Common Law and Equity

Outline the development of common law and equity.

The Law in England didn’t come about all at once, but has developed over the centuries. There are 5 different sources of law: Customs, Judicial decision, Acts of Parliament, Delegated Legislation and, most recently, European Law. However, new law is still being created today.

The law as we know it today all started in 1066, when William the Conqueror invaded England. He found a country with no single system of law, just sets of customary rules which differed from area to area. This was due to the different invaders who had settled in different parts of England, bringing their laws with them. William decided to set events into motion that helped bring about the system we have at present.

William introduced the feudal system, in which all land belongs to the king, and he slowly started to gain control of England. He then split the land up and granted parts of the land to people who supported him and who were willing to grant him services, e.g. barons. He then made them pay taxes to him yearly. They in turn granted land to their followers and then them to theirs. This meant that the king had gained control of the whole country.

The King’s Justice was introduced for any landholder who had a problem that could not be sorted with their landowner. They were able to apply directly to the king, and William made himself available to them. The King’s Justice was administered by the Curia Regis which was a body of advisors to the king, who would apply a system of rules, keeping customs the king thought were best and discarding those he felt were inappropriate. These rules applied to the whole of the country and soon became known as common law.

Various central courts started to develop and the Royal Courts which were located at Westminster started to send itinerant justices into the provinces on assize. In 1176 the king split the country into 6 circuits and itinerant justices just travelled round each separate circuit which made the system faster and more efficient. These judges would visit the different areas in the land and listen to any matters that needed sorting; they would try and sort out the matters and then would return to London to give their verdict. The system of judicial precedent was used and the decisions made by the courts were followed in all similar cases. This was known as stare decisis which means let the decision stand, and it meant that the law became more predictable and constant.

The problem with the King’s Justices was that they were very expensive, so only the rich or those with spare money could use them. However, by the time of Henry II, the royal courts were impartial and had great authority, and they could decide a judgement and enforce it quicker. They developed its bench of Judges and its Bar of Advocates. These were all advantages of taking a dispute to The Royal Courts rather than local courts.

So from the 13th century, written records were kept, which put a definitive stamp on any judgement since no one could argue with the authority of the court. And, by 1250, by taking all the best local laws and applying them throughout the land, a common law had developed.

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At first the common law system was thought of as a fair system but over a period of time it became rigid and fixed which caused problems with common law. By the end of the 13th century no new writs were allowed to be created, and therefore claims would only be allowed if they could fit into an existing writ. If your case did not fit an existing writ you may not have been able to pursue your case. Another problem with the common law was that it failed to offer satisfactory remedies; they could not give out injunctions and therefore had no way of making a person keep his promise, or stop him from carrying out the act again. The only remedy that the courts could offer were damages which was not always suitable.

People became dissatisfied with the system as a result and started to petition the king as the ‘fountain of justice’ for a remedy. At first he dealt with the petitions himself but there were so many he decided to hand over the responsibility to his most senior official the Chancellor. So, whenever the common law was unable to offer a remedy, the Chancellor would get involved and come up with a suitable remedy.

The Chancellor had no strict rules he needed to follow when settling a case, his jurisdiction was very flexible and he would decide cases on the basis of what he thought was equitable for that particular case. However, different Chancellors had different opinions on what they viewed as fair/unfair and one criticism of the system was that it was too flexible and lacked certainty. It was said that “Equity varied with the length of the Chancellors foot”.

This gave rise to equity and the proceedings took place in the Court of Chancery, where they were started by either a bill or a petition. Equity is a very important part of law as it over came the problems associated with the common law, offering additional remedies.

The flexible approach and the lack of consistency in the Chancellors decisions and the fact that the common law was so inflexible it was unfair caused great deals of conflict between the common law courts and the Court of Chancery. This dispute however, was resolved in 1616 as a result of the Earl of Oxford’s Case. The case involved the sale of a lease of Covent Garden by Merton College in Oxford to the Earl of Oxford, which they later wanted back arguing that the sale was void under statute law. The College went to the common law court and the common law judges refused the Earls claim, however, the Earl went to the Court of Equity and they said that he should be able to keep the land. The dispute was then referred to the king who decided that “when common law and equity are in conflict, equity shall prevail”. From that time on the common law and equity worked together, side by side.

The disputes between the two systems continued for a long time, but gradually faded away as equity developed case law and recognisable principles and was no less rigid than the common law. Now that equity had become a body of law, there was no reason why it needed its own courts and as a result of the Judicature Acts 1873-1875, the two court systems were eventually combined, forming the Supreme Court of Judicature which would administer common law and equity. They still continued to be two distinct systems, each with its own principles. It was said that “the two streams have met and now run in the same channel but their waters do not mix”.

As a result of the Judicature Acts 1873-1875, the common law court system and the court of chancery were combined. So now, all civil courts administer both systems concurrently and can apply both equitable and common law principles to the cases that come before them and award either common law or equitable remedies. However, if a conflict between the two systems arises, equity will prevail.

By the middle of the 17th century the judges began more and more to follow the decisions of their predecessors and by the end of the century there was a marked attempt to reduce equity to a more fixed system. The principles of equity continued and by 1948 the Court of Appeal was saying in the case of Re Diplock that any claim in equity “must be shown to have an ancestry founded history and in practice and precedents of the courts administering equity jurisdiction. It is not sufficient that, because we may think that the justice of the present case requires it, we should invent such a Jurisdiction for the first time.”

Equity created legal maxims, which had to be satisfied before equitable rules could be applied. Maxims are principles applied by courts of equity in deciding cases before then and were designed to make sure that decisions made by the courts were morally fair. At common law, if a claimant proves his case he is entitled to the remedy of damages and the courts are not concerned about his own conduct, any delays or if the outcome if unfair to the defendant. However, equity is interested in the conduct of the parties and if a remedy breaks one of the maxims, it will be refused.

In total there are 20 maxims, but the four main ones are: 1. one who comes to equity must come with clean hands; an example of this type of case is D&C Builders v. Rees (1996) 2. Delay defeats equity, and Leaf v. International Galleries (1950) is an example of a type of case which breaks this maxim. 3. One who seeks equity must do equity, and an example of this type of case is Chappell v. Times Newspaper Ltd. (1975) 4. Equity does nothing in vain, Ryan v Mutual Tontine Westminster Chambers (1893) is an example of this maxim.

Equity has survived modern law, showing to be capable of adapting and expanding to meet new needs. It still continues to play an important part. During the 1950’s and 1960’s it responded to marital breakdown by stating that a deserted wife could get an equitable interest in the family home, providing an interim solution to a growing problem until legislation should be passed in the form of the Matrimonial Homes Act 1967.

Lord Denning gave a lecture in 1952 entitled “the need for new equity” in which he regretted the fact that since the Acts of Judicature equity seemed to have lost its power. He himself, in the High Trees case had been responsible for developing the new equitable principle of promissory estoppels, which introduced and element of fairness into contract law. Estoppel is a rule of law that prevents a person going back on a promise.

In the High Trees case, September 1939, the claimants let a block of flats to the defendant at an annual rent of £2,500. By 1940, because of World War 2 the flats were mostly empty and the claimants agreed to reduce the costs by 50% to £1,250 a year. After the war the block of flats filled back up again and the claimants wanted to charge full rent again of £2,500 per year, but the defendants claimed the reduced rent was for the whole period of the lease. The case was held in favour of the claimants that the reduced rent was only intended to last as long as the war continued and that the claimants were now entitled to full rent.

Promissory Estoppel does not create a cause of action but merely acts as a defence. Estoppel can only be used as a “shield” and not a “sword”. In Combe v Combe (1951) this application was made clear when a husband, on their divorce, promised his wife £100 per annum. He failed to do this for 6 years and the wife sued him for £600 arrears. But, when his ex-wife tried to take advantage of the principle that had been introduced in the High Trees case to enforce her husband’s promise to give her maintenance, the Court held that promissory estoppel could not be applied. It was only available as a defence and not as a cause of action.

Equity served to supplement common law. It is not an entire system in itself; instead equity enhanced the common law by creating new rights and remedies. At common law there was only one remedy which was damages, but it was often unsuitable. Equitable remedies are discretionary and are only awarded at the discretion of the court. The most important equitable remedies are: Injunction, this prevents the defendant from doing or continuing with a unlawful act. In some cases where there is a continuing nuisance, waiting for the case to go to trial may be inappropriate and the claimant may apply for and interim or interlocutory injunction, which orders the nuisance to be stopped until the matter can be decided. Mandatory injunctions are injunctions which order a person to do something, whereas prohibitory injunctions forbid a person from doing something. A perpetual injunction is an injunction which lasts for an unlimited period of time. The next equitable remedy is specific performance which compels the defendant to carry out the terms of the contract to which he has agreed. Another is rectification. The court may order rectification if there is a mistake in written documents, e.g. wills. In order to do this it must be shown that the parties had agreed before the written document was prepared and the agreement was complete and there must have been a common mistake. The last equitable remedy is rescission, if one party to a contract wish to cancel a contract they may apply for the agreement to be rescinded. This will be like the contract never existed.

The range of injunctions available was extended in the 1970’s and two new important remedies were created. One of these is Search Orders, which is an interlocutory mandatory injunction, and is obtained to stop the defendant from concealing, removing or destroying documentary evidence or any moveable property. The second is known as a Freezing order, and this is obtained again usually following an ex parte application, to prevent the defendant from removing assets outside the jurisdiction making then unavailable if damages were ordered. This type of injunction will also be granted if there is a real danger that the assets will be dissipated within the jurisdiction

In the Hamiltons Case the court granted a freezing order on Ms Milroy-Sloan’s assets. Ms Milroy-Sloan accused Neil and Christine Hamilton of sexual assault and received £400,000 from the News of the World by giving them an interview. The Hamiltons were demanding "appropriate" damages and had obtained a High Court injunction freezing her assets up to £400,000, pending the outcome of legal proceedings. Another freezing order was granted to the Assets Recovery Agency on 4th July 2005 in respect of a limited edition Volkswagen Golf R32 which was purchased with £24,000 in cash. Mr McGovern acquired the assets from the proceeds of unlawful activity and now has 14 days to make his initial response to the Agency’s case. Whilst the Freezing Order is in force he cannot dispose of the car.

More recent attempts to extend equitable jurisdiction, notable in Scandinavia Trading Tanker Co AB v Floata Petrolera Ecuatoriana (1983) have been firmly resisted by the House of Lords

The availability of discretionary remedies means it still fulfil the traditional function of supplementing the common law, providing just and practical remedies where the common law alone is not enough, but restricting itself to cases where those remedies are felt to be genuinely and justly deserved.