid creditors)
 4. COATSWORTH v JOHNSON 1886 54 LT (failed to follow
lease agg.)
 5. KHOO HOCK LEONG v LIM ANG KEE (1888) 4 KY 353 (bona
fide clearing of land)
1962 1 All ER 494 - F owned the maximum 99 acres of rubber land as
allowed under the administrative regulations at that time. F
acquired another 40 acres of land which he transferred under Son’s
name to avoid tax assessment, on the understanding it was to held
by the son only as a nominee. A receipt of $7000 was produced by
Son even though no money was involved. F subsequently
contracted to sell the land under Son’s name and requested him to
sign a power of attorney in favour of the father. Son refused and F
brought the claim for breach of trust.
 P Council: Lord Denning dismissed the father’s application on the
ground of ‘unclean hands’. The transfer to the son was made for a
fraudulent purpose and the Court was not prepared to accept a
pleading based in illegality

Case 35 6.Equity is Equality 36

 TINSLEY v MILLIGAN 1992 2 All ER 391 - A house was jointly purchased by Tinsley (T) and
Milligan (M) and was registered under the sole name of T to enable M to make fraudulent  A.k.a. ‘equity delights in equality’, equality
social security claims for housing benefit. After an argument, T, moved out and claimed
possession of the house as legally hers. M, who had earlier admitted to the relevant here means proportionate equality
authorities her wrongs, sought a declaration that T held the house on trust for both of them.
T argued that since M’s claim was based on equity and that the transaction was effected according to the risks & burdens
by fraudulent claims, M could not seek equitable relief as she did not come to equity with
cleans hand. undertaken by each party.
Court of Appeal granted M’s application by adopting the most flexible view of public
 Meaning – equity will not play favourites

policy. The appeal Court was of the opinion that by allowing T to keep the house for
herself would have been grossly unfair since she had full knowledge and indirect benefit of
M’s illegality.  Not literal or absolute equality, but in
 However the House of Lords by a bare majority rejected this approach and by a simple
majority reached the conclusion an applicant could assert an equitable title provided that
proportionate equality
he could do so without relying on his own illegality.
LLB20503 Maxims of Equity 1
Nature & application
 Applicable in cases where 2< parties are entitled to an
interest in the same property and there is no express
provisions as to how it should be allocated to the parties.
 If the court finds it impractical to make an accurate
division of property among the competing claimants,
Equity would give equal shares to those who are entitled
to property if there exist no other basis /evidence for the
court to divide the property.
 Occurs quite frequently in cases of matrimonial property,
joint account, joint ownership.
Cases
 LAU CHOONG CHOO v CHAU WE CHUAN 1980 1
MLJ 6 (division of matrimonial home which under
H’s name)
 RE ROGERS QUESTION 1948 1 All ER 328
(matrimonial home; W contributed 1/10)
 ROBERTS v UMMI KALTHOM (1966) 1 MLJ 163
(Harta sepencharian division recognized)
 BURROUGH v PHILCOX (1840) (trust for relatives;
nephews & nieces)
2/11/2021
37 Midland Bank PLC v Cooke [1995] 4 38
ALL ER 562
 The house was purchased by way of mortgage that was under the
husband name. The wife did not make any direct payment but
discharged other household outgoings.
 There had been no discussion or agreement between husband and
wife at the time of the acquisition as to the basis upon which the
property was held by the husband, or as to the extent of their
respective beneficial interests.
 Principles : The fact that a married couple made no express agreement
as to the proportions in which their home should be beneficially owned
did not prevent the court, applying general equitable principles,
inferring an agreement that they should own it jointly in equal shares.
 It is ONLY if no such inference can be drawn that the court is driven to
apply as a rule of law, and not as an inference of fact, the maxim
“equality is equity,” and to hold that the beneficial interest belongs to
the spouses in equal shares.
39 References 40
 Zuraidah Ali et al: Equity & Equitable Remedies in
Malaysia
 Mohsin Hingun & Wan Azlan : Equity & Trust in
Malaysia, 2nd edition, 2014.
 Snells on Equity – Chapter 3.
 Trusts and Equity 4th Ed. – R. Edwards & N.
Stockwell – Chapter 2.
 Mallal’s Digest – Vol. 6 – on Equity
 Any text book on Equity & Trust, 2010 onwards.
LLB20503 Maxims of Equity 1 2/11/2021

Next class 41

 Continue with maxim 7-13