Definition of Equity and Development

  “An attempt to arrive at definition of equity is bound to fail. Equity cannot be confined within some tightly drawn formula. The most that can be done is to indicate the main areas in which equity intervenes in the legal system, to estimate the value of those interventions and to try and estimate where equity may travel in the future”. DUDDINGTON: Essentials of Equity and Trust Law, Pearson 2006 at page 6 Discuss this statement by reference to the growth and development of modern equity. Modern equity generally refers to “the doctrines and remedies that originated in the English Court of Chancery in contrast to the “common law” which is the body of rules developed by the King’s courts”.

[1] Here, it becomes necessary to inform how equity worked alongside of the common law practically.

Since the common law has the drawn formula and set precedents to grant the verdict as well as to award the available remedies, people were forced to go by the decision of the court even if common law awarded none of the remedies or less of what the plaintiff actually has to be awarded. For this reason, the deserving plaintiff appeals to the king asking for a suitable just. So that Chancellor was appointed by the king and he responded to plaintiff’s request by granting available remedies to which he is entitled to. “…..Equity was born later on, after equity had become a regular system of law, and rival to the common law”.

[2] Common law refers that “in order to ensure the smooth running of society it is necessary to formulate general rules which work well enough in the majority of cases”

[3] So called general rules are defined and limited to a certain extent, consequently the common law was seemed to be harsh and unjust in providing remedies and the writ system of common law. As a result of that, the world was in need of other rules and regulations which could lessen the severity of law or amendment in the existing law. Lord Ellesmere once commented in Earl of Oxford’s Case

[4] as “men’s actions are so diverse and infinite that it is impossible to make any general law which will aptly meet every particular and not fail in some circumstances”[5]. It says that it is impractical to generate a general law to rightly meet the conduct of every individual as their conducts are very different and immeasurable from each other. At this point, where the equity was ready to intrude in order to mitigate the harshness also to grant the available remedies to the claimant and impose his rights. This is where progress development of equity was taken place and observed as a separate branch of law. This case further says that in the event of conflict between common law and equity, equity should overcome. Concerning the later development of equity, it matured rapidly and compared to common law, in which evolution of trust was sooner than others. In the Court of Appeal Lord Denning attempted to put forward three developments in equity. It includes, firstly equitable rights for mutual mistakes of the parties; however it was failed, secondly rights to deserted wives. According to Matrimonial Homes Act 1967 deserted wives are aided in common law. Both these attempts failed because the common law has the resolution for those disputes.

Later he attempted for a new trust that is entitled as constructive trust. Now the constructive trust is in practice. It is concerned as a recent development in modern equity[6]. Cases such as Jones v Kernott

[7] and Stack v Dowden

[8] established the principle of development in equity and common intention constructive trust. In equity, cases were decided based on the principle of natural justice and the conscience.

[9] Private knowledge of fact of judges and defendants has to be demonstrated is called as conscience. It should be noted that in the development of equitable jurisdiction, conscience has contributed in a significant way.

Lord Browne-Wilkinson explains that “equity operates on the conscience of the owner of the legal interest in the case of trust; the conscience of the legal owner requires him to carry out the purposes for which the property was vested in him [express or implied] or which the law imposes on him by reason of his unconscionable conduct.”[10] In Gissing v Gissing[11] Viscount Dilhorne says that “it would be unconscionable for the legal owner of the property to deny a person an equitable interest in the property wherever there was a common intention between the parties that they should share the beneficial interest in it”[12] Contrast to this Eves v Eves[13] and Grant v Edwards[14] were upheld because unconscionable conduct of the parties were proven since the common intention was implied. At this point constructive trust is imposed by the courts. This trust is imposed on the trustee by the courts in the absence of trustee’s conscionable conduct in variety of circumstances. Edmund Davies L.J states that in “a constructive trust is a trust which is imposed by equity in order to satisfy the demands of justice and good conscience without reference to any express or presumed intention of the parties.[15] Lord Justice Chadwick also said that “….with constructive trust, it was a matter of unconscionability”[16]. This type of trust does not require any formalities to create a trust as it is imposed by the courts. Constructive trust emerges where, “the perfection of imperfect gifts, fully secret and half secret trust, breach of fiduciary duty and accessory liability for breach of trust.[17] [18] Court of Appeal came to a decision in Binion v Evans[19] not only could that constructive trust be imposed instances where the trust property sold in reduced price. Equitable maxims such as “he who seeks equity must do equity”, this illustrates that the plaintiff who seeks for equitable remedy must have acted equitably, this motion was established in the case of Chappell v Times Newspapers[20] and “he who comes to equity must come with clean hands,” this maxim means that a party seeking an equitable remedy must not himself be guilty of unconscionable conduct[21]. This maxim was mentioned in the Guinness v Saunders[22].Both these maxims speak about the conscionable behavior of the plaintiffs.[23] This is where maxims were developed as guidance to the equitable jurisdiction. “Equity is no part of law, but a moral virtue, which qualifies moderates, and reforms the rigor, hardness, and edge of the law, and is universal truth”.[24] This statement portrays that equity has nothing to do with law but it is absolutely a moral virtue. In actual fact, equity is playing key task to support the common law in its absence and it looks at every individual’s circumstances. Here it is advantageous to specify that ‘equity essentially does not contradict the common law, but rather it aims at securing substantial justice when the rule of common law might see injustice”[25]. Equity was once explained by Sir Henry Sumner Maine as ‘a set of legal principles entitled by the extrinsic superiority to supersede the older law’.[26] This is a well elucidated remark concerning equity. The question demands that, even if the equity is described in numerous ways, when turning up to define equity in a substantial and constructive way, it simply fails. It is evidently revealed in the above two declarations. In other words, despite the fact that the equity is explained by several people in several circumstances, it has no collectively acknowledged definition like we do have in other branches of English legal system. It is one of the well recognized core individuality of modern equity. As said in the introduction, equity serves “to prevent injustice being caused by the automatic applications of legal rules”. This is the sole purpose of equity[27]. Thus it is comprehensible that modern equity thwarts the individual from the application of rigid rules by bringing flexible nature when deciding cases. “The flexibility of the Court of Chancery was illustrated by the fact that it was not constraint by precedent”[28]. Case of Comiskey v Bowering-Hanbury [29] is a classic example for flexible nature of equity. Extra comment on this point is illustrated in the pages to come. As stated above, the flexible nature is due to the fact that the modern equity has no set precedents and drawn formula. It is clear that equity mostly goes with guidelines; hence it is unable to draw up the prescription.

The major reason behind this could be, in equity, the courts do not make the judgment based on case laws and statutes. Instead, the decisions are made case by case basis by considering the maxims of equity as long as it functions as guidelines. Therefore when attempting to define equity, the experts are at utter confusion to draw up a concrete formula on equity. On the contrary, Hudson states “….we might argue that equity is an ancient institution. On the other hand, we must recognize that the law of trusts, while growing out of that equitable jurisdiction, has become a more rigid institution ever before providing both for big corporations and ordinary citizens to achieve……….” [30]. This can further be explained that, he says equity is an old form. But trust has become the result of equity and it is gradually becoming more rigid institution. So the rigidity of trust can be witnessed at the creation of private express trust which has formalities to be followed. One of the formalities is statutory requirements which prevent frauds in relation to land[31] and will[32]. The other formality is called three certainties[33]. If one of them fails to serve its purpose, then the trust would not be created. So it becomes automatically mandatory to follow, in which, after the Executors Act 1830 a strict approach was taken place when deciding cases to precatory words.

Lambe v Eames[34] and Re Adams and the Kensington Vestry[35] are two classic paradigms intended for this approach. A trust obligation would not be enforceable and would not impose compulsion on trustee as well. Despite the fact that this is more like common law however, it reflects the nature of modern equity when the different approach which was taken place in Comiskey[36]. Although the precatory words were used in the above case, the settlor’s intention was clear and he directed the trustee to do what he intended to do, so that this case gives a clear demonstration in relation to the flexibility of equity. The next step taken to address the equity in the question was equity permeates in other areas of English legal system. Trust is a developed standard of equity. When a settlor intends to create a trust “equity intervenes to protect beneficiaries where the trust assets have been mixed by the trustee with other assets”[37]. In a broader sense, once the legal title is passed on to the trustee, the trust is automatically completed according to the common law; however the purpose of trust is to transfer the equitable title to the beneficiary. In this particular situation equity interferes to protect the beneficiary. Furthermore Duddington states that “equity is not a complete system of law in itself.

Take the law of contract. This deals, of course, with the law of agreement. The law tort deals with civil wrongs. It is not possible to state simply precisely what area of human behavior is covered by equity.”[38] Intrusion of equity into other areas of law was originated very considerably since it contracts with varieties of aspects. Maitland in his Selected Historical Essays said; “if we were asked what is the greatest and most distinctive achievement performed by Englishmen in the field of jurisprudence I cannot think that we should have any better answer to give than this, namely, the development from century to century of the trust idea”[39]. Trust is an advanced form of equity. This advancement is developed time to time when resolving new demands with innovative decisions. In fact, not only is trust a developed principle of equity but it was also formed by it, thus the growth in trust must have been born from the doctrine of equity. Consequently, equity has also grown on its own. The importance of equity has widely grown in the modern world because it exists not only in the eyes of law but also it includes “certain probate business, patents, trade mark, and copyright, the appointment of guardians for minors, partnership matters, and mortgages”[40]. These have become so essential in the current world. If conflict arises for example in partnership matters they will mostly prefer for equitable remedies more willingly than common law remedies such as damages. On the other hand, the focal function of equity is to grant remedies to the deserving plaintiff when the compensations of common law are inadequate.

This is another side of growth in modern equity. Modern equity includes specific performance of an obligation, injunction, recission, and rectification.

These were brought forward to mitigate the insufficiency of common law remedies as “the underlying principle is the inadequacy of the common law remedy of damages”[41]. Equitable remedies are decided with the court’s discretion but common law remedies were set before hand. These interventions are inevitably and extremely important in the modern era. The reason for the intervention of modern equity was that of the rigor writ system of common law. In the absence of interventions of equity the litigants were unable to attain justice as the juries were bribed and the judges themselves had to explain the law to the juries. Intervention of modern equity is significant not only in the eyes of law but also in the social and economic point of view as the globalization is taking place in haste. Therefore, the future of the modern equity has also to be considered. Duddington states that there could be two possibilities that modern equity may be available in the future term.

First could be said as it might be merged with common law and occupies no place at all in effect of the fusion debate. Secondly equity will continue to exist as a separate system of law, but with changes of emphasis. People in general are highly impressed with the system of a developed modern equity and, unfortunately the common law is viewed by them in contrast to the equity system. It went up to the extent that people start to think the equity will exist separately as a system of law by replacing the existing common law. In this regard, it would be necessary to highlight the point made by Mc Ghee; he says that ‘equity is exercising the responsibility of supporting and protecting the common law from shift and crafty contrivances against the justice of the law’[42]. Yet in the context of today equity and common law are not two contradicting doctrines but rather go hand in hand and has formed a superior development in deciding disputes. Here Somer J speaks again “neither law nor equity is now stifled by its origin the fact that both are administered by one court has inevitably meant that each has borrowed from the other in furthering the harmonious development of the law as a whole”[43]. At this point Maitland argues that “equity cannot be explained as a different unit in law and separate body of law”[44] which clearly states that equity cannot function separately and on its own. In conclusion the emergence of equity was solely for the purpose of aiding and protecting the common law in the event of any deficiency. Both these are administered by one court and each has benefited from the other in extending the harmonious situation of the law as a whole. When noticed this, if equity can mingle with the rest of the procedure, an unimaginable development would be possible in the near future. Bibliography BOOKS A Hudson,Understanding Equity and Trust(1st, Routledge Cavendish,) C Elliott and F Quinn,Tort law(7th, Pearson Education, 2009) G Watt,Equity and Trust Law(4th, Oxford, 2014) J Duddington,Essentials of Equity and Trust Law(1st, Pearson Education, 2006) J McGhee,Snell’s equity(31st, Sweet and Maxwell, 2005) M Macnair, ‘Equity and Conscience’ [2007] EC 659, R Edwards and N Stockwell,Trust and Equity(8th, Pearson Education, 2007) S Panesar,Exploring Equity and Trusts(2nd, Pearson, Longman 2012) T.Etherton, ‘Constructive Trust: A New Model for Equity and Unjust Enrichment’ (2008) CLJ 265 Hudson A,Understanding Equity and Trust(1st, Cavendish Publishing Limited, 2001) 9 JOURNAL ARTICLES

1. Anthony J. Duggan, ‘Is equity efficient?’ [1997],

2. Charles Pugh Partner, Llewelyn Zietmen, ‘Equity and fraud — time for an over-haul?’ [1999] IL&p,

ONLIE ARTICLES

1. , ‘The reasons behind the creation of equity’ (Law Teacher ) <https://www.lawteacher.net/equity-law/essays/the-reasons-behind-the-creation-of-equity-equity-law-essay.php19> accessed 15 November 2014

2. Angel Versetti, ‘Development of the Principles of Equity in the English Law System’ (acadamiaedu 2011) <What are the Principles of Equity and why are they important?> accessed 16 December 2014

3. George P. Kyprianides, ‘Has Common Law and Equity ‘Mingled Their Waters’? ‘ [2014] unknown, unknown

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[1]Anthony J. Duggan, ‘Is equity efficient?’ [1997] ,

[2] J Duddington, Essentials of equity and trust law (Pearson Education 2006) 8 [3]J McGhee,Snell’s equity(31st, Sweet and Maxwell, London 2005) 4 [4][1615] 1 Ch rep 1 [5]S Panesar,Exploring Equity and Trusts(2nd, Pearson, Longman 2012) 4

[6] Justice David Hayton, ‘The development of equity and the “good person” philosophy in common law systems’ [2012] TDEGPCL 4,

[7] [2011] UKSC 53; [2011] 3 W.L.R. 1121

[8] [2007] UKHL 17; [2007] 2 A.C. 432 [9]M Macnair, ‘Equity and Conscience’ [2007] EC 659, 22 [10]Westdeutsche v Islington London Borough Council[1996] 699 705 (HL) [11] [1971] AC 886 [12] Emma Warner-Reed,Equity and Trust(1st, Pearson Education, 2011) 202 [13] [1975] 7 WLR 1338 [14] [1986] Ch 638 [15] Carl Zeiss Stiftung v Herbert Smith & Co (No 2) [1969] 2 Ch. 276 [16] Banner Homes Group v Luff Development Ltd [2000] 2 WLR 772 [17] T.Etherton, ‘Constructive Trust: A New Model for Equity and Unjust Enrichment’ (2008) CLJ 265 [18]S Panesar,Exploring Equity and Trusts(2nd, Pearson Education, 2012) 356 [19] [1972] Ch 359 [20] [1975] 2 All ER 233 [21] Trusts and equity – maxims of equity [22][1990] 2 AC 663 [23] Hudson A,Understanding Equity and Trust(Cavendish Publishing Limited, 2001) 9 [24]J McGhee, ‘The nature, history and courts of equity’ in (eds),Snell’s equity(31st, Sweet and Maxwell, London 2005). [25], ‘The reasons behind the creation of equity’ (Law Teacher ) <https://www.lawteacher.net/equity-law/essays/the-reasons-behind-the-creation-of-equity-equity-law-essay.php19> accessed 15 November 2014 [26]S Panesar,Exploring Equity and Trusts(2nd, Pearson, Longman 2012) 8 [27]A Hudson ,Understanding Equity and Trust(1st, Routledge Cavendish, ) 1 [28]S Panesar,Exploring Equity and Trusts(2nd, Pearson, Longman 2012) 11 [29] Comiskey v Bowering-Hanbury [1905] AC 84 [30]A Hudson 2001 [31] Section 53 (1) (b) Law of Property Act 1925, section 27 Land Registration act 2002 [32] Section 9 Wills Act 1837 [33] Knight v Knight (1840) 3 Beav 171 [34] (1871) 6 Ch App597, CA [35] (1884) 27 ChD 394, CA [36] [1905] AC 84 [37]Charles Pugh Partner, Llewelyn Zietmen, ‘Equity and fraud — time for an over-haul?’ [1999] IL&p , [38]J Duddington,Essentials of Equity and Trust Law(1st, Pearson Education, 2006) 6 [39]R Edwards and N Stockwell,Trust and Equity(8th, Pearson Education, 2007) 1 [40]R Edwards and N Stockwell,Trust and Equity(8th, Pearson Education, 2007) 2 [41]J McGhee,Snell’s equity(31st, Sweet and Maxwell, London 2005) 25 [42] J McGhee,Snell’s equity(31st, Sweet and Maxwell, 2005) 4 [43]Elders Pastoral Ltd v Bank of New Zealand [1989] 2 NZLR 180 at 193 [44] Angel Versetti, ‘Development of the Principles of Equity in the English Law System’ (acadamiaedu 2011) <What are the Principles of Equity and why are they important?> accessed 16 December 2014

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