A further problem with this system was that the only remedy available form the common law courts was monetary compensation, which was not always adequate.
The problems with the common law meant that many became dissatisfied with the system and many appealed to the King and his Court. As the number of appeals grew he delegated responsibility to the Chancellor, his most senior official. This meant that whenever the common law was unable to offer a remedy the Chancellor would intervene. There were no rigid rules on how the Chancellor had to settle certain cases making his judgement very flexible and he would settle cases on the means of his view on what was fair or ‘equitable’. Criticisms on the flexibility of the system arose, with many saying it depended too much on the Chancellor’s personal opinion and gradually the Chancellor built up a large body of principles which gave rise to what is now called Equity, which can be simply thought of as ‘fairness’. The main advantage of Equity is that it overcomes the problems associated with common law and also offers additional remedies, being described as the finishing touch to the common law system.
Despite this new system, a problem arose where there was considerable conflict between the common law courts and the Court of Chancery, which is the court where the Chancellor exercised his jurisdiction. This dispute was eventually resolved as a result of the Earl of Oxford’s Case in 1616.
This case came about with the lease to Convent Garden being purchased by Merton College, Oxford who then sold the remainder of the lease to the Earl of Oxford. Using an Elizabethan statute, a formal, written law of a country or state, which forbade the sale of college land, the college reclaimed Covent Garden, saying that the sale had been void and was not legally binding. The common law court refused to allow the Earl to take the land from the college because the statute stated that college land could not be sold. The Earl then went to the Court of Chancery who felt that it would be ‘against good conscience’ to act in favour of the college as it had acted unfairly. The two courts totally contradicted each other and so it was left to the King to decide which would be accepted.
James I made the ruling that when the Common Law and Equity were in conflict, as in The Earl of Oxford’s Case, Equity shall always prevail.
With this new law meaning that Equity would prevail if conflict arose, there was no reason why the two courts could not be combined, as the two systems would remain separate from each other, and so this was introduced with the Judicature Acts 1873-1875. This meant that all courts could administer both systems, applying both equitable and common law principles to every case and awarding either common law or equitable remedies.
The law system was finally established with no problems and common law and equity working together as the twin pillars of English Law.
- Describe and comment on the role of Equity today
Although both the common law and equity law down rules, equity also created maxims. These have to be satisfied before equitable rules could be applied, they were designed to ensure morally fair decisions.
An example of the maxims is ‘he who comes to equity must come with clean hands’, an example of this could be that if you desire your tenant to vacate, you must have not violated the tenant's rights.
This maxim was used in the case of D&C Builders v Rees (1966) where a small building firm did some work on the house of a couple named Rees. When the builders asked for the balance, the Rees announced that the work was defective, and they were only prepared to pay a fraction of the money they owed them. As the builders were in serious financial difficulties (as the Rees knew), they accepted the money. The decision to accept the money would not normally be binding in contract law, and afterwards the builders sued the Rees for the outstanding amount. The Rees claimed that the court should apply the doctrine of equitable estoppel, which can make promises binding when they would normally not be. However, Lord Denning refused to apply the doctrine, on the grounds that the Rees had taken unfair advantage of the builders' financial difficulties, and therefore had not come 'with clean hands'.
Equity provided a big increase in the number of remedies available to a wronged party, as at common law the only remedy available was monetary compensation, which was not always enough. The four most important remedies include injunction, specific performance, rectification and recission.
Injunction orders a defendant to do or not do something, for example a person might live next door to a factory form which black smoke is emitted, covering his property with soot. At common law, the person would have to sue on every occurrence of the ‘nuisance’ as damages were the only remedy available. However with the remedy of injunction you could order the factory to stop emitting black smoke.
Specific performance compels a party to meet a previous agreement, for example someone who has longed to buy a particular house, say his childhood home, and who, having entered into an agreement to purchase it, finds the owner changes his mind. The purchaser does not want damages but can use the remedy of specific performance to make the owner keep to their previous agreement and to sell the house.
Rectification alters words from a document which does not express the true intentions of the party to it, for example changing a lease for renting a property.
Rescission restores parties to a contract to a position they were before the contract was signed, for example if someone discovered a painting that had been sold to them as genuine was actually a fake they could ask for the remedy of rescission to reclaim their money and give the painting back.
Despite equity retaining its flexibility in the early stages of its development, by the middle on the 17th century judges began to follow the decisions of their predecessors. The fixing of the priciples of equity continued and by 1948 the Court of Appeal stated that and claim in equity must have been claimed before and that we should not invent further jurisdictions for the first time.
Contrary to this Lord Denning, in 1952, was concerned that equity seemed to have lost its power and that judges were unable to adapt the law to changing conditions.
He was responsible for developing the new equitable principle of promissory estoppel, where someone is stopped from going back on a promise. This principle was developed through the High Trees case (1947).
This case came about when in 1937 a block of flats was leased for 99 years at a rent of £2,500 per annum. With the bringing of war and many vacancies in the flats, it was agreed in 1940 to reduce the rent by half, with no time limit set for the reduction, and by 1945 the flats were full again. The leasing company wrote to the tenants, claiming the full rent for the last two quarters of 1945, the time when the flats became full. In defence, the tenants claimed that the agreement of 1940 related to the whole term of the lease. The case was settled with the leasing company being successful and able to put the rent back up, on the basis that the agreement was only intended to last until the flats were full. However, the court stated that had they tried to claim the rent for the time when the flats were not full they would have been stopped form doing so as the promise was intended to be binding until such a time as the flats were full.
This new concept was introducing an element of fairness into the contract law.
