The Equitable Maxims - Lecture notes 1-2 PDF

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The Equitable Maxims 1) Equity follows the law

equity has no clash with law neither it overrides the provisions of law, nor it is the enemy of law. It adopts and follows the basic rules of law. It is said that equity is not a body of jurisprudence acting contrary to law but is rather a supplement to law. It is a well-known rule that equity follows the analogies of law. The equity came not to destroy the law but to fulfill it, to supplement it, to explain it. Equity respects every word of law. equity is intended to supplement the law and not to supersede it. 2) No wrong without a remedy

Equity courts are the courts of natural justice. Whenever a right is infringed, a remedy is available. There is always a remedy for a wrong. Only rights recognized by law can be enforced by the court, Ubi Jus ibi Remedium is the crux of the whole jurisdiction of equity. It expresses that every right will be enforced and wrong redresssed by equity of not by common law then equity will not provide a remedy against such law. Equity will not suffer a wrong to be without a remedy means no wrong should be allowed to remain unredressed if it is capable of being remedied by the court of justice. 3) Where equity is equal, the law prevails

This maxim means that “when the conflicting interests of two or more parties are supported by equitable pleas of equal value, equity being unable to prefer one to the other would allow the conflicting equities to cancel out and leave law to take its course”. Where one thing follows two claimants on the base of equal equity, equity shall follow the law and legal right shall be preceded. Law provides relief to those who claims on the base of legal right. According to this maxim if legal right is equal to equitable rights, legal right shall remain there. It means the person bearing legal right shall precede however equity is under law. 4) First in time prevails

The related maxim is concerned with priorities of competing interests, that is to say which of various interests prevails in the events of a conflict, may be dealt with together. To understand this maxim, a distinction and understanding of the concept of “legal interest or estate” and “equitable interest” is necessary. A legal interest or estate is an interest in the property required by a purchaser for valuable consideration either by cash or marriage consideration. It also includes mortgagee and lessee. An equitable interest is any interest which recognized from the Chancery court. An example would be in the case of trust; although the trustee’s name would be registered as the holder of the property, the beneficiaries acquire an equitable interest over the trustee’s property. They have a right to sue the trustee for breach of trust. 5) He who seeks equity must do equity

Anyone seeking assistance of a court of equity must, as a conduction to obtaining relief, do justice as to the matters in which the role of the court is sought for. if anyone is willing to have the justice of equity then he should always be ready to return equity to others. The maxim means that to obtain an equitable relief the plaintiff must himself be prepared to do ‘equity’, that is, a plaintiff must recognize and submit to the right of his adversary.

6) He who comes to equity must come with clean hands

The person seeking relief must not himself guilty of illegal or immoral conduct with regard to the same transaction which would dis entitle him to any assistance of the court. the court of equity will take into consideration, the personal conduct of the plaintiff in the transaction in dispute and if he had not sought the help of the court with clean hands, court will refuse to grant him relief. Equity demands fairness not only from the defendant but also from the plaintiff. It is therefore said that “he that hath committed an inequity, shall not have equity.” While applying this maxim the court believed that the behaviour of the plaintiff was not against conscience before he came to the court. 7) Delay defeats equity

If there is an unreasonable delay in bringing proceedings the case may be disallowed in equity. Acquiescence is where one party breaches another's rights and that party doesn't take an action against them, they may not be allowed to pursue this claim at a later stage. These may be used as defences in relation to equity cases. For a defence of laches courts must decide whether the plaintiff has delayed unreasonably in bringing forth their claim and the defence of acquiescence can be used if the actions of the defendant suggest that they are not going ahead with the claim so it is reasonable for the other party to assume that there is no claim. A Latin term in this regard is “Vigilantisms, non dormentibus, jura subvenient.” which means “Equity aids the vigilant and not the indolent”. So, if one sleeps on his rights, his rights will slip away from him. Legal claims are barred by statutes of limitation and equitable claims may be barred not only by limitation law but also by unreasonable delay, called laches. 8) Equity abhors a vacuum

The idea behind this maxim is that it goes against the principle of the court of equity for a piece of property to be left with NO beneficial owner. This means that in considering property rights, equity will not allow there to be property rights which are not owned by some identifiable person. This maxim is mostly concerned with resulting trusts. 9) Equity looks to substance/intent not form

This maxim is characteristic of the greater freedom of action of the equity courts, as compared with the common law courts, and of their efforts to do substantial justice rather than enforce technical rules. Common law was very rigid and inflexible. It could not respond favourably to the demand of time. It regarded the form of a transaction to be more important than its substance. It looked to the very letter of the agreement and not the intention behind it. On the other hand, Equity looks to the spirit not to the letter, it looks to the intention of parties and not to the words. 10) Equity will not permit a statue to be used as an instrument of fraud

Equity prevents a party from relying upon an absence of a statutory formality if to do so would be unconscionable and unfair. This can occur in secret trusts, constructive trusts etc. 11) Equity imputes an intention to fulfil an obligation

Generally speaking, near performance of a general obligation will be treated as sufficient unless the law requires perfect performance, such as in the exercise of an option. Text writers give an example of a debtor leaving a legacy to his creditor equal to or greater than

his obligation. Equity regards such a gift as performance of the obligation so the creditor cannot claim both the legacy and payment of the debt. Where a claimant is under an obligation to do one thing but does another, his action may be treated as close enough approximation of the required act. A claimant who has undertaken an obligation, will, through his later conduct be interpreted as fulfilment of that obligation. 12) Equity regards as done that which out to be done

This maxim means that when individuals are required, by their agreements or by law to have done some act of legal significance, Equity will regard it as having been done as it ought to have, even before it has actually happened. This makes possible the legal phenomenon of equitable conversion. Sometime this is phrased as "equity regards as done what should have been done." If someone undertakes an obligation for the other, equity courts look on it as done and as producing the same results as if the obligation had been actually performed. Equity courts therefore look to the acts of the person bound by his conscience and interpret and construe them in such a way that they amount to what ought to be done. 13) Equity acts in personam

In England, there was a distinction drawn between the jurisdiction of the law courts and that of the chancery court. Courts of law had jurisdiction over property as well as personsand their coercive power arose out of their ability to adjust ownership rights. Courts of equity had power over persons. Their coercive power arose from the ability, on authority of the crown, to hold a violator in contempt, and take away his or her freedom (or money) until he or she purged himself or herself of his or her contumacious behavior. This distinction helped preserve a separation of powers between the two courts. Nevertheless, courts of equity also developed a doctrine that an applicant must assert a "property interest". This was a limitation on their own power to issue relief. This does not mean that the courts of equity had taken jurisdiction over property. Rather, it means that they came to require that the applicant assert a right of some significant substance as opposed to a claim for relief based on an injury to mere emotional or dignitary interests. 14) Equality is equity

Equity always tries to put the litigating parties on an equal level so for as their rights and liabilities are concerned. equity acts in such manner that no party gets an under advantage over the other party. benefits and burden of common interests and obligation cannot be imposed upon and pressed against any one. "Equality is equity" is also expressed "Equity delighteth in equality which means that as for as possible equity would put the litigating parties at equal pedestal. it expresses the object of both law and equity in order to effectuate distribution of property and losses proportionate to several claims and liabilities of the parties concerned so equality therefore means proportionate equality. 15) Equity will not allow a trust to fall for want of a trustee

If there is no trustee, whoever has legal title to the trust property will be considered the trustee. Otherwise, a court may appoint a trustee. In Ireland, the trustee may be any administrator of a charity to which the trust is related. 16) Equity will not assist a volunteer

volunteer is defined in equity as one who has not offered consideration for a benefit they have received or expect to receive. For example, if a person A expects from past conversations and friendship to receive property under any will of person B, but person B dies before writing this into their will, person A, having not made any contribution to person B, will not be able to seek equity's aid. This maxim is very important in restitution. Restitution developed as a series of writs called special assumpsit, which were later additions in the courts of law, and were more flexible tools of recovery, based on equity. Restitution could provide means of recovery when people bestowed benefits on one another (such as giving money or providing services) according to contracts that would have been legally unenforceable. However, pursuant to the equitable maxim, restitution does not allow a volunteer or "officious intermeddler" to recover. Those successfully pleading benefit from an estoppel (promise relied on to their detriment) will not be considered volunteers for the purpose of this maxim. 17) Equity will not perfect an imperfect gift

If a donor has failed to fulfil all the required legal formalities to effect a transfer, meaning the gift is an imperfect gift, equity will not act to provide assistance to the done. This maxim is a subset of equity will not assist a volunteer. However, there are certain relaxations to the maxim, including the rule of Re Rose of where the donor has “done all in his power to divest himself of and to transfer” the property, and the more recent but controversial use of unconscionability as a method of dispensing a formality requirement. Note the exception in Strong v Bird (1874) LR 18 Eq 315. If the donor appoints the intended done as executor of his/her will, and the donor subsequently dies, equity will perfect the imperfect gift. Recognition of Trusts Act 1987 The term ‘trust’ refers to the legal relationship – created inter vivos or on death – by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose. • • •

Created by a person, the settlor When assets have been placed under the control of a trustee For the benefit of a beneficiary

For example: • Person A buys house • Person A owns the house

Fully constituted trust capacity

(legal and beneficial owner) • Person A declares that s/he

CERTAINTY is holding the house on trust Beneficiary principle

for the benefit of Person B and Person C in equal shares

FORMALITIES (creation / disposition)

Settlor (A)

Trustee (A)

Beneficiaries = B&C

EFFECTIVE EFFECTIVE TRANSFER TRANSFER

FULLY CONSTITUTED TRUST

“Fully constituted trust”

1)

FULLY CONSTITUTED TRUST

principle

th four elements: capacity, certa

1) Capacity Capacity means that the person who creates a trust must be legally capable of doing so. Generally, anyone who can hold property can form a trust. However, because kids can’t own property, they cannot create a trust. Nor can they form a will. People who are considered mentally disordered under the Mental Health Act 1983 no longer control their property if they have a receiver. 2) Beneficiary principle

3) Certainty Certainty means that a trust must show certainty of intention (to create a trust), subject matter (which specific property) and object (clarity of who beneficiaries are). These are known as the three certainties. A trust can be uncertain in four ways: - Conceptual uncertainty – when language is unclear - Evidential uncertainty – where a factual question cannot be answered - Ascertainability – where beneficiary cannot be found 3) Formalities There is no requirement for particular formalities – they can be oral or written. The only requirement is that it needs to be shown that there is an intention to create a trust. However, as usual with law, there are a number of exceptions. When transferring land, trusts must comply with Section 53 (1)(b) of the Law of Property Act 1925, meaning that there must be evidence of the trust’s existence – a signature on a declaration usually does the trick. When disposing of land, or transferring it into trusts, the Law of Property (Miscellaneous Provisions) Act 1989 must be followed. This can only be made in writing and must list all the terms in one document. This document must also be signed alongside the exchanged contracts. Equitable interests are also an exception to the formalities rule. When an equitable interest is disposed of this must be in writing and signed by the person disposing of the equitable interest. For instance, nominating somebody to received benefits of a pension fund in the event of the pensioner dying is not a valid disposition. Neither is nominating somebody to benefit from a life insurance policy. Wills must also follow formalities in order to be valid. It must comply with the Wills Act 1837, whereby no will is valid unless it is in writing and signed by the testator; the testator intended to give effect to the will; the signature is made in the presence of at least two witnesses, who also must attest and sign the will or acknowledge the signature....