Equity and Trust – Week 1: Introductions
The History of Equity and Trusts
The Legal System Before Equity
- Equity is Natural Justice
Prior to 1066:
- England had a single legal system
- Cases were heard by the King’s Bench
- Petitions were heard by the King himself, and then the Lord Chancellor
- And then came the Court of Chancery…
Why did the Court of Chancery Arise?
To address the issues with the common law system:
– The system was too rigid and procedural:
– It was inflexible and focuses too much on uniformity and not the wider
context of the specific case itself.
– Even the priority of the judges was to follow procedure:
– The judge’s role was to focus on the procedure and formalities of it
and not whether an unjust consequence would result from the
application. So, they were to simply apply the role and not question
whether it was fair or whether it required reform.
– There were issues with the Writ System which was reluctant to evolve:
– The rigidity of the procedure opened the system up for abuse, this
meant individuals were able to commit acts which, whilst unjust and
unfair, were not punishable because they fell outside the rigid
application of the law.
Equity’s Intervention through the Court of Chancery
There were many features of the Court of Chancery that allowed it to overcome the
issues of the Common Law System:
– It is a court of conscience: Not bound by common law rules, so they could rule
cases on case by case basis and not on one single procedure
– Judges did not focus on procedure, but morality
– The court was designed to handle issues that the common law system could
not, or did not
– See the description of the court of chancery in The Earl of Oxford’s Case
[1615] 21 ER 485: and Dudley v Dudley [1705] 24 ER 118:
, PP2: The Maxims of Equity
What are the Maxims of Equity?
Equity Follows the Law
Ordinarily, equity will follow the law’s answer to questions such as ownership unless there is
a good reason not to:
– Felton v Callis [1969] 1 QB 200 -
– Insolvency Act Ss 122, 125 -
– Ebrahimi v West Bourne Galleries Ltd [1973] AC 360 -
He who Seeks Equity must do Equity
You have to act fairly yourself if you want to receive support from equity:
– Central London Property Trust Ltd v High Trees House Ltd [1947] KB
130
– D&C Builders v Rees [1966] 2 QB 617
He who comes to Equity must come with Clean Hands
One cannot act improperly or unconscionably if they are seeking an equitable remedy
themselves:
– Is the test still the ‘reliance’ test on illegality?
– Holman v Johnson (1775) 98 ER 1120 and Tinsley v Milligan [1994] 1 AC
340-
VS.
– Patel v Mirza [2016] UKSC 42 and Stoffel & Co v Grondona [2020] UKSC
42 -
Delay Defeats Equity
A person who is entitled to an equitable remedy must act without delay:
– Leaf v International Galleries [1950] 2 KB 86 -
– Smith v Clay [1767] 27 ER 419 -
– s21 Limitation Act 1980 -
Equity Looks on the Intent, not the Form
Equity is more concerned with what the parties intended, rather than the form of their
agreement:
– Parkin v Thorold [1852] 51 ER 698 -
– Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 -
The History of Equity and Trusts
The Legal System Before Equity
- Equity is Natural Justice
Prior to 1066:
- England had a single legal system
- Cases were heard by the King’s Bench
- Petitions were heard by the King himself, and then the Lord Chancellor
- And then came the Court of Chancery…
Why did the Court of Chancery Arise?
To address the issues with the common law system:
– The system was too rigid and procedural:
– It was inflexible and focuses too much on uniformity and not the wider
context of the specific case itself.
– Even the priority of the judges was to follow procedure:
– The judge’s role was to focus on the procedure and formalities of it
and not whether an unjust consequence would result from the
application. So, they were to simply apply the role and not question
whether it was fair or whether it required reform.
– There were issues with the Writ System which was reluctant to evolve:
– The rigidity of the procedure opened the system up for abuse, this
meant individuals were able to commit acts which, whilst unjust and
unfair, were not punishable because they fell outside the rigid
application of the law.
Equity’s Intervention through the Court of Chancery
There were many features of the Court of Chancery that allowed it to overcome the
issues of the Common Law System:
– It is a court of conscience: Not bound by common law rules, so they could rule
cases on case by case basis and not on one single procedure
– Judges did not focus on procedure, but morality
– The court was designed to handle issues that the common law system could
not, or did not
– See the description of the court of chancery in The Earl of Oxford’s Case
[1615] 21 ER 485: and Dudley v Dudley [1705] 24 ER 118:
, PP2: The Maxims of Equity
What are the Maxims of Equity?
Equity Follows the Law
Ordinarily, equity will follow the law’s answer to questions such as ownership unless there is
a good reason not to:
– Felton v Callis [1969] 1 QB 200 -
– Insolvency Act Ss 122, 125 -
– Ebrahimi v West Bourne Galleries Ltd [1973] AC 360 -
He who Seeks Equity must do Equity
You have to act fairly yourself if you want to receive support from equity:
– Central London Property Trust Ltd v High Trees House Ltd [1947] KB
130
– D&C Builders v Rees [1966] 2 QB 617
He who comes to Equity must come with Clean Hands
One cannot act improperly or unconscionably if they are seeking an equitable remedy
themselves:
– Is the test still the ‘reliance’ test on illegality?
– Holman v Johnson (1775) 98 ER 1120 and Tinsley v Milligan [1994] 1 AC
340-
VS.
– Patel v Mirza [2016] UKSC 42 and Stoffel & Co v Grondona [2020] UKSC
42 -
Delay Defeats Equity
A person who is entitled to an equitable remedy must act without delay:
– Leaf v International Galleries [1950] 2 KB 86 -
– Smith v Clay [1767] 27 ER 419 -
– s21 Limitation Act 1980 -
Equity Looks on the Intent, not the Form
Equity is more concerned with what the parties intended, rather than the form of their
agreement:
– Parkin v Thorold [1852] 51 ER 698 -
– Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514 -
