EQUITY AND EQUITABLE REMEDIES Flashcards
Subject matter of equity
There is no exhaustive list, however certain matters have been assigned by the Senior Courts Act 1981:
- The sale, exchange or partition of land, or the raising of charges on land
- The redemption or foreclosure of mortgages
- The execution of trusts
- The administration of the estates of deceased persons
- Bankruptcy
- The dissolution of partnerships or the taking of partnership or other accounts
- The rectification, setting aside or cancellation of deeds or other instruments in writing
- Probate business, other than non-contentious or common form business
- Patents, trade-marks registered designs, copyright or design right
- The appointment of a guardian of a minor’s estate
- All causes and matters involving the exercise of the High Court’s jurisdiction under the enactments relating to companies
How equity works
IN PERSONAM
On the person of the defendant
Equity undermines the Rule of law in its ex-post, in personam, discretionary adjudication
Under and over inclusiveness of legal language
The law, to be useful, must use language that is under or over inclusive in some cases
Equity is what allows the judge to apply the law so that it fits with the demands of morality
The lawmaker may be unaware of a problem with the application of the legal in some cases, or notice it and nevertheless choose to stick with the rule (e.g. the rule is useful, laziness, ideology)
Example of commercial law in the inadequacies of the legislation
What is really important is that business people can read and understand the rule and know exactly where they stand. The rules must be predictable and clear, there should be no dependence on the judge. Prioritising the swiftness of the market
Aristotle on Equity
Equity is fixing a fault in the law that results from the inability or unwillingness of the legislator to precisely explain to us how the law applies to every individual case
The law maker may be unaware of the problem. But sometimes they know that their rule is going to lead to injustice if it applies straight to the case without the litigation of equity
The rule could be easy to apply
Writs
History of Equity
From the mid-14th Century, the categories of Writs and procedures are sealed. The common law becomes a rigid system of rules
Forms which dictated whether or not your case goes to court
- The form is all that matters
- There is legal certainty and predictability
- The rigidness of the form made people complain, and so the Lord Chancellor is called upon to do justice. The LC’s authority is based on ‘conscience,’ an objective moral judgment on the facts
Equity’s notion of conscience
Completely objective: it is an objective duty on people not to act in certain ways
Selden - conscience is subjective, and thus is dangerous to use as a standard in law
Creation of Court of Chancery
To mitigate the rigidity of the common law
At the beginning, all decisions were ad hoc
What was equity
A set of unrecorded, in personam, ex-post decisions
Aim of the Judicature Acts
19th Centry reform
Judicature Commission - First Report of the Commissioners:
reforms aim to tackle the evils of the double system of Judicature and the confusion and conflict which has resulted from it
Nature of the common law and law of equity courts before the Judicature Acts
Common law - took criticisms of reform seriously; applied more open-ended standards so that the law could be changed in the outskirts to match specific cases
Courts of equity - come off with rules and thus by the 19TH century they were very bureaucratic, whilst the Common Law courts were more flexible
Result of the Judicature Acts
Older higher courts were abolished, creation of the Supreme Court of Judicature
Unified the courts and the procedure - administrative fusion
Administrative fusion
Courts and procedures remained the same
The rules stayed the same, only if there is collision will equity prevail [Senior Courts Act, s49]
Nature of a beneficiary’s remedy against the trustee
A beneficiary’s remedy against the trustee is a right in personam
Are trust interests in rem or in personam
English law has been incapable of determining conclusively whether they are in rem or in personam
Equitable interests under a trust
Equitable proprietary interests corresponding to legal estates
The beneficiary can be regarded as the owner of the beneficial interest
Penn v Lord Baltimore
A court of equity can exercise jurisdiction to order specific performance of a contract for the sale of land abroad
Ewing v Orr-Ewing
A court of equity can exercise jurisdiction to administer assets abroad if the executors are in England
Orthodox view on fusion
Only the jurisdictions have been fused - the changes made by the Judicature Act gave rise to no new causes of action, remedy or defence
The nature of legal and equitable rights have not changed, all that has happened is that they are now administered in the same court
Tinsley v Milligan
Lord Browne-Wilkinson explained that legal and equitable interests had different incidents for historical reasons, but that ‘fusion’ resulted in the adoption of a single rule
The rule was the same whether the claim is to a legal or equitable title
Complete fusion - Burrows
Advocates that there is still some way to go regarding complete fusion:
- identification of the wrong
- compensation and its restrictions
- restitution for wrongs
- punishment
- anticipated wrongs
- general defences
It would require only a small step forward to assimilate common law and equitable monetary remedies for common law and equitable wrongs
Burrows
Identification of the wrong
A wrong is a breach of duty; the law treats conduct as such breach if compensation is available for the loss caused by this conduct
In common law, breach of contract and torts are the main types of wrongs, whilst in equity, breach of fiduciary duty, breach of confidence, dishonestly procuring or assisting a breach of fiduciary duty (the wrong recognised by the Privy Council in Royal Brunei Airlines v Tan) and estoppel that constitutes causes of action (particularly proprietary estoppel) are wrongs
Both common law and equity recognise what, at root, is exactly the same phenomenon, namely wrongs or breaches of duty triggering compensation
All equitable wrongs should be treated as examples of breach of contract or torts
Burrows
Compensation and its restrictions
The primary remedy for the common law wrongs is compensatory damages. There are restrictions on compensatory damages, particularly: remoteness, intervening cause, the duty to mitigate and contributory negligence
The courts have a wide discretion in deciding the losses to be compensated by damages for common law wrongs
Because it involves dishonesty, the tort of deceit has been treated differently and a wider remoteness test than reasonable foreseeability applies in this tort
A trustee would be liable for breach of trust even if the immediate cause of the loss was a third party
Restrictions on compensatory damages do not apply to equitable compensation. However, some argue that the restrictions apply in the same way to equitable compensation as to compensatory damages
Compensatory damages and equitable compensation should be regarded as identical
Burrows
Restitution for wrongs
The common law remedies are an action for money had and received and restitutionary damages; while the equitable remedy is an account of profits
As the Law Commission has pointed out, it would be much simpler to recognize fusion and to have one remedy instead of three
Burrows
Punishment
Punitive damages have only ever been awarded for torts
We should put into effet the Law Commissions proposed reform, which will mean that the courts would have the power to award punitive damages for torts and equitable wrongs according to the same principled basic test of whether there was an outrageous and deliberate disregard of the claimant’s rights
Burrows
Anticipated Wrongs
Common law damages give relief only for an accrued wrong, albeit that the relief given can extent to future as well as past consequences
Equitable damages can be awarded, albeit exceptionally, for anticipated, as well as accrued, wrongs
It is clear that equitable damages can be awarded for common law, as well as equitable wrongs
Target Holdings v Redfern
There can be no equitable compensation where the loss in question would have been suffered even if there had been no breach of duty by the defendants solicitors
Bristol & West Building Soc v Mothew
The suggestion that equitable compensation may sometimes have a special more restrictive restorative aim than compensatory damages should be resisted – it confuses the aim of the remedy with the application of that aim to different duties broken
Rookes v Barnard
The present law allows the award of punitive or exemplary damages (unless statutorily authorized) in two restricted categories only: where the wrong comprised oppressive, arbitrary or unconstitutional action by a servant of the government or was committed cynically to make a profit
Burrows
General Defences
Equitable remedies are subject to discretionary general defences that simply do not apply to common law remedies
It is false to imagine that there are irreconcilable differences between common law and equitable defences
A defence may operate to rule out specific performance or an injunction while not ruling out damages, whether equitable or common law
Nature of remedies in equity and at common law
At common law, the normal form of relief is an award of damages
Equity has a range of discretionary remedies; their availability depends upon the inadequacy of common law remedies, and they are governed by the doctrine that equity acts in personam
Specific performance
When the courts require performance of the contract
A remedy in personam (as against the person); the obligation is owed by the contracting party
Only available where the common law remedy of damages for breach of contract is inadequate
Co-Operative Insurance Society v Argyll Stores
The claim was brought to enforce a covenant in a lease of a supermarket
The owners of the shopping centre wanted to force the owners of the supermarket (who were running at a loss) to continue running the supermarket for a further 19 years (the time left on the lease)
The court here declined specific performance because they said it would be oppressive on the defendant
It is impractical for the courts to have to check the performance, it is a waste of court resources
Settled practice of the court: the fact that the judge has discretion to give specific performance, it is still based of general practices of the courts
Lord Hoffmann in Co-Operative Insurance Society v Argyll Stores
The principle upon which English judges exercise the discretion to grant specific performance are reasonably well settled and depend upon a number of considerations, mostly of a practical nature, which are of very general application”
Albeit that it is still a matter of the judge’s discretion whether it is awarded, depending on the facts of the case