Nature of Equity Law: Analysis of Ward v Ward - Case Study Example

Case analysis for Ward v Ward1 The Facts The elderly Plaintiff Kenneth Charles Ward once lived with his younger son Anthony and his partner. However, he started re-establishing contact with his older son; the Defendant, Brian Charles Ward with whom he had no contact since early 1990’s owing to the fact that he had been assaulted by his younger son with his wife in April 2003. Moreover, the Plaintiff has a long history of alcohol abusing. In 2003, the Plaintiff sold his old property and purchased a property from Iris Lawson, the son of his de facto Partner. Subsequently, the property was put under joint tenants of the Plaintiff, Iris and Brian. The Plaintiff lodged a claim to undo the transfer of property to the Defendant under the law of equity. The Issue To establish whether the transfer of property was unconscionable and as a result should be set aside under the law of equity. The Decision Equity means severe intervening. However, as a general principle there needs to be some sort of “wrong” existing for the law of equity to intervene. It is therefore of paramount importance to establish a proof citing the whole dealing was based on the grounds of unconscionability, and as such the law of equity needs to intervene for justice provisions. Unconscionability being the prime motivation in this case is the reason as to why the law of equity would intervene. More specifically, unconscionable dealing is classified as any unfair, unjust, and unreasonable dealing. Bearing this in mind, Brereton J applied the unconscionability test in this case according to Commercial Bank of Australia Limited v Amadio 2by taking into consideration 3 essential elements. (i) The transaction party was specially disadvantaged leading to an unfair transaction. (ii) The other party noticed or ought to have noticed such a disability and it could be construed that the Plaintiff was not at a position to look after his interests. (iii) The stronger party bears an onus prove that the transaction was fair or independent advice had been obtained by the weaker party. Brereton J applied the above test based on the following facts. The first part involves establishing special disability for the Plaintiff. Here, influencing factors could be lack of language skills, healthy conditions, age concerns, lack of instruction or assistance, or/and influences under alcohol or drugs in the transaction. In this case, the Plaintiff was elderly, alcohol abusing not mentioning his emotional reliability on his older son. Since he had been assaulted by his younger son, his situation was sufficient enough to categorize him as suffering emotional disability. Brereton J considered relevant cases about emotional disability Louth v Diprose3; Bridgewater v Leahy4; Tillett v Varnell Holdings Pty Limited & ors5. Based upon his findings, Brereton J concluded that although it was not a strong case of ‘special disability’ as there was no sufficient proof to suggest the nexus between the influence of alcohol and the entering of transaction. However, the Plaintiff had the advantage of deemed admissions 6 regarding this issue, given that the Defendant failed to plead guilty of the allegation. The second part of the test is to determine whether the Plaintiff had knowledge or ought to have had knowledge which resulted to him not being in a position to look after his own interests due to the fact that he was suffering from special disability. Based on reasonable grounds, the knowledge could either be actual knowledge or constructive knowledge. Brereton J considered the benefit and loss for both parties in the transaction, and concluded that it was sufficient to establish such constructive knowledge for the Defendant because of imprudence of the transaction which made it evident that the Plaintiff was not in a position to look after his own interests. On the Plaintiff side, he received neither consideration, nor obtained any practical benefit from the Plaintiff, but rather bore significant risk of losing his property as a result of the transaction. On the other hand, The Defendant paid neither consideration nor bore any risks, but enjoyed substantial benefit of one-third ownership of the property. As such, the transaction was considered to be of improvidence, and hence the Defendant ought to have known that the Plaintiff was not in a position to look after his own interests because of his special disability suffering. Finally, as the Defendant failed to prove that either the transaction was fair or that independent advice had been obtained by the Plaintiff, Brereton J concluded that the transaction was of unconscionable nature. As a result, Brereton J allowed the remedy to be declaration that the Defendant holds interest in property on trust of the Plaintiff, meaning that the Defendant as a trustee holds one-third interest of the property for the benefit of the Plaintiff as a beneficiary. In that way, the lost one-third proprietary interest for the Plaintiff was claimed back. Relation to the Nature of Equity The case demonstrates strong correlation with the nature of equity from the following aspects: 1. Equity is often described as “to mitigate the rigor of common law"7. “Equity is the means by which a system of law balances out the need for certainty to rule-making with the need to achieve fair results in individual circumstances.” Earl of Oxford’s Case 8. The quote explains that the purpose for equity is to achieve justice, which is somehow a necessary supplement to balance the unjust outcomes which could be brought by the certainty of common law. In other words, once dealings are considered to be unconscionable then equity law can intervene to bring justice to the Plaintiff even though it is legitimate in common law system. 9 In this case, from common law perspective, the transfer of property had already been registered; the transaction itself was legitimate within the regime of common law. However, the Defendant unconscionably took advantage in the transaction, resulting into an unfair go to the Plaintiff. Clearly under common law, by no means it was possible for the Plaintiff to challenge the legitimately obtained property right of the Defendant. However, the Plaintiff can rely on the law of Equity to undo the unconscionable transaction which Common law simply could not handle. Having established that in this case, the law of equity sufficiently demonstrated that it can do what common law can’t to achieve a fair and just result for the affronted. 2. The intervention of the law of equity is based on the grounds of “unconscionability”10 “Unconscionability” is the prime motivation as to why the law of equity would intervene for the purpose of equity for justice provision. As such, it was essential to prove unconscionability in cases where the law of equity was pled to intervene. In this case Brereton J applied a three elements unconscionability test on the fact. Basically, the rationale behind the test is that it constitutes the grounds for “unconscionability” by knowingly taking advantage of the weaker party’s special disadvantage. In this case, the unconscionability of the Defendant can be easily construed from the fact that the Plaintiff bears substantial risk and receive little benefits whereas the Defendant bears no risk but receive substantial benefits. As such, the Defendant ought to have known that the Plaintiff was not able to look after his interests. However, the Defendant unconscionably accepted such benefit instead of helping the Plaintiff obtain independent advice. On this ground, the dealing was considered to be unfair and unconscionable, therefore forming the grounds for equity law to intervene to undo the property transfer. 3. Remedy in equity is unrestricted to the extent of doing justice11 As the maxim states, “equity does not suffer a wrong without a remedy.” Unlike common law, usually monetary damages are granted. In equity the court can consider whatever remedies to be fair or appropriate to do justice. Thus an equitable remedy usually can be more practical and specific compared with common law, given that it is purely based on the discretion from the court on a case by case basis. In this case, declaration of constructive trust has been considered as an appropriate remedy by the court. This affirmed the beneficiary status for the Plaintiff and allowed him to claim back his lost one-third proprietary interest which had been legitimately transferred to the Defendant under Common law. Such remedy in equity law can be differentiated from the usual common law remedy of damages. Importantly to note, Brereton J awarded such remedy purely based on individual circumstances of this case; as said each equity case was unique. Thus such flexible remedies in equity law guaranteed its efficient and severe intervention overcoming the deficiencies of common law. Read More