History of Equity

Conceptual Definitions and the Relationship with Common Law

• Classic Definition by Maitland: Equity is fundamentally understood through its relationship with the common law. Maitland characterizes equity as a ‘sort of gloss’ upon the common law rather than a self-sufficient, independent system of rules.

• The Dual System (Worthington Reading): The legal landscape is comprised of a dual system represented metaphorically by "red rules" and "green rules."

  • General Rules (Red Rules): These are the standard rules established by the common law.

  • New Situations/Remedial Rules (Green Rules): These are the rules of equity that emerge when existing common law rules are insufficient for new or exceptional circumstances.

• Operational Dependency: Equity presupposes the existence of the common law; it cannot exist in a vacuum because its purpose is to correct or supplement an underlying legal framework.

• Core Functions of Equity:

  • Corrective: Amending the common law where it fails to deliver justice due to its generality.

  • Supplementary: Providing additional remedies or protections where the common law is silent or incomplete.

Practical Examples of Common Law and Equity Interaction

• Doctrine of Rectification (Contractual Error): In a scenario where a vendor contracts to provide $5$ sections of land but actually intended to provide only $4$, equity steps in to remedy the error and align the contract with the actual intent.

• Doctrine Against Penalties: Equity intervenes in cases where a specified penalty in a contract is deemed disproportionately harsh.

• Express Trust and Breach of Trust: This identifies a supplementary function of equity. It occurs when land is granted to a specific person solely to allow them to administer it for trustees.

• Specific Performance: In the context of buying a house, if a buyer has a specific interest in that particular property, equity can compel the completion of the sale through specific performance, a remedy not typically available at common law.

Aristotelian Conception of Equity

• Definition of Epieikeia: Aristotle defined equity as ‘that which is appropriate’ or ‘right.’

• Correction of Legal Justice: According to Aristotle in Nicomachean Ethics [$1137b$ $20–24$], equity is a correction of "legal justice" in instances where general rules fall short.

• The Concept of Legislative Omission: Aristotle argues that when a legislator enacts a general rule, they may err by not covering exceptional cases due to the generality of the language. Equity represents the ruling the legislator would have provided had they been present and aware of the specific circumstances: ‘[W]hen the law states a general rule, and a case arises under this that is exceptional, then it is right… to correct the omission by a ruling such as the legislator himself would have given.’

Early Historical Development of the Chancery

• $13^{th}$ Century Context: During this period, there were three primary courts: the King’s Bench, Common Pleas, and the Exchequer. Sources of law included common law, statute, custom, and royal prerogative; equity did not yet exist as a distinct system.

• The Nature of the Chancery: Originally a secretarial department headed by the Chancellor. The staff consisted of clerks trained in Canon Law (the law of the church), which heavily influenced early equitable principles.

• The Chancellor’s Tools: The Chancellor held the King’s Seal and issued "writs." These were the required templates for a person to take another to court. This role gave the Chancellor contact with the mechanism of justice, even if he did not yet hear cases himself.

• Transition to Judicial Functions:

  • Writs: The Chancery had the power to create new writs, although they had to follow specific wording.

  • Royal Prerogative: The King held a residual power to hear petitions for justice. As the volume of these cases grew, the Chancellor assumed more of this responsibility.

The Dual Role of the Chancellor

• Latin Side: Concerned with questions regarding church and Canon Law.

• English Side: Concerned with appeals from the people.

• Judicial Expansion: The Chancellor evolved into a judicial figure. He gained the ability to issue writs (an action disliked by common law courts) and could hear cases himself using a subpoena. This procedure resembled the inquisitorial methods used in Canon Law.

• Subject Matter of Appeals: The Chancellor predominantly dealt with cases involving power imbalances, such as assaults, battery, imprisonment, deprivation of possession, duress, fraud, and mistake.

• Basis of Decisions: Appeals were often addressed to ‘conscience and God.’ Decisions were made ad hoc, informed by common law, Canon Law, jurisprudence, and potentially Roman civil law. The underlying focus was morality and the religious effect of wrongs committed.

The Conflict Between Common Law and Equity

• Effect of Decisions: A decision in the Chancery did not technically invalidate a common law judgment. Instead, it prohibited the enforcement of that judgment against the person. This operated in personam (against the person's conscience) rather than in rem (against the property or the law itself).

• Undermining the System: By acting as a de facto appeal court, the Chancery began to undermine common law authority, leading to warnings to the Chancellor not to interfere.

• Theories of the Conflict (JH Baker):

  1. A conflict between Coke CJ and the King regarding the extent of the Crown’s extraordinary jurisdiction.

  2. A long-standing tension between common lawyers and "extraordinary" jurisdictions like ecclesiastical courts and the Admiralty.

  3. A personal antagonism between Coke CJ (who believed the King’s Bench should oversee all courts) and Lord Ellesmere (a defender of the royal prerogative).

The Earl of Oxford’s Case ($1615$)

• Facts: A law stated that land conveyances exceeding $21$ years were void. A college sold land to the Queen, assuming the sale was unimpeachable. Both the college and a subsequent buyer tried to lease the land, raising the question of whether the original conveyance was void.

• Common Law Ruling: The sale was void based on the strict letter of the law.

• Chancery Ruling: Lord Ellesmere ruled that the common law judgment could not be enforced.

• Ellesmere’s Reasoning:

  • Reiterated the Aristotelian view: Equity exists because general laws cannot contemplate every specific situation.

  • Equity serves to protect consciences and mitigate the "harshness and extremeness" of the common law.

• Resolution ($1616$): King James I issued a decree in favor of the Chancery, establishing that equity prevails in cases of conflict. This position was later codified by legislation.

Systematization and the Evolution of Consistency

• Pressure to Systematize: Equity faced criticism for being arbitrary and unpredictable, as it was based on the individual Chancellor's conscience. Increasing caseloads and backlogs required structured case management.

• Critique of Arbitrariness: John Selden ($1689$) famously mocked the system, stating: "'T is all one as if they should make the standard for the measure we call a 'foot' a Chancellor's foot; what an uncertain measure would this be!"

• Legalization of the Role: It became a requirement for the Chancellor to be a trained lawyer, leading to decisions based on rules and established precedents.

• Key Chancellors: Lord Nottingham and Lord Eldon were instrumental in the development of equitable precedents.

• The Goal of Consistency:

  • Gee v Pritchard: Lord Eldon emphasized that equity should be consistent and predictable.

  • Earl of Feversham v Watson: Consistency was deemed especially vital in the context of property rights, moving equity away from its ad hoc origins toward a rigid system of rules similar to the common law.