LAW OF EQUITY 1

AND TRUST I
GLUP 3053 / A191
Roos Niza Mohd Shariff
 TOPIC 1:
2

THE GENERAL DEVELOPMENT

OF EQUITY (PART 1)

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1. Definition
and meaning
of equity

Common law
Civil matters courts

4. Reception Content 2.
of English s of Development
Commercial equity in of equity -
matters Malaysia Topic 1 before 1873

The court of
Land
Chancery
matters
3.
Developmen
t of equity –
after 1873 High Court of
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DEFINITION AND MEANING OF EQUITY

• In general, equity implies fairness; rights as founded in the law of nature;
recourse to principles of justice which enable the common law to be
interpreted rightly.

• ‘Equity’ is derived from the Latin expression Aequitas Aequuas, suggesting the
sense of levelling or equalisation.

• ‘Equity’ is a term that invokes notions of good conscience, fairness and justice.
It is also used in contrast to the strictness of law.

• Equity exists to mitigate the severity or rigidity of the common law.

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• The Greek Philosopher Aristotle :

“It is equity to pardon human failings, and to look to the law giver and
not to the law; to the spirit and not to the letter; to the intention and
not to the action; to the whole and not to the part; to the character of
the actor in the long run, and not in the present moment; to remember
good rather than evil, and the good that one has received rather than
the good that one has done; to bear being injured; to wish to settle a
matter by words rather than by deeds; lastly to prefer arbitration to
judgments for the arbitrator sees what is equitable but judge only the
law, and for this an arbitrator was first appointed in order that equity
might flourish.”

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EQUITY AND JUSTICE IN ISLAM

The term ‘justice’ comprises the following
• To place things in their rightful places
• To say the truth (even though it is against a person’s own self)
• To be balanced in one’s view and judgments (the principle of wasatiyyah”.
• To avoid bias and prejudice
• To avoid oppressing and tyrannising others
• The Prophet : “On the day of judgment, rights will be given to those to whom
they are due and wrongs will be redressed.”

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THE DEVELOPMENT OF EQUITY –

BEFORE 1873
• Equitable principles took place over many years as a direct result of the injustice
often caused by a strict application of the common law.
• The period from the Norman conquest to the reign of Henry III in 13 th century
witnessed the rapid growth of the common law based on the custom of the
country.
• The Normans introduced an entirely new legal system to England. This law was
common to the whole of the kingdom. Hence the term ‘common law’ was used to
refer to the new system of legal principle created by the English courts which was
common to the entire realm.
• Rights were founded and obligations were created as a result of the decisions of
these early English courts / common law courts.
• However, there remained a right to petition to the King directly if it was thought
that the decision of the common law courts was unfair or unjust.
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• Later on, the position of Lord Chancellor was created to hear those petitions,
which would otherwise have been taken directly to the King.
• The Lord Chancellor was empowered to issue royal writs on behalf of the
King, but gradually acquired power to hear petitions directly during the 13 th
and 14th centuries. As a result, the Lord Chancellor’s discretion broadened.
• The writ that the Lord Chancellor served were processed by his
administrative department known as the Chancery.
• Over time, the number of petitions brought before the Lord Chancellor
become so numerous that a separate system of courts was created to hear
those cases – the Courts of Chancery.
• It was in these Courts of Chancery that the principles of equity were
developed.
• The Court of Chancery’s greatest contribution to substantive law was the
doctrine of uses, which was the forerunner to the law of trust.

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• Therefore, there were two completely distinct sets of courts in
England, and two completely distinct system of law – COMMON
LAW AND EQUITY.
• Due to this situation, it was necessary for a litigant to decide
whether her claim related to common law or to equity.
• To select the wrong jurisdiction would mean that the claim would
be thrown out. So if a claim for equitable remedy were brought
before a common law court, that common law court would dismiss
the claim and the claimant would be required to go to the court of
equity instead.
• This position continued until the enactment of the Judicature Act
1873.
• It was the cost and time implications of this duality that led to the
enactment of the Judicature Act of 1873, which fused the
administration of common law and equity.

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THE DEVELOPMENT OF EQUITY –

AFTER1873
• The enactment of the Judicature Act 1873, which came into full effect
in 1875, abolished the old court system and replaced it with a new
High Court of Justice which was vested with complete jurisdiction
previously exercised by the separate courts.
• There was one code of procedure for all claims.
• The practical distinction between the common law and equity
disappeared. However, the intellectual distinction remains.
• In practice, the Chancery division of the high Court deals with matters
relating to trust and property law, whereas the Queen’s Bench
Division deals with common law issues such as the interpretation of
contracts or matters concerning the law of tort.
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• The spirit of equity in any situation of conflict with the common law
was specifically preserved in section 25 of the supreme Court of
Judicature Act 1873:
“ Generally, in all matters not hereinbefore 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.”

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 THE RECEPTION OF ENGLISH
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EQUITY IN MALAYSIA

• English law applied in Malaysia through sections 3 and 5 of the Civil Law
Act 1956. The existence of these provisions required courts in Malaysia to
be bound to apply English law, in particular English common law and rules
of equity.
• Before this Act was introduced, there were three separate statutes
governing Peninsular Malaysia, Sabah and Sarawak – the Civil Law
Ordinance 1956, application of Law Ordinance 1951 in Sabah and
Application of Laws Ordinance in Sarawak.
• The Civil Law Act 1956 has incorporated all the three earlier statutes and
becomes the statutory authority for the application of English common law
and rules of equity in Malaysia.

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Application of U.K. common law, rules of equity and certain statutes 13

3. (1) Save so far as other provision has been made or may hereafter be made by
any written law in force in Malaysia, the Court shall—
(a) in Peninsular Malaysia or any part thereof, apply the common law of England
and the rules of equity as administered in England on the 7 April 1956;
(b) in Sabah, apply the common law of England and the rules of equity, together
with statutes of general application, as administered or in force in England on 1
December 1951;
(c) in Sarawak, apply the common law of England and the rules of equity, together
with statutes of general application, as administered or in force in England on 12
December 1949,
Provided always that the said common law, rules of equity and statutes of general
application shall be applied so far only as the circumstances of the States of
Malaysia and their respective inhabitants permit and subject to such qualifications
as local circumstances render necessary.
(2) Subject to the express provisions of this Act or any other written law in force in
Malaysia or any part thereof, in the event of conflict or variance between the
common law and the rules of equity with reference to the same matter, the rules of
equity
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THE ESSENCE OF THE

PROVISION:
• (class exercise - fill in the blank)
1.The
dates

Subject
matter

Proviso

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PROVISO = LIMITATION

1. It is applied only in the absence of local statute on a particular subject, as a means to fill
in a local gap

●
e.g. – English law in any matter relating to land tenure will not apply because the National
Land Code is a comprehensive code.

2. The application will only cover the part of English law that is suited to local circumstances

●
Choa Choon Neoh v Spottiswoode (1869) 1 Ky 216 – “…in questions of marriage and divorce, it
would be impossible to apply our law to Mohammedans, Hindoos and Buddhist..”
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EQUITY IN A BROADER CONTEXT

• It is the spirit of equity and justice that must be instilled and embodied in
every individual, particularly those who directly involve in the
administration of justice.
• Example – Malaysian Court Rules of 2012 – to avoid procedural injustice
or cases being struck off on the ground of procedural irregularities.
• It offers a flexible means of providing justice from case to case. For
example, suitable cases can be settled by the way of mediation or other
alternative dispute resolutions mechanisms.

Roos Niza Mohd Shariff