Lecture 3: Emergence of Equity & Legal and Equitable Rights Flashcards
Explain the emergence of Equity (deficiencies in the common law).
Administration of common law in England up to 14th Century –> Grievances arising out of deficiencies
- Limited Number of Writ Systems
- Writs: Formal written notice/order to defendant issued by the common law courts which spells out the complaint the plaintiff has against the defendant
- Writ is required for a legal action to be taken & there must be a course of action supported by Writ
- However, there were only a limited number of situations and Writs in the 11th to 14th Century England, where one can take legal action against the wrongdoer
- One will not be able to sue wrongdoer as there is no course of action recognized by the common law courts - Rigid and Technical Court Procedures
- Spells out the technical rules to ensure clarity and fairness
- Advantage: Efficiency and Consistency
- E.g. Given 14 days to respond to a Writ –> if no response will be punished even if there is a valid reason
- E.g. Section 6d of the Civil Law Act: the contract has to be in writing even if a deposit is given
- Resulted in harsh outcomes and innocent parties suffered, as rules may be abused as there is no flexibility - Limited Remedies for Affected Parties
- Usual form of remedy offered in common law was damages only –> however it is not always an adequate remedy to compensate buyers when it comes to land disputes
- Specific performance and injunction arose outside of common law where equity came out of these remedies
What is the consequence of these deficiencies in common law?
Due to flaws in common law, the consequence is that there were petitions made to the King (fountain of Justice) to remedy wrongs that the people had suffered.
Too numerous for the King to handle himself –> delegate the task to the Lord Chancellor (Kepper of King’s Conscience), who is concerned with Justice and Conscience
Initially done on the King’s behalf, in 1474, Chancellor obtained authority and issued decrees in his own name –> Formation of Court of Chancery
Explain what the Court of Chancery is.
Litigants interrogated under oath by Chancellor
Decrees of Chancellor often in conflict with the common law’s judgments
The objective of Chancery Courts: to mitigate the rigors of common law and decide cases according to “justice and equitable principles, disregarding technical pleas, but paying regard to the conduct of the parties.”
Explain what the Maxims of Equity are.
- Equity does not suffer a wrong to be without remedy —> when equity felt that something is not fair and right and there was a gap in common law, equity will provide a course of action for the plaintiff
- Clean Hands Rule: He who seeks equity must do equity: Plaintiff cannot show unfairness to the defendant/harassment
- Delay defeats Equity: Must bring claim promptly as there would be a higher chance of a plaintiff fabricating evidence, unsure about his position and no confidence —> court of chancery will likely not assist him
- Equity looks at Intent rather than Form
Explain what a Trust is and who are the parties involved.
Settlor conveys the legal title to the Trustee who holds in Trust for Beneficiaries.
- Settlor: Original Owner
- Owns and transfers the legal title of the property to Trustee to create a Trust for his wife and children - Trustee
- Settlor has conveyed his estate and transferred legal title or estate to Trustee, with the intention and instructions that Trustee would manage/rent/use the land for the benefit/to the use of his family
- Recognised by the Court of Equity as merely the nominal owner, who merely holds the estate in the name - Beneficiaries: Equitable owner
- Party named by Settlor to benefit from Trust
- Recognised by the Court of Equity as True Owner, who holds the equitable title of the equitable estate who owns true benefit
This has led to the Trustee to abuse his position as the legal owner of the land and did not carry out his duty to use the land to the benefit of the beneficiaries, instead the Trustee sold the immovable property which the Settlor has transferred to him to the Trustee’s own benefit.
Common Law: only recognised the person with the legal title/name in deed, who is the Trustee, which was unfair to Settlor and Beneficiaries –> no remedy for beneficiaries –> Court of Equity intervened.
Around 1400, Chancery Court recognized the use whereby, it was recognised that:
- The person in whom the legal estate was vested were the nominal owners (trustees) and beneficiaries were the owners of the nominal estates
- Separates legal ownership from the beneficial use and enjoyment of land
What is Equitable Interest?
General Law requires compliance with certain formalities before interest in land can pass
- Section 53(1) of the Conveyancing and Law of Property Act states that “a conveyance of an estate or interest in land must be made by deed in the English language”
- If you want to sell/rent/lease/manage the property, the contract must be formal, written, and sealed in the form of melted wax to be on a document, then delivered by parties to be handed over by one party to another party
If there is no compliance, purchases will only have an equitable interest –> in which only the Chancery Court will recognise
Explain the essential difference between Legal and Equitable Interest.
The main difference is enforceability
Legal Interest is enforceable against the whole world.
Equitable Interest is enforceable against the whole world, except the bonafide purchaser for value without notice.
Equity’s Darling
Criteria of being a bonafide purchaser:
- Unaware of Trust & Settlor’s intention was to benefit beneficiaries & Beneficiaries’ rights before and at the point of purchase
- Purchaser must pay fair value for the property
- Completed the purchase in good faith
If criteria are fulfilled, then the purchaser is a bonafide purchaser and his legal interest will prevail and defeat the beneficiaries’ equitable interest, from the Court of Chancery’s stance.
Name the Legal remedies.
The Court’s basic power is to award monetary compensation which is called damages.
- Compensatory damages: Actual damages awarded for an actual loss
- General damages: Damages for non-monetary loss that arises from the breach of contract
- Liquidated damages
- Consequential damages: Hadley v Baxendale
Name the Equitable remedies.
More flexible and suitable to demands of justice than common law remedy of damages
Equitable remedies are discretionary and cannot be arbitrarily given
- Specific performance: Positive nature and only awarded in Chancery –> want the land itself in land disputes
- Injunction: Stop work order –> Negative in nature to stop someone from making unauthorized use
- Recission: Plaintiff has the right to rescind from contract –> back out of contract
- Rectification: Rectify/correct mistakes
What happens when there is a Union of Courts of Equity and Common Law?
Each can enforce legal and equitable rights and grant legal and equitable remedies
No need to go to separate courts for different remedies –> process more convenient and flexible
Fusion of Administration of Common Law and Equity achieved in Singapore Civil Law Ordinance 1878 –> Now governed by Section 3 of Civil Law Act (1999)
Law and Equity to be administered concurrently by the same courts –> work together to come up with cases and remedies –> Courts in Singapore have the power to grant both Common Law and Equitable remedies.
