Differences Between Common Law and Equity

Equity, according to Maitland, “is now that body of rules administered by our … courts of justice which, were it not for the operation of the Judicature Acts, would be administered only by those courts which would now be known as Courts of Equity.” Therefore, birth of equity came about when the strictures of the writ system through the twelfth and the thirteenth centuries failed to develop further remedies. Disappointed litigants began petitioning the King to do justice in their particular case, as he was “the fountain of all justice”. As the petitions increased, the King delegated the duty to the Chancellor, his most senior official, as the “keeper of the King’s conscience”. On receiving the petitions, the Chancellor would adjudicate them, according to principles of fairness and justice, thus developed equity.

By the fifteen century, equity became well established and was seen as the rival system of common law. The Chancellor’s jurisdiction was exercised through the Court of Chancery. He was not bound by precedent or strict legal rules as the common law courts and consequently, was able to use discretion to administer justice to a particular case. They developed well established principles which govern the exercise of the discretion of the court, which was flexible and adaptable to achieve justice and fairness, which is, as Lord Selborne LC in Wilson v Northampton and Banbury Junction railway Co. [1] remarked, to “do more perfect and complete justice than would be the result of leaving the parties to their remedies at common law”.

The increasing popularity of the Court of Chancery soon led to conflict with the common law courts. When there was a conflict between the two, equity would use a remedy which had the effect of preventing common law action from proceeding or prevent the common law judgement from being enforced. One such conflict occurred in the Earl of Oxford’s Case [2] , where the court of common law ordered the payment of a debt. The debt had already been paid, but the deed giving rise to the obligation had not been cancelled. The court of equity was prepared to grant an order preventing this and ratifying the deed. It was ruled that, where there is a conflict between the common law and equity, equity will prevail. The conflict was finally put to rest by the setting up Judicature Acts in 1873-75 where the Supreme Court could now administered both rules of common law and equity.

One of the major differences between common law and equitable rights lies in the deficiencies of the common law remedy. When equity originally developed as a “gloss on the common law” according to Pettit, [3] it developed new remedies and recognized new rights where the common law fails to act. Therefore, equity provides a remedy where common law provides none or provides a more suitable remedy than common law. According to Lord Nicholls in AG v Blake [4] , “in general, legal rights and remedies remain distinct from equitable ones. Some overlap does, however, occur, for example, an injunction, an equitable remedy, can be sought for an anticipatory breach of contract, or to stop a nuisance, both common law claims”. In this case, the House of Lords allowed the equitable remedy of account of profits for a claim for breach of contract where the common law remedy of damages would have been inadequate.

Equity has been important in supplementing many new remedies to the common law. Some of the most important are those of specific performance, injunction, rescission and rectification. A decree of specific performance compels the defendant to perform his side of the bargain while an injunction prevents someone from performing a certain act. The remedies developed by equity, are, distinct from the common law remedy of damages, subject to the discretion of the judge. Thus a judge will decide that, for claimants to be granted equitable remedies they must come to court with clean hands, they must have behaved equitably and must not have delayed in seeking the intervention of equity. Otherwise, if damages are an adequate remedy, then there is no need to substitute an equitable remedy.

Another difference between common law and equitable rights is the concept of trust. According to Haley and McMurtry [5] , “the concept of the trust has been the vehicle for much creative activity on the part of the courts of equity”. It recognized the trust when the common law had refused to acknowledge the existence of a beneficiary and provide remedies for breach of trust against a trustee who fail to perform its duties.

Also, equitable rights acts in personam, while common law rights act in rem. This means that equity remedies are personal in that they exercise against specific persons except, a bona fide purchaser of a legal estate for value without notice of the prior equitable rights. For example, where someone build a home on someone else’s land, with the understanding that the ownership of the land would be transferred to them on completion. If the land owner refused to perform this duty, the builder of the home would have no action under common law; however equity will act against the person and order him to do something such as specific performance.

Common law and equitable right has two different function in that, common law establishes general rules which provide certainty, while, equitable rights acts as a check and balance of common law. This arises from the strict application of the common law.

On the other hand, one could also argue that there are no differences between common law and equitable rights. While it is clear that the Judicature Act fused the administration of common law and equity, there is a view by Ashburner [6] , that common law and equity are two streams running alongside one another, but never mingling their waters. As well, in Salt v Cooper [7] , Sir George Jessel MR states that; “the main object of the acts was not the fusion of the law and equity, but the vesting in one tribunal of the administration of law and equity in all actions coming before that tribunal”. However Lord Diplock had a different view, in United Scientific Holdings Ltd v Burnley Borough Council [8] , he states, “The innate conservatism of English lawyers may have made them slow to recognise that by the Judicature Act 1873 the two systems of substantive and adjectival law formerly administered by courts of law and courts of equity . . . were fused. If Professor Ashburner’s fluvial metaphor is to be retained at all, the confluent streams of law and equity have surely mingled now”.

Although equity did not acquire the rigidity of the common law, there are rules of equity, whereas once equitable rights were entirely discretionary, it must now obey the rules of precedent as does the common law. While common law and equitable rights have become closer, there are both some similarities and differences which is reflected in the maxims. Therefore equitable follows the law, show a relationship between common law and equitable rights, in that equity will only intervene when there are reasons to.

It is possible to cite examples, however, where the distinction has become irrelevant. Such a in registered land, the categories of registered, minor and overriding interests imposed by the land Registration Act cut across the distinction between legal and equitable rights.

According to Sir Nathan Write LJ in Lord Dudley and Ward v Lady Dudley [9] , state that “equity represent a later development of law, laying an additional body of rules over the existing common law which, in the majority of cases, provides an adequate remedy. Equity, therefore, does not destroy the law, nor create it, but assists it”. Therefore, there still remains differences between common law and equitable right, equity work alongside the common law and provide different solutions to problems.