Common Law and Equity - Lecture notes 1 PDF

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Common Law and Equity Introduction COMMON LAW AND EQUITY: TERMS AND CASES

Common Law

Equity

Primogeniture

Court of Chancery

King’s Bench

Equity and Conscience

Exchequer

Actions ‘in personam’ and ‘in rem’

Common Pleas

Equity ‘tempers and mitigates’ the law

Writ of Replevin

Uses and Trusts

Writ of Detinue

Specific performance, Injunction

Inductive reasoning

Equity prevails over common law

Reasoning by analogy

Equity does not abolish law ‘but fulfils it’

Rylands v Fletcher [1868] UKHL 1

Judicature Acts (19th cent)

Rickards v Lothian [1913] AC 263

Common law and Equity run side by side

Precedent and Damages

Unconscionability (in Contract Law)

HISTORICAL PERSPECTIVE ON LAW Common Law and Equity are often together referred to as ‘the common law’ or ‘the general law’. They are the result of centuries of law developed through the courts. Statute law is law created by parliaments in the form of Acts of Parliament To better understand the Australian legal system we need to have a basic awareness of its historical development.This helps us understand some key aspects of the law that arise again and again in our law degree. Many of the main legal principles and substantive legal rights we study derive from a variety of sources that co-exist. A person’s rights and interests usually derive from one or other of these sources: common law or equity or statute. This is very visible in the ‘private law’ subjects: torts, contracts, equity, property, commercial law etc. A brief look at the historical development of common law and equity – and of statute law – is useful. The historical origins of these sources of law can be found in medieval England. Many fundamental features of our legal system derive from that period: juries, legal reasoning, legal procedure and court pleadings, the distinction between common law and equity, types of property ownership etc. Australian law has developed its own character, but it is still largely based on the roots inherited from the English legal tradition. !

Common Law EARLY ORIGINS A starting point can be the Norman invasion of Anglo-Saxon England by William the Conqueror or also known as William of Normandy in 1066 (11th century) after the Battle of Hastings. The process took a very long time – over many centuries – and there was no ‘grand design’. In the very early days disputes were often resolved by self-help, family feuds and private conflict. Over time, disputes were increasingly resolved by local assemblies according to local custom. An example of an early custom was primogeniture – by which land was passed on to the eldest son.There was a feudal society, with a monarch at the top, land-owning nobles in the middle and the great mass of working people at the bottom. The country was divided into shires (administrative regions based on military service to the monarch and the collection of taxes), which were divided into hundreds. These had ‘courts’ of a very primitive kind. THE NORMAN INVASION The Norman influence was mainly in administration and centralisation of the existing laws and customs. During the reign of Henry II (12th century) the royal court began to send out ‘justices’ to hear cases, including ‘common pleas’, by which people could have their disputes resolved by the king’s judge, rather than a local ‘court’. The travelling justices were all part of the king’s court (curia regis), a body of legal advisers to the monarch. Over time, a body of judges became fixed in one place (Westminster in London) known as the Bench. EARLY ROYAL COURTS By the beginning of the 14th century there were three royal courts operating from Westminster: King’s Bench (matters dealing with the Crown); Exchequer (matters dealing with tax and revenue); Common Pleas (all other matters basically for them peasants). These courts developed a system of bringing claims by way of writ. Writs were basically letters requesting permission to use the king’s courts. The writ outlined the complaint and demanded that the defendant undertake some action or answer an allegation. WRITS AND PLEADINGS Examples: The writ of Replevin was used recover goods that had been wrongly acquired by someone. The writ of Detinue was used to recover goods from someone who had acquired them rightfully but later refused to return them wrongfully. Pleadings were precisely drafted documents that put the plaintiff’s specific question for decision by a jury. An answer to the question was filed by the defendant. Decisions made by the courts began to be recorded and were shared in common by justices across the country. They were the beginning of the ‘common’ law. NATURE OF THE COMMON LAW

The common law is a collection of legal principles derived from court decisions made to resolve disputes. It developed in an incremental way over time. Courts used logic and reason. The method that emerged is a form of inductive reasoning – moving from particular issues to general principles. Central to this jurisprudence was reasoning by analogy from case to case. A proposition describes a case, and is then made into a rule of law, and is then applied to the next similar case. Common law reasoning is dynamic as it allows for change. The scope of a legal rule depends on deciding what facts will be considered similar to the facts that were present when the rule was first announced. Finding a similarity – or a difference – in the actual facts that the court must deal with is the key to this reasoning by analogy.The rules are discovered in the process of determining similarity or difference in the presented facts from case to case. Rylands v Fletcher [1868] UKHL 1: People who accumulate things on their land that are likely to cause damage if they escape must be strictly liable for such damage. Rickards v Lothian [1913] AC 263: The Rylands v Fletcher precedent was applied but distinguished on the facts. People who accumulate things on their land that are likely to cause damage if they escape must be strictly liable for such damage – unless a third party intervenes unlawfully to cause the escape. Major 19th century reforms made the common law simpler and less formal.!

Equity EARLY ORIGINS Over time, the common law courts began to rely too much on very formal and rigid rules in their attempts to promote certainty and predictability in the law. This gave rise to much criticism and dissatisfaction. Litigating parties complained about delay, misconduct, corruption of court officials and jurors, and inflexible judges who focused more on the correctness of writs rather than justice. The large number of petitions and complaints to the king for justice and mercy led the king to give special powers to the Chancellor to investigate and resolve the complaints. CHANCERY AND CONSCIENCE Chancellors were usually senior bishops who had some legal knowledge. The large number of complaints and petitions led to the formation of a Court of Chancery. Chancery looked beyond the logic, reason and formalities of the common law and began to resolve complaints according to principles of fairness (or ‘equity’) and justice. Proceedings in Chancery were less formal than the common law courts, they were in English (not French or Latin) and there were no juries. The court took account of the merits of each case and decided according to ‘conscience’. Chancery developed the power to make orders in personam (against the litigant personally), while common law courts only made orders in rem (against the property or thing). Actions in personam were used to force a person, wherever he or she was located, to do something personally such as fulfil a personal obligation. Actions in rem were limited to property or goods and had to be commenced where the property was located. This led to the growing popularity of Chancery for resolving complaints from decisions made by common law courts. Example: To prove William owned a piece of land, he had to present evidence that he occupied and worked the land. A common law court acting in rem could then declare William to be the legal owner. This affected the land and bound anyone who had a claim on the land. But, imagine that Simon could prove William got title to the land on the condition that he use it for Simon’s benefit. Chancery, acting in personam, could make an order against William as owner to hold the land for the benefit of Simon, So Chancery, acting on the basis of conscience, recognised Simon’s equitable right to benefit from the land – even though he was not the legal owner (ie the owner at common law). Chancery accepted the common law position that William was the legal owner, but qualified his title by ordering him to use the land in a particular way in order to do justice. This arose from William’s personal moral obligation in good conscience.

Chancery acted where it was necessary to “leave the words of the law and to follow what reason and justice requires … to temper and mitigate the rigour of the law.” (from Christopher St Germain’s Doctor and Student (1531)). Over time, the precedents and principles developed by the court of Chancery began to be called ‘Equity’. ’USES’ and THE LAW OF TRUSTS An important example of the growth of Equity’s jurisdiction was the law of ‘uses’, which was the origin of the law of trusts. Land was often held by one person for the benefit of another. This was usually to avoid paying taxes to an unpopular king when land was transferred to children, or when gifts of land were made to the church or a religious order. Example: A would transfer land to B to hold it for the use or benefit of C. Problems arose when B (the legal owner) acted as the true owner and failed to give the benefit to C Chancery recognised that the legal owner of the land B was bound in conscience to carry out the wishes of the grantor of the land A. It enforced ‘uses’ and prevented the moral obligation that arose when the land was transferred from being denied fraudulently. Chancery did not deny that the owners were the legal owners at common law. But it recognised that the beneficiaries were the true owners in equity. That is why the beneficiaries had an equitable interest, recognised by Chancery, that could override the owner’s legal interest. THE RELATIONSHIP BETWEEN COMMON LAW AND EQUITY Tensions and jurisdictional battles between the common law courts and Chancery were finally resolved in the 17th century. It was accepted that in any conflict between the rules of common law and the rules of equity, equity should prevail. ‘Equity came not to abolish the law but to fulfil it.’ (Maitland) Equity is a ‘gloss on the common law’. It accepts common law principles and recognises common law rights. But it will act to override them where it would be unjust or unconscionable (extremely unfair) to allow someone to rely on those rights. THE ‘FUSION’ of COMMON LAW AND EQUITY Major reforms in the 19th century fused the administration of the common law and equity. All courts (and in Australia as well) had the jurisdiction to administer both common law and equitable doctrines and remedies. Common law and Equity have continued to develop their principles, doctrines and jurisdictions in parallel. ‘The two streams of jurisdiction, though they run in the same channel, run side by side, and do not mingle their waters.’ (Ashburner)!

Conclusion SOURCES OF LAW: COMMON LAW, EQUITY AND STATUTE Example: Unconscionability in the Law of Contracts. Whether a person has validly purchased land under a contract is determined by common law principles (offer, acceptance, consideration etc). These will determine who is the owner. If the purchaser used very unfair tactics to take advantage of the seller and get a very low price, the seller could seek an order for rescission in equity to set aside the contract. If the seller takes no action, the purchaser remains the legal owner. Parliament may decide to pass legislation to extend or modify the right to set aside contracts to a whole class of people (such as ‘consumers’) in certain types of similar cases. This statute law will have priority for anyone who has rights under the legislation. But if no statute law prevails in that area, a person can fall back on his or her common law rights (as qualified by equity)....