Law 3103 Equity & Trusts

Dr Elliot Schatzberger
Lecture 1
Historical Introduction
History

 Equity developed over time to supplement, aid and correct common law, as and when
necessary. Equity is unique to common law systems of law as it does not feature, as a
concept, in civil jurisdictions.

 It is based on the concept of fairness

Timeline

 1066

 The conquest of William I. He confiscated all land from all landowners and declared
himself the ultimate owner of all lands. Landowners were given their land back but only in
return for services or money. Since then and to a certain extent even today, all land is
owned by the Crown (at least, formally).
 1230

Emergence of the device of ‘use’. Henry III dispensed with

baronial chancellors who held offices for life and took the office
Timeline into his own hands as early as in 1238.

It was also around this time that common law became inflexible.
Petitions to the King, as the Fountain of Justice, soon started to
emerge as individuals often had no other way to gain redress for
wrongs that may have been done to them.
Timeline

 1535

 Statute of Uses – this statute aimed to decrease the influence of the Court of Chancery by
abolishing the main form of business, namely the ‘use’. It didn’t quite work as ways to
avoid the prohibition of ‘uses’ were quickly found and led to the creation of ‘uses upon
uses’. Powerful incentives existed for ‘uses’ to continue with inheritance rules and taxation
being the main ones. In many ways, the same principle applies in the modern form of a
trust that often is used not only for convenience but also for tax avoidance.
 1238 – 1620

Continuing battle between Equity and Common Law. Chancery decisions

were characterised by flexibility and remedies would vary from case to
case.

Timeline Common law remained quite rigid. Political battles between the powers of
the King and the powers of Parliament continued as common law
judgments often contradicted decisions of the Chancellor.

This continued until the seminal Earls of Oxford Case.

Timeline

 1615

 The Earls of Oxford Case – the most important case that determined Equity’s existence. If
the decision went the other way, Equity would probably have lost its significance and
would not exist.
 This case determined what should happen if there was a direct conflict between common
law and Equity.
 As you probably have already guessed, Equity won and since then, if there is a conflict the
decision of the Court of Chancery prevails over the decision of the Court of Common Law.
 Oxford’s Case
‘It’s the function of the judge not
to make law but to declare law,
according to the meta-wand of
the law and not by the crooked
cord of discretion’
Sir Edward Coke representing
Common law
‘The cause why there is Chancery is, for that’s
men’s actions are so divers 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’
Thomas Egerton (Lord Ellesmere) representing
Equity
 Despite the seminal case, Equity continues to struggle, primarily due to delays,
inconsistencies, unpredictability, and some unscrupulous Chancellors.

The decisions were so varied that it led to the creation of a saying; ‘Equity’s
justice can be measured by the Chancellor’s foot’. [John Selden – jurist;
Problems? 1689]

It was when the role of Chancellor moved from clergymen to lawyers that
Equity began adhering to some form of precedent. The last of the non-legal
Chancellors was Lord Shaftesbury, who held office during 1672-73. It was his
successor, Lord Nottingham (1673-1682) who started the development of a
more settled system of equity.
Timeline

 1676

 Cook v Fountain 3 Swan 585 – Lord Nottingham expressed a more measurable and rule –
based version of Equity – ‘the conscience by which I can proceed is merely civilis et
politica and tied to certain measures’.
1689 – John Selden

 1. Equity in Law is the same that the Spirit is in Religion, what everyone
pleases to make it, sometimes they go according to Conscience,
sometimes according to Law, sometimes according to the Rule of Court.

 2. Equity is a roguish thing: for law we have a measure, know what to

trust to; equity is according to the conscience of him that is Chancellor,
and as that is larger or narrower, so is equity. ‘Tis all one, as if they
should make his foot the standard for the measure we call a
Chancellor’s foot; what an uncertain measure would this be! One
Chancellor has a long foot, another a short foot, a third an indifferent
foot; ‘tis the same thing in the Chancellor’s conscience.
Timeline

 17th Century onwards

 This development of a settled system of law continued, credited to Lord Hardwicke (1763-
1756). It was completed in the early 19th century by Lord Eldon (1801-1806 and 1807-
1827). In the 17th century, the reporting of cases also commenced which allowed for
references to be made to previous decisions. This caused Equity to lose much of its
flexibility and caused it to become almost as rigid and fixed as the rules of the common
law.
 18th century saw the biggest growth of Equity; it was also during this time that many
modern equitable principles and rules developed. However, having two concurrent systems
of laws (common law and equity) led to many problems - until the Judicature Acts.
The Judicature Acts

 1873 & 1875

 Judicature Act – ‘fusion of the two systems’ or at least fusion of the ‘administration’ of
the two systems. Ashburner famously declared ‘The two streams of jurisdictions, though
they run in the same channel; run side by side, and do not mingle their waters’.
 s.25(11) of the Supreme Court of Judicature Act 1873 codified the decision of Earls of
Oxford case by providing that ‘in the event of conflict between the rules of law and
equity, the rules of equity shall prevail’. It also paved the way for the creation of a
common court that stopped the need for parallel proceedings or having to start all over
again if the claim started in the wrong court.
 Many tried to define or to describe Equity
by using different approaches (legal,
philosophical, moral) but many also
wondered what the use of such definition
would be.
Definition of
Equity
Consider the examples below to see if they
help you appreciate what Equity is about.
Aristotle

 Aristotle’s ‘Ethics’ – “For Equity, though

superior to justice, is still just … justice and
equity coincide, and although both are good,
equity is superior. What causes the difficulty is
the fact that equity is just, but not what is legally
just: it is rectification of legal justice”.
Oxford’s Case

 Earl’s of Oxford’s Case – ‘The office of the

Chancellor is to correct men’s consciences for
frauds, breach of trusts, wrongs and
oppression… and to soften and mollify the
extremity of the law’.
 Modern approach – it is seen as a branch
of law which was, before the Judicature
Acts of 1873 and 1875, administered by
the Court of Chancery.

Today?
It gives flexibility and discretionary
remedies where the common law is too
rigid
Vandervell – a perfect
example!
 Re Vandervell Trustees Ltd (No 2) [1974]
EWCA Civ 7