Introduction to Equity

1) The nature of equity:

• There are several meanings of equity in a broad and general sense, equity means - fairness, or the
achieving of some sort of social justice; or

A branch of morality (applies principles derived from moral philosophy):

Lord Dudley v Lady Dudley (1750) Prec Ch 241, 244 per Lord Cowper: "Now equity is no part of the law,
but a moral virtue, which qualifies, moderates, and reforms the rigour, hardness, and edge of the law,
and is an universal truth'; or

 Aspect of divine justice (derives from the fact that earliest equity Chancellors or judges were
mainly bishops)

 According to Aristotle, equity is a complementary system of law that conduces to the

The Earl of Oxford's Case (1615) | Ch Rep 1, per Lord Chancellor Ellesmere:

"the office of the chancellor is to 'correct men's consciences for frauds, breaches of trust, wrongs and
oppressions of what nature so ever they be, and to soften and mollify the extremity of the law"

Technical and legally speaking - equity means that part of substantive law that represents the body of
rules and principles historically developed and enforced by the Chancery Court, at least before the
Judicature Act of 1873. This is the narrowest and most acceptable definition of equity.

2) Why and how equity developed: common law courts:

 Before equity came into existence from about the 13th century, the legal system was solely
constituted by the common law, which applied throughout the realm.

 The Common Law was administered by the three common law courts - King's Bench, the
Common Bench or Court of Common Pleas, and the Exchequer, and it was in these courts that
the laws of Contract, Tort and Property were developed.

 Legal proceedings were begun in these common law courts by means of writs sealed and issued
by the Chancery, an important department of government headed by the Chancellor, usually a
learned cleric, such as a bishop

3) Why and how equity developed: petitions to the King, and later, the Chancellor

Although justice was solely administered by the common law courts, the King as the fountain of justice
in the realm, had power to do justice in appropriate cases, and overtime, dissatisfied litigants made
petitions to the King, which were ultimately referred to the Chancellor. Some of the reasons for the
petitions were:
  Rigidity of the common law: For instance, litigants who were denied justice in the common law
courts, because there cases were not covered by existing writs, petitioned the King, and
eventually the Chancellor, for justice.
 Enforcement of the Use (precursor of trust): common law did not recognize trust (the main topic
of this module), a legal owner's undertaking to hold property for the benefit of another person,
so beneficiaries of such trusts petitioned the Chancellor for enforcement of the undertaking.

 Unfair mechanism of the common law, such as corruption or intimidation of juries (see The Earl
of Oxford's Case above).

In hearing such petitions, the Chancellor did not apply any particular system of law, but a mixture of his
conscience, natural law, and even sometimes, by analogy to rules of common law.

Overtime, owing to the increasing volume of such petitions, the Chancery became an established court
for dealing with such petitions, and the Chancellor became the judge of the Court of Chancery.

4) Why and how equity developed: inefficiency of the court of Chancery

In the following years, especially between the 17'-19* centuries, the systematization of the Chancery,
and particularly the use of precedents (just like the come law courts) brought about some inflexibility in
the administration of justice, as well as inefficiency, such as high costs of litigation and delays (Dickens,
Bleak House)

So up until 1873, what we had was two parallel systems of court (Common law courts and the court of
Equity (Chancery), administering two different systems of law (common law and equity).

Thus, conflict and inconvenience was inevitable in such a system. Such a conflict came to a head in The
Earl of Oxford's Case, which was resolved in favour of equity. The litigant who lost in the common law
court - common law court headed by Lord Cook. Litigant got a judgment in the court of equity which
granted an injunction. Lord Cook was angry and issued an order for the release of the party who lost
(and where put in prison because there was crisis). Matter came to the attention of the King and the
king resolved the dispute in favour of the court and equity by decreeing that when there was a conflict
between the courts that equity should prevail.

The Judicature Acts of 1873-75 also tried to deal with the economic inefficiencies of the two systems co-
existing together (for instance, a litigant who wrongly began an action in the common law courts had to
start a fresh action at the Chancery, with all the costs involved).

5) Fusion of law and equity: Judicature Acts 1873-75

The Judicature Acts 1873-1875 abolished the Chancery and the common law courts, and established just
one High Court of Justice in their stead to administer both law and equity.

Abolish the common law clause and cut off everything, and in that place just establish one single court.
So that whatever the case is, you wait to only court (the high court). That one court is required to apply
the two systems of law to your case. We have just one high court.
High court has divisions... QB matters in the past that would have been heard by common law court,
chancery which hears matters that would have been heard by the court of equity.

Note the debate as to the effect of the Judicature Act: whether it is merely procedural/administrative
(one court now administering both systems of law, but maintaining their distinctiveness) or substantive
(merging the two systems into a single system of law).

The structure of English private law: substantive principles of common law and equity are still distinctive

Examples of claims:

Common law Equity

Damages Compensation
Common law tracing Equitable tracing
Money had received Specific performance