Equity and Common Law - Case Study Example

Equity and Common Law Ashburner is of the view that equity and common law are distinct and separate and run side by side, without any mingling or fusion possible between them.1 This may be supported by the fact that equity is relevant only in specific instances and recognized situations where its maxims can be applied, rather than on an ad hoc basis. As stated by Bagnall J in Cowcher v Cowcher2 “I am convinced that in determining rights, particularly property rights, the only justice that can be attained……is justice according to law; the justice which flows from the sure and settled principles to proved or admitted facts.”3 The development of equity and the law as different streams was largely due to the early development of equity as a separate system from the common law. The term “equity” as used in law and jurisprudence suggests principles of fairness, equality, mercy and judgment. It is also used to connote the bypassing of the common law in some instances where matters of conscience, humanity and natural justice are at issue and where judgment has to be given in accordance with the spirit of the law rather than the letter of the law4. Plato defines this as the “law of our forefathers” which “mankind at large” defines as the “unwritten law” which if judiciously followed in practice, will serve as an effective shield for the statutes that are committed to writing.11 A general rule that was laid out on the basis of equity was given by Seldon, who stated that the standard that needs to be applied for equity is the measure of the Chancellor’s foot, or the conscience of the Chancellor5. Where common law was deemed to be inadequate, equity could be sought as a remedy in the interest of fairness and justice and in his decisions, the Chancellor was guided by his conscience rather than strict observance of the letter of the law. Thus the essential distinction between civil law and equity can be distinguished as ad personem in the case of equity, where the facts of a particular case are taken into consideration and decisions made that sometimes overshoot the limits prescribed by civil or common law6. The Chancellor’s jurisdiction developed as equity, administered through the Chancery courts. The Common law courts had limited jurisdiction to grant equitable relief, since the Common Law Procedure Act of 18547 only allowed a limited power for common law courts in granting injunctions, while the Chancery Amendment Act of 1858 gave power to the Court of Chancery to award damages, instead of or in addition to injunctions. Common law was administered by the Courts of Kings’ Bench, Common Pleas and Exchequer, while equity was the realm of the Chancery Court. There are some examples that may be cited to support the existence of separate streams of common law and equity. In the case of remedies, there is a notable distinction that exists between the common law and equity streams, with legal rights and remedies remaining distinct from equitable rights and remedies8. According to Lord Nicholls, such a distinction has arisen largely as “an accident of history”9. Where the issue of trusts is concerned, there is a clear distinction made between legal rights in rem and equitable rights in personam, while part performance can only be enforced through the application of an equitable remedy. Petitt states that only when there is an initial fiduciary relationship, the beneficial owner of an equitable proprietary interest in property can trace it into the hands of anyone holding the property, unless the continued existence of such funds cannot be established, in which case “equity is helpless.”10 There are also certain equitable interests such as equitable easements and restrictive covenants, which are still regulated only by equity. However, with the passage of the Judicature Acts of 1873 and 1875, the superior courts were amalgamated into one Supreme Court of Judicature, which could administer the rules of common law as well as equity. In the case of Salt v Cooper11 Sir George Jessel stated that the main purpose of the Act was not to fuse law and equity but rather to vest into one tribunal, the administration of law and equity in all the actions coming before the tribunal. In opposition to this, the view offered by Lord Diplock in the case of United Scientific Holdings Ltd v Burnley Borough Council is that the Judicature Acts of 1873 and 1875 had merged the two confluent streams of law.12 In the case of United Scientific Holdings, the issue at stake was the timing of notices triggering rent review clauses, since it had been served late by the landlord. According to the Law of Property Act of 1925,13 there was a clear stipulation that a rule of equity was to be adopted in respect of time as well as other stipulations in a contract. However, Lord Diplock felt that with fusion of the two streams, no distinction existed between law and equity. Lord Denning also supports the view that a fusion of the two streams has been achieved14. The case of Walsh v Lonsdale was one of the first to be heard after the passage of the Judicature Acts of 1873-1875. George Jessel MR while discussing the relevant aspects of the case, was of the view that there was only one court and the rules of equity prevailed in this Court. In the case of Tinsley v Milligan15 common law and equity rose in conflict, since one woman was the legal owner of the property, but the other claimed beneficial interest, despite the existence of illegal conduct on her part, which would have negated her interest under common law due to the presumption of advancement. Lord Browne Wilkinson offered the view that English law was now a single law made up of both legal and equitable interests, therefore a person owning either kind of estate had a right of property which amount to a right in rem and not merely in personam. A similar view was also offered by Lord Geoff in the case of Napier and Ettrick (Lord) v Hunter16 when he stated that it was the duty of the courts to see that the two streams law and equity, were molded into a coherent whole. To support the cause of fusion of the jurisdictional streams of equity and the common law, Sarah Worthington tries to expose equity’s influence in the common law of contract, property, tort and unjust enrichment, and argues in favor of a fusion of common law and equity doctrines and remedies.17 One of the problems that rises in trying to fuse the equity and common law aspects is that most social interaction is currently regulated by statutes, therefore it is statutory aspects that comprise a major part of the legal landscape. It is only in the non statutory aspects that practical fusion can be said to have occurred in the realms of equity and common law. On the basis of the above, it may be noted that it is difficult to conclusively argue in favor of a complete separation or a complete fusion of the two jurisdictional streams. Rather, the law is still developing and there are still instances where one stream of law intervenes into the other. There are several instances that reveal how common law can intervene in the issue of equity. For example, trusts as equitable obligations are to be governed by the principle of lex fori, even when those rights relate to property situated abroad, as also set out by case law.18 A rule was laid down that an English Court has no jurisdiction at common law to adjudicate on the question of title to land abroad.19 However the rationale for allowing the exercise of jurisdiction of the English courts under common law over equitable rights on land situated abroad has been stated as follows: “the Court cannot act upon the land directly but acts upon the conscience of the person living there.”20 Another instance that may be cited is the case of Saunders v Vautier21 in which a rule was laid out wherein a trust may be varied with the consent of the beneficiaries, without applying to the Court. While the terms of a trust would generally be administered within the jurisdiction of equity and legal and beneficial interests would be separately examined, this case allowed for the imposition of the common law principles of free will contracting among the parties to the trust, to dissolve the trust through mutual consent. However, the principle established in Saunders v Vautier was deemed to be inapplicable in the case of Re Brockbank,22 where one of the trustees wanted to retire so that he could be replaced with Lloyds Bank, yet despite the fact that all the beneficiaries agreed to this and were unanimous in their decision, the Court refused to allow such replacement on the basis that they were not the only ones entitled to the trust property. This further illustrates how it is difficult to discern a distinct and separate set of rules that will apply in every case, rather courts have exercised their jurisdiction in equity or at common law depending upon the individual circumstances of a particular case. In the case of Seager v Copydex Ltd23an action was brought for breach of confidence which would have mandated an equitable remedy of injunction. But in this instance, the court awarded an equitable remedy of damages based upon its own discretion, because an injunction would have been ineffective. In the case of Tribe v Tribe,24 there was another conflict posed between equity and common law in the equitable transfer of shares from father to son and the common law presumption of advancement. The Court however held that in the individual circumstances of the case, the father could rebut the resumption of advancement despite the illegality of avoidance of cost, because such illegality had not proved to be necessary and had not been carried out. Such judgments therefore reflect the discretion of the Courts rather than application of fixed principles. Some authors argue that equity is not discretionary at all and in the context of unjust enrichment and the law of obligations, Birks argues for fusion, on the basis that the traditional divide between common law and equity would not necessarily justify different categorization of causes of action; rather all obligations, irrespective of their jurisdictional origins, must be categorized similarly.25 In some cases where the issue of fairness is involved, the principles of equity have taken precedence over those of common law. The new trust that aims to prevent unjust enrichment was articulated in the case of HKN Invest OY v Incotrade PVT Ltd26, wherein the Court held that this was a special kind of trust that comes into existence irrespective of the will of the parties and arises by operation of law, to protect especially children and mentally disabled persons for example, who may not be in a position to prevent misuse of their assets and mis-appropriation of their resources by unscrupulous parties. However, as illustrated above, there are several instances of cases where the distinction between common law and equity is not so clear cut and courts have applied relevant streams according to their discretion. On the basis of the above, it is not possible to argue conclusively either in favor of Ashburn’s view that equity and common law have functioned as separate and distinct streams, nor does there appear to be adequate support for Lord Diplock’s contention that the two streams of law have fused. In cases where equitable or common law principles will clearly apply, the Courts function in accordance with those principles, as also articulated by Bagnall J in Cowcher v Cowcher,27 which supports Ashburn’s view of the separation of the two streams of law. The conclusion that must be drawn is that there are two separate streams which still apply, however in certain instances, the Courts may eschew those separation rules and apply justice as appropriate. -2000 words Bibliography Books: * Allen, Carleton Kemp, 1958. “Law in the Making”, 6th ed. Oxford. * Ashburner, 1933. “Principles of Equity” (2nd edn) * Birks, E.G.P, 2000. “Three kinds of objections to discretionary remedialism”, 29, Western Australian Law Review, 1. * Holdsworth. William S, “A History of English Law” Oxford: Blackwell Online * “Landmarks in the Law” (1984), London: Butterworths * Pettit, Philip (1993). “Equity and the law of trusts”, London: Butterworths * Plato “The Laws” translation. A. E. Taylor. London, 1934 * Wilson, Sarah, 2007. “Todd and Wilson’s textbook on trusts” Oxford University Press * Worthington, Sarah, 2003. “Equity” Oxford: Clarendon Press Case law cited: * A-G v Blake (2000) 3 WLR 625 at 634 * British South Africa Company v Companhia de Mocambique (1893) AC 601 * Cowcher v Cowcher (1972) 1 WLR 425 * HKN Invest OY v Incotrade PVT Ltd (in liq.) (1993 3 IR 152) * In Re Brockbank (1948) 2 All ER 318 * Lord Cranston v Johnson (1796) 3 Ves 170 at 182 * Napier and Ettrick (Lord) v Hunter (1993) AC 713 * Penn v Lord Baltimore (1750) 1 Ves Sen 444, 27 ER 1132 * Salt v Cooper (1880) 16 Ch D 544 * Saeger v Copydex Ltd (1967) 1 WLR 923 * Saunders v Vautier (1841) Cr and Ph 240 * Tinsley v Milligan (1994) 1 AC 340 * Tribe v Tribe (1996) Ch 107 * United Scientific Holdings Ltd v Burnley Borough Council (1978) AC 904 Read More