Maxims of Equity Equity Law PDF

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Lecture by Aisling McMahon...

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Maxims of Equity: • •

What are the maxims of equity? Key Maxims: 1. Equity will not suffer a wrong without a remedy 2. Equity follows the Law 3. She or he who seeks equity must do equity 4. She or He who comes to equity must come with clean hands 5. Delay Defeats Equity 6. Equality is Equity 7. Equity looks to the intent rather than the form 8. Equity looks on that as done which ought to have been done 9. Equity implies an intention to fulfil an obligation 10. Equity acts in personam 11. Where the equities are equal the first in time prevails; Where the equities are equal the law prevails

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Maxims - general principles developed by the Court of Chancery over time. ▫ Should not be viewed as positive rules ▫ Reflect general trends on how equitable jurisdiction operates Relationship between maxims: ▫ Maxims may overlap or appear to contradict each other – Need to look at maxims in practice Understanding maxims provides a better understanding of the operation of equitable jurisdiction generally

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1. Equity will not suffer a wrong to be without a remedy • Rationale for this maxim: ▫ Equity will intervene to protect a recognised right which is not enforceable at common law ▫ Reflects basis for origins of equitable jurisdiction • However – equity has become more formalised and this maxim must now be considered with caution ▫ Lindley LJ in Holmes v Millage [1893] 1 QB 551, 555: ‘It is an old mistake to suppose that, because there is no effectual remedy at law, there must be one in equity’ • Instead: ▫ Re Diplock [1948] Ch 465, 481-482 'if a claim in equity exists it must be shown to have an ancestry founded in history and in the practice and precedents of the courts administering equity jurisdiction'. 2. Equity follows the law • ‘Equity follows the law but not slavishly nor always’ ▫ Cardozo CJ in Graf v Hope Building Corp (1930) 254 NY 1 • Equity doesn’t question legal rights but will attempt to mitigate harsh effects of enforcement ▫ Equity will not allow statute to be used as an instrument of fraud • However, generally equitable interests in law correspond with legal interests • Where two parties own a property in joint names

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Relationship fails – equity will generally presume that their beneficial interests in property correspond to legal interests ▫ And they will share a beneficial interest equally Jones v Kernott [2012] 1 AC 776, 794 Lord Walker and Baroness Hale held ▫ where a family home is bought in the joint names of a cohabiting couple ‘[t]he starting point is that equity follows the law and they are joint tenants both in law and in equity’. Default can be displaced by showing different common intention Heavy onus of proof on party seeking to show that equity should not follow the law

3. She or he who seeks equity must do equity. • Must be willing to act fairly towards defendant • Chappell v Times Newspapers Ltd [1975] 1 WLR 482 ▫ Injunction denied to employees who wished to restrain employer from dismissing them ▫ They refused to undertake that would not strike again. ▫ Failed to establish that they intended to act equitably by abiding by the terms of their contracts of employment. ▫ Lord Denning MR p. 502 : ‘if one party seeks relief, he must be ready and willing to do his part in it.’ 4. She or he who comes to equity must come with clean hands • Reflects discretionary nature of equity • S/he seeking equitable relief must refrain from fraud, misrepresentation or other form of disreputable conduct to be granted a remedy ▫ Halliwell: ‘the unclean hands maxim is often influential in persuading a Court to exercise its discretion in a particular way when considering equitable remedies’ [2004] Conv 439, 449 • However – this refers to past conduct of plaintiff •

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Dering v Earl of Winchelsea (1787) 1 Cox 318, 319-320: ▫ “A man must come into a court of equity with clean hands; but when this is said, it does not mean a general depravity; it must have an immediate and necessary relation to the equity sued for, it must be a depravity in the legal as well as the moral sense” Examples: ▫ Overton v Banister (1844) 3 Hare 503 - infant beneficiary ▫ Smelter Corporation v O'Driscoll [1977] IR 305 – land sale Equitable relief may be refused to a plaintiff where his conduct in relation to the transaction at issue has been less than honest even if conduct not directly prejudiced defendant ▫ Parkes v Parkes [1980] IRLM 137 Needs to be a connection between impropriety and relief sought for maxim to apply ▫ Argyll v Argyll [1967] Ch 302. Curust Financial Services Ltd v Loewe-Lack-Werk Otto Loewe GmbH & Co. KG [1994] 1 IR 450 Finlay CJ ▫ Court has a discretion, where it is satisfied that a person has come to court otherwise than with ‘clean hands’ to refuse equitable relief in the form of an injunction on that ground alone.

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However: ‘It seems to me that this phrase must of necessity involve an element of turpitude and cannot necessarily be equated with a mere breach of contract.’ [page 467]

5. Delay Defeats Equity • Legal claims often governed by statutes of limitations • What time of delay (if any) defeats equitable claims? Two main concepts evident: ▫ Laches ▫ Acquiescence • Case Law: ▫ Alcard v Skinner (1887) 36 CH D 145 – nun’s property ▫ J.H. v W.J.H. 20 December 1979, Keane J – farm ▫ Toal v Duignan (No.2) [1991] ILRM 140 – inherent jurisdiction 6. Equality is Equity • Where more than one person is entitled to property equity presumes they will be treated equally ▫ Example – equity leans towards tenancy in common as opposed to joint tenancy ▫ In some cases even if joint tenants equity will regard them as tenants in common of beneficial interests • Sheehy v Talbot [2008] IEHC 207 – Tenants legally joint tenants, but: ▫ “…as the parties contributed to the acquisition and subsequent improvement of the property in unequal shares the maxim that equity leans against joint tenancies comes into play so that in equity the parties are presumed to have acquired the property as tenants in common with beneficial interests proportionate to their respective contributions.’ • E.B. v S.S. [1998] 2 ILRM 141 - does not necessarily apply for s. 117 Succession Act 1965 provision for children • Maxim used in context of surplus funds remaining on the dissolution of an unincorporated association ▫ English approach: Re Bucks Constabulary Widows’ and Orphans’ Fund Friendly Society (No. 2) [1979] 1 WLR 936 – equally for members alive at date of dissolution ▫ Irish approach – Lack of consensus on whether equal division or on contributions made • Tierney v Tough [1914] 1 IR 142 – divided on contributions made • Feeney v MacManus [1937] IR 23 – looked at equal distribution so every member gets the same amount 7. Equity looks to the intent rather than the form • \Does not mean that there will be no formalities • However equity looks to substance rather than form and will not require unnecessary formalities ▫ Parkin v Thororld (1852) 16 Beav 59, 66: ‘Courts of Equity make a distinction in all cases between that which is matter of substance(intention) and that which is matter of form; and if it finds that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person to

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insist on such form, and thereby defeat the substance.’ cant insist on formalities if its going to deny the form/substance. Examples: ▫ Valid trust created without using word ‘trust’ ▫ Delay on completion of sale of land not within time – equity allows it provided time not key on contract ▫ Basis of rectification

8. Equity looks on that as done which ought to have been done • If parties entered into a contract which is specifically enforceable, equity will treat the contract as having been performed. • Or if defendant agreed to transfer property to another party but has not done: ▫ Common law treats defendant as owning property ▫ If specifically enforceable, equity will treat the defendant as having done as promised and the claimant as owning property • s.52(1) Land and Conveyancing Law Reform Act 2009 ▫ Equitable interests passes to purchaser and held on trust for them by vendor until completion • Equity is looking at the intentions again. Once signed the contract, it is treated as having been performed. • A volunteer in equity is a 3rd party. Mixed view. 9. Equity implies an intention to fulfil an obligation • Where person has an obligation to perform an act and does some other act which could be regarded as fulfilment of that original obligation, it will be regarded as such. • Maxim is basis of equitable doctrines: ▫ Satisfaction – pay something. ▫ Performance – do something. 10. Equity Acts in Personam • Equitable jurisdiction exercised against the person (defendant) rather than against his property ▫ Judgment made against person ▫ Failure to comply with an order e.g. specific performance - constitutes contempt of court punishable by imprisonment. • Example– Property outside the jurisdiction 11. Where the Equities are equal the first in time prevails; Where the equities are equal the law prevails • Two related maxims are about priorities over competing interests in land. • Difference between equitable interests and mere equities ▫ Equitable interests – actual rights in property  E.g. interests under trust, equitable mortgages etc ▫ Mere equities – lower hierarchy  Rights of a procedural nature ancillary to property right  E.g. right to have transaction set aside for fraud or undue influence • Distinction between equitable interests and mere equities relevant to priorities • Take two examples: ▫ Bona fide purchaser of a legal estate for value and

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No notice of an earlier equitable interest may take the property free of that interest However: ▫ A bona fide purchaser of an equitable interest, and ▫ No notice of an earlier equitable interest will take subject to it Reason for difference: ▫ Maxim that where the equities are equal the first in time prevails. However, while such a purchaser does not take free of prior equitable interests, he will take free of any prior mere equities on the basis that the ‘equities’ are not equal....