Equity as a Modern Source of Law

With reference to relevant case law and
legislation, examine the importance of equity as a modern source of law in
light of its historical development

This essay examines the
importance of equity as a modern source of law in light of its historical
development, with reference to relevant case law and legislation. Equity, according to Alastair Hudson is the means by
which a system of law balances out the need for certainty in rule making on the
one hand, with the need for sufficient judicial discretion to achieve fairness
in individual factual circumstances on the other[1].
In the biblical genesis, God created Adam and Eve. In the genesis of common
law, history created common law and equity. Until 1875, two legal systems
co-existed in England and Wales: the common law system that appeared in the
11th-12th century, and the equity system in the 14th century. Both derived from
the same source of law, the King-in-Council. They evolved in parallel until the
end of the 19th century. In 1876, the common law and equity jurisdictions
merged.

After the Battle of Hastings in 1066, the new King of
England, William the Conqueror (reign 1066-1087), crowned at Westminster Abbey
in London, left local customary law in force while initiating a process of
centralization. In order to govern, he relied on a royal council
(King’s Council) called Curia Regis (King’s Court in Latin) composed of nobles
and clergymen. Curia Regis was also a traveling court presided over by the
King, who would sit in judgment of civil or criminal cases during his travels.
The Kings of England delegated part of their judicial power to judges. In doing
so, the King controlled the conditions under which royal justice was rendered,
not only by appointing the judges, but also by determining the applications
that may be submitted for dispensation of royal justice. The Chancellor of the
King would use writs to resolve the civil disputes. The writs were sent to the
defendant’s county sheriff, with an order to summon the defendant to appear in
court before the Chancellor who would either grant the claim or refuse it with
justification.  In the course of the
trial, judges must check whether the case falls within the limits set by the writ.
Very early on, the procedure became an important part of the nascent common-law
system.

The common
law system was found to be too rigid, too technical and too slow. The system
was also found to not be suitable for settlement of all disputes. Some disputes
do not fall within the scope of a writ and cannot be settled by a common law
jurisdiction. Thus, the legal system of equity was born out of a desire to
correct the defects of the common law. In the 1350s, a new writ was endorsed by
the King’s Council: The Writ of Trespass on the Case. It broadened the scope
and possibility of taking legal action. Under this writ, it suffices for the
plaintiff to present a claim establishing the existence of damage, and to show
that it was caused by the act or fault of the defendant. However, this writ
arrived too late: the equity system, in 1350, was emerging.

From the
14th century, disappointed litigants began to take their cases before the King,
the “fountain of justice”. Requests for royal audience were handled
by the Chancellor, the King’s counsellor for justice, also known as ‘the keeper
of the King’s conscience’. This practice progressively created The Chancellor’s
Court (Court of Chancery). Chancellors
were prominent clergy who dispensed justice according to their conscience and
the moral principles of equity.  To quote
an aphorism of a 17th century English jurist, John Selden in his book
Table-Talk, in relation to the King’s Chancellor “equity varies according to
the length of the Chancellor’s foot”[2].

In
essence, Equity can be described as a full-fledged right developed by the
Chancery Court from the 15th century. These new rules of law made it possible
to provide more flexible answers, sometimes more adapted to particular
situations. These flexible answers were based on the equitable remedies which
consisted of: injunctions, specific
performance, promissory estoppel, rescission, and, last but not least,
rectification. The injunction procedure, in particular, allows the judge to order
a party to do a specific act or transaction or, on the contrary, not to do so.
This remedy was seen in the case of Warner
Bros. V Nelson [1937][3].
This case was about a film star, Bette Davis, who breached her contract with
the Warner Brothers Pictures film company to work with another company. Warner
Bros was awarded a negative injunction to prevent her from working with another
company. The injunction procedure has the advantage of also acting on the
future rather than simply sanctioning past behaviour. In 1615, tensions started
emerging between common law and equity. These tensions were referred to the
King for a decision, and that was when the Earl of Oxford Case came about. The
Earl of Oxford Case[4]
ruled that where there was conflict between common law and equity, the latter,
equity, should prevail. [5]

Gradually, towards the beginning of the 18^th
century, the general principles of maxims emerged. The maxims summarize the
general principles established by the jurisprudence of the courts of equity.
They are expressed in Latin and translated into English. Maxims do not
constitute strict and intangible rules. They are simply principles to which the
judge’s ruling in equity are conventionally referred, and which are used to
bring moral fairness. There are nearly 20 equitable maxims. The 3 main maxims
are: first, “He who comes
to equity must come with clean hands”, meaning that where the claimant has
acted in a manner that is inequitable towards himself, the court will decline
to award an equitable remedy, such as an injunction, in situations where the
defendant’s conduct would otherwise justify it[6]. This maxim is seen in
the case of D & C Builders v Rees [1966][7]. “Delay defeats equity”
is when equity takes into account the claimant’s conduct, as well as that of
the defendant. Therefore, in the same way as equity looks at the claimant’s
‘clean hands’ and the claimant’s future conduct, equity will also be alert to
the possibility that the claimant has delayed before bringing a claim[8]. This second maxim is
seen in the case of Leaf v International Galleries [1950][9]. Last but not least, the
third maxim: “He who seeks equity must do equity” refers to the future conduct
of the claimant, in that the process of the litigation should be conducted in a
manner that is fair towards the defendant[10]. This maxim is seen in
the case of Chappell v Times Newspapers Ltd [1975][11].

The duality of jurisdiction, common law and equity,
was abolished in England by the Judicature Acts of 1873-1875. These Acts merged
the common law and equity and allowed all superior courts to rule at once
according to the common law and according to equity. This new jurisdiction is
what then created the High Court of Justice, which comprised three Divisions:
Queen’s Bench (common law), Chancery (Equity) and Probate (formerly Probate,
Divorce and Admiralty). The same law provided that, in the event of a conflict
between the rules of the common law and those of equity, the latter should
prevail. The rules of equity continue to be distinct from those of the common
law, but now the plaintiff can invoke one and the other in a single action in
one jurisdiction. Equity completes and corrects the common law in some
respects: thus, cases of nullity of common law contracts are supplemented by
equity-sanctioned vices of consent. This points to the importance of equity as
a modern source of law.

Equity continues to evolve. In modern times, the
relevance of Equity is evident in new equitable remedies, such as the Anton
Piller Orders, Mareva Injuctions and Super Injunctions. The Anton Piller Orders
gave the court authority to search the defendant’s premises, which is seen in
the case of Anton
Piller KG v Manufacturing Processes Ltd. [1976][12].
The Mareva injunctions, on the other hand, gave the court power to freeze the
assets of a party, mainly known as the ‘freezing injunction’. This injunction
is seen in the case of Mareva Compania
Naviera SA v International Bulkcarriers SA [1980] [13].
Last but not least, the Super Injunctions allowed celebrities to preserve
privacy and prevented the press from getting much information about them. This
injunction is seen in the case of Ferdinand
v Mirror Group Newspapers [2010][14].
The importance of Equity in modern times is evident in different disciplines or
subjects of the English Legal System, such as Contract law, Land Law, Tort Law,
and Mortgages. In Contract law, Lord Denning sought to use equity to find
solutions when dealing with contractual disputes, some of which included
estoppel, undue influence, mistake, and the equitable remedies[15].
Equity occupies a big place when it comes to Land Law and Mortgages. These two
subjects cannot be discussed without the input of Equity. Perhaps the biggest
example of Equity in both Land Law and Mortgages is Trust, and the context of
undue influence[16].
Last but not least, in Tort Law equity is seen through the use of injunctions
to find equitable remedies to prevent tortious behaviour[17].  

In
conclusion, today, Equity’s importance as a modern source of law can be
understood from its key attributes of: preventing strict legal rules being applied unjustly; creating
substantive rules itself, especially in the law of trusts; and lastly, creating
procedural rules and remedies[18].

References:

1. Elliott and Quinn, English Legal System, 16^th edn (Pearson, 2015)
2. Hudson, Alastair,  Principles of Equity and Trusts , 2^nd edn (London: Cavendish Publishing, 2001).
3. Selden, John, Table-talk, being discourses of John Seldon, Esq or his sense of various matters of weight and high consequence, relating especially to religion and state. (1696), (London: EEBO Editions, ProQuest, 2011)
4. Huws, Catrin Fflur, Text, cases and materials on equity and trusts, (London: Pearson, 2015).
5. Virgo, Graham, The Principles of Equity and Trusts, 3^rd edn (Oxford, 2016)
6. Levenstein, Michael, Maxims of Equity: A Juridical Critique of the Ethics of Chancery Law, (Algora, 2014)
7. Hayton and Mitchell, Commentary and Cases on the Law of Trusts and Equitable Remedies, 13^th edn, (Sweet & Maxwell, 2010)
8. Martin and Hanbury, Modern Equity, 19^th edn (Sweet & Maxwell, 2012)
9. Hudson, Alastair, Understanding Equity & Trusts, 6^th edn (Routledge, 2017)
10. Hutchinson, C. Allan, Evolution and the Common Law, (Cambridge University Press, 2005)
11. Milsom, S.F.C, Studies in the History of Common Law, (The Hambledon Press, 1985)
12. Warner Bros v Nelson [1937] 1 KB 209
13. Earl of Oxford’s case (1615) 21 ER 485 
14. Anton Piller KG v Manufacturing Process Ltd [1976] 1 ALL ER 779
15. Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213
16. Ferdinand v MGN [2011] EWHC 2454
17. D&C Builders Ltd v Rees [1966] 2 QB 617
18. Leaf v International Galleries [1950] 2 KB 86
19. Chappell v Times Newspapers Ltd [1975] 1 WLR 482 

[1] Alastair
Hudson, Principles of Equity and Trusts 
2^nd edn (London: Cavendish Publishing, 2001

[2] John, Selden, Table-talk, being discourses of
John Seldon, Esq or his sense of various matters of weight and high
consequence, relating especially to religion and state. (1696), (London: EEBO Editions, ProQuest, 2011)

[3] Warner
Bros v Nelson [1937]
1 KB 209

[4] Earl
of Oxford’s case (1615) 21 ER 485 

[5] Elliott and Quinn, English
Legal System, 16^th edn (Pearson, 2015) pg 130

[6] Alastair Hudson, Principles of Equity
and Trusts , 2^nd edn (London: Cavendish Publishing, 2001).

[7] D&C Builders Ltd v Rees [1966] 2 QB 617

[8] Alastair Hudson, Principles of Equity
and Trusts , 2^nd edn (London: Cavendish Publishing, 2001).

[9] Leaf v International Galleries [1950] 2 KB 86

[10] Alastair Hudson, Principles of Equity
and Trusts , 2^nd edn (London: Cavendish Publishing, 2001

[11] Chappell v Times Newspapers Ltd [1975] 1 WLR 482 

[12]  Anton Piller KG v Manufacturing Process Ltd [1976] 1 ALL ER 779

[13] Mareva Compania Naviera SA v International
Bulkcarriers SA [1980] 1 All ER 213

[14] Ferdinand v MGN [2011] EWHC 2454

[15] Catrin Fflur, Huws, Text, cases and materials on equity and trusts, (London: Pearson, 2015), p.43.

[16] Catrin Fflur, Huws, Text, cases and materials on equity and trusts, (London: Pearson, 2015), p.61.

[17] Catrin Fflur, Huws, Text, cases and materials on equity and trusts, (London: Pearson, 2015), p.63.

[18]
Alastair Hudson, Principles of Equity and
Trusts, 2^nd edn (London: Cavendish Publishing, 2001), p.4.