During the reign of James I, conflict continued between the common law courts and the Court of Chancery. However, the dispute between the two systems was finally resolved as a result of the ‘Earl of Oxford’s Case 1616’. This involved the Earl of Oxford and Oxford University contesting who rightly owned the land of Covent Garden. The college claimed that although they had sold the remainder of the lease to the Earl, an Elizabethan statute forbade the sale of ecclesiastical and college land, and therefore the sale was void and was not legally binding, a view supported by the common law court. However, the Earl filed a bill of equity which was granted by Lord Ellesmere in the Court of Chancery who felt it would be “against all good conscience” to find in favour of the college, which had acted unfairly. The reason why this was such an important case was because it prompted King James I to make the ruling that when common law and equity are in conflict, then equity shall prevail. If this decision had not been made, equity would have been worthless and could not fulfil its role of ‘filing in the gaps’ of the common law unless it was dominant.
Once equity became a body of law, rather than an arbitrary exercise of conscience, there was no reason why it needed its own courts. Consequently the Judicature Acts of 1873-1875, which established the basis of the court structure we have today, provided that equity and common law could both be administered by all courts, and that there would no longer be different procedures for seeking equitable and common law remedies (i.e. visiting separate courts). It is important to remember that the Judicature Acts did not fuse common law and equity, only their administration. A body of rules of equity still exists which is distinct from common law rules, and acts as an addition to it. Although implemented by the same courts, the two branches (systems) of the law remain separate and when conflict exists, equity shall prevail.
Since equity was established, it has significantly increased the number of remedies available to wronged parties. Below are listed the four most important remedies, however it is necessary to remember that others are also in practice:
Injunction: This orders the defendants to do or not to do something. An example may include a property owner forcing a neighbour to cut down or remove trees causing a nuisance.
Specific performance: This compels a party to fulfil a previous agreement. Examples may include the completion of a contract such as a housing agreement or delivery of goods by a certain date.
Rectification: This order alters the words of a document which does not express the true intentions of the parties to it i.e. the Deed of Covenant which imposes restrictions of use regarding business premises or household properties.
Rescission: This restores parties to a contract to the position they were in before the contract was signed. Rescission can occur in one of two ways: either a contract can be set aside (rescinded) because of some defect in its formation (such as , or undue influence) or it can be set aside by agreement by the parties, for example if they reach a new agreement.
Equitable remedies are discretionary and means that a claimant who wins the case is awarded the common law remedy of damages as of right, but the courts may also choose whether or not to award equitable damages. They are very much an addition to common law remedies, and are usually only available if common law remedies are inadequate or inappropriate. It is important to note that equitable principles have their greatest impact in the development of the law of property and contract. The best known contributions come from property law, the developments of the law of trusts, and the basis of the rules which govern mortgages.
Although both the common law and equity lay down rules developed from precedents (previous decisions), equity also created maxims which had to be satisfied before equitable rules could be applied. The idea behind these maxims is to ensure decisions are morally fair, however, these actions have consequently reduced the application of equity by limiting the times when a court may apply an equitable remedy. At common law if a claimant proves his case, he is entitled to the remedy of damages. The courts are not concerned with regard to having knowledge of his personal conduct, any delays in seeking relief or that the outcome is unfair to the defendant. However, because equity has a discretion over the granting of remedies, it is interested in having an understanding of the conduct of all parties concerned, which is why a remedy will be refused if a maxim is defied (broken). Many maxims are present in the law system, such as, ‘He who comes to equity must come with clean hands’. An example to illustrate this specific maxim involves the case concerning D & C Builders v Rees (1996). In this indictment a small building firm carried out some work on the house of a couple named Rees. The bill came to £732, which the Rees’ had already paid the sum of £250. The problem occurred when the builders asked for the balance of £482, and the Rees declared that the work was defective and not to the required standard, and consequently were only prepared to pay £300. Due to the builders financial difficulties (which the Rees’ were fully aware of), they reluctantly accepted the additional payment ‘in completion of the account’. 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 defendants (Rees) claimed that the court should apply the doctrine of ‘equitable estoppel’, which can make promises binding when they would normally not be. The decision taken by Lord Denning was to refuse 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’.
The development of maxims means that a person claiming an equitable remedy will only be granted if the maxims are justified (such as the case described above). Regardless of the limits imposed by maxims, equity has had a great impact on law, in terms that it allows relief where the common law has failed. However, it must be recognized that equity’s role (both past and present) is an addition to the common law and only available if the common law remedy is inadequate.
Although during the early stages of its development equity maintained its flexibility and was able to create new principles of justice when they were needed and required, by the middle of the 17th Century, the judges began to centre their decisions on previous verdicts and rulings (also known as Judical Precedent) in order to attempt to reduce equity to a more fixed system. The deception with regard to the principles of equity continued and, by 1948, The Court of Appeal was said, in the case of Re Diplock, that any claim in equity, “…must be shown to have an ancestry founded in history and in the 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.”
However, following this declaration, Lord Denning, one of the most respected judges of the 20th Century, gave a lecture in 1952 entitled ‘the need for a new equity’. He regretted the fact that since the establishment of the Arts of Judicature, equity had seemed to have lost its power and therefore influence and authority in the legal system. His view focused on the concern that judges were unable to adapt the law to changing conditions. In addition, he himself, in the ‘High Trees’ case, had been responsible for developing the new equitable principle of promissory estoppel which introduced an element of fairness into contract law. Estoppel is a rule of law that prevents a person going back on a promise not to enforce their rights under a certain contract. An example to illustrate the new equitable principle can be referred to the case concerning Central London Property Trust Ltd v High Trees House Ltd (1947). The claimants argued that since the flats had once again become fully occupied following the events of the second world war, they would be increasing the rent charges to their original figure prior to the war (i.e. an additional 50%). The defendants claimed that the agreement of 1940 which reduced the rent by half (currently at £1,250 pa) related to the whole term of the lease which was for 99 years. The case was taken to court and the claimants were successful which meant that they could increase the rent back to the figure applied in 1937 (£2,500 pa). However, the court stated that had they tried to go back on their agreement to reduce the rent from 1940 –1945 then they would have been prevented by doing so as the contract was intended to be binding until such time as the flats were full. This concept is referred to as promissory estoppel.
The legal action described directly above, confirms that equity is capable of developing new remedies and relief’s. In addition, this shows equity has survived and plays an important part in modern law, shown by the Anton Piller Orders and the Mareva Injunctions outlined below:
- The Anton Pillar Order meant that it could order the defendants premises to be searched and relevant documents removed.
- The Mareva Injunction meant that the court could order a third party, such as a bank, to freeze the assets of a party to a dispute where there is a possible danger that they may be removed from the courts jurisdiction (by being taken out of the country for example and therefore made unavailable if damages were ordered by the court).
Through the availability of discretionary remedies, this therefore means that equity still fulfils the traditional function of supplementing the common law, providing just and practical remedies where the common law alone is not enough, and restricting itself to such cases where certain remedies are felt to be genuinely and justly deserved.
Bibliography: English Legal System – Catherine Elliott and Frances Quinn
Encarta ‘97
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