The law of equity
The law of equity
By the end of the 13th century, the central authority had established its precedence at least partly through the establishment of the common law. The Courts of Exchequer was a court originally dealing with disputes involving revenue, taxation and revenue laws. The Court of Common Pleas was where pleas between subject and subject were brought. And the King’s Bench heard actions to which the King was a party.
The common law however, had a number of defects. The inflexibility of the writ system appeared to lead to injustice because matters that were not within the scope of writes recognized by the common law were dismissed. Furthermore, the common law did not recognize rights in the property other than those of strict legal ownership. Nor did it recognize security for loans (mortgages) or the right of third parties in general. The common law courts had no power of enforcement. Also, it did not allow any form of oral evidence.
The only remedy provided by the common law were damages, which were inappropriate in certain cases. This led to injustice and the need to remedy the perceived weaknesses in the common law system. The more general a rule, the less likely it is to do justice in all the particular cases to which it applies. Moreover, an attempt to construct in advance the qualifications to the rule necessary to do justice in all cases would lead to a system of rules too complex, even if all the problems could be foreseen.
The Court of Chancery emerged as a solution to the common problems faced by the common law system by administering the law of equity. Proceedings before the Chancellor were simple, and were in other respects advantageous when compared with the proceedings of the common law courts. Plaintiffs unable to obtain access to the three common law courts would turn for help to the Chancellor. Moreover, the Chancellor developed several remedies which were not available in other courts, most notably injunction, specific performance, recessions and rectifications.
Other improvements made by equity are the imploration of additional obligations on an individual while recognizing his or her rights at common law. By accepting that a trustee is the legal owner of property while requiring the individual to hold it benefit of another.
Equity is concerned with individual justice. Therefore, it is only available at the discretion of the court. Also, this means that anyone who seeks equitable remedies must not themselves be guilty of misconduct in the case.
The division between the common law courts and the Courts of Equity were eventually combined under the Judicature Acts 1873-1875. Matters of both law and equity is now determined in the course of one set of proceedings: if there is any conflict between rules or law and rules of equity, the latter are to prevail.
Injunction is as an order that prevents a person from performing or continuing to perform a particular act. In the case of Kennaway Vs. Thompson, the plaintiff sought an injunction to restrain a motor boat racing club from committing nuisance by excessive noise. The Court of Appeal granted the injunction, holding that the rights of the plaintiff shouldn’t be overridden by the interest of the club or the general public. In considering whether to grant an injunction or damages in lieu under Lord Chairns Act, the public interest does not prevail over private rights. In this case, damages wouldn’t have satisfied the plaintiffs private rights.
Specific performance is an order that requires a person to perform or continue to perform a particular act. In the case of Jones Vs. Lipman, the defendant entered into a binding contract to sell some land to the plaintiff. After the date of the contract, the defendant changed his mind, and sought to avoid specific performance by selling the land to a company acquired by him solely for this purpose and controlled by him. While specific performance would not normally have ordered against a vendor who no longer owned the property, here the defendant was still in a position to complete the contract, because the company was a sham in an attempt to avoid recognition by equity. Thus, specific performance was decreed against the vendor and the company.
Recession is an order that returns parties to contractual agreement to the position they were in before the agreement was entered into. Cooper Vs.Phibbs, Phibbs was the legal owner and trustee of land which, unknown to either party, belonged in equity to Cooper. Phibbs improved the land and agreed to let it to Cooper. On discovering the facts, Cooper sought to rescind the letting agreement. The House of Lords held that, subject to a lien for Phibbs’s expenditure, it should be set aside. If parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that agreement is liable to be set aside as having proceeded upon a common mistake.
Rectification is an order that relates to the alteration, under extremely limited circumstances, of contractual documents. In A.Roberts and Co. Ltd. vs. Leicestershire County Council, the plaintiffs had undertaken to build a school for the defendants. The agreement provided that the school should be completed within the period of 18 months, but the officers of the Council altered the period to 30 months in the draft contract without making it clear to the company. The company signed the contract without noticing the change, and one of the defendant’s officials was aware of the mistake. Rectification was ordered.
In conclusion, equity has greatly ameliorated the common law system. Various forms of remedies other than damages have been made available under specific circumstances such as, injunction, recessions, rectifications and specific performance.
However, in most instances there are differences between the operation of law and equity rather than conflict. For example, different remedies may be available in respect of what both systems acknowledge to be wrong. In respect of a nuisance, damages and injunction come into conflict.
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Jill E. Martin, Hanbury & Martin Modern Equity 13th Ed, London Sweet & Maxwell Ltd. 1993.