Understanding Equity and Trusts - Essay Example

Equity Name: Instructor: Course: Date: Generally, equity means justice and fairness. Equity in laws suggests that judges should not only dwell in the strict use of laws but should as well see to it that laws perfect the course of justice. In case strict laws would harshly apply to an individual depending on the nature of the case, then the judges uses their discretion litigate in favor of justice. The set of principles that are used to supplement harsh application of laws are referred to as equity. Equity principles require that the judges should use their conscience to rule in civil cases especially if they feel that the available law may trample on justice in specific instances. In this case the conscience of the judges should be void of manipulation and also should be impartial and virtuous. This paper will examine the good conscience of equity in respect to fiduciary relationships in contracts between parties and employee employer relationships. The principle of good conscience obliges the judges to deviate from the common law and it assumes that the deficiencies in law should be corrected through application of equity. Equity is a matter of jurisdiction of good conscience and in the history of common law in England various rulings made by the jurors held that, when litigating in cases the ruling should demonstrate good conscience. 1 The commissioners of various courts were required to express good conscience and equity when adjudicating on debt matters. In this regard they held that in the rules of natural justice requires wise jurors to take a realistic view of the circumstances therefore doing what is right and honestly guarding the virtues of fair play. Regardless of the rules of common laws the judges may deviate in order to administer justice and therefore meticulous use of law does not mean equity. Cohen described equity as doing what is right and honest between man and man whereby the positive laws of the country should be propagated and not infringed. In fiduciary relationships whereby an individual, corporation or associations have the legal authority to hold assets for another party and make paramount financial decisions, the principle of good conscience and equity must be observed to the latter. When adjudicating in disputes arising from these relationships adherence to common law is not emphasized. Equity general jurisdiction in this case is supposed to set the contracting parties in an equitable ground which ensures that both of the parties adhere to the principles of good conscience as well as practical justice.2 Courts are bestowed with powers to adjudicate in matters of liability in fiduciary relationships. The adjudication is based on the liability of a party to fiduciary duty and in order for a court of law to come up with appropriate remedy in such case it must abide by the principles of equity. It takes accounts of all prevailing circumstances where by it considers the enforceability of the contract and good faith of the parties. When either of the party acts in bad faith to gain from the ignorance of the other party then it is referred to as unconscionable conduct. Justice must prevail to both parties and before a court of law issue any remedy the principal of practical justice should be embraced. The remedies imposed should not be used enrich the party but to restore him back to the financial position he was before the loss. Therefore justice must be seen to be done for the principle of equity to prevail. The principles of good conscience and equity are such relation requires that, the person who holds assets for trust should make sure that he acts in the best interest for the party. In this case he is supposed to advice the party on investment and legal implications. In case the party makes loses because of bad advice from the trustee then the trustee is entitled to restore the party back to the financial position it was before the loss. This was demonstrated in the case of law society of NSW versus Harvey whereby the law society members appealed to the Supreme Court to rescind a decision by the district court whereby the solicitors were told to restitute their clients to the financial position after they failed to advise them accordingly. The solicitors held that the clients were ready to go on with the investment poultry breeding and that they probably could have gone against their advices.3 However it was revealed that the solicitors flatly refused to disclose important details to the clients thereby in order to benefit from the transaction by getting a certain commission they had agreed with the poultry firm mangers. It was held that they had fiduciary obligation to act in the best interest of the clients but on contrary they were imbibed to the benefit of getting the commission more than the interest of the client thus the court stood by the latter decision of the district court. The trustee should always make sure that all the benefits accrued from the properties that he holds on trust reaches the appropriate beneficiaries. If the trustee happens to cheat the real beneficiary and benefits instead then that would be beyond the jurisdiction of good conscience. Syndicate trustee mostly cites procedure hiccups as a defense hence sticking to dangerous application of laws and procedures. However as indicated by Virgo, courts should make sure that they stick to principles of natural justice and justice should not only be done but should be seen to be done. The courts should make sure that the real beneficiaries get their deal and hence compel the trustee to give back the benefits to the rightful owners.4 A party should also not be allowed to gain from wind fall during rescission. A party that applies for rescission is required to do equity by giving back all the gains it has accrued as a result of the contract and hence before breaking away it should be able account for all the gains it made from the contract. This was demonstrated in the case of Long versus Lloyd whereby long after acquiring a defective lorry at half from Lloyd and purported he would repair the lorry and work with it.5 After he repaired the lorry he gave it to his brother and it broke down. He applied to be rescinded back to his financial position before the contract but it was held that he had accepted the lorry before he purported reject the offer. It was also said that by been rescinded it will amount to making him gain more than he was required to gain. The trustee or the party is not required to unjust enrich themselves in the fiduciary relations. Equity holds that a party should not aim to unlawfully materially gain from a relationship at what so ever circumstances. 6 Court is not supposed to act in contravention to the rules of natural justice by recommending remedies which will result to enriching one party unlawfully. If the party files for a remedy that it is unwarranted then the court should throw out such a remedy. This was demonstrated in the case of Maguire versus Tansey’s case whereby the court found out that the plaintiff had not suffered loss and it rescinded the decision which was made by a lower case for the compensation of the respondents.7 It held that equitable compensation was not adhered to and hence the remedy proposed was harshly imposed to the respondent thereby unwarranted. One should not be asked to provide a remedy that is beyond his means and capabilities. As much as the parties are asked to pay for damages the court has to embrace equity and the practicability of the law. The principles of good conscience and equity can be applied to guide employer employees’ relationship especially when it comes to the matters of pension, salaries compensation and retirement benefits. Since most of the employer employee relationship disputes are resolved through tribunals it has been held that the commissioners of various tribunals are poised to act in accordance to good conscience and equity. the evidence that is provided in the court of law should be used to make sound judgment however if there is another evidence that shows that the rulings made were not in line with the principles of good conscience and equity the decision can be rescinded. The recipients of compensations should act in accordance to the good conscience and equity principles and in the event that they have received unwarranted extra benefits they are required to give them back. In this case they should give the correct details and further should report events carefully. In the case they have changed their status they should report the matter to the relevant authorities. The office which has been aggrieved should prove beyond reproach that the claimant received over payments within his or her knowledge. Once the court is satisfied that the defendant had received the incorrect payments within her knowledge then he is required to pay the entire excess amount. In children welfare schemes for instance the claimant should disclose all the details including those pertaining self employment and change of the children status to adults. When one of the children has surpassed the adolescence age and he or she has attained independence status then the parent should report to the health scheme failure. This was demonstrated in the case of Morris (plaintiff- appellant versus Robert, the secretary of education and health welfare (defendant- appellant).8 Morris was required to refund the extra benefits she had received from the scheme whereby she did not give details of self employment. she also did not report the change of status of two of her children whereby two of them had attained adult status after which she was not supposed to receive the benefits any more. However, due to the negligence of the office of the children welfare and health they went on giving her the entitled amount. The secretary of the office of the children welfare and health filed a case to the district court requiring Morris to pay the excess benefits she had received of which was granted. On appeal Morris held that it was due to the negligence of the officials of children welfare and health that she had received the said amount.9 The Supreme Court however held that she was in contravention to the principles of good conscience and equity hence ought to have notified the officials of the fault. The officials’ negligence did not count in this case because the matter at hand was whether or not the repayment of the excesses was in line with the principles of good conscience and equity whereby the appeal court ruled that she was supposed to pay all the accrued benefits she had received from the scheme. The determinant of the case is not the procedure followed when paying the employees but it was on the ground that the claimant received incorrect amounts that she knew she ought not to have received. Once an error of overpayment has been made it is prudent to correct such error by decreasing the subsequent payments of the individual entitled to the benefits. The recovery of the payments should be in line to the principles of good conscience and equity and in this regard the formula of payment should subscribe to the rules of fair play. There are various circumstances which prevail in this case. First the information about income and assets is sought to guide the best formula for payment schedule. Second the individual may commit himself to refund the amount in cash which does not require further scrutiny to the assets and income. The third instance is when the payment schedule at that time may place the individual under straining financial circumstances. This might defeat the principles of good conscience and equity and the claimant is not supposed to be forced to accomplish the duty. The employee is not entitled to deduct the payments when the individual is facing financial havocs such as servicing of loans. It would be against the principles of good conscience and equity if the payment arrangement would cause more financial harm to the claimant and in this regard the office is supposed to wait until the time he or she has attained stable financial status. If the individual is no longer receiving payments, incomes the office is not entitled to recover the amount under debt collection act. This was demonstrated in the case of William Evo (Plaintiff- appellant) versus Shirley Chatter Commissioner of social security (defendant- Appellee).10 William had received overpayment benefits from the social security funds. He received the benefits after suffering from arteriosclerosis whereby he could no longer attend his duties because of the complications. He was entitled to benefits until when he could resume to work for earnings. William however did not notify the board of social security after resuming his duties thereby kept on receiving the benefits. Upon realizing the error the board soughs for the refund on the overpayments whereby they were deducting from his salary. 11 William filed a case for the payments to waive on the grounds it was against the principle of good conscience and equity whereby it put him in an awkward financial status. The board however refuted the claim and held that William is supposed to take full responsibility of his unfaithfulness. However he applied to the Supreme Court on the ground of good conscience and equity. After reviewing the evidence that was provided by William the court found that cutting of the income directly from the salary constrained William because he was servicing a loan and also he could not amicably provide for the education of her daughter.12 The payment schedule was ruled to be against the principles of good conscience and equity thereby restraining the board to reconsider its stand and consult further to avoid going against the principles of natural justice. It was proved beyond reproach that William had committed a demeanor by benefiting more than he was supposed to benefit, however the board ought not to have gone against the principles of natural justice by imposing payment procedures which would amount to making William suffer financial havoc and therefore going against the principles of good conscience.13 Conclusions Equity is matter of good conscience and it stipulates what ought to be done and not what is supposed to be done in law. Fiduciary relationships have been enforced more on equity than on the pretext of mere application of the laws. The procedures which accompany strict use of rules do not augur well with the principles of good conscience and therefore rules of natural justice dictate that sometimes judges have to use their discretion to correct the flaws of the common law. References Malcolm, Cope, Proprietary Claims and Remedies ( 2nd ed, Federation Publishers 1997) Margaret, Halliwell, Equity and Good Conscience, (Oxford press 2004) Alastair, Hudson, Understanding Equity and Trusts ( 4th ed Routledge Press, 2005) Alastair, Hudson, Equity and Trusts, ( 2nd ed, Routledge Publishers (2008) Dennis, R, Klinck, Conscience, Equity and the Court of Chancery in Early Modern England, (prentice Hall Publishers, 2010) Edward, F, Mark, Digest and Decisions of the Employees Compensation Appeals, ` (Blackwell Publishers, 2002) Bowker, Miller, P, Essays Towards a theory of Fiduciary Law, ( 4th ed Sage Publications 2008) Graham, Virgo, The Principles of the Law of Restitution, (Oxford University press, 1999). Read More