🗒️
Introduction to Equity and the
Trust
EQUITY
WHAT IS EQUITY - INTRO
‘When someone seeks to rely on their in circumstances under which they can be
considered to be acting unfairly, Equity may be available to ensure a just result.’
Common Law = The body of law that developed in the Common Law courts rather
than the Chancery courts.
Equity = This body of law started in the Chancery courts of England. It was created
to address situations where the strict rules of Common Law would result in
unfairness or injustice.
Aspect Common Law Equity
Developed to address the shortcomings
Medieval England, rule-
Origins of Common Law; initially petitioned to
based and formalistic.
the King and later the Lord Chancellor.
Based on statutes and judicial Based on principles of fairness and
Nature
precedents. justice, not strictly bound by precedent.
Deals with contracts, torts, Addresses areas where Common Law is
Focus
property rights, etc. too rigid or harsh, filling gaps.
Limited to remedies Offers remedies such as injunctions,
Remedies traditionally available in specific performance, and trusts that are
Common Law courts. discretionary.
Traditionally, Equity is flexible & discretionary, based on fairness, justice, and
morality. However, became more principled and rule-based over the years as the
Equity jurisdiction transferred from the Lord Chancellor to judges.
Therefore, modern Equity is built on a set of principles that aim to give it
structure and predictability, but the application of these principles and the granting
Introduction to Equity and the Trust 1
, of remedies are often influenced by judges' discretion to ensure results are just and
fair. Equity is still now described as modifying the rigidity of Common Law.
Modern Equity in Practice - Supreme Court Analysis ⇒ Vauxhall Motors
Ltd v Manchester Ship Canal Co Ltd [2019] UKSC 46, [2020] AC 1161: the
equitable remedy of relief from forfeiture could be applied to possessory rights
over land, such as licenses, thereby expanding its traditional application which
was previously limited to proprietary interests [47].
Claimant failed to pay £50 for a license to use adjacent land, risking
losing access valued at over £300,000 annually.
Lord Briggs: Relief from forfeiture prevents unjust loss of rights due to
non-compliance with obligations like payments, especially when less
severe remedies exist (than losing the right). However, he emphasised
the need for ‘principled boundaries’ to maintain the ‘certainty’ of
English law in business and property, avoiding overly broad and
‘uncontrolled intervention of equity’ [2].
Lady Arden acknowledged the inherent uncertainty in Equity, which
relies on judges' discretion via an assessment of the facts, rather than
strict, automatically applied rules.
A BRIEF HISTORY OF EQUITY
Historical Context: Originating in the Middle Ages (12th century), judge-made law
evolved as kings standardised legal systems across England, termed 'common law.’
Early common law was rigid, with judges applying strict rules and limiting judicial
creativity.
Role of the Lord Chancellor: Faced with the limitations of common law, petitioners
sought justice directly from the King, later delegated to the Lord Chancellor. Initially
influenced by religious and philosophical ideals, the Lord Chancellor's decisions were
based on personal conscience, introducing discretion and fairness into legal judgments.
‘It was through the exercise of conscience that the characteristic of Equity as a
discretionary system emerged.’
Equity is a roguish thing: for law we have a measure, know what
to trust to; equity is according to the conscience of him that is
chancellor, and as that is larger or narrower, so is equity. [It is] as
if they should make the standard for the measure we call a foot a
chancellor’s foot; what an uncertain measure would this be! One
Introduction to Equity and the Trust 2
, chancellor has a long foot, another a short foot, a third an
indifferent foot. Tis the same in the chancellor’s conscience
(Table Talk of John Selden, ed. Pollock (London: Selden Society,
1927), 43).
Establishment of Chancery Court: Due to increasing petitions, the Chancery Court
was established, focusing on equity, which provided flexible legal remedies like
injunctions and subpoenas, differing significantly from the rigid common law
approach.
Conflict and Resolution: A notable historical conflict between common law and
equity courts peaked in the Earl of Oxford's case, which established that in the event
of a conflict, equity prevailed. In this case, equity was deemed necessary to ‘soften
and mollify the extremity of the [common] law’ (Lord Chancellor Ellesmere).
Systematization of Equity: Post-seventeenth century, equity became more structured
under various Lord Chancellors, like Lord Nottingham and Lord Eldon, who refined
equitable principles significantly. However, equity as a body of law remained far
from ideal. Common Law and Chancery courts applied separate legal rules. This dual
system led to great inconvenience and injustice, with claimants having to choose the
right court to pursue their claim. If they chose the wrong court, they would have to
start again in the other one. This led to lengthy delays and inordinate costs. This
contributed to the push for reforms…
Judicature Acts of 1873 and 1875: These acts merged the common law and
Chancery courts into a single High Court with multiple divisions (Chancery, Queen’s
Bench, Family), allowing for a more integrated application of law and equity.
Although the Chancery is the specialised division for Equity, Equity as a body of law
can be applied in any Division of the High Court so remedies can be awarded
regardless of the court hearing the case. It also affirmed that equity prevailed where
conflicts arose.
Introduction to Equity and the Trust 3
, 👉🏻 NB: The Judicature Acts fused the administration of Common Law and
Equity, but did NOT fuse the two bodies of law themselves, which
remained distinct, with Equity prevailing in situations of conflict.
→ There are conflicting academic views on this:
Academics such as Peter Birks say it is illogical and unprincipled to
have two systems (Andrew Burrows - ‘We do this at Common Law
but that in Equity’).
Others argue: Common Law is a complete system which could stand
alone but is tempered in its harshness by Equity. Equity is not a
complete system that could stand alone and so the continued
existence of a separate body of law known as Common Law is
essential. Equity alone would lose its identity and function as
modifying the rigours of the Common Law.
Modern Perspective: Equity today is seen not as a vague concept but as a body of
law with established rules and principles. It complements the common law,
addressing areas where legal rigidity might lead to injustice.
Noteworthy cases like Walsh v Lonsdale (1882) 21 Ch D 9 illustrate equity’s role
in enforcing agreements that common law would not recognize due to
technicalities.
In this case, a lease was intended but failed to meet the formal requirements
under Common Law, making it unenforceable. Equity prevailed, enforcing the
agreement based on the parties’ intention to create a lease, treating it as if it had
been validly made. This case demonstrated Equity’s flexibility in addressing
issues where strict Common Law rules would lead to an unjust outcome.
Characterization of Law Today: Both common law and equity are viewed as
complementary rather than conflicting systems, with common law also adapting and
evolving through areas like negligence and unjust enrichment, demonstrating its
capacity for innovation and fairness.
Role of Equity today = To address injustices that arise from the rigid application of
legal rules in Common Law: ‘One of the principal functions of equity is to put right
injustice to which the law is otherwise blind, by restraining the rigid application of
legal rules where their implementation would be unconscionable’ (Lord Briggs, Guest
v Guest [2022] UKSC 27, [2022] 3 WLR 911 [4]).
Introduction to Equity and the Trust 4
Introduction to Equity and the
Trust
EQUITY
WHAT IS EQUITY - INTRO
‘When someone seeks to rely on their in circumstances under which they can be
considered to be acting unfairly, Equity may be available to ensure a just result.’
Common Law = The body of law that developed in the Common Law courts rather
than the Chancery courts.
Equity = This body of law started in the Chancery courts of England. It was created
to address situations where the strict rules of Common Law would result in
unfairness or injustice.
Aspect Common Law Equity
Developed to address the shortcomings
Medieval England, rule-
Origins of Common Law; initially petitioned to
based and formalistic.
the King and later the Lord Chancellor.
Based on statutes and judicial Based on principles of fairness and
Nature
precedents. justice, not strictly bound by precedent.
Deals with contracts, torts, Addresses areas where Common Law is
Focus
property rights, etc. too rigid or harsh, filling gaps.
Limited to remedies Offers remedies such as injunctions,
Remedies traditionally available in specific performance, and trusts that are
Common Law courts. discretionary.
Traditionally, Equity is flexible & discretionary, based on fairness, justice, and
morality. However, became more principled and rule-based over the years as the
Equity jurisdiction transferred from the Lord Chancellor to judges.
Therefore, modern Equity is built on a set of principles that aim to give it
structure and predictability, but the application of these principles and the granting
Introduction to Equity and the Trust 1
, of remedies are often influenced by judges' discretion to ensure results are just and
fair. Equity is still now described as modifying the rigidity of Common Law.
Modern Equity in Practice - Supreme Court Analysis ⇒ Vauxhall Motors
Ltd v Manchester Ship Canal Co Ltd [2019] UKSC 46, [2020] AC 1161: the
equitable remedy of relief from forfeiture could be applied to possessory rights
over land, such as licenses, thereby expanding its traditional application which
was previously limited to proprietary interests [47].
Claimant failed to pay £50 for a license to use adjacent land, risking
losing access valued at over £300,000 annually.
Lord Briggs: Relief from forfeiture prevents unjust loss of rights due to
non-compliance with obligations like payments, especially when less
severe remedies exist (than losing the right). However, he emphasised
the need for ‘principled boundaries’ to maintain the ‘certainty’ of
English law in business and property, avoiding overly broad and
‘uncontrolled intervention of equity’ [2].
Lady Arden acknowledged the inherent uncertainty in Equity, which
relies on judges' discretion via an assessment of the facts, rather than
strict, automatically applied rules.
A BRIEF HISTORY OF EQUITY
Historical Context: Originating in the Middle Ages (12th century), judge-made law
evolved as kings standardised legal systems across England, termed 'common law.’
Early common law was rigid, with judges applying strict rules and limiting judicial
creativity.
Role of the Lord Chancellor: Faced with the limitations of common law, petitioners
sought justice directly from the King, later delegated to the Lord Chancellor. Initially
influenced by religious and philosophical ideals, the Lord Chancellor's decisions were
based on personal conscience, introducing discretion and fairness into legal judgments.
‘It was through the exercise of conscience that the characteristic of Equity as a
discretionary system emerged.’
Equity is a roguish thing: for law we have a measure, know what
to trust to; equity is according to the conscience of him that is
chancellor, and as that is larger or narrower, so is equity. [It is] as
if they should make the standard for the measure we call a foot a
chancellor’s foot; what an uncertain measure would this be! One
Introduction to Equity and the Trust 2
, chancellor has a long foot, another a short foot, a third an
indifferent foot. Tis the same in the chancellor’s conscience
(Table Talk of John Selden, ed. Pollock (London: Selden Society,
1927), 43).
Establishment of Chancery Court: Due to increasing petitions, the Chancery Court
was established, focusing on equity, which provided flexible legal remedies like
injunctions and subpoenas, differing significantly from the rigid common law
approach.
Conflict and Resolution: A notable historical conflict between common law and
equity courts peaked in the Earl of Oxford's case, which established that in the event
of a conflict, equity prevailed. In this case, equity was deemed necessary to ‘soften
and mollify the extremity of the [common] law’ (Lord Chancellor Ellesmere).
Systematization of Equity: Post-seventeenth century, equity became more structured
under various Lord Chancellors, like Lord Nottingham and Lord Eldon, who refined
equitable principles significantly. However, equity as a body of law remained far
from ideal. Common Law and Chancery courts applied separate legal rules. This dual
system led to great inconvenience and injustice, with claimants having to choose the
right court to pursue their claim. If they chose the wrong court, they would have to
start again in the other one. This led to lengthy delays and inordinate costs. This
contributed to the push for reforms…
Judicature Acts of 1873 and 1875: These acts merged the common law and
Chancery courts into a single High Court with multiple divisions (Chancery, Queen’s
Bench, Family), allowing for a more integrated application of law and equity.
Although the Chancery is the specialised division for Equity, Equity as a body of law
can be applied in any Division of the High Court so remedies can be awarded
regardless of the court hearing the case. It also affirmed that equity prevailed where
conflicts arose.
Introduction to Equity and the Trust 3
, 👉🏻 NB: The Judicature Acts fused the administration of Common Law and
Equity, but did NOT fuse the two bodies of law themselves, which
remained distinct, with Equity prevailing in situations of conflict.
→ There are conflicting academic views on this:
Academics such as Peter Birks say it is illogical and unprincipled to
have two systems (Andrew Burrows - ‘We do this at Common Law
but that in Equity’).
Others argue: Common Law is a complete system which could stand
alone but is tempered in its harshness by Equity. Equity is not a
complete system that could stand alone and so the continued
existence of a separate body of law known as Common Law is
essential. Equity alone would lose its identity and function as
modifying the rigours of the Common Law.
Modern Perspective: Equity today is seen not as a vague concept but as a body of
law with established rules and principles. It complements the common law,
addressing areas where legal rigidity might lead to injustice.
Noteworthy cases like Walsh v Lonsdale (1882) 21 Ch D 9 illustrate equity’s role
in enforcing agreements that common law would not recognize due to
technicalities.
In this case, a lease was intended but failed to meet the formal requirements
under Common Law, making it unenforceable. Equity prevailed, enforcing the
agreement based on the parties’ intention to create a lease, treating it as if it had
been validly made. This case demonstrated Equity’s flexibility in addressing
issues where strict Common Law rules would lead to an unjust outcome.
Characterization of Law Today: Both common law and equity are viewed as
complementary rather than conflicting systems, with common law also adapting and
evolving through areas like negligence and unjust enrichment, demonstrating its
capacity for innovation and fairness.
Role of Equity today = To address injustices that arise from the rigid application of
legal rules in Common Law: ‘One of the principal functions of equity is to put right
injustice to which the law is otherwise blind, by restraining the rigid application of
legal rules where their implementation would be unconscionable’ (Lord Briggs, Guest
v Guest [2022] UKSC 27, [2022] 3 WLR 911 [4]).
Introduction to Equity and the Trust 4
