Topic: THE GENERAL DEVELOPMENT OF EQUITY

Contents:

• Introduction
• Definition/Meaning of Equity
• Objective/Purpose of Equity
• Origin of Equity
• Development through Court of Chancery- Before 1873
• Development through/after the Judicature Act 1873
• Fusion of Law & Equity
• The Relationship of Equity & Common Law
• Equity in Islamic Law
• Equity under English Law Today
• Conclusion

INTRODUCTION
• Equity arose and developed in its early days as a reaction to the rigours and inadequacies of the common law. The
unavailability of writs for some who needed them, their high costs, their inapplicability to many types of complaint,
procedural difficulties and the dominance of technicalities meant that the common law was losing touch with the
requirements of the community. See the case of Denom v Scot (1343), which exemplifies the problems. In this case X
sued Y on a debt and Y pleaded truthfully that X had received payment following a previous judgment. The deed
recording the obligation had not been cancelled. Y was ordered to pay again.
• Equity is a modification of, and hence a supplement to, the common law. ‘Equity came to fulfil the law, and not to
destroy it.’ Thus, its development can be comprehended only within the context of common law.

DEFINITION/MEANING OF EQUITY
• Equity is a word with many meanings. In a wide sense, it means that which is fair and just, moral and ethical. In other
words, “equity” is a term that invokes notions of good conscience, fairness and justice. Hence, the popular
definition of equity refers to ‘the quality of being equal or fair; impartiality; even-handed dealing’ and notes its
derivation from aequus (= even, fair). Popular usage has in mind ideas of what is just right, associated with
‘conscience’ or so-called ‘natural justice’.
• The legal meaning of equity is much narrower i.e. it is a branch of law which, before the Judicature Act 1873 came into
force, was applied and administered by the Court of Chancery. It is not synonymous with justice in a broad sense. For
example, a plaintiff asserting some equitable right or remedy must show that his claim has “an ancestry founded in
history and in the practice and precedents of the court administering equity jurisdiction. It is not sufficient that
because we may think that the ‘justice’ of the present case requires it, we should not invent such a jurisdiction for the
first time”. See the case of Re Diplock [1948] Ch 465 at pp.481-82 where the above statement was echoed by the
court.
• In addition to the legal meaning of equity, reference could also be made to the case of Re National Funds Assurance
Co (1878) 10 Ch.D 118 at p. 128 Where Jessel M.R. Said: “This court is not, as I have often said, a Court of Conscience,
but a Court of Law.”
• Note: See the criticism of Maitland of the legal definition i.e. It is a poor thing to call a definition.

OBJECTIVE/PURPOSE OF EQUITY
• It fulfils the law, and not destroy it. The objective of equity is to restrain or restrict the exercise of legal rights and
powers in particular cases, whenever it would be unconscionable for them to be exercised to the full. Thus, it is
said that equity ‘supplements’ the shortcomings of the common law, but if this is correct, it is nevertheless the
case that equity only supplements the common law when, by doing so, it can prevent unconscionable reliance on
the shortcomings of the common law.
• For example, if property was conveyed to “A upon trust for B” the common law courts regarded A as the absolute
owner and would not recognise B’s rights. Equity, however, would enforce the trust and compel A (as trustee) to hold
the property on behalf of B (the beneficiary).
• All in all, its objective is to mitigate the severity of the rules of common law.

1|Page
 ORIGIN OF EQUITY
• The origin of equity can be traced back to the existence, in 13th century reign in England of Edward I, of three distinct
courts, the King’s Bench, the Common Bench or Court of Common Pleas, and the Exchequer. These courts operated
independently, entitling plaintiffs to a choice from the three. However, predominantly they all administered
traditional and statute law, collectively known to the Edwardian lawyer as common law, a collection of legal principles
and rules dating back to 1189.
• Owing to defects in Common Law (i.e. incomplete or no remedies in many cases; inadequate relief; and incomplete
& defective procedures), Equity Courts came into existence and they gave birth to equitable remedies, equitable
rights and equitable interests. There was a double system of administration of justice in England prior to the
Judicature Acts, 1873-75. Legal rights and interests were those that were recognised and protected by the Common
Law courts. Equitable rights and interests were those that found recognition and protection from the courts of equity.
• As mentioned earlier, 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, among other things, for the issue of writs and all actions had to be
commenced by the issue of a royal writ.
• However, in the 17th & 18th centuries there was a tension between the chancery and the common law courts
animated by Lord Ellesmere. In the Earl of Oxford Case (1615), Lord Ellesmere, the Chancellor, granted relief in equity
against certain claims of Merton College which had been upheld by the common law judges. Coke declared that he
would no longer hear any counsel who had participated of petitions/bills in equity directed against the
judgments of the common law. Ellesmere appealed to the King (James I) to resolve the dispute. James I referred the
matter to his AG, Bacon (a bitter enemy of Coke). The decision favoured Chancery; the Chancellor was instructed
that he had no need to refrain from giving relief in equity. Ellesmere’s exposition of the role of Chancery was
upheld: “The cause why there is Chancery is for men’s actions are so diverse and infinite that it is impossible to make
any general law which may aptly meet with every particular act and not fail in some circumstances’.
• Thus equity was born. But its growth began to pose threats to the indolence of the common law system. The Earl of
Oxford case was the theatre of the conflict between equity and the common law. All that follows from this
moment was a triumphant operation of equity until 1873 when the first of the Acts that would further establish its
rules- and subject its development to much stricter regulation emerged.
• All in all, the Courts of Chancery introduced the law of equity in order to fill in the gaps of law that common law failed
to address. In addition, equity sought to avail a kind of flexibility in the law because the common law presented a rigid
system where writs governed the system of judgment. Equity is fair and just rule and looked into availing fair
judgment to individuals based on the rules that governed equity and the particular circumstances of the case.

DEVELOPMENT THROUGH THE COURT OF CHANCERY- BEFORE 1873

• First and foremost, before addressing or discussing the development of equity through the Court of Chancery
before 1873, it is of paramount importance to note that equity arose and developed in its early days as a reaction
to the rigours and inadequacies of the common law e.g. the unavailability of writs for some who needed them and
many more.
• Having said that, it is now important to pay attention to the development of equity through the Court of
Chancery before 1873. However, it would be vital to first of all note that the long history of the Court of Chancery is a
fascinating story e.g. in the medieval period the Chancellor was the most important personage in the country next to
the King himself: Maitland described his position as “the King’s prime minister,” “the King’s secretary of state for all
departments.”
• In addition to the above, one very important function of the Chancery was to issue the royal writs which began an
action at law. By varying existing writs or inventing new ones, the Chancellor could have some influence on the
development of the law; a limited influence, however, for the decision to issue a writ did not create a new form of
action. The litigant could not proceed without it; but the common law court could still decide that the writ
disclosed no claim recognised by the law. Hence, an injured plaintiff could only sue at common law if his
complaint came within the scope of an existing writ.
• From the 13th to the 16th centuries, developments of equity stemmed from the Chancellor’s office- the Chancery
from which writs were issued. New writs were invented to cover new complaints; the Statute of Westminster 1285
empowered the Chancery to issue writs based on variations of existing formulae to meet cases which were novel
but of ‘a similar nature’ to decided cases.
• Furthermore, petitions were addressed to the Chancellor in situations in which petitioners complained that his
case was beyond the ordinary mechanism, and sought another way. In other words, if the mechanism appeared to

2|Page
 work unfairly, as where juries were misled, corrupted or intimidated, the petitioner would seek another way. Hence,
the Chancery “was the head of office of the organisation, and it was here that application was made when the
ordinary mechanisms appeared to be incapable of working.
• Later the petition was used to obtain relief in cases where the common law was inflexible and incapable of providing a
remedy. Thus, it is important to note that the common law developed into a comprehensive system, but an injured
plaintiff could only sue at common law if his complaint came within the scope of an existing writ.
• Apart from what has been said above, by the 16th century local jurisdictions, where many matters not covered by
common law writs had been dealt with, played a much smaller part. The common law was taking on the aspect of a
substantive as well as a comprehensive system, and the application to the Chancery was ceasing to look like a request
for the same justice, withheld by some mechanical fault. There seemed to be two parallel systems, and the
relationship between them had to be explained in theory and practice.
• Based on the above discussions, it would be right to state that the Court of Chancery grew from the practices of the
Chancellor and his staff in hearing petitions addressed to the King and in issuing appropriate decrees. For
example, the Chancellor’s discretion operated in the sense that he would give or withheld relief, not according to any
precedent, but according to the effect produced upon his own individual sense of right and wrong by the merits of the
particular case before him. The Chancellor could also order the attendance of the petitioner by issuing a writ called a
subpoena to answer the complain.
• In addition to the above, as to enforcement, if the petition is successful, the Chancellor’s conclusion will usually be
different from that which the common law court would have reached; otherwise the matter would have been litigated
at common law. For example, if the Chancellor finds that the Blackacre is owned by A, but that, in conscience, it
should be beneficially owned by B, he may order A to convey the land to B, or to hold the legal estate for the exclusive
benefit of B. The Chancellor does not and cannot in these circumstances hold that B is the owner. A’s right at law is
undoubted, and the Chancellor cannot change the law. What does the Chancellor does is to issue an order to A either
to convey the land to B, or refrain from action interfering with B’s right, as the case may be. The Chancellor’s
jurisdiction is against the person; in personam, and directed to the conscience of the individual in question. He has the
power to back up his orders with the threat of imprisonment for those in contempt.
• Looking at how the enforcement of petition operates in the development of equity through the Court of Chancery
above, it could be said that although there is, theoretically, no interference with common law property rights, there is
in substance an interference with common law jurisdiction.
• Having said that above, the 17th and 18th centuries witnessed a decisive struggle between Chancery and the common
law courts, provoked in part by the jealousy of Coke, the Lord Chief Justice, in the face of the growing
popularity of Chancery. In the Earl of Oxford Case (1615), Lord Ellesmere, the Chancellor, granted relief in equity
against certain claims of Merton College which had been upheld by the common law judges. Coke declared that he
would no longer hear any counsel who had participated of petitions/bills in equity directed against the judgments of
the common law. Ellesmere appealed to the King (James I) to resolve the dispute. James I referred the matter to his
AG, Bacon (a bitter enemy of Coke). The decision favoured Chancery; the Chancellor was instructed that he had no
need to refrain from giving relief in equity. Ellesmere’s exposition of the role of Chancery was upheld: “The cause why
there is Chancery is for men’s actions are so diverse and infinite that it is impossible to make any general law which
may aptly meet with every particular act and not fail in some circumstances’.
• All in all, the Court of Chancery flourished, with burgeoning of doctrines and precedents. By the end of the 18th
century, the great equitable doctrines of trust, the injunction, specific performance had been formulated.

DEVELOPMENT THROUGH/AFTER THE JUDICATURE ACT 1873

• The 19th century was a period of great development of the equitable jurisdiction. In other words, the 19th
century saw common law courts permitted to utilise certain procedures hitherto allowed only in Chancery. The
Judicature Acts 1873-75 established one Supreme Court of Judicature and effectively fused the administration of
equity and law. Under sec 25(1), the rules of equity were to prevail in the event of a conflict between equitable
and common law rules.
• In addition to the above, the coming into picture of sec 25 could be attributed to the possibility that a court
which applied the rules both of common law and equity would face a conflict where the common law rules would
produce one result, and equity another. Hence, it could be said that the Supreme Court of Judicature Act 1873 made
provision, in the first 10 subsections of sec 25, for the solution of many problems in which those rules would conflict.
For example, sec 25(11) of the Act deals with the order of priority of payment of debts of a person dying insolvent.
See also the refusal of common law but not equity to recognise the assignment of debts and choses-in-action by
virtue of sec 25(6). See for example how the issue of choses-in-action is now dealt with under the English Law
Property Act 1925.
• Apart from addressing the provision of sec 25(1) to (10) of the Supreme Court of Judicature Act 1873, reference could

3|Page
 also be made to subsection 11 which contains a general residual clause. It provides: “Generally, in all matters not
herein before particularly mentioned in which there is any conflict or variance between the rules of equity and the
rules of common law with reference to the same matter, the rules of equity shall prevail.”
• Furthermore, the effect of the Judicature Act is best shown by the leading case of Walsh v Lonsdale (1882) 21 Ch.D. 9.
In this case, the landlord (defendant) entered into an agreement in writing to grant to the tenant (plaintiff) 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 the grant of 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 (i.e. issue a distress). The tenant brought this action for
illegal distress. The action failed. The distress would have been illegal at law, because no seven years lease had been
granted, and the yearly legal tenancy which arose because of entering into 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 held liable to pay a year’s rent in advance and the distress was held to be lawful.
• All in all, the effect of the Judicature Act was to enable the court to treat as done that which ought to be done (an
equitable maxim), and to allow the landlord to use his equitable defence (based on his right to specific performance)
to the common law claim. The principle is not limited to cases dealing with agreements for leases, but is applicable to
all cases where there is a contract of which equity will decree specific performance, by a legal estate owner to convey
or create a legal estate.
• It is equally important to note that in addressing the development of equity after the Judicature Act 1873, reference
must also be made to the Supreme Court Act 1981 with special attention to sec 49, which basically addresses the
situation today. Hence, the situation today is summed up in the Supreme Court Act 1981, sec 49. The sec provides:
(1) Every court exercising jurisdiction in England or Wales in any civil cause or matter shall continue to administer
law and equity on the basis that, wherever there is any conflict or variance between the rules of equity and the
rules of the common law with reference to the same matter, the rules of equity shall prevail.
(2) Every such court shall give the same effect as hitherto (a) to all equitable estates, titles, rights, reliefs, defences
and counterclaims, and to all equitable duties and liabilities...
• Looking at the situation today, it could be argued that ‘the two systems of substantive and adjectival law formerly
administered by courts of law and equity have surely mingled now’ as per Lord Diplock in United Scientific Holdings v
Burnley BC 1978

FUSION OF LAW & EQUITY

• To remove the abuses of double administration of justice the Judicature Acts 1873-75 fused law and equity,
thereby replacing the Court of Chancery and the Common Law courts by the Supreme Court of Judicature. It is
important to note that the Acts established a new and uniform procedure assimilating the best rules of both the old
systems. Under sec 25(11), the rules of equity were to prevail in the event of a conflict between equitable and
common law rules. In other words, law and equity were administered concurrently but where the rules of
Common Law and Equity were in conflict on a particular point, rules of equity prevailed.
• The Judicature Acts 1873-75 [section 25(11)] have neither made ineffective the principles of equity nor have they
superseded the law, but they have sustained the existence of both. In effect they have brought about the fusion
without affecting the substantive rights at law and in equity. This is supported by the case of Britain v Rosssiter (1879)
11 QB 123.
• In Britain v Rosssiter, the plaintiff agreed to serve for more than a year. This was not in writing as required by the
Statute of Frauds. Thus, before the Judicature Act the plaintiff had no remedy at law for want of writing. At equity
also a contract of hire and service was not enforceable. But the plaintiff based his case on part performance. As
the agreement had been partly performed it could not come within the Statute of Frauds and therefore he could
sue for wrongful dismissal. But this argument was rejected and it was held that by virtue of the Judicature Act,
the plaintiff did not acquire any right which he did not have prior to the Act of 1873. The true construction of the
Judicature Acts is that they confer no new rights, they only confirm the rights which previously were to be found
existing in the courts either of law or equity…
• The fusion have done away with the auxiliary jurisdiction and converted the exclusive jurisdiction into a concurrent
one, the simple reason as is apparent is, that now a court is capable of granting all the necessary reliefs, be legal or
equitable or both. It is now a court of complete jurisdiction.
• The distinction between legal and equitable remedies has not been broken down as could be seen from the case of
Joseph v Lyons (1884) 15 QBD 280. In this case A after acquiring the property pledged it with C who took it without
notice of prior assignment. B sued C to recover the goods contending that his equitable right had become a legal
one due to Judicature Acts and it was available as against purchasers without notice. This argument was negative
and rejected for it was not intended by the Legislature that legal and equitable rights should be treated at a par

4|Page
 and identical, but that the courts should administer both legal and equitable principles. Thus at appropriate places
rules of equity were allowed to prevail but the fusion did not change the nature of the substantive rights at law and in
equity.

THE RELATIONSHIP OF EQUITY & COMMON LAW

• Common law was originally based on the customs and traditions that governed England, and the royal courts were in
charge of ensuring the proper administration of these laws. The law of equity is a set of rules created by the courts
of Chancery in order to mitigate the harshness that the common law system provided to the country. There is
a certain relationship between the common law and equity.
• The common law availed only monetary remedies when addressing grievances brought forward by the parties of a
case in order to determine which party can claim victory of a case. This limited the ability of the courts of law to
address other issues that fell outside the scope of monetary compensation. The law of equity brought about a system
where the judges weighed the particulars of the case to determine whether to avail a remedy in terms of
damages or provide a remedy that did not border on financial grounds, such as an injunction, thus boosting the
remedies available to parties.
• The judges in the common law system declared the substance of the law when they made decisions regarding the
different cases of law. The judges in the Chancery Courts who administered the rules of equity brought about the
system of judge-made law, which is based on precedents. The judges look into previous judgments made in order
to direct the presentation of justice in another case with similar facts. The system of judge-made law developed
over the years even after the merger of common law and equity to form the common law that stands today.
• The Judicature Acts led to a merger of both common law and equity in the 19th century. This conflict between
common law courts and Chancery courts boosted this move because the judgments given in the two courts would at
times conflict. In addition, the law of equity in itself was not a fully established system of law because it only acted as
a remedy when the common law failed to address certain legal issues. The merger incorporated the principles of both
common law and equity in order to avail a more wholesome system of judgment.

EQUITY IN ISLAMIC LAW

• According to Said Ramadhan in his book Islamic Law- Its Scope & Equity, echoed the sentiment that: “The door is
wide-open to the adoption of anything of utility, of whatever origin, so long as it does not go against the texts of the
Al-Qur’an and the Sunnah”. Hence, Islamic equity finds its roots/sources in Al-Qur’an and Sunnah.
• Concept of equity in Islam is wide and flexible but holds firm in the provisions of Al-Qur’an and Sunnah. In Islam, legal
reasoning must take five principle objects of Shariah (Maqasid al-Shariah). The five principle objectives are:
protection of religion, protection of life, protection of reason, protection of lineage and protection of property.
• Equity can only be practised if someone has equipped knowledge and proper understanding of: the concept of
Islam, its tawheed, the objectives of Shariah, the concept of Khalifah and the concept of accountability to Allah.
• A Qadhi can only exercise equity after he has exerted himself to search for the answers in Qur’an and Sunnah. He
does not ‘dispense justice’ according to ‘consideration of individual expediency or according to his conscience’.
• There are a lot of authorities from the Qu’ran and Sunnah addressing the concept of equity in decision making
process. The following are some of the authorities from the Qur’an:
i. We have sent down thee the Book in truth, that thou might judge between men, as guided by Allah: so be
not used as an advocate by those who betray their trust (Surah An-Nisa 4:105).
ii. Is not Allah the wisest of judges? (Surah at- Tin 95:8).
iii. The word of your Lord does find its fulfilment in truth and in justice: none can change His words (Surah Al-
An’am 6:115).
iv. Say: My Lord has enjoined justice (Surah Al-Araf 7:29).
• Apart from the authorities in the Al-Qur’an, the Prophet is reported to have said: The best of your religion is that
which brings ease to the people.
• Secondary sources of the Shariah have also been used by the jurists to achieve equity in Islam. The exercise includes:
Ijma, Qiyas, Maslahah Mursalah, Istislah & Istihsan.

5|Page
 EQUITY UNDER ENGLISH LAW TODAY
First and foremost, there are many and varied contributions to the modern law that have been made by equity. The
following provide the major examples as far as the operation of English law today is concerned:
• If property was conveyed to “A upon trust for B” the common law courts regarded A as the
(a) The trust (originally
absolute owner and would not recognise B’s rights. Equity, however, would enforce
called a “use”
the trust and compel A (as trustee) to hold the property on behalf of B (the beneficiary).
• The general rule is that covenants only bind the parties themselves and do not bind third
parties. Although the benefit of a covenant can easily be transferred to a third party
expressly or under statute (e.g. the Contracts (Right of Third Parties) Act 1999), stricter
(b) Restrictive covenants
rules govern its burden. In relation to freehold covenants affecting land, equity stepped in
to allow restrictive (or negative) covenants to run with land so as to bind all future
purchasers.
• Where a landowner mortgages his land (i.e. Offers the land as security for a loan),
the mortgage contract will specify a contractual date for redemption. This is the agreed
(c) The mortgagor’s
date when the debt is to be paid off (redeemed) by the borrower. At common law,
equitable right to
the borrower had to discharge the loan by this date or he would lose the land. Equity
redeem
intervened and allowed repayment to be made even though the contractual date had
passed.
• Under common law, the procedure for enforcement of the existing rights was quite
unsatisfactory. A defendant could not be compelled to appear and give evidence in a
(d) New
court of common law; and even the parties who were interested in a suit could not be
procedure/subpeona
called. However, the court of equity/Court of Chancery developed the concept of a
subpoena to compel a litigant to appear in person before the court and be questioned.
• An estoppel arises in circumstances where X makes a statement, promise or some
other representation to Y and, as a result, Y acts to his detriment. Y’s detrimental reliance
can trigger an estoppel that will prevent X from enforcing his strict legal rights. Of the
various categories of estoppel that exist, the most common found are promissory estoppel
(e) Estoppel and proprietary estoppel. Promissory estoppel can only be employed as a defence (it is a
shield and a sword) and hinges upon there being a promise as to future conduct.
Proprietary estoppel requires a statement (whether in the present or future tense)
concerning land and can be used as a cause of action (i.e. it concerns a positive right to
sue).
• Under common law, remedies at law were limited to recovery of the property or damages.
A wider range of remedies was introduced by equity. These include specific performance,
injunctions, rectification (rewriting of a contract), rescission (unilateral withdrawal from a
(f) New remedies
contract) and the appointment of a receiver (to receive income from a business). A
distinguishing feature of all equitable remedies is that they are discretionary (i.e. not
available as of right).
• The common law courts failed to enforce many rights which the equity courts enforced. If
a right exists, there must be a chance to the public to exercise this right. In that period, to
avoid and defeat the common law provisions people tried to abuse the ‘use of land’
(g) New rights
by transferring land to somebody else’s name. Equity legalised these matters and thus
created new rights. Equity in this sense, therefore, enforced that portion of natural justice
which common law court failed to enforce.

CONCLUSION
• Equity is a modification of, and hence a supplement to, the common law. ‘Equity came to fulfil the law, and not to
destroy it’. Its origin and growth can be comprehended only within the context of the common law. In some historical
circumstances it appeared to rival the common law. Today, however, as a result of its development, and the Judicature Acts
1873-75 in particular, law and equity stand not in rivalry, but as integral parts of one system.

6|Page