Equity and Trusts Coursework May 2020 PDF

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ESSAY QUESTION:

“…Equitable maxims are inconsistent, applied randomly and indiscriminately dependant on the whim of the presiding member/s of the judiciary hearing the case. However, the application of these maxims provides unparalleled flexibility”


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Word Count: 1,383 without bibliography and footnotes Before the Judicature Act 1973-75 came into play, the English Court system involved the Common Law system and the Equity system, causing inconsistencies within the system. Despite solving the issues of the dual court systems, the Courts were still in need of a method which distinguished which system presided over which. Typically, equitable maxims expand into areas all over law. However, where maxims are applied by Judges usually deal with unconscionability. I will be judging whether judges correctly use their discretionary rights when applying maxims in granting equitable remedies.

‘Equality is equity’ is an example of what maxims stand for. Where there exist certain incongruities in the rights or ownership of property, equity will intervene on the conscience of the owners with legal interest: Westdeutsche Landesbank Girozentrale v Islington LBC1. This was also illustrated in Thorner v Major2 where formalities set by the common law were not complied with, causing equity to intervene. In equity, the courts will split proprietary rights amongst the two parties who are competing for that right. Remedies can be inconsistent in the sense that common law and equity applied rules differently giving rise to inconsistent remedies. However, the law is consistent in its principle that fairness prevails. ‘Where there is equal equity, the law shall prevail; this is the basis of equity when dealing in cases where unconscionanilty has occurred. ‘Equity acts in personum’ relates to persons and not the object in question. Lord Romilly MR, in Parkin v Thorold3 outlined the divide between the matter of substance and form. This maxim is consistent, to an extent, with ‘equity looks to substance rather than form’. Rather than looking at the specific contract or a lease, equity is concerned with the party’s intentions; the spirit rather than the letter of the law. ‘Thus, statute now provides that equity cannot grant specific unless the contract is in writing, containing all relevant terms and signed by both parties’.4 This is proof that maxims are generally principles relating to conscience and, as a collective, focus on the actions and intentions of the particular person; and contain implications that equity has power over people.

Typically, equitable maxims expand into areas all over law however, maxims usually cover with the inaccuracies of trust law. Therefore, it’s arguable that ‘equitable maxims are applied randomly’. Firstly, you can argue that maxims do not cover the whole ground of the law as equity does not share the same concerns of the common law in laying down principles for society to follow. Maxims are more concerned with restraining the unconscionable exercises of legal rights as well as working to ameliorate the certainty of the common law. Namely, maxims cover and is triggered by unconscionability. ‘One who seeks equity must do equity’. Like in Vadasz v. Pioneer Concrete (SA) Pty Ltd5, where the Courts held that for the claimant to be granted recession, he ‘must do equity’ by ‘returning, or paying for, goods that the defendant had supplied to the guarantor since the date of the guarantee’ 6. The principle applied in O’sullivan v. Management Agency Ltd7 where the Judge’s aim was to implement a practical balance of justice. As maxims are often applied in trust law by using maxims which help the courts reach a fair remedy for the parties, the courts will do what is practically just in the individual case.

It’s arguable that maxims cover all grounds and are applied indiscriminately when it comes to the law as it works alongside the common law by preventing unconscionable reliance on the short comings of 1[1996] AC 669 2[2009] UKHL 18 3[1852] 16 Beav 59 4Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). p.540 5[1995] 184 CLR 102 6Gary Watt Trusts and Equity (6th edn, Oxford University Press 2014). p.531 7[1985] QB 428

Word Count: 1,383 without bibliography and footnotes the common law8. Maxims are generally broad principles, applied in the exercise of the court’s discretion. ‘Equity will not suffer wrong without remedy’ can portray a sense of generality as equity will remedy a wrong, even if the common law does not provide a right to the proprietor or a remedy. The same qualities are reflected in ‘those who come to equity must come with clean hands.’ The claimant’s past actions relating to his claim must not ‘systematically and knowingly’ 9 perform an improper conduct in a legal sense, in the words of Dering v Earl of Winchelsea10. Namely, the defence of unclean hands applies if there exists a connection between the claimants’ wrongful actions and ‘the immediate and necessary relation to the actions he is suing for’ 11. Alternatively, these maxims are applied where discretionary relief is sought. The one quality stopping the maxims from overlapping is that this does not apply in a case to prevent a claimant from enforcing his equitable entitlement rights as the first one does. Without a claimant seeking discretionary relief sought, judges cannot apply the maxim. Maxims can be said to overlap one another in the sense that they represent the same principle. ‘One who seeks equity must do equity’ is an enforceable rule that standardises those seeking an equitable remedy to have acted fairly towards the other party. This principle to cases such as equitable estoppel and a wife’s equity to settlement of property. The law also inculcates that obligatory terms are fulfilled towards the defendant in the latter.

Where judges are dealing with unconscionabilty, ‘equity seeks to prevent injustice occurring in individual cases as a result of the application of general legal rules’ 12. Meaning, the courts are acting within the limits set by the law of Equity when granting a remedy in equity. In Lee v Haley, the Court of Chancery refused to grant an injunction on behalf of the claimant on the basis that “equity would not grant a remedy for the protection of a fraudulent trade” 13. The judge used his powers as ‘the court will normally do what is practically just in the in the individual case’14. ‘Equity acts in personum’ relates to persons The Courts of equity are courts of conscience, operating in personum and not in rem15: as illustrated in Norris v Chambres16. When the judgment was made in Richard West Ltd v Dick17, the courts acted to make sure the defendants act in good conscience 18. The courts exercised their powers of discretion within the law. Although maxims are applied dependant on the whim of the presiding judge, they rely solely on the law and principles provided by the law of equity. For example, ‘equity follows the law’ implies that, really, it is the law that takes precedence and equity follows. The role of equity is to mitigate the harshness of common law. Whilst this does not depart decisions from the law, judges’ only role when applying maxims, is to acknowledge common law and grant remedies and injunctions, thereby being true to ‘equity follows the law’. According to Maitland19, ‘we shouldn’t think of the two systems of law as rivals’ instead understand that ‘equity does not supersede the prevailing law’ 20 like seen in the judgment in Grad v. Hope 21.

8Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). p.15 9Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). p.541 10[1787] 1 Cox Eq Cas 318 11Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). p542 12Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). p18 13Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). 541 14Peter MacDonald Eggers, Vitiation of Contractual Consent (CRC Press 2016). p 15Delaney Raighne; Ferguson Juanita, ‘The Equitable Maxims: A Primer’ [2019] Vol. 48, Iss. 4 16[1861] 29 Beav 246, 54 ER 62 17Richard West and Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 (CA) 18Hudson, A., Understanding equity & trusts (5th edn New York: Routledge. 2014) 19Frederic William Maitland, Equity, Also the Forms of Action at Common Law: Two Courses of Lectures (CUP Archive 1909) p.19 20Graf v. Hope Building Corporation, 254 N.Y 1 at 9 (1930) 21Graf v. Hope Building Corp., 254 N.Y. 1, 171 N.E. 884 (N.Y. 1930)

Word Count: 1,383 without bibliography and footnotes

Application of these maxims provides unparalleled flexibility, to the extent that – as Plato termed equity as a, “necessary element supplementary to the imperfect generalisation of legal rules”. This portrays a degree of flexibility as ‘equity follows the law’. Sir Anthony Mason, suggested that: “by providing for the administration of the two systems of law by one Supreme Court and by prescribing the paramountcy of equity, the Judicature Act freed equity from its position on the coat-tails of the common law and positioned it for advances beyond its old frontiers”’.22 Although, successful in its role, Snell articulated that ‘equity follows the law, but not slavishly, nor always’23. Maxims are applied where unfairness has occurred, the judges use their discretion in coming to decisions and applied principles which encapsulates the moral values subsisting within this scope. Simply put, maxims do not provide unparalleled flexibility if it is not within trust law concerning unconscionability. Equity aims to provide fairness – ensuring the law is not applied too strictly with the help of the courts’ discretion. In conclusion, through critically analysing maxims involving unconscionability and how maxims are applied, it is clear that inconsistencies that brought upon the dual system have reflected requirement for equity in today’s legal system. In this spirit, maxims overall, do not have the power to cover all grounds of the law as its only function is to regulate the law 24. Therefore, implying that maxims lack unparallel flexibility.

Bibliography 22Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). P16 23Graham Virgo, The Principles of Equity and Trusts (OUP Oxford 2012) p36 24Gary Watt, Trusts and Equity (8th edn, Oxford University Press 2020). P.17

Word Count: 1,383 without bibliography and footnotes

Cases Dering v Earl of Winchelsea [1787] 1 Cox Eq Cas 318 Graf v. Hope Building Corp., [1930] 254 1, 171 N.E. 884 (N.Y) Norris v Chambres [1861] 29 Beav 246, 54 ER 62 O’sullivan v. Management Agency Ltd [1985] QB 428 Parkin v Thorold [1852] 16 Beav 59 Richard West and Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 (CA) Thorner v Major [2009] UKHL 18 Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 Vadasz v. Pioneer Concrete (SA) Pty Ltd [1995] 184 CLR 102

Books

Eggers M. P., Vitiation of Contractual Consent (CRC Press 2016) Hudson, A., Understanding equity & trusts (5th edn New York: Routledge. 2014) Maitland W. F, Equity, Also the Forms of Action at Common Law: Two Courses of Lectures (CUP Archive 1909) Watt G, Trusts and Equity (8th edn, Oxford University Press 2020) Watt G, Trusts and Equity (6th edn, Oxford University Press 2014) Virgo G, The Principles of Equity and Trusts (OUP Oxford 2012)

Other sources Raighne D; Juanita F, ‘The Equitable Maxims: A Primer’ [2019] Vol. 48, Iss. 4...