THE NATURE OF EQUITY

Introduction
Right in personam and right in rem
Maxims of Equity
Conclusion

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 THE NATURE OF EQUITY

Introduction: (Continuation)
Apart from the definitional aspect of equity as part of its nature,
reference could also be made to the following points:
(4) Standard of conduct: Equity does not apply defined rules, it evaluates
specific conduct, this requires flexibility and discretion. Most
equitable principles are based upon discretionary standards of conduct
rather than definitive rules; these standards usually stem from the
basic precepts of good faith, honesty and generosity, and in this sense
are rational in nature. The concept of unconscionability is a good
example to cite here i.e. abusing a position or relationship of trust or
confidence; exploiting a recognised vulnerability or weakness).

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 THE NATURE OF EQUITY

Right in personam and right in rem:

All legal rights are either in personam or in rem. An in personam right
is a personal right attached to a specific person. In rem rights are
property rights and enforceable against the entire world. In other words,
in rem rights are proprietary in nature; related to the ownership of
property and not based on any personal relationship.
The law of rights in personam is one and the same as the law of
obligations. The reason is that a right in personam in one person
correlates-berhubung with an obligation in another.
For example, if you negligently run over my foot, I have a right in
personam to an award of damages. And you are the persona against
whom I can exercise my right. Looked at from your end of this
relationship, the same thing can be affirmed by saying that you are under
an obligation to pay me damages. (See examples such as contract law,
law of tort, etc)

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 THE NATURE OF EQUITY
Right in personam and right in rem: (Continuation)
A suit in personam is a suit against a person. A suit in rem is a suit against
a piece of property. Most suits in modern days are in personam. In rem suits
are useful, however, when you can't get jurisdiction over the person.
in rem is Latin for "in a thing". In a lawsuit, an action in rem is directed
towards some specific piece of property, rather than being a claim for, say,
monetary compensation against a person (which is an in personam or
personal action). It focuses on proprietary title to property. Land is an
example of a case where, when the title (e.g. who owns a house) is in
dispute, an in rem action is used to deliver the land itself back to the rightful
owner.
The distinction between an in rem action and an in personam action is
relevant to which jurisdiction a court case may need to be filed, for the
purposes of conflict of laws and civil procedure. An in rem action means that
the right jurisdiction would be where the property actually is.

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 THE NATURE OF EQUITY
Maxims of Equity:
There are a number of maxims that represent the general principles of equity. These
maxims provide broad guidelines by which the courts exercise their equitable
jurisdiction. As equitable remedies are discretionary, they may often dictate, when (and
when not) a remedy will be granted. The most important equitable maxims include:
(a)Equity will not suffer a wrong without a remedy: The principle
behind this maxim is that equity will intervene to protect a right
which, perhaps because of some technical defect, is not
enforceable at law. It is not sufficient that the defendant may be
guilty of some moral wrong: the plaintiffs right must be suitable
for enforcement by the court. In other words, the maxim is not to
be taken literally as equitable remedies are geared only to strike
against unconscionable behaviour and operate only if that
behaviour constitutes a legal (as opposed to a mere moral)
wrongdoing.

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 Cont

The classic example is the enforcement of trusts. The

beneficiary had no remedy at common law if the trustee
claimed the property for himself, as the trustee was the legal
owner, but he could enforce his rights in equity. More
modern developments include the giving of an equity in
matrimonial home to a deserted spouse, the evolution of
promissory estoppel, the employment of constructive trust,
expanding the range of injunctions. See also specific
performance as a classic case.

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 THE NATURE OF EQUITY

Maxims of Equity: (Continuation)

(a) Equity will not suffer a wrong without a remedy:
Reference could be made to the case Ashby v White (1704)
in trying to have a better understanding of this maxim. In
this case, the court held that If a plaintiff has a right, he
must of necessity have a means to vindicate it, and a remedy
if he is injured in the exercise (of right) or enjoyment of it.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(b) Equity follows the law: Clearly equity may not depart from statute law, nor does it
refuse to follow common law rules save in exceptional circumstances (i.e.
Conflicts between the rules of law and equity). equity follows the law means in
its literal sense equitable right may not generally override a legal right; in the
sense that equity has adopted some of the rules of the common law, unless there is
a good reason for deviating from the law, equity will follow it.
Thus equitable interests in land corresponds with legal estates and interests. For
example, the rights and duties of the parties under an equitable lease are the same
as if the lease were legal. See also the case of Hopkins v Hopkins (1739) where
Lord Hardwicke said: Trust estates, which are creatures of equity, shall be
governed by the same rules as legal estates so as to preserve the uniform rule of
property.

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 THE NATURE OF TRUST
Maxims of Equity: (Contribution)
(c) He who seeks equity must do equity: This looks to the future conduct of
the claimant or plaintiff and entails that, for example, if the claimant
seeks to rescind (i.e. withdraw from) a contract, the court will ensure
that the claimant acts equitably by returning any deposit paid under the
contract. Similarly, if the claimant seeks to specifically enforce a
contract then he must be prepared to perform his side of the bargain. In
other words, a claimant or plaintiff who seeks equitable relief must be
prepared to act fairly towards the defendant. Hence, a claimant or
plaintiff seeking an injunction will not succeed if he is unable or
unwilling to carry out his own future obligations. The maxim is,
therefore, employed to ensure fairness.

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 Cont..
See the case of Chappell v Times Newspapers (1975), where the Court of
Appeal emphasised that plaintiffs, by their refusal to undertake to refrain from
disruptive action during an industrial dispute, had not shown themselves willing
to perform their side of contracts of employment and could not seek equitable
relief when they were not prepared to act equitably.
See also the case of Jordan v Money (1854), where Lord Cranworth said: If a
person makes a false representation to another, and that the other acts on it as a
prima facie proposition, the person who made the false representation shall not
afterwards be allowed for his own benefit to set up that which he said was false.
(he has to act upon that false representation). he who seek equity also must do
equity.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(d) He who comes to equity must come with clean hands: This principle looks to
the previous conduct. This maxim looks to the past conduct of the claimant or
plaintiff and entails that, if the claimants conduct in relation to the dispute has
been improper, the chances are that equity will not assist him.
See the case of Overton v Banister (1844) in which a minor fraudulently
misrepresented her age and persuaded trustees to pay money to her; later, when
she came of age, she sued them for payment of the sum again, but her claim was
not allowed.
See also the case of Midland Bank v Wyatt [1975] 1 FLR 696- where a
husband and wife executed a declaration of trust in 1987 (when the husband
was contemplating a new business). The husband apparently settled their only
real asset on the wife and daughters name. The document was kept in a safe
and the couple continued to act as absolute owners of the property, in particular
by mortgaging it. The husbands business failed and the bank obtained a
charging order against the house. The husband then revealed the trust document.
The court held that it was a sham. The inference was that the husband had kept
it up his sleeve for rainy day in order to defeat future creditors.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(d) He who comes to equity must come with clean hands: See also the
case of Dering v Earl of Winchelsea (1787), where Lord Eyre said:
A man must come into a court of equity with clean hands; but when
this is said it does not mean a general depravity; it must have an
immediate and necessary relation to the equality sued for; it must be a
depravity in a legal as well as in a moral sense.
See also the case of Argyll (Duchess) v Argyll (Duke) [1967] Ch.
302- where the court held that the fact that the wifes adultery had led
to the divorce proceeding was not a ground for refusing her an
injunction to restrain her husband from publishing confidential
material; her adultery did not license her husband to broadcast
unchecked the most intimate confidences of earlier and happy days.

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 Cont..

Reference could also be made to a case of specific

performance i.e. it would not be granted in relation to a
contract which was brought about by the claimants
misrepresentation or fraud or where the claimant is
himself in breach of that contract.
If both parties have unclean hands, the court should
consider only those of the applicant, and need not balance
the misconduct of one against that of another. See the
case of San Lee Investment Co. Ltd v Wing Kwai
Investment Co. Ltd (1983).

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(e) Where the equities are equal the law prevails (f) Where the
equities are equal the first in time prevails: These two maxims,
dealing with the priorities of competing interests, can be dealt
with together.
They provide the foundation for the doctrine of notice. Thus, a
prior equitable interest in land can only be defeated by a bona
fide purchaser of a legal estate without notice. If the purchaser
is bona fide and without notice then the equities are to be
equal and so his legal estate prevails.
If he took with notice the position is otherwise, as equities are
not equal. If he does not acquire a legal estate then the first in
time i.e. The prior equitable interest, prevails, as equitable
interests rank in order of creation.
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 Cont

See the case of Cave v Cave (1880), in which a sole trustee

used trust money, in breach of the terms of the trust, so as to
purchase land. He took the conveyance in his brothers
name. The brother mortgaged the land by legal mortgage to
X, and then to Y by way of an equitable mortgage. Neither
X nor Y had any notice whatsoever of the existence of the
trust. It was held that Xs legal mortgage had priority over
the beneficiaries equitable interests. Ys mortgage, since it
was created later in time, was postponed to the beneficiaries
interests.

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 THE NATURE OF EQUITY

Maxims of Equity: (Contribution)

(g) Equity imputes an intention to fulfil an obligation: Where a
person is obliged to do something, but instead does
something else that could be regarded as a performance of
the earlier obligation, equity will regard this as fulfilling
the obligation. This is the basis of the doctrines of
performance and satisfaction.
Eg..A owes money from C. A leaves a will to C before he
dies the property with as much as his debt to C. So C can
take the will as a repayment of As debt.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(h) Equity looks on that as done that which ought to be done/Equity regards as
done the thing that 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 performance of the obligation.
A contract to perform an act is treated in equity as if the act had been
performed, and equity will consider the parties to the contract as possessing
the rights, duties and remedies they would have had if the act had been
performed. Therefore, in equity a specifically enforceable contract for a
lease creates an equitable lease.

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 See the case of Walsh v Lonsdale (1882) where a seven-year lease was
granted to the tenant, but no deed was executed. The fixed term lease was,
therefore, equitable. In the light that specific performance of the contract to
create a legal lease was available, the court admitted that an equitable lease
is as good as a legal lease. This was because equity looked on the lease as
legal as soon as it was informally created.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(h) Equity looks on that as done that which ought to be done/Equity regards as done
that which ought to be done:
In addition the above, reference could also be made to the case of Lee Eng Teh
v Teh Thiang Seong & Anor [1967] 1 MLJ 42- where the Abdul Kadir JCA
stated that: ...it does not matter whether the trust is completely constituted or
not as equity regards as done which ought to be done and will perfect an
imperfect conveyance for value by regarding that as a contract to convey.
Furthermore, another example of this maxim is the doctrine of conversion that
arises on a binding contract for the sale of land. As soon as the contract is
entered into, the vendor becomes the trustee of the legal estate for the benefit of
the purchaser. This entails that the vendors interest has been converted into
the agreed proceeds of sale. Accordingly, if the property is damaged after the
contract, the risk potentially falls on the shoulders of the purchaser and the
vendor is entitled to the full purchase price.
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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(i) Equity is equality: This maxim applies where two or more persons claim to be
interested in the same property. If there respective shares are not stated, and in
the absence of contrary intention, equity assumes that they are to have equal
shares. The maxim of Equity is equality is exemplified by equitys dislike of
the joint tenancy.
See the case of Jones v Maynard (1951), where a husband and wife had paid
into and withdrawn from time to time from a joint banking account; after their
divorce, the balance in the account was held to belong to them jointly, being
considered by the court a a joint purse. Per Vaisey J: I think that the principle
which applies here is Platos definition of equality as a sort of justice. If you
cannot find any other, equality is the proper basis.

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 Reference could also be made to the case of Bowers Trusts
(1942), in which a settlement included a clause directing
that a fund be held for persons in unequal shares. An accruer
clause concerning shares failing to vest did not state the
proportions. It was held that the accruer was to be in equal
shares.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(i) Equity is equality:
In addition to the above, reference could also be made to the case of
Burrough v Philcox (1840), where a trust in favour of a testators
nephews and nieces was created, subject to a power to appoint in the
testators child. On the childs failure to appoint, it was held that the
property was to be divided equally among the objects of the trust.
The maxim also can be seen in operation is entitlement to matrimonial
property. Where the parties have both made substantial contributions to
the acquisition of the property, whether directly or indirectly, then if no
other basis for division clearly appears, equity prefers to treat the parties
as equally entitled rather than to examine their precise contributions.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(j) Equity looks to the substance and intent rather than to the form: This
maxim does not mean that formalities may be ignored in equity, but
rather that equity looks at the substance rather than form. Thus, equity
will regard a transaction as a mortgage even though it is not so
described, if in substance it appears that the property was transferred by
way of security. See the case of Parkin v Thorold (1852) where Romilly
MR said: If [a court of equity] finds that, by insisting on the form the
substance will be defeated, it holds it inequitable to allow a person to
insist on such form and thereby defeat the substance.

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 Cont..

In addition to the above, reference could also be made to the

case of Metropolitan Electric v Ginder (1901), where X had
agreed to take from Y all the electrical energy he needed for
his premises. Later, Y asked for an injunction which would
prevent Xs taking any electrical energy from Z. The court
held that, in substance, the agreement oblige X to take
electricity from Y; so in essence, X could not obtain such
energy from anyone other than Y.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(i) Equity looks to the substance and intent rather than to the form:
Based on the operation of this maxim, it could be said that similarly a
trust may be created although the word trust has not been used. See
the case of Paul v Constance [1977] All ER 195, where the court held
that the absence of the word trust was not fatal to the findings of an
express declaration of trust, taking into account the unsophisticated
character of the deceased and his relationship with the plaintiff. The
words used by Constance to assure Paul of her joint entitlement to the
moneys in the account were sufficient to constitute a declaration of trust.

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 Cont..

See also the case of Re Kayford - where Megarry J held

that it is well settled that a trust can be created without
using the word trust or confidence or the like. The
question is whether in substance a sufficient intention to
create a trust has been manifested.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(j) Delay defeats equity: This is sometimes called laches and means that a
claimant who takes too long to exercise his legal rights will not receive
the assistance of equity. The idea is that the claimant has to act
expeditiously. In practice, the role of this maxim has been subsumed by
the Limitation Act (which set out time limits within which actions must
be commenced), but it still exerts influence when deciding whether
equitable remedies should be granted.
Furthermore, it is important to note that the doctrine of laches continues
to apply to those equitable claims which are outside the Limitation Act,
for example a claim to set aside a purchase of trust property by a trustee.
Similarly, claims to rescission and rectification may be barred by delay.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(k) Equity acts in personam: This means that equitable remedies are personal in that
they are exercised against specific persons. They compel or permit a person to
do something or not to do something. For example, in relation to a breach of
trust the remedy is exercisable against the trustees personally. This can involve
an order of freezing the trustees assets even if those assets are subject to a
foreign jurisdiction. In other words, equity has jurisdiction over the defendant
personally. Thus, the personal nature of the jurisdiction is illustrated by the fact
that failure to comply with an order, such as specific performance or an
injunction, is a contempt of court punishable by imprisonment. Provided that the
defendant is within jurisdiction (or can be served outside it), it is no objection
that the property which is the subject-matter of the dispute is outside it.

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 Cont..

See the case of Penn v Lord Baltimore (1750), where

specific performance was ordered of an agreement relating
to land boundaries in Pennsylvania and Maryland, the
defendant being in this country.
See also the case of Ewing v Orr-Ewing (1833), where the
court held that the courts of equity in England are, and
always have been, courts of conscience, operating in
personam ...and not in rem.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(l) Equity will not permit a statute to be used as an engine of fraud: This prevents a
party from relying upon an absence of statutory formalities (e.g. Relating to land
contracts, the creation of legal leases and express trust and the registration of
land charges) if to so would be unconscionable and unfair. See the case of Shah
v Shah (2001), where a deed was not properly executed and a witness to the
deed sought to have it set aside for his own benefit. The court held that for the
witness to rely on this defect would be tantamount to fraud and upheld the deed.

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 Cont..
Apart from the case cited above, reference could also be made to the case of
Bannister v Bannister (1948), where the plaintiff (P) gave the defendant (D) an
oral promise that D could stay for as long as she desired in a rent-free cottage. In
return, D sold P the cottage at a relatively low price, and also an adjoining
property. The conveyance did not refer to Ps promise. P claimed possession of
the cottage, arguing that the trust was invalid because of an absence of writing
(see the English Law Property Act 1925, sec 53(1)). It was held that fraud was
on Ps part had been shown; the plea relating to absence of writing failed.

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 THE NATURE OF EQUITY
Maxims of Equity: (Contribution)
(l) Equity will not permit a statute to be used as an engine of fraud:
See also the case of Midland Bank Trust Co v Green (1981) in which
equity did not intervene in circumstances which appeared to suggest use of
the English Land Charges Act 1972 as a cloak of fraud.
Reference to be made to the operation of secret trust. For example, equity
will intervene to impose a constructive trust. Take for instance in a case of a
secret trust where A intends his gift to be used for C who, for some reason or
another, could not be named by A in the will, either expressly or by
implication. In doing so, A has failed to comply with the requirements of the
Wills Act 1959, but to allow B to take beneficially at the expense of C would
be to allow a statute to be used as an instrument of fraud. Thus, the one who
is trying to use a statute as an instrument of fraud i.e. B would be construed
as a constructive trustee.
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 THE NATURE OF EQUITY

Maxims of Equity: (Contribution)

Note: Apart from the maxims of equity addressed above,
there are other equitable maxims as well such as: (i) equity
will not assist a volunteer. Thus equity will not grant
specific performance of gratuitous promise (i.e. an
agreement that is not supported by consideration. In relation
to trusts, this means that equity will assist a beneficiary only
when there is perfectly constituted trust (i.e. once legal title
to the trust property has vested in the trustee)

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 THE NATURE OF EQUITY

Conclusion:
The nature of equity embodies the general principles which
evolved in the Court of Chancery. For example, the maxims
of equity are not rules which must be rigorously applied in
every case, but are more in the nature of general guidelines
illustrating the way in which equitable jurisdiction is
exercised. A few examples of their operation must suffice,
but they should be borne in mind when considering the
various rules and doctrines of equity.

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 Application in Malaysia- Specific Relief Act 1950
35

Object of the SRA 1950.

is confined to the class of remedies which a suitor seeks
to obtain and a Court of justice seeks to give him the very
relief to which he is entitled.
There is the existence of a legal duty binding upon the
defendant and unfulfilled by him. What a man ought to do
by a rule of law, he ought to be made to do by the force of
law.
 36

Per Kamalanathan R., JC in Arab Malaysian case [1998] 6

MLJ 136:
.the relief provided under this Act is a relief in specie,
that is, the performance of a specific act or the delivery of
particular articles and not relating to the payment of
money.
 How it is given?
37

Taking possession
Ordering the person to do the act
Preventing him to do the work- SRA s 5
Determining and declaring the rights of the person
Appointing the receiver.