MAXIMS OF EQUITY

Example question:
Wrong in “equity will not suffer a wrong to be without a remedy” must be legal wrong.

- other maxims that compliment this maxim

o maxims in relation to conduct/conscience of persons
o maxims that provide basis for remedies
o maxims that look at the jurisdiction of the chancery courts

1. Equity will not suffer a wrong to be without a remedy

 no wrong should be allowed to go unredressed if it is capable of being remedied by the courts
 reflects the doctrine of unconscionability
 equity intervenes to protect a right that is not enforceable by common law to ensure fair result
 Examples: enforcement of trusts, equitable remedies, injunction
 Allows the emergence of new remedies for new situations such as the Mareva injunction.

 Walsh v Lonsdale
 Lonsdale agreed in writing to grant a 7 years’ lease of mill to Walsh at a rent payable quarterly
in arrear, but with a years’ rent payable in advance if demanded. No formal deed was executed.
Walsh entered into possession and paid his rent quarterly without arrear. Subsequently,
Lonsdale sought to enforce a year’s rent in advance and Walsh refused to pay. Walsh claimed
for an injunction and damages for illegal distress on the ground that at law, he was tenant from
year to year at a rent not payable in advance.

 Held: The action failed. In equity, an agreement for a lease is considered to be as good as an
equitable lease. The tenant therefore was liable to pay a year’s rent in advance and the distress
was lawful.

2. Equity follows the law

 Courts of equity is bound by common law and its statutes where a rule is direct and governs the case
with all its circumstances on the particular point.
 It cannot override statutes unless the circumstances warrant intervention by equity.

 Abdulrahim v Drahman
 The plaintiff and his sister were the only next of kin to the deceased who were not yet the
administrator of the estate and had not taken out the letter of administration. They deposited the
deceased’s title deeds with Wahab for consideration of 60$ as security paid by Wahab. Wahab
then agreed to assign said security and title deeds held by him to Essah, the defendant’s wife,
with the plaintiff’s consent and was paid 60$. After obtaining letter of administration, the
plaintiffs sought to recover the possession of the title deeds on equitable grounds. The issue is
whether the mortgage executed by the plaintiff before obtaining LOA was valid?
  The court held that no dealing by the next of kin in regards to the estate of a deceased person is
binding on them unless it is beneficial to the state.

 The court of equity will not allow for the defendants to withhold the title deeds from the
administrator so as to hinder administration of the estate. Court decided for the plaintiff and the
title deeds are recoverable.

 “For the benefit of the revenue as well as the benefit of the estate, equity will follow the law.”,
Hackett J

 Graf v Hope Building

 Concerns the foreclosure of a consolidated mortgage due to the default of payment of interest.
 Cardozo J: “equity follows the law, but not slavishly nor always. If it did, there could never be
occasion for the enforcement of equitable doctrine.”

3. He who seeks equity must do equity

 Anyone who comes to seek equity must be prepared to also fulfill his obligations under equity
 Demands the remedy seeker to act conscientiously as he expects others to act in an equitable way.

 Lodge v National Union Investment

 The P borrowed money from the D, an unregistered money lender and had mortgaged securities
to him. Under the Moneylender’s Act 1900, contracts by unregistered moneylenders are void.
The P sued the D for the return of his securities and payments. The defendant argued that the
plaintiff seeking equitable remedy should do equity too as the P should pay back his loan.

 The court held that in granting equitable remedies, the court should apply equitable principles
to ascertain what conditions such remedies should be granted. The order can only be made
upon terms that P should repay the money advanced to him by the D.

 Chillingworth v Chambers
 A joint trustee was also one of the beneficiaries. The trustee lost money through unauthorized
investments.
 Held although the trustees were held to be jointly liable, the loss was paid out of the
trustee/beneficiary’s share of the estate. The trustee/beneficiary was not entitled to contribution
from his co-trustee.
 “Where a trustee is also a beneficiary and participates in the breach of trust, he is required to
indemnify his co-trustee to the extent of his beneficial interest”

 Hardoon v Belilios
 A was the registered proprietor of shares in a company. He held the shares on a bare trust for R
as they were not wholly paid up. The company went into liquidation. R wanted A to pay for the
debts.
 Held R was bound to indemnify A personally
  “The plainest principles of justice require that the beneficiary of trust who gets all the benefits
of the property should bear all it burden unless he can show some good reason why the trustee
should bear them himself.”

 Chappel v Times Newspaper*

 The employees of Time launched a strike against their employer who then threatened to sack
the employees unless they stop. The employees went to the court and applied for an
interlocutory injunction to prevent their employer from carrying out the threat

 The application was refused as the court held that for an injunction to be ordered, the strikers
should first withdraw from the strike.

 Wong Chun Wah v Kok Kam Chee*

 The plaintiff promised to marry the defendant. He asked the defendant to look for a house to be
their matrimonial home which she did and the plaintiff purchased it. The plaintiff entered into a
sale and purchase agreement and deposited rm50k in the name of the defendant as security. At
the same day, the defendant executed a trust deed to effect that the defendant was holding the
property and 50k in trust for the plaintiff. Their relationship broke down when the defendant
found out the plaintiff was already married and refused to marry her. The plaintiff is now
claiming the property and the 50k from the defendant.

 The court applied 2 equitable maxims. He who seeks equity must do equity. Plaintiff who is
now seeking equitable relief of enforcing the trust must do equity which is to be right and fair
to the defendant. He who seeks equity must come with clean hands. The plaintiff’s breach of
promise to marry clearly shows that the plaintiff has not acted rightly and fairly to the
defendant and reveals that he has not acted with clean hands. The appeal was dismissed.

 Leo Leslie Armstrong

 Appellant - owner of freehold land. Applied for subdivision of 2 lots to the R, R charged it with
lease. R did not have authority to direct the A to change. A did not contest for 45 years
 the better maxim to apply was delay defeats equity. Not a very good illustration of clean hands.

4. He who seeks equity must come with clean hands

 The claimant must show that his past records in the transaction is clean.
 If his actions are fraudulent or unconscionable, the court may deny him equitable remedies

 Tinsley v Milligan
 The couple had jointly purchased a property in which Milligan contributed to the purchase
price and it was solely registered in Tinsley’s name. This was so with Tinsley’s full knowledge
that Milligan could fraudulently claim social security benefits. When their relationship ended,
Tinsley wanted to claim possession of the house while Milligan sought a declaration that
Tinsley held the house for them both equally on resulting trust. Tinsley argued that as Milligan
defrauded the Department of Social Security, she did not come to equity with clean hands and
no equitable relief should be granted.

 HoL held since Milligan could invoke the presumption of resulting trust without relying on the
illegal purpose, she had a share in the house and it was Tinsley who had to rely on the intention
 to defraud the social security system to rebut the presumption of a resulting trust and get the
property in her name.

 Patel v Mirza
 Overruled TvM. Court reconsidered how they should deal with a case like this by looking at
public policy. In tinsley v milligan, court allowed for milligan because she relied on basis of
common intention
 The parties entered into an agreement where Patel paid Mirza a sum of money which Mirza
would bet on the price of some shares using insider information, which is an offence under the
Criminal Justice Act 1993. The scheme failed because the insider information was mistaken.
Patel claimed the sum he paid to Mirza under contract on the grounds of unjust enrichment.
Mirza argued that such contract could not be enforced because it was illegal and any claim is
precluded by this equitable maxim.
 Supreme Court held Patel could recover the money.
 A person who satisfies the ordinary requirements for a claim of unjust enrichment should be
entitled to the return of his property. He should not be debarred from recovering his property
just because the consideration which failed was an unlawful consideration.
 Lord Toulson: Reasons for this maxim:
 One should not be allowed to profit from his own wrongdoing

 The law should be coherent and not self defeating, condoning illegality by giving with the
left hand what it takes with the right hand.

 Palaniappa Chettiar v Arunaselam Chettiar

 A father transferred some land to his son to avoid paying taxes under the Rubber Regulations.
When the son wanted to sell the land, he was stopped by the father who claimed back the land.

 The court held since it was a transfer from father to son, there was a presumption of gift. To
prove otherwise, one must clearly and distinctly show that the son took it upon as a trust. Since
the father made the transfer with the intention to commit fraud, he cannot use the courts to get
the best of both worlds.
 “Equity will not aid a person who has practised deceit on the public administration of the
country for personal gain. The fact that the father arranged the transfer for an illegal
purpose and such purpose had in fact been carried out, the father is precluded from
obtaining aid of the court (seek equity)

 Gascoigne v Gascoigne
 The husband took a lease of land in his wife’s name and built a house with his own money. He
used his wife’s name in the transaction with her knowledge and convenience because he was in
debt and was trying to protect the property from creditors. He tried to argue that the property
was still his.

 The court held that the property belonged to the wife as there was a presumption of gift. The
husband also had fraudulent intention to defraud his creditors.
 Fusion construction v eon finance (read case)

 However, the conduct that is referred to must be material to the claim

 Dering v Earl of Winchelsea

 Dering, Earl, and Rouse were all sureties for a bond belonging to Dering’s brother. When he
defaulted, Dering had to pay all of it and sought to recover payment from the other two, The
other two sureties said that Dering had led his brother astray by encouraging him to gamble

 The court held that the brother’s loss was not caused by Dering but by himself and Dering
could recover from the other two.

 “A man must come into a court of equit with clean hands; but when this is said, it does not
mean a geenral depravity, it must have an immediate and necessary relation to the equity sued
for, it must be depravity in a legal as well as moral sense.

5. Where the equities are equal, the law prevails

 Where the rights of both parties are the same, the party with a right in law takes priority.
 For example, under section 206(1) and (3) of the NLC provides that in a claim for land where equity is
equal, the court will give priority to the party holding the registered title.

 Langan v Lee Cheng Keat

 A land situated in Penang is held on trust as marriage settlement. The trust was never registered
and the title deeds remains in the name of the owner. On the death of the owner, the
administrator sold and conveyed the land to D who is now in possessions of the title deeds.

 Held that D was in possession of the land and the title deeds as a bona fide purchaser without
notice of trust. His equity prevails over the beneficiary.

6. Where equities are equal, the first time shall prevail

 Where the equities are equal, in absence of any other factor that determines the rights between the
priority, the first in time has priority.

 A prior equitable interest in land can only be defeated by a bona fide purchaser of legal estate without
notice.
 Provide for the doctrine of notice

 Abigail v Lapin
 The Lapins executed a transfer of Torrens title land to Mrs Heavener as security for a loan. The
Lapins did not put a caveat on the title. Mrs Heavener then mortgaged the property to the
Abigails and absconded with the money, however the mortgage was not registered by the
Abigails. The issue was which party had better equitable interest?

 The Abigails’ interest had priority, even though the general rule is the first equitable interest
succeeds unless there is good reason not to. This is because the Lapins “armed” Mrs Heavener
not only by giving her the transfer of title but also because they failed to lodge a caveat, even
though it is not compulsory.

 Vallipuram Silvaguru v Palaniappa Chetty

  P deposited issued document of title as security for loan with the bank. He then entered into a
sale and purchase agreement and fraudulently told the purchaser he had lost the IDT.

 It was held that the bank had acquired first right by virtue of having the IDT with him and was
not guilty of any priority postponing conduct On B’s failure to enter a caveat – no evidence that
C had searched the register. Even if he had done so, he would still have had to be on his guard
owing to the absence of the IDT.

 The loss fallen on C was not due to negligence on the part of B, but entirely owing to the
factthat C had ignored the most elementary precaution when he bought the land.

 B did not part with the IDT, as was in Abigail. He retained possession of the IDT
throughout and had the right to enter caveat at any time. B had done nothing to forfeit his
priority.

 United Malayan Banking Corporation v Goh Tuan Laye

 A had given an overdraft to three partners in a firm. In return, a document of title was deposited
by the three partners of a firm to A as a security. A did not enter a lien-holder’s caveat as they
were prohibited by the Kelantan Land Settlement Ordinance, 1955. Subsequently the owner of
the land agreed to sell the lands to R, who paid the purchase price in full. There was also no
caveat entered by them. A had obtained judgment in default against the firm and subsequently
obtained sale and prohibitory orders relating to the lands. A appeal against the judgment of trial
court. Issue was whether failure to enter lien holder’s caveat affected the priority in interest of
the land?

 When there is a contest between two equitable claimants, the first in time, all other things being
equal, is entitled to priority. The claimant may lose his priority by any act or omission which
had or might have had the effect of inducing a claimant later in time to act to his prejudice.

 In the absence of caveats and registrations the court applied the principle given and decided in
favour of the bank as they were the first claimant in time. The bank was also not guilty of any
act or omission which had or might have had the effect of inducing the interveners to act to
their prejudice.
 Only applicable where equities are equal.

 Harun bin Guriaman v Nik Mah bte Nik Mat

 A was a first purchaser who paid full price of the land was it was not registered. R was the
second purchaser who paid a substantial part of the purchase price and took possession of the
land, not knowing about A’s contract. R applied for specific performance to enforce the sale. A
upon learning R’s action entered a caveat upon the title.

 Held that in absence of caveat or IDT, the only indication of title which can be considered is
the de facto possession of the land. R had been in possession of the land the whole time and A
was aware of it. Thus, since he did not impose a caveat to protect his interest then, with no
physical possession and no IDT, he is guilty of gross negligence and his equity is postponed
even though he is first in time.

7. Delay defeats equity

 Equity aids the vigilant and not the indolent.
 Foundation for the doctrine of laches where a party who has delayed cannot obtain equitable relief.

 Smith v Clay
 Concerning a petition to review a decree between thirty and forty years old regarding the
execution of a will.

 The petition was dismissed on the grounds of long delay between making of the decree and this
petition as after twenty years most appeals would be dismissed.
 Lord Canden:

 A court of equity has always refused its aid to stale demands where the party has slept
upon his rights for a great length of time. Nothing can call forth this court into activity but
conscience, good faith and reasonable diligence.
 However, delay itself does not restrict the right to claim where it is not related or relevant to the claim.

 Lindsay Petroleum Company v Hurd

 The doctrine of laches in the Courts of Equity is not arbitrary or technical doctrine.

 Where it would be practically unjust to give a remedy, either because the party has, by his
conduct, done that which might fairly be regarded as waiver of it, or where by his conduct and
neglect he has, though perhaps not waived that remedy, yet put the other party in a situation in
which it would not be reasonable to place him if the remedy were afterwards to be asserted, in
either of these cases, lapse of time and delay are most material.

 But in every case, if an argument against relief, which otherwise would be just, is founded upon
mere delay, the validity of the defense must be tried upon principle substantially equitable.

 Two circumstances, always important in such cases, are the length of the delay and the
nature of the acts done during the interval, which affect either party, and cause the balance
of justice or injustice in taking the one course or the other, so far as it related to the
remedy.
 Delays that are material; length of delay and nature of the act during interval.

 Erlanger v New Sombrero Phosphate Co

 A bought the lease of the Anguilla island of Sombrero for phosphate mining for 55k. He set up
the R company and a few days after incorporation, he sold the island to the R company for
110k. Through promotion and advertising, A got many members of the public to invest in the
company. After several months, public investors discovered that A bought the island at half the
price which the company paid for. R sued for rescission for non disclosure.

 Held that the promoter of a company stands in a fiduciary relationship to investors, meaning
they have a duty of disclosure. Court considered that in a company, delay caused by a change
in the governing body might be excused.

 Re Len Chee Omnibus v Lee Chee Omnibus

 R applied for letters of administration 3 years after the death of the mother. A claimed that he
was entitled to administer the estate but he brought the claim 2 years after R administered it. A
was also aware of the mother’s death for 5 years but did nothing to secure his right.
 Held that A was guilty of unreasonable delay and hence the claim was denied.
  Allcard v Skinner
 A was a member of a sisterhood and claimed she was unduly influenced to transfer
considerable property to the sisterhood. She commenced action to demand return of her money
6 years after she left.

 It was held that there was undue influence and she was entitled to restitution. However, her
claim was denied because the case was brought within 6 years and the fact that these 6 years
she was fully aware of her rights means she had acquiesced to her loss.

 Goh Keng How v Raja Zainal Abidin bin Raja Husin

 A was a beneficiary under a trust who entered a private caveat instead of a trust caveat and
failed to state his interest as beneficiary of the trust. Beneficiaries had done nothing for a period
of 30 years to get the registered proprietor to register the land in their name.

 Held there was substantial delay and they were estopped by laches to bring any claim tainted
by undue delay.

8. Equality is equity
 Where there are conflicting claims and there is no other basis of division, all who are entitled to the
property should have equal division.

 Tai Kwong Goldsmiths v Jewellers

 A partnership was dissolved and a receiver was appointed by the court. He applied for
directions for the priority to be given in respect of the payment of monies.

 Held that no provision in the Partnership Act provides for the order of priority of payment of
debts and liability of partnership. As such, it should be divided equally.

 Jones v Maynard
 Husband withdrew money from his account to create a joint account before flying off for
military service. Wife used the sum of the money for investment. They later got a divorce.

 Held that wife was entitled to half of the final balance and half of the investment existing at the
closing of the account.

9. Equity looks to the intent rather than the form

 In certain circumstances equity will not allow a transaction to be set aside on grounds of technicality.
 Equity looks at the substance rather than the form.

 Parkin v Thorold
 Courts of Equity make a distinction in all cases between that which is matter of substance and that
which is a matter of form: and if it finds that by insisting on such form, the substance will be
defeated, it holds it inequitable to allow a person to insist on such form, and thereby defeat the
substance.

 Wan Naimah v Wan Mohd Nawawi

  The land had been sold to the parties’ father but the land was transferred to A, the daughter. R was
the son of the purchaser, who was still an infant. There was evidence showing that the father had
intended to create a trust of an undivided half share in the land in favour of his son, R but there was
no creation of a trust in writing.

 Held there was a declaration showing that he wanted to give the half share to his son. The intention
of the deceased was paramount and need not be in writing as long as it was clear and unequivocal
that there was conclusive evidence vis-a-vis the deceased’s intention.

10. Equity will not permit the provisions of a statute intended to prevent fraud to be used as an
instrument of fraud
 Equity will not allow a party to insist on his legal rights under a statue to cause detriment or to avoid
performance of his obligation.

 Sia Siew Hong v Lim Gim Chian

 A were shareholders of a company who had obtained a loan, creating a charge over the R’s
land. A executed a document described as a guarantee as security to the R which can be
enforced ‘anytime’. Company defaulted and R had to pay for the default. A then argued that
R’s claim was time-barred.

 Held: It would be unjust to permit the A to raise the defence of limitation as the A had agreed
that the guarantee may be enforced anytime

 Aik Ming v Chang Ching Guen

 2nd P was given shares in trust for the 3rd and 4th D because the company needed 2 Malaysian
directors to deceive the Registrar of Companies into believing that the 2nd P was the true
beneficial owner of the shares.

 Held the deeds of trust and powers of attorney were tainted with illegality and thus, worthless.
Such statutory provisions cannot be relied upon for a fraudulent purpose.

11. Equity looks upon that as done which ought to be done

 Where there is a specifically enforceable obligation, equity regards the parties as already in the position
which they would be in after the performance of the obligation.

 Lysaght v Edwards
 After a contract for sale had been settled, the vendor becomes in equity, a trustee for the
purchaser of estate sold, and the beneficial ownership passes on to the purchaser. Vendor has a
right to the purchase money, charge or lien on the estate for the security of that purchase money,
and a right to retain possession until the money is paid.

 “ It appears to me that the effect of a contract for sale has been settled ... it is that the moment
you have a valid contract for sale the vendor becomes in equity a trustee for the purchaser of
the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right
to the purchase money, a charge or lien on the estate for the security of that purchase money,
and a right to retain possession of the estate until the purchase money is paid, in the absence of
express contract as to the time of delivering possession.”
  Borneo Housing Mortgage Finance v Time Engineering
 Developer entered into agreement to sell an industrial building to a purchaser. The developer
charged the land to a finance company. The developer defaulted and the finance company
applied for an OFS. The purchaser argued that the developer was a bare trustee for him and the
charge should not be valid.
 Held: Doctrine of bare trust applies only after full payment is made and MoT is executed.
 “The contractual events which result in the vendor becoming a bare trustee of the land for the
purchaser, is on completion of the sale and purchase agreement, that is to say, upon receipt by
the vendor of the full purchase price, timeously paid and when the vendor has given the
purchaser a duly executed, valid and registrable transfer of the land in due form in favour of the
purchaser, for it is then that the vendor divests himself of his interest in the land.”

12. Equity will not perfect an imperfect gift/equity will not assist a volunteer
 Undertaking to convey or transfer something without consideration cannot be enforced because it is
gratuitous.
 Unless there was an outright transfer, the done cannot enforce a promise.

 Milroy v Lord
 A executed a voluntary deed purporting to transfer some shares in the Bank of Louisana to R to
hold on trust for him. However, under the bank’s constitution, shares could only be transferred
by registration in the register of the bank.

 Held that A used an incorrect form in attempting to transfer shares which rendered the gift
imperfect. Thus there was no trust in favour of A although R had power of attorney on behalf
of A
 Equity will only assist a beneficiary when there is a perfectly constituted trust.

 To render a voluntary settlement valid and effectual, the settlor must have done everything
which acc to nature of property and render the settlement binding upon himself.

 Jones v Lock
 P is a father who produced a cheque which was payable to himself and said it was for his infant
son. He gave the cheque to the baby and later took it back and put it in a safe. P saw his
solicitor and told him he wanted to add $100 to the cheque and invest the total for the son.
When he wanted to make an appointment with his solicitor to change his will to provide for his
son, he died on the same day. Solicitor as one of the executors found the cheque and cashed it
in favour of the estates.

 Held the legal title did not pass to the son. There was no gift to the baby nor a declaration of
trust in his favour. Though the father intended to settle something on the child, it did not mean
the child could bring an action for the cheque.
 Equity refuses to cure the defect and the gift failed.
 Court of equity will not assist volunteers.

13. Equity acts in personam

