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Equity & Trusts 1 Introduction “Equity can be described as the body of rules which evolved from those rules applied and administered by the Court of Chancery before the Judicature Acts 1873 and 1875” per Hayton & Marshall Before 1066, the law was not administe...

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Introduction “Equity can be described as the body of rules which evolved from those rules applied and administered by the Court of Chancery before the Judicature Acts 1873 and 1875” per Hayton &

Marshall Before 1066, the law was not administered in any way that was common throughout the country. From “a patchwork of tribal customs” (Hudson) to a system of law that is common to the entire realm. The Norman invasion introduced a new legal system that was uniform in application to every person in every part of the country. The trust is a creature of equity. Equity is a body of rules that grew up before we had the judicature Acts. This body of rules was administered in the particular court of chancery . Dudley (Lord) v Dudley( Lady) 1705. Equity existing to supplement the law and rectify situations where common law will fall short of justice. The difference between what is legal (common law) and what is equitable. Ownership can exist concurrently in a legal sense and an equitable sense with different proprietors (dual ownership). “Now, equity is no part of the law, but a moral virtue, which qualifies, moderates and reforms the rigour, hardness and the edge of the law and is a universal truth; it does also assist the law where it is defective and weak in the constitution[…] and defends the law from crafty evasions, delusions and new subtleties invested and contrived to evade and delude the common law, whereby, such as have undoubted right are made remediless: and this is the office of equity, to support and protect the common law from shifts and crafty contrivances against the justice of the law. Equity therefore does not destroy the law, nor create it, but assists it.” per Lord Cowper LC.

Historical Development: The courts system for some time after 1066 remained itinerant, that is to say it was not centralised. The administration of the law migrated in temporary courts. By the 12th century, most cases were being heard by local shire courts judged by local Lords, land owners. This meant that the king and his court had to travel the length of the country, administering justice and dispensing justice. In this way, they selected best practice from the local judiciary customs and collected them to applying them across the country. By the end of the 12th century had so successfully superimposed this unified system of this former multiplicity of systems, that there are court records to be found with reference to the ‘customs of the kingdom’. By the end of the 13th century, the first permanent law courts began to emerge, showing growing institutional power to these courts. To commence an action a person had to be issued with a writ (claim form) which described the cause and form of action. This writ would no longer be handwritten by this point specific to each case, the forms had become more fixed and rigid (standardised). In consequence, the writs became more inflexible, limiting access to the courts. One of the most important members of the king’s court was the The Lord Chancellor and was held to be the keeper of the King’s conscience and keeper of the King’s seal. This gave the chancellor a lot of power, and the power to issue royal writs on behalf of the crown and differ from normal writs, and dealt with particular issues, issues that fell within the king’s prerogative. Matters falling within the King’s prerogative: - Treason - Murder - Unjust judgments - Default of justice The two last points are said to be the roots of equity today.

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As common law grew, those who had been judged unjustly to petition the king and chancellor for a royal writ who was not bound by common law. Due to the influx of petitions, the chancellor obtained the first permanent court. Courts of Chancery (equity) The granting of justice is not based on the common law, but based on fairness, reason and conscious. The decisions in this court were very fact dependant on the case, and on the particular chancellor of the day - Ideas of conscionability - (very subjective?). “Equity is a roguish thing - for law, we have a measure…equity is according to the conscience of him who is Chancellor and as that, is longer or narrower, so is equity. Tis all one, as if they should make the standard for the measure – a Chancellor’s foot.” Per John Seldon

Became very firmly established in the 15th and 1§th century and the decisions made in the court of equity started being recorded, and so acquired a legal authority in the same way as the common law. This caused a rivalry between the common law courts and the courts of chancery because of the way that the remedies were enforced. Example of how the Equitable Jurisdiction would work:

A has the legal title to the land and is in possession (living on the land) – and has claimed ownership – won the case in the common law courts. B says that whilst A does possess the title deeds – that A knew that B was the person intended to actually own and occupy the land (dual ownership in law and in equity). B says the common law judgment is wrong and petitions the court of equity. In law A owns the land, but is morally owes to B. Equity does not undermine the law, but it does do is work on the conscious of the legal owner. In “ personam” applying the law to the individual conscious to the person in the court, and therefore the remedy only applies to that person and denies them the ability to impose the legal power but still recognizes the common law. Violating things imposed by equitable courts, you are in contempt, and can face jail time.  Earl of Oxfords case (1615) 1 Ch Rep 1 This rivalry came to a head in this case in which equity prevailed. “the office of the Chancellor is to correct men’s consciences for frauds, breaches of trusts, wrongs and oppressions of what nature so ever they be, and to soften and mollify the extremity of the law.” Lord Ellesmere “where equity and law conflict, equity prevails”

The role of equity was to modify and qualify the edge of common law. Litigants with similar facts receiving different judgments created disparity and inequality. This was resolved, when the then Lord Chancellor put before parliament the Judicature Acts 1873 & 1875. This piece of legislation established a concurrent jurisdiction which could administer both the common law and equity. The distinction between the two remained but the separate court systems fused applying what is legal and equitable simultaneously. However, when in conflict, the rules of equity shall prevail. You have a right to a legal remedy if a wrong is recognized, but if a legal remedy does not satisfy, the equitable jurisdiction can be applied at the judge’s discretion. These maxims provide the boundaries in which equity will be exercised.

Maxims of Equity:      

Equity will not suffer a wrong without a remedy Equity follows the law Where there is equal equity, the law shall prevail Where the equities are equal, the first in time shall prevail Delay defeats equity He who seeks equity must do equity He who comes to equity must come with clean hands (must have behaved morally to

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Equality is equity

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ask for an equitable remedy).

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Equity looks to the intent rather than to the form Equity looks on as done that which ought to be done Equity imputes an intention to fulfil an obligation Equity acts in personam Equity will not permit statute or common law to be used as an engine of fraud Where equity and the law conflict, equity shall prevail

Equitable Remedies (Interim) INJUNCTIONS There is a vast range of equitable remedies in many areas of law. These remedies can be either ‘personal’ or ‘propriety’ (= not only a right against a person but a right in the property). Interim Injunctions: The injunction is a well-used equitable remedy and can be used in any number of types of situations. Like all equitable remedies it is only ever ordered at the discretion of the courts, meaning you have no right per se to the equitable remedy if found that the legal remedy is unjust. An injunction is usually ordered to oblige someone to perform some action or to prohibit someone from performing an action. In some instances, though, a statute will provide for the remedy of an injunction and then the courts must provide this as an order. An award of damages is the common law remedy and sometimes in equity if it is indicated in statute. Inherent jurisdiction is implemented whenever it is necessary to avoid injustice. There are certain pre-requisites always at the discretion of the court (equitable remedies applied within certain parameters): - maxims of equity - legal or equitable cause of action  Day v Brownrig (1978): Mr. Day lived in a house which for at least 60 years was called Ashford lodge. The defendant, his neighbour, which for 40 years had been called Ashford Villa. Mr. Brownrig changed the name of his house to Ashford Lodge. Mr. Day asks for an injunction to stop the change of name, and does not succeed because he has no right (no cause of action) to the name of his property.  Paton & Trustees: It was held that a husband had no legal or equitable wife to stop his wife from having an abortion or stop a doctor from performing an abortion. He had no legal right that was affected.  Douglas and Low: English law will recognize and protect where appropriate a right of personal privacy grounded in the equitable doctrine of breach of confidence. The law can recognize privacy as a legal principle drawn from the fundamental value of autonomy. The categories are not closed and the law is prepared to recognize new courses of action. locus standi Must also show that they have locus standi, the principle that an applicant cannot sue on some issue unless they have a right that is affected. However, as an individual I do not have that right but the attorney general does have that right where it would be to protect the rights of the general public. As with all equitable remedies, the injunction will act in personam. With injunction the question arises, whether its nature can bring it to act against a third party. If the remedy acts in personam, could an injunction be granted to a third party or against the world (contra mundum)? Logically no because of in personam, in  Ison v Harris

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You cannot have an injunction except against the party to the suits because of the nature of equity. However, more recent authorities have shown this is no longer the case,  Venables v newsgroup newspapers The extent of these equitable remedies when a human right is at stake. The killing of a small change, the murderers were very young children. They served the sentences and were released and were still young adults. At the tile of the release there was an outcry and a media witch hunt for these boys. There were fears that their identity would be discovered and unclosed, these boys claimed that they were at risk of having their right to life infringed. There was an injunction against the media to prohibit this information to be disclosed contra mundum and for an indefinite period of time.

 Attorney general v times newspaper Spy catcher litigation. A former British secret agent in breach of the Official Secrets act had written a book of his former life. The attorney general on behalf of the state applied to have publication of parts of the books by the newspaper injunction. He was successful, but the court said that any newspaper, not necessarily the times newspaper, which published confidential material knowing that other newspapers had injunctions against this, would themselves be guilty of contempt of court. Thus anyone with notice of injunction or knowledge can incur the contempt of the court. The basis would not be the breach of the injunction per se as they would not be a party to it but it would be knowingly interfering with the administration of justice. There are more recent cases in the handbook. Interim injunction as opposed to final injunctions. It is awarded or granted during the litigation before a judgment has actually been given. It will be binding until the final judgment is given. Lord Wilberforce in Hoffman v Laroche: “The object of an interim injunction is to prevent the litigant who lust necessarily suffer the laws delay, from losing from that delay the fruit of their litigation.” Interim Injunction types: - prohibatory - mandatory - quia timet (he who fears) – an injunction which anticipates an action against the applicant in the future. When granting an interim injunction there are particular problems. The court at interim stage will not yet have heard full details of the case, so the court may not have a full or realistic picture of the actual merits of the case. Granting an interim injunction may stop the respondent from acting the way he would have, and it is possible this will be of detriment to them if they win the case. On the other hand, if the injunction is not granted and the claimant win, the damage is done, and the trial was of no use.

 American Cyanamid v Ethicon It had long been established in cases such as Stratford v Linley (1965), that a claimant requesting an interim injunction had to show a strong prima face case that their right had been infringed. There had to show that damages (the legal remedy) would be inadequate at full trial and that overall the balance of convenience supported a grant of the injunction. This was a very heavy burden for any applicant. They had to show at interim stage that they had a really good chance of winning at completed trial stage. This test was replaced by the rules or guidance laid down in American Cyanamid v Ethicon. It involved asking for an quia timet interim injunction to restrain the alleged infringement of a patent. Cyanamid registered a patent in the UK for absorbable

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surgical sutures of a particular chain polymer, the patent date 2/10/1964. At this time the most commonly used sutures were used of animal based material (cat gut), Ethicon was the primary supplier of these. In 1970, Cyanamid start to sell their new sutures in the UK and was beginning to build a strong share of the market. In competition, Ethicon introduced their own artificial polymer suture. IN 1973 Cyanamid brings this quia timet action against Ethicon to restrain a threatened breach of patent if they are allowed to sell these sutures too. There are going to sue Ethicon for breach of patent but it will take time and therefore they request an interim injunction to stop Ethicon for selling in the meantime as they have the majority of the market already. There was a lot of complex and conflictive scientific written evidence submitted. At first instance, the case was heard by a specialist Patent law, he, after assessing this evidence, assessed that Cyanamid had sufficient evidence applying Stratford tests and awarded the injunction. Ethicon appealed to the court of appeals based on exactly the same evidence, they lifted the injunction. Cyanamid appeals to the house of Lords, Lord Diplock disapproved of the approaches the previous courts had adopted, applying a test requiring Cyanamid to show a prima face test and deemed it a technical rule of comparatively recent origin (misinterpretation of the law). The House of Lords required then  Whether the claim is vexatious or frivolous. Is there a real prospect of success at full trial? Must not be frivolous or vexatious.  Adequacy of damages. Courts should consider if damages be an adequate remedy (part of the balance of convenience/ justice). If damages would be sufficient, that will lead the court to be hesitant to grant the injunction. Also important, the ability of both parties to pay damages.  Establishing the balance of convenience or justice Balance of convenience.  Status quo? For a quia timet injunction, if the parties do not have the ability to pay damages, then the status quo is to grant the injunction (not if the injunction is propitiatory or mandatory).  Strength of parties’ case. Only as a last resort should the strength of the parties’ cases should be considered.  Special factors, very case sensitive. Finally, the courts decided that the interim injunction should be granted. This test is not meant as a checklist but a guidance in an attempt to achieve the minimum injustice.

Exceptions to Cyanamid: 

When the injunction is mandatory, might not be suitable (Sheppard Homes v Shandom - court must feel a high degree of assurance that a party will succeed at complete trial.)

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Trade union and labour relations (consolidation) act 1992

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Trial unlikely or delayed. (Kane v Global natural resources - Where the granting of an interim injunction will make it likely to end with the trial and no longer need to sue.)

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No arguable defence. (Cambridge Nutrition v BBC – it is stated that Cyanamid should not be taken as laying down strict rules and the strength should be considered where the grant of the injunction will achieve much of the trial’s process. No arguable defence will be frivolous.)

 Libel If defamation is alleged, the classic remedy would be an injunction to stop publication. In 1891 in the case of Bonnard v Perryman, the courts asserted an

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equitable jurisdiction to stop an allegedly libelous publication. Historically, the courts have had the approach that freedom of expression trumps a person’s right to their reputation. In libel Cyanamid has no place, and there are high thresholds to award interim injunctions to stop publications.  Greene v assoc newspapers Reiteration of Bonnard v Perryman. The courts said that an injunction to protect reputation should not be granted unless the defence of truth was bound to fail. In this case, Ms. Greene submitted that the rule in Bonnard v Perryman could no longer be considered authoritative in the light of HRA, the court was under a duty to act in a way that was compatible under her right. Her case was dismissed as she was not entitled to the prior restraints of the newspaper that she sought. The courts said that a claimant’s article 8 to reputation was protected under English law by the trial process, until then with all the considered evidence a judge could not suppose that the defence of truth could not succeed. Granting this before a thorough evaluation in trial would severely undermine article 10 of freedom of expression. The courts then argued that s12(3) of the Human Rights Act had been inserted to protect freedom of expression and parliament could not have intended to weaken this with common law.  Terry v Persons unknown Super injunctions. Initially, John terry (footballer) had been successful in being granted a super injunction against a newspaper. That is an injunction which itself injuncted the reporting of the fact of a specified personal relationship with a person that wasn’t his wife, details of that relationship, and consequences of it, any information leading to the identification of both parties, or any photograph relating, the injunction that he got forbade the reporting of the fact that there was an injunction. The newspapers appealed this and the high courts that lifted the injunction. Terry had been arguing misuse of private information, breach of art.8, respect for family life, etc. The courts felt that essentially what he was arguing for was his reputation (libel). The court also believed that editors would be fairly careful of what they would report and how to avoid claims of defamation. Human rights act 1998 s 12 The human rights act 1998 creates another exception to when the Cyanamid guidelines will apply. Particularly s12. Where one party is claiming freedom of expression. S12 is the framework within which the court will exercise its discretion in these cases to grant an interim injunction. -

Freedom of expression is protected under article 10 European Convention of human rights act (not to be mistaken with domestic corresponding law).

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