The Fusion of Law and Equity PDF

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KEY C - cases J - judges T - thoughts Q – quotes L - legislation

1.

The “fusion” of law and equity

1.1 Background “No suitor should be defeated because he commenced his dispute in the wrong court, and sending the suitor from equity to law and from law to equity, to begin his suit over again in order to obtain redress, will no longer be possible …. [Each division of the Supreme Court] should be enabled to grant such relief or apply such remedy or combination of remedies … as all the present courts combined would have jurisdiction to administer”. First Report of the Judicature Commission (1869). The Judicature Commission recommended the creation of a single Supreme Court of Judicature, comprising the High Court and the Court of Appeal. (Since the abolition of the judicial functions of the House of Lords on 1st October 2009 and their transfer to the Supreme Court of the United Kingdom, the Supreme Court, the Court of Appeal and the High Court are together called the Senior Courts of England and Wales.) That new single court was to have all the jurisdiction then exercised by the separate superior courts of law, equity, probate, admiralty and divorce.

1.2 The statute ·

The Judicature Acts 1873-1875, including section 25(11). See now Senior Courts Act 1981 s.49(1):

‘Subject to the provisions of this or any other Act, every court exercising jurisdiction in England or Wales in any civil cause or matter shall continue to administer law and equity on the basis that, wherever there is any conflict or variance between the rules of equity and the rules of the common law with reference to the same matter, the rules of equity shall prevail.’

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In terms of substantive law, this continues the settlement between law and equity established by the Earl of Oxford’s Case (1615).

The High court now had jurisdiction to administer both equitable and common law jurisdiction. The aim of the juridicature acts was to mitigate conflict between the two, and under it if there is a conflict between the two equity shall prevail. Now, there is one rule system that can administer both the rules of common law and chancery as opposed to the former dual-court structure. This doesn’t end the controversy between the common law and equity because there is a long debate as to whether the judicature fused just the administration of equity and the common law or whether it fused the rules also.

1.3 The debate There is debate as to whether the Judicature Acts fused merely the administration of equity and the common law (“procedural fusion”), or also fused the substantive rules of those jurisdictions (“substantive fusion”). In England at least, the generally accepted view now is that there has been no substantive fusion of law and equity. The only effect of the Judicature Acts was procedural. Procedural fusion -

administration of common law and euity has been fused

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substantive common law and substantive equity remain separate jurisdiction

So essentially if you had an equitable claim youd only have an equitable remedy, and a common law claim would only have a common law euity ‘… the two streams of jurisdiction, though they run in the same channel run side by side and do not mingle their waters.’ Ashburner, Principles of Equity (2nd edn, 1954) 18. ‘It is difficult to conceive how the rules of equity could prevail over those of Law, if there were no longer any rules of Equity or Law; if the Judicature Acts had assimilated the two in order to create the successor to Equity and Law what conflict could there be?’ Lord Neuberger, Has Equity Had its Day Salt v Cooper (1880) 16 ChD 544, 549 Jessel MR: ‘the main object of the Act was to assimilate the transaction of Equity business and Common Law business by different Courts of Judicature. It has been sometimes inaccurately called ‘the fusion of Law and Equity’; but it was not any fusion, or anything of the kind; it was the vesting in one tribunal of the administration of Law and Equity in every cause, action or dispute which should come before that tribunal.’ MCC Proceeds Inc v Lehman Bros International (Europe) [1998] 4 All ER 675 (CA), 691

Mummery LJ: ‘[The Judicature Acts w]ere intended to achieve procedural improvements in the administration of law and equity in all the law courts, not to transform equity interests into legal titles or to sweep away altogether the rules of the common law…’ Substantive fusion The idea that the judicature acts removed any substantive distinction between common law and equitable claims, and abolished defences and remedies. (sometimes called the ‘fusion fallacy’ by its detractors) Boyer v Warbey [1953] 1 QB 234 Lord Denning: ‘I know that before the Judicature Act 1873 it was said that the doctrine of covenants running with the land only applied to covenants under seal and not to agreements under hand … But since the fusion of law and equity the position is different. The distinction between agreements under hand and covenants under seal has largely been obliterated.’ United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, 924-925 Lord Diplock: ‘… by 1977 this metaphor [of two streams running side by side] has in my view become both mischievous and deceptive. The innate conservatism of English lawyers made them slow to recognise that by the Supreme Court of Judicature Acts 1873 the two systems of substantive and adjectival law formerly administered by the Courts of Law and the Courts of Chancery … were fused.’ → QUESTION: Was this case ‘the low water-mark of modern English jurisprudence’ as claimed by Meagher, Gummow and Lehane?

Tinsley v Milligan [1994] 1 AC 340, 371 Lord Browne-Wilkinson: ‘… to draw a distinction between property rights enforceable at law and those which require the intervention of equity would be surprising. More than 100 years has elapsed since the fusion of the administration of law and equity. The reality of the matter is that, in 1993, English Law has one single law of property made up of legal and equitable interests.’ The fusion fallacy You may see reference to the “fusion fallacy.” This is referring to the idea that after the Judicature Acts any substantive distinctions between common law and equitable claims, defences and remedies has been abolished. “The fusion fallacy involves the administration of a remedy, for example common law damages for breach of fiduciary duty, not previously available at law or in equity, or the modification of principles in one branch of the jurisdiction by concepts which are imported from the other. The fallacy is committed explicitly, covertly, and on occasion with apparent inadvertence. But the state of mind of the culprit cannot lessen the evil of the offence”: Meagher, Gummow and Lehane’s Equity: Doctrine and Remedies (4th edn, 2002) 54

The debate between procedural and substantive is about whether the JActs did actually remove this distinction and in fact did fuse them substantively, but there is also a q about whether they ought to be fused going forward. Burrows introduces the idea of fusion by convergence, a more moderation fusion. Fusion by convergence

‘the support of fusion seems self-evident, resting, as it does, on not being slaves to history and on recognising the importance of coherence in the law …’ Burrows, “We do this at common law but that in equity” (2002) 22 OJLS 1, 4 This a more moderate and principled version of the substantive fusion position. The argument is that as law evolves and develops, it is proper for judges to borrow ideas back and forth between law and equity. This particularly the case when two bodies of rules operate alongside each other in the same kind of dispute. There is a strong argument that like cases should be decided alike. This ensures fairness and coherence in the law. Historical differences in the origin of the claim is not a good enough argument to justify substantively different results. The argument is based on the claim that like cases should be decided alike. We could query, however, whether the cases actually are always alike. Borrowing principles back and forth across the old common law/equity divide may be problematic when judges do not consider the different policies served by those old rules. For example, do we really want contributory negligence to apply to cases where a trustee has breached one of her duties? And what would this mean for the trust? ‘It may be asked … why not abolish at once all distinction between law and equity? I can best answer that by asking another question – Do you wish to abolish trusts? If trusts are to continue, there must be a distinction between what we call a legal and an equitable estate.’ Lord Selborne LC, HL Deb 13 February 1873, vol 214, col 339 ‘The substantive Common Law would continue to exist insofar as it did not conflict with Equity. The twin streams of English substantive law were thus intended to continue to flow separately, even though the common law stream would narrow at those points where it overlapped, but did not mingle, with flowing waters of Equity.’ Lord Neuberger MR, Has Equity Had its Day? Lord Napier and Ettrick v Hunter [1993] 1 All ER 385, 401 Lord Goff: ‘No doubt our task nowdays is to see the two strands of authority, at law and in equity, moulded into a coherent whole; but for my part I cannot see why this amalgamation should lead to the rejection of equitable proprietary right…’...