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11057807- Equity and Trusts: Assignment 1

1,662 Words
The Supreme Court of the Judicature Act 18731 was enacted in order to form a single
Supreme Court of England and Wales which would rule on both common law and Equitable
claims. However, it has since been argued that its true effect has been to fuse the two
systems of law entirely so that the courts precedents are today inseparable blends of the
doctrines of both (the Substantive Fusion argument). Justice Somers view2 (above) is an
example of that viewpoint. The alternative view, Dualism or Substantive Fusion purports
that the while the two legal processes remain separate entities and are merely administered
under the single court structure, they. The model was best described by Walter Ashburner,
that the two were like, parallel streams ,which though they run in the same channel run
side by side and do not mingle their waters3

Prior to The Act, two separate judicial systems were used in England and Wales. The
first of these was The Common Law court system, which formed following the Norman
Conquest as The Court of Common Pleas and decided cases according to a strict
interpretation of statute law and its own previous judgements. Those who were not able to
find justice under that system could petition the king for his intervention as the fount of
justice and overseer of all the courts in his Kingdom. When the volume of claims became
too large, The King (believed to be Edward I of England4) delegated this responsibility to the
Chancellor who was said to be the keeper of the Kings Conscience. The numbers of
petitions continued to grow leading to the creation of the Court of Chancery in the 15th
Century.

The Court of Chancery administered justice through Equity. Among the earliest and
most succinct definitions of Equity was that given by Aristotle, as, "that justice which lies

The Supreme Court of the Judicature Act 1873, Section 25


Elders Pastoral Ltd v Bank of New Zealand [1989] 2 NZLR 180 at 93
3
Walter Ashburner M.A, Principles of Equity, pg. 23, London : Butterworth & Co. 1902
4
Parkes, J. A History of the Court of Chancery, pg. 29, London, 1828
2

beyond the written law,"5 and "a correction of law, where law falls short because of its
universality6." The word beyond describes equitys ability to prevent the application of a
common law rule where it would produce an injustice in an individual case. However, it is
untrue that Equity gave its Judges free reign to hand down rulings according to their own
consciences. The Court of Chancery could only cut across the common law in order to
prevent it from being used unconscionably or as an instrument of abuse7. It is important
to recognise the distinction between Equity and the more subjective concept of moralty.
Sir Anthony Mason was keen to make this point in Liverpool Maritime Credit Co. v Hunter8.
The court there was unable to intervene in equity, despite clear evidence of bad faith by the
mortgagor in avoiding the mortgage. Sir Mason said, The breaking of a promise, without
more, is morally reprehensible, but not unconscionable in the sense that equity will
necessarily prevent its occurrence or remedy the consequent loss, The courts of equity
could only act under a set of 14 principles called equitable doctrines9. These both guide and
constrain the power of an equity judge

That Equity follows the law- but not slavishly or always is one such maxim. It was coined
by Chief Justice Cardozo of New York in 192010 . It acknowledges that while equity courts
must recognise legal interests and obligations, there are circumstances where they can be
set aside. The primacy of equitable principles over common law rules was established in the
decision of the Attorney-General Sir Francis Bacon in The Earl of Oxfords Case (1615)11.
Bacon agreed with Lord Ellesmere that, Mens 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, and therefore Equity is indispensable to a functioning legal

Roger A. Shiner, Aristotle's Theory of Equity, 27 Loy. L.A. L. Rev. 1245 (1994). I. Introduction, pg. 1247
Available at: http://digitalcommons.lmu.edu/llr/vol27/iss4/1 (collected November 2014)
6
Ibid.
7
As it did in Gibbs v Guild (1882) 9 QB 59
8
Liverpool Marine Credit Company v. Hunter, Law Rep. 3 Ch. 479
9
R. Francis, Maxims of Equity. Fleet Street: J. Stephens, 1727
10
Graf v Hope Building Corp (1920) 254 NY 1
11
The Earl of Oxfords Case (1615) 1 Ch Rep 1, (1615) 21 ER 485

system and should be allowed to take priority over common law to prevent injustice. This
was embraced in the Judicature Act12 and later in the Senior Courts Act 198113.
The first instance judgement in Hodgson v Marks14 (despite being overturned on appeal
on a separate basis) provides a good illustration of the protection that Equity gives to the
Common Law. Equity prevents the purpose of a law being knowingly perverted to suit an
individuals needs. The claimant in the matter had vested the legal ownership of their
property in another person in order to be given a mortgage and then wanted to receive the
interest back in order to be freed from that mortgage whilst continuing to live there
throughout. The Divisional court found that Mrs Hodgson was bound by the mortgage in
equity although not in law. A second example of the utility of Equity can be demonstrated
by the famous case Walsh v Londsdale15 where an equitable lease was able to be construed
on identical terms as an unexecuted legal lease in order to fulfil the original intentions of the
contracting parties and forbid one from avoiding their duty to the other under the lease.
This is an example of the maxims Equity looks to the substance not form, and the similar;
Equity sees as done that which ought to be done.

It is clear that Ashburners fluvial metaphor ceased to hold water due to the collateral
effects of the 1873 Act. The first instance of confluence between the two systems is in their
flexibility. Common Law rules have become more malleable while Equitys rules have
become more rigid. Although it is true, that even before the Judicature Act, equity was
limited to its doctrines; these were open to far wider interpretation from than their
common law counterparts would be until the 1970s. John Mcghee QC wrote, in 2010, that,
conscience serves as a reserve of basic principle that judges can draw upon as they develop
equitable principles16. However he also acknowledges that under Chancellors Hardwicke
and Eldon in the 18th and 19th Centuries, Equity largely kept to its existing doctrines for fear
of becoming a form of discretionary justice. This was done to move Equity away from
being, as it was dubbed, as variable as the length of the Chancellors foot. Lord Eldon
12

The Supreme Court of the Judicature Act 1873 S.25(11)


The Senior Courts Act 1981 Section 49
14
Hodgson v Marks [1971] Ch 892
15
Walsh v Londsdale (1882) 21 Ch D 9
16
J.A Mcghee, Shells Equity 32 edn. Sweet and Maxwell, 2010
13

wished for Equitys principles to be just as concrete and lasting as those of the Common
Law, but be applied, according to the circumstances of each case17. Lord Greene went
further, in 1948, stating that for a claim in equity to exist it must have, an ancestry founded
in history and in the practice and precedents of the courts administering equity
jurisdiction18 and that Judges may not deviate from this merely because, the "justice" of
the present case requires it. This is very similar to the Common Law doctrine of precedent.
It also represents a considerable deviation from Bacons definition of the purpose of Equity
in the Earl of Oxfords Case. The conclusion must be that Equity has been influenced by
Common Law practices. This suggests a greater degree of Fusion than a mere procedural
fusion. It is a partial vindication of Justice Somers assessment of the relationship between
the
The second element of Justice Somers description is that the result of the fusion has
assisted the harmonious development of the Law as a whole. This may suggest that the
Common Law has returned to primacy. The purpose of Equity, as has been explained is to
block the enforcement of Common Law rules where they amount to an injustice and their
aims are being circumvented or avoided. In essence Equity is designed to act as a critic of
the universal applicability of the Common Law. If both were operating according to their
original definitions; this should not be a harmonious relationship; it is more akin to that of a
superior and inferior court.
It is inaccurate to presume that by becoming far less adaptable, Equity has completely
lost its own identity. Lord Denning flew its flag with limited success during the 1970s. He
wrote, of the 19th Century confrontation of the two forms, Equity was, or should have
been, more flexible (than the Common Law) It was the means by which the needs of the
people could be met19. The decision in Cresswell v Potter20 demonstrates how Equity, in
1978, remained self-sufficient and true to Dennings complementary description and to its
ancient principles. The court prevented a women it found to be poor and ignorant from
being exploited by her husband who had taken all the necessary legal steps in the purchase
her share in their house and subsequently its sale. Because the consideration he gave in
17

Gee v Pritchard (1818) 36 ER 670, per Eldon, LC


Re, Diplock v Wintle (sub nom Re Diplock's Estate) [1948] Ch 465, [1948] 2 All ER 318
19
Lord Denning, The Disipline of Law, pg 197. London, Butterworhts, 1979
20
Cresswell v Potter [1978] 1 WLR 255
18

exchange for her joint interest was so insufficient that no right minded person would accept
it (that she would be free from liability of the partially repaid mortgage), they set aside his
conveyance of the property following the equitable principle given in Fry v Lane (1888)21 .
Lord Dennings cherished decision in High Trees22 and United Scientific Holdings Ltd v
Burnley Borough Council23 also upheld equitable rules and acknowledged them as being
separate and supreme to Common Law principles, the promissory estoppel in the former
and that time should not be presumed to be of the essence in a contract. These three cases,
viewed together, refute the concern that Common Law has absorbed Equity entirely.
Equity still remains, as Lord Ellesmere put it, to soften and molity the extremities of the
Law.

Justice Somers statement is a good desctiption of the modern relationship between


equity and the Common Law. He is correct that they have clearly borrowed a good deal
from one another, an example of this being The Mischief and Golden Rules of statutory
interpretation which are unmistakeably equitable in their origin. However, it is less true to
suggest that that they have bonded for the betterment of the law as a whole. The value of
Equity as a tool to protect individuals in unusual circumstances from injustice may have
been diminished as a result of a Fusion that cannot be merely called Procedural and which
pre-dates The Judicature Act 1873.

Bibliography
21
22

23

Fry v. Lane (1888) 40 Ch.D. 312.


Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130,[1956] 1 All ER 256
United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, HL, [1977] 2 All ER 62

Texts and Articles


Walter Ashburner M.A, Principles of Equity, pg. 23, London : Butterworth & Co. 1902
Parkes, J. A History of the Court of Chancery, pg. 29, London, 1828
Roger A. Shiner, Aristotle's Theory of Equity, 27 Loy. L.A. L. Rev. 1245 (1994).
.R. Francis, Maxims of Equity. Fleet Street: J. Stephens, 1727
England and Wales Statute Law
The Supreme Court of the Judicature Act 1873 S.25(11)
The Senior Courts Act 1981 Section 49
The Supreme Court of the Judicature Act 1873, Section 25

England and Wales Case Law


Graf v Hope Building Corp (1920) 254 NY 1
The Earl of Oxfords Case (1615) 1 Ch Rep 1, (1615) 21 ER 485
The Liverpool Marine Credit Company v. Hunter, Law Rep. 3 Ch. 479
Elders Pastoral Ltd v Bank of New Zealand [1989] 2 NZLR 180
Gibbs v Guild (1882) 9 QB 59
Hodgson v Marks [1971] Ch 892
Walsh v Londsdale (1882) 21 Ch D 9
J.A Mcghee, Shells Equity 32 edn. Sweet and Maxwell, 2010
Gee v Pritchard (1818) 36 ER 670, per Eldon, LC
Re, Diplock v Wintle (sub nom Re Diplock's Estate) [1948] Ch 465, [1948] 2 All ER 318
Lord Denning, The Disipline of Law, pg 197. London, Butterworhts, 1979
Cresswell v Potter [1978] 1 WLR 255
Fry v. Lane (1888) 40 Ch.D. 312.
Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130,[1956] 1 All ER 256
United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, HL, [1977] 2 All ER 62