Tutorial 1 - Introduction to Equity PDF

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Tutorial 1Essential reading:Textbook: Penner, Chapter 1Cases Riggs v Palmer 115 NY 506 (1889) - Elmer Palmer was legatee under the will of his grandfather Francis - To speed up his inheritance he poisoned Francis - Statute of Wills, construed literally, leaves legacy to Elmer - Elmer did not have cl...

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Tutorial 1 Essential reading: Textbook: Penner, Chapter 1 Cases Riggs v Palmer 115 NY 506 (1889) - Elmer Palmer was legatee under the will of his grandfather Francis - To speed up his inheritance he poisoned Francis - Statute of Wills, construed literally, leaves legacy to Elmer - Elmer did not have clean hands therefore he cannot claim his grandfather’s inheritance Walsh v Lonsdale (1882) 21 Ch D 9 - Concerns a situation where there was a specifically enforceable contract to grant the lease but the lease itself was not properly executed so there was no lease that came to existence at law. The kings bench did not recognise it as coming into existence - If there is a specifically enforceable contract to grant a lease, Equity will treat this lease as having come into existence Thorner v Major [2009] UKHL 18 - The Court of Appeal had been wrong to reverse a trial judge's decision that a sufficient assurance had been made by a landowner to his nephew to support the operation of proprietary estoppel so as to enable the nephew to inherit his uncle's land. - David works for Peter for 30 years without pay, with the hope of inheriting the farm - Appelant (D) appealed against the decision, proprietary estoppel could not operate in his favour as to entitle him to inhere the estate of his deceased uncle - D had worked on the farm and hoped to inherit the farm, although no express representation was made but D relied on various hints made by P - The Court of Appeal had reversed that decision, finding that there had been no clear and unequivocal intention on the part of P and that there was no basis to construe P's statements as a definite assurance rather than a statement of present intention. - D submitted that the Court of Appeal had been wrong to apply the "clear and unequivocal" test because it was not relevant to proprietary estoppel. - The appeal was allowed. Proprietary estoppel had to relate to identified property (usually land) owned or about to be owned by the defendant. The trial judge had made a clear finding of an assurance by P that D would become entitled to the farm. Both P and D knew that the extent of the farm was liable to fluctuate as development opportunities arose and tenancies came and went. There was no reason to doubt that their common understanding Eves v Eves [1975] 1 WLR 1338

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Where a man leads a woman, to whom he is not married, to believe that she is to have an interest in a house which he has purchased, and the parties maintain and use it for their joint benefit, the court will find a constructive trust in favour of the woman that the house is held partly for her benefit. - P a woman starting living with D and had a child. D bought the house and said he would have had it transferred into their joint names had she been over 21, at the trial he admitted that this was merely an excuse. - P did a lot of heavy work improving the house - D married another woman, and P was compelled to leave the house with the children because of threats of violence, and she applied for a share in the house - It was held that P had been led to relive that she was to have a share in the house, the court made the declaration that D held the house on trust as to one quarter in her favour Rochefoucauld v Boustead [1898] 1 Ch. 550 - He who comes to Equity must come with clean hands - Equity will not allow a statute designed to prevent fraud to be used as an instrument of fraud - Comtesse de la Rouchefoucauld held some lands in Ceylon that were subject to an old mortgage - She could not keep up with mortgage payments but wanted to keep the land - Bousted orally agreed to purchase the land and hold on trust for the Comtesse - He breaks his promise - Court held that he had ‘unclean hands’ and the court did not insist on the signed writing of the trust and recognises the trust in his name Articles Matthew Harding Equity and the Rule of Law [2016] Law Quarterly Review 278 - ‘Critics argue that equity’s tolerance of indeterminacy is anathema to rule of law values and should therefore be abandoned: perhaps the most notable exponent of this view is Peter Birks, for whom discretion in equity is as indefensible as Reinhard Heydrich’s resort to conscience in seeking to justify his barbarities’ - ‘Margaret Halliwell, for example, describes equity as "subversive of law" in a book largely sympathetic to equity’ - ‘Roscoe Pound identifies equity as "anti-legal". 4 Indeed, the idea that equity undermines the rule of law is so widespread in scholarly understandings of equity as to seem largely beyond question’ - ‘This article will challenge the commonplace view that equity undermines the rule of law. It will do so in two ways: first, by arguing that equity’s tolerance of indeterminacy constitutes a much smaller threat to the rule of law than is commonly supposed; and secondly, by arguing that there are reasons to think that equity makes a particular contribution to the rule of law by performing a function of restraining unconscionable reliance on legal rights’ (he challenges the notion that equity undermines the rule of law) - ‘conceptions of the rule of law dwell on what must be true of a legal system to say that it is, in the words of John Finnis, "legally in good shape"; these conceptions tend to focus on the form and structure of law and on the functioning of

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institutions, such as courts, that work with law. Other conceptions cast the rule of law as a political ideal, seeking to specify what must be true of the exercise of political authority if citizens are to live free of the tyranny of arbitrary power; these conceptions tend to concentrate on the content of law’ (this answers what is the rule of law) ‘conceptions of the rule of law seem, at first glance, to be especially unforgiving of equity. Such conceptions emphasise the importance of values like clarity, consistency and predictability in the legal system, and it is these values that are often thought to be opposed to equity with its tolerance of indeterminacy’ (why at first glance equity doesn’t support the rule of law) 'to the extent that equity tolerates indeterminacy, judges deliberately decline to formulate and follow determinate rules and principles when developing and applying equitable doctrine; and they eschew determinate rules and principles when deciding on appropriate equitable remedies…there is a tolerance of indeterminacy in equity’ (what the judges do, and how there is indeterminacy) ‘Virgo points out that where the concept of conscience is deployed in this latter way in equity, it is often accompanied by relatively precise principles prescribing and channelling its content; however, he also notes that in some types of case the concept of conscience is used to direct judges in an unspecific and open-ended way…Virgo’s taxonomy of uses of the concept of conscience in equity is helpful for present purposes because it shows that, to a significant degree, equitable doctrine organised around that concept is determinate’ ‘This statement makes clear that much equitable doctrine organised around the concept of conscience is indeterminate only in a limited and interstitial way. In such doctrine, conscience may serve more of an expressive than an operative function in equity’ (in response to the high courts statement about conscience in equity in the case of Tanwar Enterprises Pty Ltd v Cauchi) HOWEVER ‘it cannot be denied that in some areas the use of conscience generates significant indeterminacy in equitable doctrine..judges are given no specific guidance telling them how to understand the demands of conscience from one case to the next’ Lord Walker in Pitt v Holt stated "The court cannot decide the issue of what is unconscionable by an elaborate set of rules. It must consider in the round the existence of a distinct mistake (as compared with total ignorance or disappointed expectations), its degree of centrality to the transaction in question and the seriousness of its consequences, and make an evaluative judgment whether it would be unconscionable, or unjust, to leave the mistake uncorrected. The court may and must form a judgment about the justice of the case.” Sir Anthony Mason concluded ‘by repeatedly evaluating the facts of particular cases within a certain class in light of the demands of conscience, may over time come to a clearer understanding of those demands that in turn renders them more determinate’ (therefore the law becomes more certain because the judges over a time will have a better understanding of what the conscience expects) However Arden L.J. stated in disagreement, that there was no exhaustive list of factors enabling a determination of unconscionability to be made, except that "there is nothing unconscionable in simply (without more) changing your mind”

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‘Judges have developed highly determinate principles to govern the award of a number of equitable remedies. The exemplar is of course the remedy of specific performance; Andrew Burrows, for instance, argues that the award of specific performance is constrained by determinate principles no less than the award of damages for breach of contract’ (the way in which remedies are awarded are determinate, and certain- which does coincide with the rule of law) However in regards to remedies it is still indeterminate in cases for example like of proprietary estoppel ‘..Equity’s tolerance of indeterminacy poses no great threat to a modal conception of the rule of law.This is because equity’s tolerance of indeterminacy typically takes the form of discretion, and because equity, like all judge-made law, is system-oriented’ (why equity does not pose a threat to the rule of law) IMPORTANT Counter argument to previous point ‘Still, it might be objected that, no matter how reliable a normative guide discretionary decision-making in equity might be, that decision-making might be reliable to a greater degree if equity were made more determinate’ Dismissal of counter argument ‘there are reasons to be cautious about that proposition. To begin with, it is not obvious that indeterminacy in equity could be eliminated or reduced significantly without unjust consequences’ ‘Sometimes highly determinate rules can, by their very insensitivity to the variety of circumstances to which they might apply, generate uncertainty and unpredictability for citizens seeking to order their affairs’ (how equity can make the law fair and certain’ HIS CONCLUSION ‘The conclusion was that equity’s tolerance of indeterminacy, while in part undeniable, is nowhere near as large a threat to the rule of law—at least on a modal conception—as is commonly supposed.’ ‘equity’s function of restraining unconscionable reliance on legal rights may serve the rule of law in a distinctive way, through contributing to conditions under which citizens are likely to form and maintain a disposition to engage with law’

Questions for discussion: 1. If we have such a wonderful legal system in England, why do we also need Equity? - Equity is there for when the law cannot provide a just/fair outcome by following the letter of the law, and the letter of the law is rigid. - Aristotle says equity steps into recifty problems with the common law, its used to perfect the law “For equity, though superior to justice, is still just … justice and equity coincide, and although both are good, equity is superior. What causes the difficulty is the fact that equity is just, but not what is legally just: it is a rectification of legal justice.” - Aristotle also said that equity is supported of the law

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Baker’s example in Penner – where a debtor fails to cancel a sealed bond they will still be liable after repayment – strict evidence rules For example the case of Riggs v Palmer (killed grandad to get his inheritance) is a prime example of how the law sometimes cannot have a fair outcome by following it as it is Rochefoucauld v Boustead [1898] 1 Ch. 550; he went back on his promise to hold the property on trust for the claimant because he hadn’t put it legally in writing Thorner v Major [2009] UKHL 18; promise to inherit farm after 30 years without pay, in which he relied on this as he thought he would inherit it These are all examples of how if we followed the letter of the law only, they would lead to unjust outcomes and equity corrects that

2. If a legal system suffers from inadequacies, is it a problem that the law chooses to cure said inadequacies by inventing a whole new legal system, rather than curing them internally? - I think an alternative system which allows discretion actually compliments the existing system - We do need certain and strict rules for society to follow - But there are also unusual and unique situations where these strict rules are hard to apply and require discretion from the judge in order to produce a just outcome - Therefore there is no need to alter or re write a whole legal system for these unique circumstances that aren’t as common. Both systems can work coincide with each other - However critics would say that it is; complicated, unpredictable, everyday individual don’t know about equity or understand it 3. What are the equitable maxims? Can you give examples, using the above caselaw? - These are general principles which the chancery courts and the modern courts apply, in granting and withholding equitable remedies - Examples; ‘he who comes into equity must come with clean hands’ case exampleRochefoucauld v Boustead [1898] - ‘equality is equity’ Eves v Eves 4. What is meant by unconscionability? Is Birks right to compare Equity’s use of the idea of conscience to Heydrich’s use of the same concept? - “The unreliability of conscience is captured in a grisly dictum of Heydrich, the chief of the Gestapo, which was recorded by Professor Archie Campbell immediately after the war: ' For the fulfilment of my task I do fundamentally that for which I can answer to my conscience.... I am completely indifferent whether others gabble about breaking the law’.” (bad things can be hidden behind the idea of conscience- he also disagrees) - Birk is right to compare this as even though everyone has a ‘conscience’ this doesn’t mean to say everyones is different, and even those who are seemingly evil, they arguably still have one, and so is it right to use this as a basis of legal decision making in cases? This could lead to unjust and unfair decisions

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To benefit from a wrong doing of taking advantage, Lord Brown Wilkingson in West Destdeutsche Landerbank said the most significant creation was that equity operates on the conscience and stops the unconsionability of the claimant benefiting but it is uncertain

5. Is it true, as John Selden said, that the standard for unconscionability is simply ‘the measure of the Chancellor’s foot’? - Yes - “Equity is a roguish thing. For the common law we have a measure. Equity is according to the conscience of him that is Chancellor, and 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.” – John Selden (he says that it is the Chancellors conscience therefore the decision will only depend on what each chancellor thinks- he disagrees with this idea) 6. Is the indeterminacy of Equity problematic? Should judges ever be allowed to exercise discretion? - Judges should be able to exercise discretion as it allow them to use their ‘conscience’ to produce a fair outcome for the claimant using equitable maxims - However it could be argued like John Selden says that it is to inconstitent, and it will mean the law becomes inconsistent as judges use their discretion rather than the law which is consistent - The law is supposed to be certain for society to rely on, and by judges using their discretion, this gets rid of that, making it also harder for lawyers to advise their clients 7. Does equity violate the Rule of Law? What does Matthew Harding say about this? - He says that in some areas it is undoubtedly indeterminate, in which the rule of law requires - However because judges are system orientated, it isn’t as indeterminate as people are ought to believe ‘is nowhere near as large a threat to the rule of law—at least on a modal conception—as is commonly supposed’ - 'This is because equity’s tolerance of indeterminacy typically takes the form of discretion, and because equity, like all judge-made law, is system-oriented’

Extra reading: Roscoe Pound The Decadence of Equity [1905] Columbia Law Review 20 - Available through HeinOnline Henry Smith Property, Equity and the Rule of Law in LM Austin and D Klimchuk Private Law and the Rule of Law (Oxford, 2014)

- Available through Oxford Scholarship Denis Klimchuk Equity and the Rule of Law in LM Austin and D Klimchuk Private Law and the Rule of Law (Oxford, 2014) - Available through Oxford Scholarship Irit Samet What Conscience Can Do For Equity (2012) 3 Jurisprudence 13 - Available through HeinOnline Alistair Hudson Conscience as the Organising Concept of Equity (2016) 2(1) CJCCL 261 Available through HeinOnline Peter Birks Equity in the Modern Law: An Exercise in Taxonomy University of Western Australia Law Review, Vol. 26, Issue 1 (July 1996), pp. 1-99 (note, it is sufficient to read only pages 17-22) - Available through HeinOnline Martin Dixon Confining and Defining Proprietary Estoppel: The Role of Unconscionability Legal Studies Vol 30. No. 3, September 2010 pp 408-420 Available through HeinOnline...