Is equity the answer to failings of the common law?

by salchichapeleona (student)

Equity Assignment

Equity has been the focus of much debate through the centuries. This has added to the evolution of the doctrine and how it co-exists with the law. In relation to the question the first point that has to be addressed is the point of what exactly is equity, its’ origins and how it has emerged into modern day society. Secondly there is the importance of how in reality it is applied, examining relevant cases as a means to achieving this insight. Furthermore there has come into existence the concept of fusion, which bares significance in consideration of the statement in question. The term general rules is also present which will evidently be given close attention and examination.

This statement when analysed and considered is true, however, there remain certain limits and thus room for debate concerning the degree to which this it is a reflection of reality in relation to the nature and application of modern equity. It is undeniable that without the general rules, meaning the common law, society would not run smoothly. Furthermore the statement is accurate in arguing that these general rules work for the majority of cases. As the layman understands that if he does something wrong there is usually a law set in place in regards to the act committed, hence the individual can appreciate what statute he has broken and have a certainty of where he stands. There are inevitably, as the question suggests, always going to be a set of unforeseen facts that arise, where the law is not sufficient in accomplishing a fair and just outcome. Lord Ellesmere in the Earl of Oxfords Case stated that

"men’s actions are so diverse and infinite that it is impossible to make any general law which will aptly meet with every particular and not fail in some circumstances. The office of the Chancellor is to correct men’s consciences for fraud, breaches of trust, wrongs and oppressions…and to soften and mollify the extremity of the law." [1]

The Chancellor has the opinion that it is his duty to correct man's consciences, and this is relevant in relation to modern equity as it strives to prevent individuals from acting unconscionably. The word 'unconscionable' translates as to something that is so grossly unfair and inexplicitly offensive to the conscience that the court will denounce it and prevent the perpetrator of the conduct to benefit, using equity as a vehicle to accomplish this feat.

Therefore, in relation to the question when the general rules do not produce substantial fairness, there is a need for an intervening source of law. Ad hoc there has through the centuries emerged equity. It attempts to intervene, to fill in the gaps as it were, that are exposed in the common law. And this is a critical point of analysis in regards to whether equity actually does succeed in achieving justice where the common law fails.

The key debate of this statement hinges on whether equity is as the question suggest the solution to the failings of the common law. It also becomes significantly apparent that flexibility seems to be a primary focal point when weighing up the attributes of the doctrine. From the positive view point that equity is the perfect barricade for preventing injustice sliding through the somewhat stubborn English legal system, there are many cases that illustrate it is.

In Binions v Evans[2] the common law left widowed Mrs. Binions with no legal or equitable property right as such, however due to equity's trust concept Lord Denning asserted her right to remain in the property if she wished. The trust concept is equity's most practical benefit as there is a great deal of scope and therefore ideal in coping with the majority of 'unforseen facts.' The academic Pearson also acknowledged the immense advantage the concept with held, finding it to be, "the greatest and most distinctive achievement performed by an Englishmen in the field of jurisprudence."[3]

In relation to Mrs. ...

This is a preview of the whole essay

In relation to Mrs. Binions the discretion of the court found a constructive trust to be created, this form of trust is defined is in Millet[4] as arising

“whenever the circumstances are such that it would be unconscionable for the owner if the legal title to assert his own beneficial interest and deny the beneficial interest of another.”

In relation to the question it is vital as it affords equity to communicate its values where it ascertains that the counterpart, common law, has fallen short. This point was described by Mr. Justice Cardozo who stated:

“A constructive trust is the formula through which the conscience of equity finds expression”[5]

In Ottaway v Norman[6] Brightman J provides a useful test to prove the existence of a fully secret trust. This assessment is immensely profitable as without it, secret trusts are usually difficult to identify due to the concealment of instructions, thus making it problematic to recognise fraud. The imperative component needed for this test is that; intention must be communicated to the trustee and there to be evidence he accepts this on occasions onerous duty. In reference to the question another strength of equity has been highlighted as the test demonstrates how equity has emerged ever further in an attempt to prevent such unconscionability. Furthermore this shows equity's capability to evolve, always aiming to seek and execute the true intention of the Settlor.

The maximum, ‘Equity regards the substance and not the form,’ is imperatively instrumental in prohibiting substantial unfairness, as the doctrine overcomes the letter of the law in cases where justice is hindered by technicalities. Such is the case Hussey v Palmer [1972] 1WLR 1286, 3 All ER 744 is the leading example of this, verifying that equity to be the solution when the general rules are unsuccessful in a fair outcome.

McPhail v Persons Unknown [1973] Ch 447, [1973] 3 WLR 71 exposed a fundamental weakness in modern equity, displaying that situations do arise where there is no equitable remedy. In regards to this scenario the courts had no authority to delay a possession order, fixing a negative light over equity, exposing its incapability in assisting the general rules of the common law when called upon. In contrast some dispute this view, believing that relief should not be afforded where the common law has been breached.

An example of where equity has been proven the victor and achieved a conscionable outcome is in Ottoway v Norman.[7] triumphs as it was Mr. Harry Ottaway’s obvious intention to make Miss Eva Hodges the trustee of Ashcroft bungalow and for her to leave it in her will for Mr.Ottaway’s son William upon her death. Furthermore she changes her will to leave the property and its contents to Mr. Norman, this has created substantial unfairness and under the common law Mr. Norman would be legal entitled, however equity intervenes to achieve a just outcome.

Flexibility v Inflexibility in relatin to the unforeseen set of facts as if it is flexible it will be a better as the statement suggests equity being the body of laws suited to dealing with as the question refers to an unforeseen set of facts that will arise.

Arguments for flexibility:

Common law failings and the flexibility of equity to intervene.

In the case of Binions v Evans [1972] 2WLR 729, Ch.359, 2 All ER 70 the common law could not achieve a just outcome as widowedMrs.Binions had no legal or equitable property right as such, however the resulting constructive trust asserted her right to remain in the property if she wished. A constructive trust is as defined in Millet [1998] 114 LQR 399 as asrising “whenever the circumstances are such that it would be unconscionable for the owner if the legal title to assert his own beneficial interest and deny the beneficial interest of another.” In relation to the question it is vital as it affords equity to communicate its values where it ascertains that it’s counterpart, the common law, has fallen short. This point was described by Mr. Justice Cardozo who stated: “A constructive trust is the formula through which the conscience of equity finds expression”Beatty v Guggenheim & Co (1919) 225 N.Y. 380, 385

In Ottaway v Norman [1972] Ch.698, 2 WLR 50, [1971] 3 All ER 1325 Brightman J provides a vital test to prove the existance of a fully secret trust. This is crucial as in general, secret trusts are difficult to identify due to the concealment of instructions, thus making it problematic to recognise fraud. In relation to the question this reveals a weakness of equity that on some occasions it cannot acknowledge and carry out the true intention of the testator, but the evolution of equity and this test shows that it has emerged ever further in an attempt to prevent such uncoscionability. The imperative component needed for this test is that;intention must be communicated to the trustee and there to be evidence he accepts this on occasions onerous duty.

The maximum, ‘Equity regards the substance and not the form,’ is a crucial intrusment in prohibiting substantial unfairness, as the doctrine overcomes the letter of the law in cases where justice is hindered by technicalities. Hussey v Palmer [1972] 1WLR 1286, 3 All ER 744 is the leading example of this, verifying that equity to be the solution when the general rules are unsuccessful in a fair outcome.

Arguments against flexibity:

The limitations of modern equity stem from the substantive and procedural rules it must follow. These include the Three certainties; the certainty of intentin to create a trust (a will must be checked first under the wills act), the certainty of the subject matter and the certainty of the objects of the trust. Requirements were set out in Knight v Knight 1840, although this predates the Judicature Act its princables remain the same in the modern judiciary.Amalgamates the historically separate courts of equity (chancery court) and common law.enforcement of the same rule of law in those cases where equity and common law recognised different rules.

It is important to recognise that there is other formalities in the Law of Property Act 1925 under Section 53.

CONSTITION: Consttion is necessary as if the trust is not constituted the beneficiaries will not be able to enforce their rights. Maximum; equity will not assist a volunteer. This demonstrates inflexibilty and might still lead to substantial unfairness which undermines the statement’s implication that equity is the body of rules to prevent such unjust outcomes. However there are exceptions to the rules of constitution. The presence of these exceptions create a counter argument that supports the statement that ironically there is flexibility within even what appears to be a stubborn aspect of equity.

-Strong v Bird:

>In order for the rule of strong v Bird to apply there must be four conditions satisified. This is a counter argument that equity is inflexible

>exception to the maxim: Equity will not assist a volunteer.

>Must be an intention to make an immediate (inter vivos) gift.

>Appointment of donee as executor(or administrator, Re James [1935] 1 Ch 449

>Continuing intention upon death

If these conditons are not met three more exceptions can be considered.

-Donatio Mortis Causa:

> Derived from Ancient Roman law (Latin, meaning "gift on the occasion of death")

>This is an inter vivos gift which takes effect upon death, the rule is almost perpetually used to perfect absolute gifts.

>laid down by Lord Russell CJ in Cain v Moon [1896] 2 QB 283

The facilitation of equity is not essential in every case that concerns d.m.c. For instance if the case involves a chattel which has been delivered to the donee, the donor’s title is automatically transferred to the done upon death, hence no further intervention is required.

However if the subject matter is a chose in action the legal title is assigned to the donor’s next of kin and the attributes of equity will be called upon. In order for valid donatio mortis causa the circumstances must be that

>the gift must have been made in contemplation of, though not necessarily in immediate expectation of death.This does not include a general consideration of death as this is a formilty to everyone. Wilkes v Allington [1931] 1 Ch. 104 asserts that even if the donor succumbs to an alternate cause of death forecasted, the gift will despite this fact, still be validated. Further criterion that will satisfy this obligation encompass for example an individual awaiting to undergo a serious operation or who might be carrying out military service.

>the subject matter of the gift must have been delivered to the donee;[3] and

>the gift must have been made under such circumstances as to show that the property is to revert to the donor if the donor should recover

DO MORE DETAIL ON D.M.C. SEE NOTES!!!!!!!!!!!!!

-Proprietary Esstopel:

(MUST CHANGE WORDING!!!!!!)Issues concerning esstoppel arise where a party has acted upon there detriment due to a promise made by another, to his or her detriment. If the person acts upon this promise and then the representor goes back on this promise the court of Equity may grant a remedy such as in the case of Holt v Gillet.(MUST CHANGE WORDING!!!!!)

-Re Rose: [1952]

It is commisioned that if the settlor has done everything within his capacity to transfer legal title, but the transfer is delayed by the routine operation of the law the gift is perfected regardless. This is widely recognised as the "Re Rose principle".

Euity established to soften the blunt instrument of common law

In conclusion equity must have an elemet of rigidiness because the population of the society yearns for an understanding of what is acceptable behaviour and what is an act of unconscionabilty.

The judgement of Turner LJ in Milroy v Lord 1862 gives a view that establishes the two equitable maxims, equity will not assist a volunteer and there is no equity to perfect an imperfect gift reinforce the foundations on constitution of trusts. The reality that more recent cases such as Pennington v Waine [2002] 1 WLR 2075, Court of appeal shows a somewhat relaxed approach to this concept, and imply that equity has become more accommodating, with the potential to change, thus transmitting a conscientious of tangiability. In relation to the question this supports the statement that equity is the correct doctrine to provide solutions to substantial unfairness covering a wide range of unforeseen facts.

Attempting to define equity can be very challenging as even the better definitions do not illustrate a complete picture or give a comprehensive explanation. Sarah Worthington, shares this view as she states, “… even the most experienced of lawyers finds it difficult to give a short, intelligible answer to the question ‘What is equity?’”

Sarah Worthington, “Equity” Oxford University Press 2003

Lord Ellesmere in the Earl of Oxfords Case [1615] 1 Rep Ch 1 pronounced that

‘men’s actions are so diverse and infinite that it is impossible to make any general

law which will aptly meet with every particular and not fail in some circumstances.

The office of the Chancellor is to correct men’s consciences for fraud, breaches of

trust, wrongs and oppressions…and to soften and mollify the extremity of the law.

Equity is a source of law, when delving into the arcades of how equity was founded we discover that

The statement uses general rules, meaning the common law, works well enough in the majority of cases and this is true, where there is no need for an application of modern

TEXTBOOK- Equity and Trusts Law 3rd edition, Directions by Gary Watt (Oxford)

[1]Lord Ellesmere in the Earl of Oxfords Case [1615] 1 Rep Ch 1

[2] [1972] 2WLR 729, Ch.359, 2 All ER 70

[3] Pearson etext version of Trusts and Equity, in Selected Historical Essays F.W. Maitland

[4] [1998] 114 LQR 399

[5]Beatty v Guggenheim & Co (1919) 225 N.Y. 380, 385

[6] [1972] Ch.698, 2 WLR 50, [1971] 3 All ER 1325

[7]Ottaway v Norman [1972] Ch. 698, 2 WLR 50, [1971] 3 All ER 1325