Law of Equity: Nature and History of Equity

Discuss about the Law of Equity for Nature and History of Equity.

Introduction:

It is important that legal system ensures fairness for the persons who are involved in the legal system. Fairness ensures by two ways one by general presumptions and procedures and other by law system known as law of equity. In this report first we discuss the history and development of the equity law, then principles of the law of equity in Australian legal system, and in last we discussed the maxims, doctrines & remedies provided in law of equity.

History of Rules of Equity:

 Body of law called equity is a direct result of injustice caused by the application of common law and it is based on two principles that are fairness and conscience. Equity principles are based on the unconscionability concept (Cockburn & Shirley, n.d.). unconscionability is a doctrine in contract law which is used as a defence against the contract which is in favor of one party who has the power of bargaining over other. It is applicable after considering the circumstances of the parties at the time when the contract was made. Unconscionability is applicable only in case when contract is unconscionable at the time it was made (LII, n.d.). At that time court applied the principles of equity and grant relief to a party whose trust has been breached. Equitable remedies can be applied both in flexible and specific ways in each case and it is not compulsory to provide equitable remedy. It is important to understand the history of equity for understanding this law. In the era of medieval period, common law is applied strictly because of doctrine of precedent. Common law is available only for some specific categories and if the cause of plaintiff does not fall under that category then common law proceedings were not commenced. Due to the common law nature and corruption, unjust and harsh decisions were taken by the common law court. Litigants who were no satisfied with the decision of the court and their matter does not fall under the category of common law then such litigants make petition before the king for relief. King transfers the petitions to the Lord Chancellor and because of that procedure Court of Chancery was established. Head of the chancery is known has chancellor who has the power to settle the disputes and provide relief to the litigants.

No formal legal training was given to the First chancellors of the court and this is the reason that their decisions are more relied on the principles of fairness and conscience. In early stage the decisions of Court of Chancery were taken after considering the law of church not on the common law because of this reason no clear doctrinal foundations was developed in this area of law. Sir Thomas Moore (lawyer) appointed as Chancellor during the 16^th century which results in change in the court of chancery. After that time only lawyers was appointed as a chancellor, and they develop the doctrines and also kept the reports of proceedings. Soon there is a conflict between the two systems of courts and there is always a race for supremacy. Litigants who are not satisfied with the common law system would go before the court of chancery for seeking relief and court of chancery give relief by way of common injunction through which either plaintiff is restrain from continuing the common law action or enforce a common law judgment. In the case Earl of Oxford’s, judgment was given by Coke CJ in a common law action was alleged by fraud. Then a common injunction was issued by Lord Chancellor, Lord Ellesmere from the court of chancery and result of which the matter was referred to the Sir Francis Bacon, Attorney –General who decided that whenever there is a different opinion  between the law of equity and common law then law of equity prevails. In Australian law equity is a corner stone, after the cases in 1980 the high court of Australia confirms the continuity of equitable doctrines. Recently high court confirms the importance of doctrines of equity. New south wales, the state is well known for the Equity jurisprudence. Equity and common law both get power in 1972 by the introduction of new act that is Supreme Court Act 1970 (NSW) (NSW, 2007).

Following are the principles of Australia legal system:

There are three main principles of the Australia’s legal system are justice, equality before the law and fairness.  There is a brief discussion on these principles:

Equality

It means everyone is equal, and they should treat in the same way and there is no discrimination between the people before the law. It states that people enjoys the same rights provided by law and no one get discriminated on the basis of law, opportunities related to education, employment, etc. must be given all the individuals in the same way.

Many ways are created to ensure the equality in law, so that everyone should be treated equal in law and no inequalities exist. There are many methods for enhance equality in law and those are legal aids, procedure regarding dispute resolution, etc.

Fairness

In this principle system tries to achieve equal outcomes from the cases. In this principle decisions taken after considering the situation of individual. Proceeding are handled after evaluating the background and disabilities of the individual.

Justice

This principle is derived after combine the equality, fairness, access and human rights. Decision is just only when it met with the principle of fairness and equality and reflects legal principles as well as values and ethics of our society.

Maxims of Equity:

There are some legal maxims which serve some general principle or rules which are followed to achieve the goal of equity and such maxims known as maxims of equity. These maxims are developed by court of chancery and courts other than court of chancery which deals in jurisdiction of equity. A well known term used for them are ‘the equitable maxims’’:

Equity will not suffer a wrong to be without a remedy- in this maxim it is expressed that if there is any right there is remedy. This maxim explains scope and ambit of equity and also the the structure on which it depends.

It recognized in the trust act, Section 9 of CPC- suits entertained by civil courts unless they are prohibited & in the specific relief act. Some of the limitations are also there: if any moral right is breached, when both right and remedy fall under the jurisdiction of the common law courts, when party damage the proofs in his own favour due to his negligence or right of equitable remedy is waived.

Equity follows the law- this maxim states that chancery court must follow the discipline, equity is to supplement the law not to destroy the law. It is important that equity follow law but not always. Some of the limitations are when there is confusion in applicability of rule of law it is not clearly applicable & when rule of law is not applicable.

He who seeks equity must do equity- it states that a person can demand relief only when he himself follow the conduct of equity. Applicability of this maxim is Illegal loans, Doctrine of Election, Consolidation of mortgages, Notice to redeem mortgage, etc.. Limitation of this act is equitable relief are granted only to the person whose case is pending & it is granted only to that person who seeks for it (member.suewrongdoers.com, n.d.)

This maxim is recognized by Under sec 19-A of the Contract Act, 1872, sec 35 of the Transfer of Property Act which states the principle of election and also section 51 and 54, In Order 8, Rule 6 of the CPC &set off.

He who comes into equity must come with clean hands- in this it is necessary that plantiff must follow the rules of equity and when court applies this maxim court believe that plaintiff’s behavior is as per the principles of equity. This act is recognized by Indian trust act (section 23), Section 17, 18 and 20 of the Specific Relief Act, 1877.

Delay defeats equities- it this maxim it is clear that if someone makes delay in availing their rights then rights are not available for them. Limitation act is applicable in case of legal claims but in case of equitable claims act of limitation and unreasonable delay is also considered.this maxim is not apply when act of limitation is applied directly or by analogy.

Equality is equity- in this court tries to put the parties of litigation on a level which is equalafter considering their right and responsibilities.

Equity looks to the intent rather than the form- common law is not flexible and easy it is very rigid. It does not consider the intention and only follow the words and on next side equity consider the intention of the parties and do not follow the words of law only (Law is cool, n.d.).

Equity sees that as done what ought to be done- as per this maxim when individuals are required to do do any act which is mention in their agreement or any act which they have to perform because of law then equity will make sure that act must be done in the way it has to be done as per law. Following are the laws in which it is recognized: the doctrine of conversion, Executory contracts, doctrine of part performance, Doctrine of conversion, Executory contracts, etc..

Equity imputes an intention to fulfill an obligation-this maxim states that when a person is bound to a specific act but he does an act which is similar in nature. This maxim is applicable on the following laws: Doctrine of performance and satisfaction, Ademption, Doctrine of presumption of advancement, Relief against defective execution of power of appointment.

Doctrines and Remedies:

Doctrines of equity and remedies provided in law of equity are produced by sydney law school & judges of the NSW Supreme Court Roderick Meagher, William Gummow and John Lehane in 1984.following are some of the doctrines which are provided by law of equity:

Undue influence- It is an equitable doctrine which involves advantage of power or position taken by one person over other person. When one party is unable to take decision freely and independently, When there is inequity of power between two persons and due to which one person is unable to exercise their free will.

Subrogation- it is a legal doctrine and applicable when one person use the right of another person for his own use. It is arises by operation of law, but it can also arise by agreement or statute. In common law it is a familier feature. There are many types of subrogation: Indemnity insurance, Law of guarantees, Trust Creditors, Bills of Exchange, etc..

Following are the equitable remedies:

Injunction-it is an equitable remedy in the form of the order issued by the court that bounds a party to do something or restrain him from doing something. If any party fails to comply with the order given by the court then he has to face penalty either criminal or civil which includes monetary penalties as well as imprisonment. Parties will also charged with contempt of court. Injunctions that stopped or reverse the enforcement of other injuction then it is known as counter injunction.

Specific performance- it is an order issued by the court in which court requires to perform a specific act from party, usually act is stated in the contract and it is a part of contract. It is an alternate option through which damages are awarding, and it is considered as an equitable remedy. It is usually provided for completed the transaction which is already pending in the contract. It is the most effective remedy because it provides safeguard of interest of innocent party. Specific performance has of opposite nature from prohibitory injunction. In common law remedy is not available in the form of specific performance. This remedy is developed by the court of chancery that is court of equity. Specific performance is granted as an remedy only when damages cannot be granted as an remedy and in cases which are specific. Court grant this remedy on the basis of circumstances of the case and situations of the parties.

Accounts of profit- this is the most commonly used remedy which is also known as accounting for profits or in simple terms accounting. This remedy mostly provided in the cases when someone breaches their fiduciary duties. Plaintiff takes action against the person who takes profit by breach of duty.

Few times before it is not a remedy available in equity law, it is a common law’s action and basically it is instrument of common law. It is from the time when there is no difference between the common law and equity.

Rescission- in law of contract it is defined as the unwinding of a contract between the parties to the contract. Through this parties are stand on the same position as they were before the contract.

In common law it is defined as self-help remedy available to the parties of the contract.

Declaratory judgement- it is also known as a declaration. It is legally determined by the court and helpful in resolving the uncertainities which are legal in nature of the litigants.

Constructive trust- it is an remedy which has the same characteristics as trust have which is completely imposed by the court for the benefit of party who is derived from his rights because other person holds a property which he does not possess legally.

Conclusion:

In last we can say that rules of equity plays an important role in the legal system of Australia. They ensure fairness, justice and conciseness in the legal system of Australia. It is ensured by two ways general presumptions and procedures and other by law system known as law of equity. Litigants who were no satisfied with the decision of the court and their matter does not fall under the category of common law then such litigants make petition before the king for relief. King transfers the petitions to the Lord Chancellor and because of that procedure Court of Chancery was established. The three main pillars known as principles of Australian legal system are fairness, justice & conciseness. There are some legal maxims which serve some general principle or rules which are followed to achieve the goal of equity and such maxims known as maxims of equity such as Equity will not suffer a wrong to be without a remedy, equity follows equity, Delay defeats equities, equality is equity. In last we discuss the doctrines and remedies of the law of equity. From the above discussion it is conclude that equity is very important term for legal systems across the world which cannot be neglected. 

References:

Cockburn. T. & Shirley. M. the nature and history of equity.retrieved on 17^th august from:  http://www.findlaw.com.au/articles/138/the-nature-and-history-of-equity.aspx.

LII. Unconscionability.retrieved on 17^th august from:  https://www.law.cornell.edu/wex/unconscionability.

Law is cool. The 12 Equitable Maxims. Retrieved on 18^th august from: http://lawiscool.com/2007/09/25/the-12-equitable-maxims/.

member.suewrongdoers.com. 20 equity maxims. Retrieved on 18^th august from: http://member.suewrongdoers.com/research/equity-law/20-equity-maxims/.

NSW. Equity: Principles, Practice and Procedure. Retrieved on 18^th august from: http://www.nswbar.asn.au/docs/professional/prof_dev/BPC/course_files/Equity%20-%20Principles,%20Practice%20and%20Procedure%20-%20Lindsay%20SC.pdf.