Equity Recap

Historical Development of Equity

• Post-Norman invasion (1066)
• Limitations of writ system in common law prompted petitions to the king as "font of all justice".
• The Chancellor acted as "keeper of the king's conscience".
• Equity addressed deficiencies in common law:
  • Absence of appropriate actions.
  • Unjust outcomes.
  • Inadequate remedies.
  • Deficient procedures.

Jurisdictions of Equity

• Exclusive Jurisdiction
  • Equity created causes of action not available at common law.
  • Examples include breach of confidence, breach of fiduciary duty, and trusts.
• Concurrent and Auxiliary Jurisdiction
  • Addresses situations where common law actions exist but are deficient.
  • Supplements rather than replaces common law.
  • Examples: specific performance, appointment of receivers.

Equity as a Court of Conscience

• Discretionary nature of equity.
• Historical tension with common law.
• Criticism regarding discretion: "The length of the Chancellor's foot."
• Discretion is constrained by principle and precedent.
• There is no absolute right to equitable remedies.

Limitations on Equitable Relief

• Undue hardship to defendant.
• Change of position.
• Delay in bringing action.
• Unclean hands.

Range of Equitable Remedies

• Equity has a broader toolkit than common law's monetary damages.
• Right and remedy are "indissolubly connected" (Chase Manhattan Bank case).
• Claims are often remedy-driven.
• Distinction between personal vs. proprietary remedies.

Purpose of Equitable Remedies

• Specific Performance
  • A court decree compelling performance of contractual obligations.
• Injunctions
  • Orders requiring or prohibiting specific actions.
• Compensation
  • For purely equitable wrongs.
  • Different approach to causation than common law.
• Account of Profits
  • Recovery of wrongful gains.
• Constructive Trusts
  • Imposing trusteeship on fiduciaries who gain from their position.
• Rectification
  • Correcting instruments that don't reflect the parties' intentions.
• Rescission
  • Setting aside transactions affected by vitiating elements.

Fiduciary Relationships

• Core Fiduciary Obligations
  • Duty of Loyalty
    • No-Conflict Rule
    • No-Profit Rule
  • Duty of Confidence
• Trustee/Beneficiary
  • Original fiduciary concept.
  • Obligations to all potential beneficiaries.
• Company Director/Company
  • Balance between trustee-like duties and commercial flexibility.
  • Separation of ownership and management.
• Solicitor/Client
  • Established category of fiduciary relationship.
  • May exist without a formal retainer.
  • Measured by equity's standards, not just professional rules.
• Partners
  • "Stronger case of fiduciary relationship cannot be conceived".
  • Partners as agents for each other.
• Agent/Principal
  • Self-appointed and gratuitous agents included.
  • Principal's obligations governed by common law.
• Employee/Employer
  • Not all employees are fiduciaries.
  • Limited to those with "decision-making discretion and responsibility".
• Bank/Customer
  • Usually a creditor-debtor relationship.
  • May become fiduciary when acting as financial advisor.

Maxims of Equity

• Guiding principles, not strict rules.
• Reflect fundamental moral themes.
• Function as axioms for equitable decision-making.
• Equity looks on that as done which ought to be done.
• Equity follows the law.
• A person who comes into equity must come with clean hands.
• A person who seeks equity must do equity.
• Equity does not allow a statute to be made an instrument of fraud.
• Equity acts in personam.
• Equity looks to intent or substance and not form.
• Equity aids the diligent and not the tardy.
• Equity will not assist a volunteer.

Conclusion

• Equity as complementary to common law.
• Discretionary nature guided by principles.
• Remedy shapes cause of action.
• Fiduciary relationships create special obligations.
• Foundation for specific remedies to be examined in future lectures.