ESSAY ON THE DEVELOPMENT OF EQUITY WITH COMMON LAW

“Equity had come not to destroy the law, but to fulfil it”. Frederic William Maitland Lectures on Equity: The Origin of Equity
This quote by Maitland represented his verdict on the tension that customarily has been seen to exist between Equity and Common Law and whether Equity evolved out of necessity to perpetuate the smooth operations of the common Law for public good or if Equity came into existence purely as a challenge to the authority and monopoly of the common law to dispense justice. The universality of the common law became problematic in the early centuries due to its creation of laws common to all. This means making rules without exceptions and the strict adherence to old legal precedents despite changing societal landscape. There was also perceived incidents of jury intimidations in common law courts that had the potential to bring the justice system into disrepute. So came equity to the rescue. The word Equity means fairness or being just; but in legal terms it can be said to be the rules developed to mitigate the severity or constraints of the common law. Equity developed alongside the common law as a separate legal authority administered by the Court of Chancery. The common law was seen as deficient in many ways and many went to the King for redress after common law verdicts that were considered unjust or unfair. With massive increase in such petitions to the King, the Chancellor (usually a Clergy) was delegated by the King to oversee these petitions. This gradually developed into the Court of Equity.
At the time, the common law had many deficiencies. Firstly, the writ system made any new claim possible only if it is based on an existing writ. And if none exists, then the case would normally not proceed. This became a big problem as many could not even initiate their petition in the common law courts. Also, there was limitation in the kind of remedies offered by the common law courts. Damages were the dominant civil remedy available, but this did not satisfy the need for justice by many litigants who would have preferred an injunction or order for specific performance. In addition, the common law courts failed to adequately recognise certain types of rights, such as beneficial owners in a Trust. The use of the Court of Equity (also known as Court of Chancery) to resolve Trust related matters became very popular.
With these deficiencies; there were growing number of unhappy citizens who petitioned the king for justice. These discretionary verdicts by the King’s court (and later the Court of Chancery); gave birth to equitable remedies, thus establishing equity as a doctrine in English legal landscape. In its early days; the Chancellors decided cases without much reference to previously written verdicts. After all, the Chancellors were expected to decide cases based on morality, fairness and good conscience.
In the late 16th and early 17th century, more non-ecclesiastical Chancellors began to emerge. Also, established rules were beginning to be introduced along with reports and procedural guidelines. This started the shaping of the operations of the court of Chancery in ways similar to the common law courts.
There were concern that two parallel legal systems have developed in the country; with its attendant conflict of jurisdiction and both vying for superiority. To address this confusion; Then came the Judicature Acts of 1873 and 1875 (JA). The 1873 JA specifically stated that in case there is conflict between Equity and Common Law rules; Equity should prevail. The JA also got rid of the old separate courts of common law and equity and in its place established the High Court and the Court of Appeal to adjudicate over both common law and equity matters. The JA fused the administration of the previous two separate courts. And in practice, it also removed the need for plaintiffs to initiate multiple cases in separate courts on the same matter. In essence, the JA also fused the jurisdiction of equity and common law, although the principles of each were still distinct from each other in many matters.
With the development and increased use of ‘Trusts’ as a vehicle for asset management by the Knights going to war on behalf of the King; The need for equitable principles was undeniable to many legal observers, due to the limitations of the common law in this crucial area. And in more recent times, equity has also influenced the case law on mortgages; thanks to the many equitable maxims. In his Lectures on Equity series; Frederic William Maitland (FWM) noted in his first lecture that “…I think we may say that had there been no Chancery, the old courts would have discovered some methods of enforcing these fiduciary obligations” This affirmed the necessity of the rules and principles embodied in Equity. Maitland however acknowledged that any solution based on the common law would have been clumsy and inadequate to fully adjudicate on these matters. To me, this confirms that ‘Equitable Principles and Rules’ were a child of necessity. And in his final comment in the first lecture of his Lectures on Equity series FWM glibly dismissed the common law competence, when he noted that “a system which sends every question of fact to a jury is not competent to deal adequately with fiduciary relationships”. This was demonstrated for example in the famous case of Walsh v Lonsdale. And more recently in Patel v Ali. In this case equity stepped in to deliver justice where the basic legal facts would have achieved an unjust outcome.
So, over time, the JA inspired (together with the body of rules of the court made by judges); the creation of a Code of Civil Procedure which sought to combine the best of both common law and equity systems. This reduced significantly any obvious perception of conflict between the two systems. ‘Equity follows the law’ is a common maxim in equity jurisprudence. This means that equity follows all the dictates of the common law and will only step in if after all have been done, something was still needed to satisfy justness and equity. This is the basis of the quote by Maitland that “Equity had come not to destroy the law, but to fulfil it”. So Equity can be said to complement the law. And with the fusion of the courts by the JA, it became possible to obtain both legal and equitable remedies from the same court. Hence equity has become like an appendix to common law intended to achieve fairness and justice (after all the rules of common law has been applied and fulfilled). So equity can be said to smoothen the rough edges of the common law. On this basis I will agree with Maitland’s quote that “Equity had come not to destroy the law, but to fulfil it”. In fact equity usually express its superiority at coming to just outcome in cases where damages will be insufficient to resolve matters; as in the case Inwards v Baker [1965] 2 Q.B. 29.
But “Trust” as a concept has been the most recognisable invention of equity. For instance; the common law considers Trustee ‘A’ to be the legal owner of Trust X set up by the Settlor. That is as far as common law goes. While Equity fully agrees with the common law, it goes further by recognising the interest of ‘B’ as the beneficiary of the trust and that A owns and holds X for the benefit of B. So Equity cannot really be said to be in conflict with the law. Equity agrees with the law; it simply ensures fairness and equitable justice by recognising the beneficial owner as well. So equity did not destroy the law in this instance; but fulfilled it.
To further support his thesis that “Equity had come not to destroy the law, but to fulfil it”; Maitland argued that Equity is not a self-sufficient system as it cannot function without the common law. But common law can function without equity, albeit imperfect and will deliver unjust outcomes in many cases. So, Equity needs the common law to operate and survive. Therefore, equity cannot destroy the law, but needs the law. Maitland encapsulated his position on this in the second lecture in his series when he stated emphatically that “Equity without common law would have been a castle in the air; an impossibility”.
There are many who argue that the fusion argument as a result of the JA is a distraction. They argue that equity and common law are now inextricably one body of law to be applied by the law court. Others believe that the two systems (though administered by one common court) are still different from each other. In Salt v Cooper, Sir George Jessel MR commented on the overriding consequence of the JA when he said the JA “has been sometimes inaccurately called the fusion of the law and equity; but it is not any fusion, or anything of the kind. It was the vesting in one tribunal the administration of law and equity in every cause, action or dispute which should come before that tribunal”. However in modern times, many judges have commented that the river of equity and law are truly mingled into a single coherent body of law in the United Kingdom. For instance; this sentiment was expressed by Lord Diplock in United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 and Lord Denning in Errington v Errington and Woods [1952] 1 KB 290 at 298; when he noted that the Law and Equity have indeed truly merged.
In today’s legal landscape, many of the remedies previously considered exclusive to equity such as Specific Performance can be ordered by the court based on common law principles. Such developments have blurred the lines that separated the two systems before the JA. In fact many believe the line no longer exist altogether. So the UK courts can now apply whichever rule best applicable to achieve justice without any dichotomy.
Before the JA, Equity was famous for its creativity and flexibility in the delivery of justice. But gradually from the existence of the JA, equity has acquired several of the rigidities of the common law as a result of its usage of precedents, fixed maxims and rules. However, despite the foregoing statement, equity still possesses lots of scope for creativity and flexibility compared to the common law. In Eves v Eves [1975] 1 WLR 1338, Lord Denning famously declared that “Equity is not past the age of Child bearing….one of her latest progeny is a constructive trust of a new model.” While many may argue with this declaration; few will contend with the continued influence of Equity on the legal landscape and it capacity to still innovate.
Lawrence, in his book Equity Jurisprudence noted that at first examination; Equity seems to be a dangerous concept as it does not provide the traditional certainty that an enduring rule of law is known for. This he claims could be seen to leave justice to the whims of the judges. But Maine in his piece Ancient Law 50 (1912); stated that Equity anchored on universal principles is sufficient to provide certainty. This position was well captured by Howard L. Oleck in a brilliant 1951 piece for the Fordham Law Review when he noted that: “Equity as a universal moral principle supplies the required certainty by basing its decisions on Principles, rather than on rules which have the defect of undesirable rigidity. As long as these principles are sound, equity is sound. Such principles must be universal, always, and beyond any dispute as to their validity. And the chief principle upon which equity is founded, dearly, is the principle that justice must be done, despite the seeming finality of any rule of law, if that rule actually works an injustice”.
Looking ahead; Equity in its self-adaptive best have continued to endure through devise of new equitable principles such as the MAREVA injunction and ANTO PILLAR orders. This self-adaptive characteristics has sometimes been captured by the modern term Unconscionability. Equitable remedies are discretionary even till today; whereas legal remedies are as of right. This makes equitable outcome less fully predictable compared to common law outcomes. Equity’s ability to innovate has always been demonstrated as evident in many cases where the court has been able to refine, adapt and differentiate the application of many long-standing equitable maxims, as it has always done.
It may be argued that equity’s focus on individual justice creates a conflict with the common law’s focus on universal justice. For instance, the maxim that ‘equity will not allow a statute to be used as cloak for fraud’ has the result of preventing reliance on statutory and common law if the outcome will be unconscionable. This may be seen as a licence from equity to ignore the common law; Thus delivering individual personal and fair outcomes that can vary from case to case (regardless of similar facts); instead of the universal outcome of the common law.
The courts verdict in Gillett v Holt, Campbell v Griffin and BCCI v Akindele is evidence that the court is prepared to rely on Unconscionability as a way of providing equitable relief rather than simply rely on legal rights where there has been unjust conduct. After all, the court of equity was also known as the court of conscience. Lord Browne-Wilkinson affirmed again that equity is conscience-driven when in Westdeutsche v Islington London Borough Council [1996] AC 699, he noted emphatically that “Equity operates on the conscience of the owner of the legal interest. In the case of a trust, the conscience of the legal owner requires him to carry out the purposes for which the property was vested in him (express or implied) or which the law imposes on him by reason of his unconscionable conduct”.
Equity therefore is and should be a changing and living legal doctrine, always adapting to avoid the law becoming frozen into inflexible and pernicious set of rules. The first basis of all legal decisions by the courts is still the common law. Equitable doctrines only come into the picture if it will be unconscionable to stay with the common law outcome. Hence Maitland’s assertion that Equity had come not to destroy the law, but to fulfil it” is a valid thesis and I agree with him.
BIBLIOGRAPHY
1. Judith Bray, A Student’s Guide to Equity and Trusts
2. Robert Pearce, John Stevens, & Warren Barr, The Law of Trusts and Equitable Obligations, 5th Edition
3. F. W Maitland, Equity: Also The forms of action at Common Law. Two courses of lectures.
4. Module 1, Equity and Trust Hand-out, University of Buckingham, Autumn Term
5. Lord Eldon on “Equity” J. Leg. Hist. (1999), 20(3), 51-74.
6. Fulop, Law and Equity in Revised Judicial System, 73 N. J. L. J. 25 (1949).
7. N. Y. L. J. 22, col. 1 (editorial Jan. 3, 1951); and Pound, Progress of the Law-Equity, 33 HARV. L. Rvv. 420, 432 (1920).
8. Howard L. Oleck, Historical Nature of Equity Jurisprudence, 20 Fordham L. Rev. 23 (1951)

FOOTNOTES  Section 44 of the Law and Equity Act codifies the principle of the Earl of Oxford (1644) case: if rules of equity and law conflict, equity prevails.  Walsh v Lonsdale (1882) 21 Ch D (HC)
Patel v Ali (1984) Ch. 283 (HC)
(1880) 16 CH. D 544 at 549
ch. 1 (1929)
Howard L. Oleck, Historical Nature of Equity Jurisprudence, 20 Fordham L. Rev. 23 (1951)
Mareva v International Bulkcarriers [1975] 2 Lloyd’s Rep 509
Anton Piller v Manufacturing Processes Ltd [1976] Ch 55
Dillwyn v Llewelyn (1862) 45 E.R. 1285
[2001] Ch210, (CA).
[2001] WLTR 981, CA
[200] 4 ALL ER 221, (CA)
Westdeutsche v Islington London Borough Council [1996] AC 699
Cardozo in Graf v. Hope Building Corporation, 254 N.Y 1 at 9 (1930)