Litigants appeared before the Chancellor, who would question them, and then deliver a verdict based on his own moral view of the question. Because the court followed no binding rules, relying entirely on the Chancellor’s view of right and wrong, it could enforce rights not recognised by the common law, which, hide-bound by precedent, was failing to adapt to new circumstances. The Court of Chancery could provide whatever remedy best suited the case, the decree of specific performance for example, would have meant that the seller of the land referred to previously would be forced to honour the promise. This type of justice came to be known as equity.
As time went by, despite the fact that the Court of Chancery became popular, justice could to appear to be arbitrary and common lawyers used to argue that the decisions varied with the length of the Chancellor’s foot! Matters came to a head in 1615 in the Earl of Oxford’s Case, where conflicting judgements of the common law courts and the Court of Chancery were referred to the King for a decision; he advised that where there was a conflict, equity should prevail.
The division between the common law courts and the courts of equity continued until they were eventually combined by the Judicature Acts (JdA) 1873-1875. Prior to this legislation, it was essential for a party to raise an action in the appropriate court-for example, the courts of law would not implement equitable principles; the Acts, however, provided that every court had the power and the duty to decide cases in line with the common law and equity, with the latter being paramount in the final analysis.
Although both the common law and equity lay down rules developed from precedents, equity also created maxims which had to satisfied before equitable rules could be applied. These maxims were designed to ensure that decisions were morally fair. The most important of these are the following: “He who comes to equity must come with clean hands”. This means that plaintiffs who have themselves been in the wrong in some way will not be granted an equitable remedy. “He who seeks equity must do equity”. Anyone who seeks equitable relief must be prepared to act fairly towards his opponent . “Delay defeats equity”. Where a plaintiff takes an unreasonably long time to bring an action, equitable remedies will not be available to him. “Equity regards as done that which ought to be done”. This maxim regards parties to specifically enforceable contract as being in position they would be in if the contract was performed.
Section 1 (3) of the Law of Property Act 1925 provides that any interest in land which does not qualify as a legal interest takes effect as an equitable interest. Equitable interests may be divided in two categories. The “traditional” ones are equitable because historically equity provided a remedy when the common law could not help.
One of the traditional equitable interests is the interest of a beneficiary under a trust. A trust arises when property is held by a person or persons “upon trusts” for another person or persons. Thus, for example, George may hold property upon trust for Mary. George is called a “trustee” and Mary is called a “beneficiary”. It is the trustee’s job to hold the property for the benefit of the beneficiary. It is the beneficiary who is entitled to the benefits of the property (called “the beneficial interest”), whilst the trustee is a bare owner but cannot use the estate for his own benefit. Another category of traditional equitable interests are the interests under contracts to create or transfer legal estates or interests. If John, who is the fee simple owner of an estate, agrees to sale his estate to Jane, their agreement is protected in two ways if either party breaks the contract. The legal remedy is that of damages for breach of contract. Equity may, however, go further and give an order for specific performance of the contract. John therefore would have to sell the estate and Jane to pay the purchase price.
Other interests, which are today equitable, were originally legal but became equitable as a result of the land statutory reforms. The range of this kind of equitable interests was significantly enlarged by the Law of Property Act in 1925 by the addition of a number of rights which until that time were legal, but ceased to be because of the new statute.
Moreover, equity substantially increased the number of remedies available to a wronged party. The following are the most notable: injunction, which orders the defendants to do or not do something; specific performance, which compels a party to fulfil a previous agreement; rectification; this order alters the words of a document which does not express the true intentions of the parties to it and finally rescission which restores the parties to a contract to the position they were in before the contract was agreed.
Equitable remedies are discretionary. A plaintiff who wins the case is awarded the common law remedy of damages as of right, but the courts may choose whether or not to award equitable remedies. Equitable principles have had their greatest impact in the development of the law of property and contract. The two best-known contributions come from property law and are developments of the law of trusts, and the basis of the rules which today govern mortgages.
Equity has shown itself capable of adapting and expanding to meet new needs, and so creating law reform. During the 1950s and 1960s it responded to increasing marital breakdown by stating that a deserted wife could acquire an equitable interest in the family home, providing a temporary solution until legislation could be passed in the form of the Matrimonial Homes Act 1967. In the 1970s two important new remedies were created extending the scope of injunctions: the freezing order (Anton Piller order), by which the court can order defendants to allow their premises to be searched and relevant documents to be removed, and the search and seize order (Mareva injunction), a court order to a third party, such as a bank, to freeze the assets of a party to a dispute where there is a danger that they could be removed from the court’s jurisdiction.
Some would say that, as equity was never anything other than a gloss on common law, it is perhaps appropriate, if not ironic, that now both systems have been effectively subsumed under the one term: common law. No one, on the other hand, however, can doubt the importance and great contribution of equity to the common law and the assistance it provides and will continue to provide, with the equitable interests and remedies acting as a perfect addition to the common law, helping in the creation of a more efficient and effective judicial system.
BIBLIOGRAPHY
Mackenzie and Phillips, Textbook on Land Law (Oxford University Press 10th edition 2004)
Oakley, Megarry’s Manual of the Law of Real Property (Sweet & Maxwell 8th edition 2002)
Slapper and Kelly, The English Legal System (Cavendish 7th edition 2004)
RELEVANT INTERNET SOURCES
D & C Builders v. Rees [1965] 3 All ER 837
Chappell v. Times Newspapers Ltd
Leaf v. International Galleries