Equity and Trusts: History and Nature of Equity – Comprehensive Notes

Defining Equity

• Equity may be described as:

  • A jurisdiction hearing certain claims

  • A jurisdiction providing certain remedies

  • A body of guided discretionary principles designed to mitigate strict common law rules, principles and procedures

  • A gloss on the common law to ensure justice and fairness

  • A jurisdiction based upon conscience and morality – in personam – against the person

Common Law Courts: Pre-1873

• Common law courts pre-1873:

  • Formal writ system for claims (common law grew out of recognised general customs – time immemorial - $1189$)

  • Writ = document authorising cause of action; Royal courts

  • New claims were not entertained

  • Rigid and certain

  • Strict application of judicial precedent

  • Remedy restricted to damages

  • Historical context

The King's Role: Pre-1688

• The role of the King pre-1688:

  • Absolute monarch & fountain of justice (executive, legislative & judicial power)

  • Could dispense justice to fit individual petition / facts

  • Provided an avenue for disgruntled common law litigants

  • Assisted by the Lord Chancellor, the ‘Keeper of the King’s Conscience’; Keeper of the King’s Great Seal

  • Historical context

Lord Chancellor's Evolving Role: Pre-1873

• The evolutionary role of the Lord Chancellor pre-1873:

  • Decided cases on principles of morality and conscience

  • Ecclesiastical origins, which evolved into a legal office

  • Introduced alternative remedies – injunction, specific performance, rescission, restitution etc.

  • Administrative / executive function later assumed a judicial character

  • Individual discretion gradually replaced by reasoned discretion; equitable principles were ‘invented’ and modified

  • Introduction of judicial precedent cured the uncertain nature of early equity

  • Modern equity

  • Cook v Fountain – Lord Nottingham

  • ‘conscience’ relates to that which concerns civil & political community

  • Historical context

Exclusive Jurisdiction

• Exclusive jurisdiction – arising solely in equity

  • ‘use’ (traditional concept) / ‘trust’ (modern concept) feoffee to use / trustee = legal title; cestui que use / beneficiary = equitable interest

  • fiduciary obligations

Auxiliary Jurisdiction

• Auxiliary jurisdiction – supporting common law, two streams where waters do not mingle

  • remedies of injunction & specific performance

Concurrent Jurisdiction

• Concurrent jurisdiction – existing alongside common law, two streams where waters do not mingle

  • fraud; misrepresentation; estoppel

Equitable Inventions

• ‘Inventions’ in Equity – examples …

Conflict with Common Law

• A tussle between 2 distinct legal jurisdictions:

  • ‘Common injunction’ awarded by the Chancery to stop common law proceedings

  • Imprisonment by Chancery for contempt of the ‘common injunction’

  • Retaliatory writ of habeas corpus by common law courts

  • The Earl of Oxford’s Case – King James I = in the event of conflict, equity prevails

The Need for Reform

• A tussle between 2 distinct ‘legal’ jurisdictions:

  • Common law courts did not recognise equitable rights, titles, or interests

  • Common law courts did not have power to order specific performance or to grant injunctions and interim relief

  • Transfer of cases from one jurisdiction to the other was not possible

  • Equity could not award damages; only equitable compensation or restitution

  • Lord Cairns’ Act $1858$ (Imp) – equity could award damages in lieu of / in addition to specific performance and injunction

The Judicature Acts

• $s25(11)$ Judicature Act $1873$ (Imp) – rules of equity prevail when in conflict with common law rules → $s249$ Supreme Court Act $1995$ (Qld)

• Administration of equity and common law became fused

• ‘Common injunction’ abolished

• All courts could hear common law and equitable claims & defences; grant appropriate remedies

• No more multiplicity of actions! J

• Queensland was the first colony to adopt the Judicature Act $1873$ (Imp) → Judicature Act $1876$ (Qld)

• Modern jurisdiction → Civil Proceedings Act $2011$ (Qld) – superior courts & District Court of Queensland Act $1967$ (Qld) – inferior courts

The Fusion Fallacy

• Important → only the administration of equity & common law became fused, NOT the principles!

• Substantive rules & principles remained separate (e.g. consideration in contract law)

• Fusion fallacy cases:

  • Walsh v Lonsdale (an improperly executed lease was upheld because the court fused the common law yearly tenancy with the equitable interest of the entire lease period)

  • Redgrave v Hurd (damages awarded for innocent misrepresentation)

Modern Equity Applications

• Equitable intervention in contract and tort (remedies (Module 2), estoppel (Module 3), vitiating factors, penalties and relief against forfeiture)

• Unconscionability and Undue Influence (Module 3)

• Fiduciary obligations (Module 4)

• Breach of confidence

• Equitable interests in property and their assignment (Module 5)

• Trusts (Modules 6 – 10)

Maxims of Equity (Part 1)

• • Equity acts in personam X v Twitter Inc

• • Equity will not suffer a wrong without a remedy Giumelli v Guimelli

• • Equity follows the law Motor Terms Co Pty Ltd v Liberty Insurance

• • When equities are equal, the first in time prevails

• • One who seeks equity must do equity

• • One who comes to equity must come with clean hands

• • Black Uhlans Inc v New South Wales Crime Commission

Maxims of Equity (Part 2)

• • Equity assists the diligent and not the tardy (Delay defeats equity) Latec Investments Ltd v Hotel Terrigal

• • Equity is equality

• • Equity regards as done that which ought to be done Walsh v Lonsdale

• • Equity imputes an intention to fulfil an obligation

• • Equity looks to the substance & not the form

• • Equity will not assist a volunteer Corin v Patton: (Mason CJ & McHugh J on maxims: … summary statement of a broad theme … precise scope is necessarily ill- defined…)