Bokhari Equity (Exam)

Equity and trusts
Question 1
Answer 1: 16/25
Equity is considered as an important source of law and it still plays a part today with many of our legal
concepts having developed from equitable principles. The word ‘equity’ has a meaning of ‘fairness’, and
this is the basis on which it operates. Alistair Hudson defines equity as, “the means by which a system
of law balances out the need for certainty in rule-making with the need to achieve fair results in
individual circumstances.” Birth of equity came about when the strictures of the common law system
through the twelfth and the thirteenth centuries failed to develop further remedies (damages being the
only recognized remedy under the regime of common law). Disappointed litigants began petitioning the
King to do justice in their particular case, as he was “the fountain of all justice”. As the petitions
increased, the King delegated the duty to the Lord Chancellor, his most senior official, as the “keeper of
the King’s conscience”. On receiving the petitions, the Chancellor would adjudicate them, according to
principles of fairness and natural justice, thus developed equity.
To ensure that the decisions were ‘fair’ the Chancellor used new procedures such as subpoenas, which
ordered a witness to attend court or risk imprisonment for refusing to obey the Chancellor’s order. He
also developed new remedies which were able to compensate plaintiffs more fully than the common
law remedy of damages. The main equitable remedies were: injunctions; specific performance;
rescission; and rectification.
The Chancellor’s jurisdiction was exercised through the Court of Chancery. He was not bound by
precedent or strict legal rules as the common law courts and consequently, was able to use discretion to
administer justice to a particular case. They developed well established principles which govern the
exercise of the discretion of the court, which was flexible and adaptable to achieve justice and fairness
as could be highlighted in the case of Wilson v Northampton and Banbury Junction railway Co in which
Lord Selborne LC (Lord Chancellor) stated that, “do more perfect and complete justice than would be
the result of leaving the parties to their remedies at common law.”
The two systems of common law and equity operated quite separately. One of the main problems was
that the common law courts would make an order in favour of one party and the Court of Chancery an
order in favour of the other party. The conflict was finally resolved in the Earl of Oxford’s case (1615)
when the king ruled that equity should prevail. This ruling made the position of equity stronger and the
same rule was subsequently included in s 25 of the Judicature Act 1873 upon which the Supreme Court
could now administer both rules of common law and equity.
Equity completes and corrects the common law in some respects: thus, cases of nullity of common law
contracts are supplemented by equity-sanctioned vices of consent. This points to the importance of
equity as a modern source of law.
The injunction procedure, in particular, allows the judge to order a party to do a specific act or
transaction or, on the contrary, not to do so. This remedy was seen in the case of Warner Bros. V
Nelson [1937]. This case was about a film star, Bette Davis, who breached her contract with the Warner
Brothers Pictures film company to work with another company. Warner Bros was awarded a negative
injunction to prevent her from working with another company. The injunction procedure has the
advantage of also acting on the future rather than simply sanctioning past behaviour.
They are simply principles to which the judge’s ruling in equity are conventionally referred, and which
are used to bring moral fairness. There are nearly 20 equitable maxims. The 3 main maxims are: first,
“He who comes to equity must come with clean hands”, meaning that where the claimant has acted in a
manner that is inequitable towards himself, the court will decline to award an equitable remedy, such as
an injunction, in situations where the defendant’s conduct would otherwise justify it. This maxim is seen
in the case of D & C Builders v Rees [1966]. “Delay defeats equity” is when equity takes into account the
claimant’s conduct, as well as that of the defendant. Therefore, in the same way as equity looks at the
claimant’s ‘clean hands’ and the claimant’s future conduct, equity will also be alert to the possibility that
the claimant has delayed before bringing a claim. This second maxim is seen in the case of Leaf v
International Galleries [1950]. Last but not least, the third maxim: “He who seeks equity must do
equity” refers to the future conduct of the claimant, in that the process of the litigation should be
conducted in a manner that is fair towards the defendant. This maxim was applied in the case
of Chappell v Times Newspapers Ltd [1975].
In modern times, the relevance of equity is evident in new equitable remedies, such as the Anton Piller
Orders, Mareva Injuctions and Super Injunctions. The Anton Piller Orders gave the court authority to
search the defendant’s premises, which is seen in the case of Anton Piller KG v Manufacturing
Processes Ltd. [1976]. The Mareva injunctions, on the other hand, gave the court power to freeze the
assets of a party, mainly known as the ‘freezing injunction’. This injunction is seen in the case of Mareva
Compania Naviera SA v International Bulkcarriers SA [1980]. Last but not least, the Super Injunctions
allowed celebrities to preserve privacy and prevented the press from getting much information about
them. This injunction is seen in the case of Ferdinand v Mirror Group Newspapers [2010]. The
importance of Equity in modern times is evident in different disciplines or subjects of the English Legal
System, such as Contract law, Land Law, Tort Law, and Mortgages. In Contract law, Lord Denning sought
to use equity to find solutions when dealing with contractual disputes, some of which included estoppel,
undue influence, mistake, and the equitable remedies. Equity occupies a big place when it comes to land
Law and mortgages. These two subjects cannot be discussed without the input of equity. Perhaps the
biggest example of Equity in both Land Law and Mortgages is Trust, and the context of undue influence.
Last but not least, in Tort Law equity is seen through the use of injunctions to find equitable remedies to
prevent tortious behaviour.
As demonstrated above the role of equity is to supplement the common law by providing alternative
remedies. Equity does not create law; it only supplements the existing law in order to achieve justice in a
particular case. Equity has developed maxims and remedies to dispense justice in individual cases where
necessary.

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Equity and trusts

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