Equity and Trust Tutorial

1) Briefly describe the origin and development of “Equity” in English law

- Equity is a body of rules and principles that form an appendage to the general
principles of law. - Equity means that which is fair, just and reasonable in preventing
unconscionable conduct. - Principles of justice and conscience are the basis of equity
jurisdiction.
- The ecclesiastical natural foundations of equity, its concerns with standards of
conscience, fairness, equality and its protection of relationships of trust and confidence,
as well as its discretionary approach to the grant of relief, stand in marked contrast to
the more rigid formulae applied by the common law and equip it better to meet the
needs of the type of liberal democratic society which has evolved in the twentieth
century. – the relevance of equity to contemporary issues stated by Sir Anthony Mason.
- Another observation of Spry in The Principle of Equitable Remedies: Equitable
principles have above all a distinctive ethical quality, reflecting as they do the prevention
of unconscionable conduct. Further, they are of their nature of great width and elasticity
and are capable of direct application, as opposed to application merely by analogy, in
new circumstances as they arise from time to time. - - It is administered by the Court of
Chancery before the Judicature Act 1873 come into force - Developed from the informal
process application made by petitioners seeking relief directly from the King, or in
circumstances where they were dissatisfied with the decision of common law courts -
Claims were later heard by the Lord Chancellor as the keeper of the King’s Conscience
- This grew and a court named ‘Chancery Court’ was set up to hear and to decide on
those claims - The Court of Chancery was in effect developed as a court of conscience
to counteract the defects that existed in the common law system. - The main purpose of
equity is to mitigate the rigidity of common law system For example, granting remedies
(common law can only grant damages, equity can grant injunction and specific
performance)
- Penn V Lord Baltimore - An order of specific performance was granted to the plaintiff
who brought a boundary dispute case to an English court, yet the land was in Maryland,
in the USA. The parties to the dispute were English and both lived in England. - Equity
can make orders affecting property outside its jurisdiction by making orders against the
person of the defendant in the jurisdiction.
- Equity came into existence during the 13th century. At that time the courts of law had
froze the types of claims they would hear as well as the procedure governing the
hearing of those claims. The range of claims that would be heard became narrow and
the processes to bring the actions to court became so technical with jurors often being
bribed. As a result of these changes plaintiffs with meritorious claims were often denied
relief.
- To attempt to counteract this discrepancy remedies could be obtained by petitioning
the King, who had residual judicial power to deal with such matters. The King began
delegating the function of dealing with such petitions to the Chancellor. The post of
Chancellor at this time was usually a clergyman and King’s confessor. The Chancery
evolved into a judicial body known as the Court of Chancery, until by the end of the 15
th century the judicial power of the Chancery was fully recognised

3. In holding that the Act of 1873 has brought about a fusion of common law and
equity Lord Diplock said: "After a century Professor Ashburner's vivid
metaphor of two streams flowing into one channel must have a different
conclusion. It may take time before the water of two confluent streams are
thoroughly intermixed but a period has to come when the process is
complete."
Discuss this statement with reference to decided cases.
The Courts of Judicature Acts 1873-75 fused the administration of law and equity by the
creation of the Supreme Court of Judicature which exercising both law and equity and
gave supremacy to equity in cases of conflict. The Court may grant both common law
and equity and equitable remedies. Equity was said as only a gloss to a common law
which the fusion of the administration did not involve a comprehensive modification of
the rules either by law or of equity.
[United Scientific Holding Ltd v Burnley Borough Council]
● By Supreme Court of Judicature Act 1873, 2 systems of substantive and
adjectival law were fused.
Newbiggins Gas Co. v Armstrong (1879) 13 Ch. D 310
Facts: A solicitor was found to have acted without his plaintiff’s permission, and the
question was whether he should follow common law or chancery courts’ practice in
bearing the costs. The defendant was not served with notice of the application, but was
left to get his costs from the person named as plaintiff, who afterwards had gotten the
costs from the solicitor.
Judgement: The result in regards to the Court of Chancery’s practice was the nominal
plaintiff who had never given any authority for the use of his name, had been asked to
pay for the defendant’s costs and might be unable to recover them by reason of the
insolvency of the solicitor. In common law, the defendant is said to had been served
with notice of the application and the solicitor is deemed to pay the costs of both the
plaintiff and the defendant.
Principle: Section 21 of Court of Judicature Act provides that the old practice shall
prevail in any cases where no new method of procedure is stipulated. In matters of
procedure after the Courts of Judicature Act came into effect, the practice which best
suited natural justice would prevail.

Name of Case Walsh v Lonsdale

Citation (1882) 21 CH D 9 – Court of Appeal
Material Facts Lonsdale (the landlord) agreed to grand Walsh (the tenant) a lease of a
mill for seven years at a rent payable quarterly in debt, with a provision entitling the
landlord to demand a year’s rent in advance. Walsh entered into possession and paid
rent in accordance with the agreement for 18 months. However, it transpired that the
lease was void at common law because it was never executed under seal as required
by statute. Lonsdale then demanded a year’s rent in advance in accordance with the
agreement, which Walsh failed to pay. Lonsdale levied/imposed for distress at common
law, seeking to seize Walsh’s chattels in lieu of payment. Walsh sought an injunction
against the distress, as well as damages for illegal distress, arguing that the agreement
was not a valid common law lease and that it amounted to no more than a tenancy from
year to year under which rent was payable quarterly, with the consequence that there
was no basis for Lonsdale’s distress action. Walsh also argued that Lonsdale should
have first sought specific performance of the agreement to lease.
Legal Issue The issue before the Court of Appeal was whether Lonsdale’s common law
remedy of distress was permitted despite the absence of a lease at common law.
Application of Law Equitable Leases An equitable lease arises where there is an
agreement to lease in writing which does not abide by formal requirements (ie, not a
deed). An equitable lease, where the court would grant specific performance on the
agreement, should be respected as if it a legal lease. The lessee acquires an equitable
interest in the property, and accordingly, the lessor acquires some protections in return
for that interest. Both parties have the same entitlements as they would if it was a legal
lease, for example, the lessor can re-enter the land under certain conditions (such as
breach of contract etc), and only under those certain conditions (ie, he can be barred
from entering unless these conditions are fulfilled).
The court reviewed the past case law, especially Hughes v Metropolitan Railway Co
(1877) 2 App Cas 439, where the House of Lords had held that parties should be
prevented from going back on a promise to waive certain rights. Denning J stated that
the cases showed that a promise which the promisor knew was going to be acted on by
the person to whom it was made was enforceable despite a lack of consideration. The
time had come for this to be recognized as giving rise to an estoppel. Here, the plaintiffs
had made a binding promise. However, the evidence showed this only applied during
the war. Therefore, after the war the defendants were liable for the full rent
Since the Judicature Acts merged the courts of common law and equity, there is only
one Court, so if you have a lease in equity, you have a lease.
Name of case United Scientific Holdings Ltd v Burnley Borough Council
Case Citation
[1978] A.C. 904
Material Facts
The respondents leased adjoining properties from the appellants for 99 years at a rent
of £1000 a year each. A rent review clause provided that, during the year preceding the
second and each succeeding 10-year period the parties should either agree or
determine by arbitration the sum total of the properties’ current rack rent and that one
quarter of that sum, or £1,000, whichever was the greater, would be the rent of each
property for the next 10 years. The first 10-year period ended on August 31, 1972, and
by that date the new rent had neither been agreed nor referred to arbitration and the
respondents sought a declaration that, since time was of the essence of the contract,
the appellants had lost their chance of increasing the rent for the second 10-year period.
Legal Issue
Whether the rules of equity as to stipulations as to contract were applicable to a rent
review clause in a lease; and, if so, Whether and in what circumstances according to
the equity, stipulations as to time in a rent review clause were deemed to be or to have
become of the essence of the contract.
Judgement
Lord Diplock: If by “rules of equity” is meant that body of substantive and adjectival law
that, prior to 1875, was administered by the Court of Chancery but not by courts of
common law, to speak of the rules of equity as being part of the law of England in 1977
is about as meaningful as to
speak similarly of the Statutes of Uses. To perpetuate a dichotomy between the rules of
equity and rules of common law which it was a major purpose of the Supreme Court of
Judicature Act 1873 is conducive to erroneous conclusions as to the ways in which the
law of England has developed in the last hundred years. The phrase by Ashburner has
been viewed as both mischievous and deceptive. The innate conservatism of English
lawyers may have made them slow to recognise that by the Supreme Court of
Judicature Act 1873 the two systems of substantive and adjectival law formerly
administered by courts of law and Courts of Chancery were fused. With the effect that
courts of law gave to those stipulations as to time that they did not regard as being of
the essence of the contract, courts of equity before 1873 had no occasion to interfere by
way of equitable relief. Such stipulations were unaffected by section 25 of the Supreme
Court of Judicature Act 1873. Fused substantively