EQUITABLE MAXIMS/Law of Equity/

  EQUITABLE MAXIMS

Equity will not suffer a wrong without a remedy.

It is the traditional purpose of equity to find solution in law suits where money will not pay for the injury; equity has the authority to find another remedy. Literally this doctrine can be defined that no person can come to equity and go without getting a remedy. 

DOUGLAS V HELLO, a case involving photographs of the celebrity couple Michael Douglas and Catherine Zeta Jones, however it is agreed that the    in the case fall into error to the extent that it sought to remedy the well established absence of a tort of privacy by ‘’ plugging the plug’’ with old equitable doctrine of breach of confidence.

In its early history it was a practice of chancery to hear certain claims precisely because there were no established common law writ of form of action covering the case by analogy to that early practice. It developed to fill in the lacuna in common law legal practice that is where there was a wrong without a remedy.

The Latin form of the maxim presently under consideration harks back to the days when the claimant petitioned the old court of chancery nullus recedat a curia canallariae sine remedio (nobody will leave the chancellors court without a remedy), however the only reason why the old court of chancery exercised such creativity was to counter the fixed and inflexible nature of the old common law forms of action .Today there are no such rigidity. The unified supreme court of Judicature is capable of recognizing cause of action to take into account changing social practice.

The House of Lords has acknowledged the equitable the label ‘’breach of confidence’’ is indeed inappropriate. Lord Nicholas that the essence of the tort is better encapsulated now as misuse of private information. This is seen in the case of CAMPBELL V MGN (2004) (although this message appears to have overlooked in at least one case in the Douglas v Hello litigation. The significant step of providing a remedy to the celebrity who is secretly photographed should be taken at all, in the name of the common law rather than equity. It might have been different if the owner of the gym had been unconsciously abusing an established legal right to photograph the princess, but of course was doing no such thing.

This maxim is a restatement of the broad legal principle  ubi jus ibi remedium, where there is a right there is a remedy. The Maxim is applied in equity in an orderly way. It does not mean that anything goes. It calls for recognized remedies for well established wrongs that are invasions of property rights or personal or civil rights and that the law considers actionable. A court will not listen to complaints about every petty annoyance or immoral act.

When the law bestows a right it also extends a remedy that can be granted in equity currently, a court of equity will not supply a cause of action where none exists in the court of law.

This maxims is not to be taken too literally as equitable remedies are geared  on to strike against unconscionable behavior and operate only if that behavior a legal( as opposed to a merely moral one) wrong doing. As Mann J commented in Dubey v HM REVENUE & CUSTOMS in relation to disappointment fare park customers who received neither their Christmas goods nor a refund of their money “at the end of the day their claims have to be based in law not sympathy….No amount of sympathy can entitle them to be paid money to which they are not or may not be legally entitled. The underlying rationale of this rule is that equity will strive to interfere in order to remedy a legal wrong when the common law is adequate to do so.

Supreme Court in L V L (1992) demonstrated that equity is not a fix it all system. Supreme Court ruled against the recognition of non financial contributions by a wife in the family home as a proprietary interest.

In other words equity will attempt to ensure that deserving claimants obtain redress. In another situation we have Diana the late princess of Wales as a result of which legal proceedings were threatened but never came to court.

Facts of the Diana case are, the princess was secretly photographed by gym owner while excising as his guest he sold the photographs to tabloid press a moral court would have charged him. The question that rises is what a legal would do? It is hard to see that princess Diana would have an action against the owner of the gym since there is no express or implied contract and there was no general tort of infringement of privacy in English  Law (equity) possibly they would have an action in reinstitution for the reversal of unjust enrichment.

Examples of equitable remedies include the injunction, rescission of contracts, specific performance. Quita timet injunctions can be employed to prevent an anticipated wrong. Whereas there is no remedy at common law until the wrongful act has been performed.

In HOLMES V MILLAGE (1873) the court set boundaries for this maxim by holding it is an old mistake to suppose that there is no effectual remedy at law, there must be one in equity. It was argued that the court did not have the jurisdiction to appoint a receiver by way of equitable execution over future debts that may become payable.

REFRENCE:

1. Collection of legal maxims in law and equity by S.S Peloubet 1880.

2. Equity and trusts Michael Haley and lara Mc Murthy.

3. Trusts and Equity Garry watt 4th edition.

EQUITY FOLLOWS THE LAW

INTRODUCTION

EQUITY may be described as that branch of the law of England which was developed by the various Lord Chancellor’s courts to supplement the common Law.

It was developed to mitigate the harshness of the common Law and can be traceable to the early petitions to the king by persons dissatisfied with the common Law. At first, the king heard the petitions and decided the dispute between the parties on the basis of what he thought was fair; He was overwhelmed by the petitions whereupon he established the office of the Lord Chancellor who would now hear the petitions. 

More offices of the Lord Chancellor were established due to the number of petitions the Lord Chancellor decided all petitions on the basis of the principle of fairness and administration of justice was fast and the writ system was not applicable. 

However, the decisions handed down by the Lord Chancellor were not legally binding as the Lord Chancellor was not legally trained. It was not until the beginning of the 16th century that the Lord Chancellors offices were held by legally trained persons and the decisions they made had the force of Law. These decisions are what are referred to as the Doctrines of Equity.

The Lord Chancellors offices had now become courts. The administration of justice by Equity courts was flexible and not tied to the doctrine of stare desicis. 

The courts had move remedies to offer and had no technicalities of procedure, Courts were guided by the principle of fairness as there were no other guiding principles and as a consequence many inconsistent decisions were made hence “Equity varied with the length of the foot of the chancellor”.

To enhance consistency in decision making, the Lord Chancellors courts developed a set of guiding principles which were the so called Maxims of Equity.

Equity follows the law

This is a saying that equity attempts to follow the law principles even though there are no laws that govern its decisions. Equity follows the law” is one of the most misunderstood and misapplied maxims. This maxim sometimes is incorrectly invoked for the proposition that equity may not act unless there is a specific law, or that equity is inferior to the law. This is, in reality, is not the case.

Equity consists of rules developed by the Lord Chancellor Courts based on the principle of fairness. The Court of Chancery never claimed to override the courts of common law.  Where a rule, either of the common or the statute law, is direct, and governs the case with all its circumstances, or the particular point, a court of equity is as much bound by it as a court of law and can as little justify a departure from it.

It is only when there is some important circumstance disregarded by the common law rules that equity interferes. Equity follows the law, but neither slavishly nor always If Common law and Equity conflict, does Equity prevail.

Both Common law and Equity are recognized as sources of law of Kenya However, only the substance of common Law and the doctrines of equity are recognized. Their application by Kenyan Courts is further qualified.  A court of law can only rely on Common law or equity as a source of Law:

• In the absence of an Act of parliament.

• If it is consistent with written law including the Constitution.

• If it was applicable in England on 12/08/1897.

• If the circumstances of Kenya and its inhabitants permits.

This is an attempt to indicate the relationship between common law and equity, which is a complex one. The traditional role of equity, as stated by Christopher St German was to temper and mitigate the rigor of the law, which implies that equity would intervene and overrule the common law if justice required it. It was stressed, even at that time, however, that it did not attempt to overrule common law judgments, but rather to act in personam on the parties to prevent injustice. 

This maxim indicates that, where possible, equity will ensure that its own rules are in line with the common law ones. Examples of equity overcoming the effect of the common law are frequent enough, but it should be noted that in most cases the principle is that equity supplements but does not contradict the common law. Thus, in the case of the trust, the interests of the beneficiary are recognized, but so too, of course, is the status of the trustee as legal owner. The trust exists, as it were, behind the legal ownership. Equally, the courts will in appropriate cases allow the common law effects to stand.

 In the case of Re Diplock  it was argued that, where money had been distributed to charities under the provision of a will which subsequently turned out to be invalid, the charities should be allowed to retain it. The Court of Appeal stated: 

“It is in our opinion impossible to contend that a disposition which according to the general law of the land is held to be entirely invalid can yet confer upon those who, ex hypothesis, have improperly participated under the disposition, some moral or equitable right to retain what they have received against those whom the law declares to be properly entitled”

Equity does not replace or violate the law, but it backs it up and supplements it. Equity follows appropriate rules of law, such as the rules of evidence and pre-trial discovery.If the law is too rigid, equity will restrict or modify the law where it seems fair to do so. 

 In McCormick v Grogan, Lord Westbury stated

 “… being a jurisdiction founded on personal fraud, it is incumbent on the Court to see that a fraud is proved by the clearest and most indisputable evidence”.

 If a court utilizes the fraud theory and finds that there was a secret trust then a finding of fraud requires a higher standard of proof that of Criminal law - beyond reasonable doubt. 

The court of conscience to which he refers is equity; and he explained the equitable obligation of the secret trustee as acting on his conscience therefore compelling the trustee to perform the testator's intentions. The fraud theory is integral to the argument of this binding obligation whereby if the testator retains the property himself the fraud is committed.

When the law bestows a right, it also extends a remedy that can be granted in equity. Conversely, a court of equity will not supply a cause of action where none exists in the law. If a cause of action is recognized in either the common law or by statute, equity will give a remedy and forum to enforce it.

Here’s what Judge Griffith said on the subject:

“Whatever may have been the course of action in the formative period of the law, courts of equity no longer assume to annul or directly disregard the positive provisions of the established law: courts of equity are now as much bound by express rules of law concerning property and its interests as are courts of law, and particularly this is true of constitutional and valid statutory requirements and provisions. Wherever the rights or duties of the parties in a given state of facts are definitely defined and established by law, statutory or common, equity must enforce those rights and enforce those duties; and it is only when some countervailing, dominant, and equally well established equitable principle intervenes that a court of equity can assail or abrogate the legal right or duty. Therefore, in adjudicating questions of legal right, title or interest equity follows the legal rules, and even in adjudicating equitable titles, interests and estates, equity will follow the law where any clear analogy exists …” 

In any case where the law does not preclude a remedy, equity will follow the law as far as the law goes, and if the law stops short in securing the rights of the parties. equity will continue the remedy until complete justice is done

The maxim has even been interpreted so that a transaction that is invalid at law may be cognizable in equity. In Coffey v. Land, the Mississippi Supreme Court, with Justice Griffith himself writing, addressed the principle in a case involving mortgages on future crops, the statute providing for which had been repealed:

“Whenever it is declared under any long line of judicial precedents that a transaction is invalid at common law and yet is valid and enforceable in equity, it will be found that the distinction is preserved out of consideration of the fact that if such a transaction were bound up in the inflexible rules of the common law, injustice and hardship and general insecurity might result, whereas, if left to equity with its broader and more flexible powers and processes, a more perfect justice may be attained and the general security better served. We shall later herein seek by illustration to show that this is precisely the case as to annual crops to be produced in subsequent years”.

 And as to any advancements made under our decisions, on the precise subject now under discussion beyond the strict bounds of the ancient common law, we would call attention to the fact that the common law is not an institution of exact and unchangeable rules, but is a system which progresses so as to accord with the general customs, usages, habits, and necessities of the people of the state, so far as agreeable to justice and reason; and this is at the same time to say that no court may, under the notion of making progress under the common law, pronounce any rule as being an allowable advancement upon the ancient common law rule, when the effect of it would be mischievous in its operation, contrary to the substantial interests of our people, and which in its tendencies would be subversive of their freedom.”

The spirit of equity is to ensure that justice is done. This maxim, also expressed as Aequitas sequitur legem means more fully that "equity will not allow a remedy that is contrary to law.

The Court of Chancery never claimed to override the courts of common law. Story states "where a rule, either of the common or the statute law is direct, and governs the case with all its circumstances, or the particular point, a court of equity is as much bound by it as a court of law, and can as little justify a departure from it. Maitland  says, “We ought not to think of common law and equity as of two rival systems. Equity had come not to destroy the law, but to fulfill it. Every jot and every title of law was to be obeyed, but when all this had been done yet something might be needful, something that equity would require, then equity prevailed" 

The goal of law and equity was the same but due to historical reason they chose a different path. Equity respected every word of law and every right at law but where the law was defective, in those cases, equity provides equitable right and remedies.

Nagle v Feilden: The Jockey Club refused trainer's licenses to women; a woman sought a declaration that the practice was against public policy and an injunction prohibiting it. The Jockey Club obtained an order striking out her claim as disclosing no cause of action, but Lord Denning MR overturned the decision, holding that it was arguable that at common law there is a right to work at a trade without being arbitrarily excluded by anyone (whether or not a public body) having control over the admission to the trade.

LIMITATIONS TO THE MAXIM

The general rule of application to the “Equity follows the law.” Maxim is that where a rule, either of the common or the statute law, is direct, or governs the case with all its circumstances, or the particular point, a court of equity is as much bound by it as a court of law and can as little justify a departure from it.” The statement purports that equity follows the law except in those matters which entitle one to equitable relief notwithstanding a strict rule of law to the contrary.

 In the case Stickland vs. Aldridge, a person died interstate who owned an estate in fee-simple, leaving sons and daughters, the eldest son was entitled to the whole of the land to the exclusion of his younger brothers and sisters. This was unfair, yet no relief was granted by equity courts. But in this case, it was held that if the son had induced his father not to make a will by agreeing to divide the estate with his brothers and sisters, equity would have interfered and compelled him to carry out his promise because it would have been against conscience to allow the son to keep the benefit of a legal estate which he obtained by reason of promise.

Where there is an attempt to apply the doctrine of ‘Laches’. 

In Frawley v. Neill , Frawley and Neill purchased a property in their joint names in 1974. Frawley  paid two thirds of the deposit, and Neill paid the other third. The balance was provided by a mortgage with the Halifax Building Society. When their cohabitation ended in 1975, Neill orally agreed that she would sell her interest to Frawley. the judge found that this agreement had been finalized and that Frawley had paid the defendant the agreed sum. Agreements to convey the property in Frawley’s sole name were made but never completed. In 1986, the building society repossessed and sold the house, paying surplus proceeds of the sale in a bank account. Frawley claimed that he was entitled to the entire sum, as he had purchased Neill’s share. Against this, Neill raised the defense of delay or laches, claiming that Frawley was too late to claim specific performance of the purchase agreement. In spite of this argument, the judge awarded a declaration in favor of Frawley. Neill appealed. It was held that Frawley’s agreement had been performed and therefore Neill had no need of specific performance. Neill was a bare trustee of the legal title until it had been extinguished by the building society. This maxim is often displaced by statutory limitations, but even where a limitation period has not yet run, equity may apply the doctrine of ‘laches’. This maxim however has no cases to which the statute of limitation applies either expressly or by analogy. One may consider equitable claims to which the statute applies expressly. Originally, it applied to courts of Common Law but later there were enactment of several other statutory provisions applicable to equitable claims. Thus, the real property equity must be brought in the same time as if it were a legal claim and the Trustee Act 1888 limited the time with in which an action must be replaced by the limitation Act.

With the further limitations, it should be noted that Common Law prevails over equity. The Limitations of Actions Act overrides the doctrine of laches either expressly or by analogy, where, express application means enactment of statutory provisions to apply to equitable claims. It is only when there is some important circumstance disregarded by the common law rules that equity interferes. Hence the modified maxim “equity follows the law, but not slavishly nor always”.

Conclusion

This an essential feature of equity that it did not seek to replace, still less to subvert, the common law: it supplements or is an appendix intended to modify the rigidity of that law. Hence, courts of equity follow the principles of the common law. But, equally clearly, equity could never have made its unique contribution to jurisprudence if it simply applied legal principles to cases, and the maxim must be understood subject to that important qualification. 

References.

1. The Judicature Act, Chapter 8;Laws of Kenya. The Kenya Law Reports

2. Maitland, Frederic William. Equity; Also the Forms of Action at Common Law. Oxford University Press (1932) 

3. J Martin,  Hanbury and Martin's Modern Equity (19th edn Sweet and Maxwell 2012) ch 1,

4. Black's Law Dictionary 4th pocket ed. (West Group, 2011), Bryan A. Garner, editor, ISBN 0-314-27544-4

5.Limitations of Actions Act,Chapter 22;Laws of Kenya.The Kenya Law Reports.

WHERE THERE IS EQUAL EQUITY THE LAW SHALL PREVAIL.

Where there are equal fairness and deserve merit, preference is given to the legal interest. Equity will provide no specific remedies where the parties are equal, or where neither has been wronged.

The significance of this maxim is that applicants to the chancellors often did so because of the formal pleading of the law courts, and the lack of flexibility they offered to litigants. Law courts and legislature, as lawmakers, through the limits of the substantive law they had created, thus inculcated a certain status quo that affected private conduct, and private ordering of disputes. Equity, in theory, had the power to alter that status quo, ignoring the limits of legal relief, or legal defenses. But courts of equity were hesitant to do so. This maxim reflects the hesitancy to upset the legal status quo. If in such a case, the law created no cause of action, equity would provide no relief; if the law did provide relief, and then the applicant would be obligated to bring a legal, rather than equitable action. This maxim overlaps with "equity follows the law. We can elaborate further by the following stated explanation below.

"Between equal equities the law will prevail."

When two parties want the same thing and the court cannot in good conscience say that one has a better right to the item than the other, the court will leave it where it is. For example, a company that had been collecting sales tax and turning it over to the state government found that it had overtaxed and overpaid by two percent. It applied for a refund, but the state refused. The court upheld the state on the ground that the money really belonged to the customers of the company. Since the company had no better right to the money than the state, the court left the money with the state. 

In the case of Dearle v Hall.The beneficial owner of a trust fund assigned it first by way of security to A, and then outright to B, in each case for valuable consideration. A had not given notice of his assignment to the trustees of the fund and, accordingly, when B made enquiries of them, he did not discover the existence of the assignment to A because the trustees were not aware of it. B did give notice of the assignment to the trustees, and then A subsequently also gave notice to them. On appeal it was decided that B took priority over A. Judgement was given in favour of B.

"Between equal equities the first in order of time shall prevail."

When two parties each have a right to possess something, then the one who acquired an interest first should prevail in equity. For example, a man advertises a small boat for sale in the classified section of the newspaper. The first person to see the ad offers him $20 less than the asking price, but the man accepts it. That person says he or she will pick up the boat and pay for it on Saturday. Meanwhile another person comes by, offers the man more money, and the man takes it. Who owns the boat? Contract law and equity agree that the first buyer gets the boat, and the second buyer gets his or her money back.

"Equity abhors forfeiture."

A Forfeiture is a total loss of a right or a thing because of the failure to do something as required. A total loss is usually a rather stiff penalty. Unless a penalty is reasonable in relation to the seriousness of the fault, it is too harsh. In fairness and good conscience, a court of equity will refuse to permit an unreasonable forfeiture. This maxim has particularly strong application to the ownership of land, an interest for which the law shows great respect. Title to land should never be lost for a trivial reason, for example, a delay of only a few days in closing a deal to purchase a house.

Generally equity will not interfere with a forfeiture that is required by statute, such as the loss of an airplane illegally used to smuggle drugs into the country. Unless the statute violates the requirements of the Constitution, the penalty should be enforced. "Equity abhors forfeiture" does not overcome the maxim that "equity follows the law."

Neither will equity disregard a contract provision that was fairly bargained. Generally it is assumed that a party, who does most of what is required in a business contract and does it in a reasonable way, should not be penalized for the violation of a minor technicality. A contractor who completes work on a bridge one day late, for example, should not be treated as though he or she had breached the entire contract. If the parties, however, include in their agreement an express provision, such as time is of the essence, this means that both parties understand that performance on time is essential. The party who fails to perform on time would forfeit all rights under the contract.

UNDER THE KENYA PESPECTIVE 

The courts has interpreted the maxims as that where the claims of the two persons are equally equitable, he who owns the legal estate in addition will be preferred. The plain meaning of the maxim, thus, is that the person in possession of the legal estate will get priority over any prior or subsequent equitable interests. Thus, when both the parties are equally entitled to obtain help from courts of equity because their equities are equal, the party who has law in his favor will succeed. This was well illustrated in the case below.

Adrian Muteshi vs Hon William Samoei Ruto the court ruled in favour of the appellant whose land was taken away and rendered an Internally Displaced Person after the post-election violence of 2008. The Deputy President William Ruto lost the appeal in the land grabbing case in which the court ordered him to vacate a 100 acre farm in Eldoret and pay 5 million shillings to the Appellant Adrian Muteshi the land's rightful.

Where the equities are equal, the first in time shall prevail

Where equities are equal, the first in time shall prevail. This applies where there are two or more competing equitable interests, the first in time shall prevail. The first in time is the first in right because it is typically employed to determine priority between competing claims to equitable rights. Property right is an asset especially land. It brings out priority aspect. This is a term used to describe the regulation of competing interest in property both real and personal.

The problem may concern any interest in property, thus, an owner of land may purport to sell it to X and then to Y or he may create successive mortgage in favor of X, Y and Z. further, a beneficiary under a trust may mortgage his equitable interest to A and then (concealing the first) from B. the priority rules determine who has the superior rights either to the property itself, or (in the case of mortgages) to have his money realized out of the land. 

There are two sets of rules for determining priorities:

1. The order of creation rules- that is all competing interests will rank according to the order of their creation. But this rule is subject to four subsidiary rules.

2. The order of notice rules- priority is determined by the order in which notices of the mortgages or assignments are received by the trustees or other persons responsible for distributing the funds. This is the rule in Dearle vs. Hall.

The basic rule of order of creation can be supplanted by an interest later in time claiming to be a bona fide purchaser of legal estate without notice or conduct –fraud, estoppels, or gross negligence in relation to the title deeds or a later purchaser (with or without) taking free of equitable interests of beneficiaries under a trust or settlement by virtue of the overreaching provisions of the LPA or application of the post- 1925 rules relating to registration of land charges.

The most important subsidiary rule after 1925 in the context of priorities is registration. In situations where the earlier of two competing interests is not registable or overreached.

The basic order of notice is qualified by the principle that a later encumbrance who, at the time of his security has actual or constructive notice of earlier encumbrance, will not obtain priority merely by being the first to give notice to the trustees as given in Re Holmes and also the requirement of written notice after 1925.

The rule in Dearle vs. Hall

The order of notice rule applies to “dealings” with an existing equitable interest, that is, an interest already separated from the legal estate. “Dealing” includes any assignment, mortgage or disposition by operation of law such as the vesting of a bankrupt property in tussle in bankruptcy. Notice is normally given to relevant trustees though where it concerns assignment of choices in action the relevant person may be a trustee, debtor or other person responsible for distributing the funds.

Where the assignor is a trustee, notice to him alone is not sufficient and the other trustee(s) must be notified as was in Brownie vs. Savage 

Where the assignee is a trustee, notice to him is effective as was in Lloyds Banks vs. Person

If the notices are received substantially simultaneously, the dealings will rank in the order in which they were made as was held in Calisher vs. Forbes

Where there is a marked difference in time in the receipt of notices the rule is applied arbitrary and inflexibly: In Re Dallas, T gave a legacy to X and appointed him executor. T became incurably insane. X borrowed money on the security of the legacy, first from A and then from B. On T’s death, X renounced probate and Y was appointed administrator with the will annexed. B was the first to give notice to Y of his charge on the legacy, and was held to be entitled for prior payments over A who gave notice within a week and as soon as he became aware of the position.

There was a rule in Re Holmes which would apply, however so that if B has notice of A’s charge he could not obtain priority merely by being the first to give notice. 

Pre-1926 the form of the notice could be oral or written so long as it was clear and distinct. By section 137(3) LPA any notice in respect of an equitable interest given after 1925 should be in writing though seemingly this need not be a formal notice.

A problem may arise where there are multiple trustees. Here it is desirable that the notice given to all of them. If that is done, an assignment/mortgage is protected even though they all die or retire without communicating the notice to their successors: Re Wasdale It is, however always desirable to give notice to a fresh set of trustees in case they innocently pay out money to a person lower in priority.

If notice is given only to one or two trustees it is only effective to preserve priority as between assignments made during the office of that one trustee, that is, it is in effective in relation to assignments made after trustee’s death or retirement, unless he had communicated it to the continuing trustee(s) before then.

In Ward vs. Duncombe W executed a marriage settlement whereby her interest in a fund of personally was settled. The marriage settlement was known to S (one of the trustees of that fund) but not to the other trustee. Later, W wished to mortgage her share without disclosing the marriage prior encumbrance existed: S replied evasively, whilst E said he knew of none. The loan was made and the lender gave notice to the trustee. Later, S died and was replaced by X as trustee. It was held that the trustees of the marriage settlement had priority over the lender. 

In Re Phillips Trust, however, one trustee out of three had notice of an assignment. He died without informing either of the others of this. After his death, ascending assignment was made to a different person, who gave notice to the trustees; it was held that the second assigner had priority.

Low vs. Bouverie established that trustees were not bound to answer enquiries, either by the beneficiary or a prospective in cumbrance, as to the extent to which the property was already in cumbered. Section 137(8) LPA provides that the trustees must now produce, on the application of any person interested in the equitable interest, any notices served on them and/or their predecessors. This arguably emasculates Low vs. Bouverie although it may be argued that a prospective encumbrance is not an “interested person”. The first instance decision in United Bank of Kuwait Plc vs. Sahib confirms that the priority rule does not extend to the advantage of a judgment creditor without security.

Important non-statutory modification/ restrictions on the application of Dearle vs. Hall. The principle from Re Holmes notes the relevant time here is the date the later encumbrance acquires his interest. Mutual Life Assurance vs. Langley.

The rule does assist a later assignment/mortgagee who does not give value, that is, a later volunteer is bound by prior interest irrespective of whether he gave notice first: Re Wallis, ex parte Jenks.

The rule cannot be used to create new rights, it merely regulates existing rights: BS Lyle Ltd vs. Rosher where the assignor never owned any beneficial interest himself.

REFERENCE

Training in Law by Professor Christopher J.S. Gale, LLB (Hons), LLM.

HE WHO SEEKS EQUITY MUST DO EQUITY

 Meaning

The maxim means that to obtain an equitable relief the plaintiff must himself be prepared to do ‘equity’, that is, a plaintiff must recognize and submit to the right of his adversary. Scriptures of Islam also inform us to be conscientious:

“Woe to those who stint the measure:

Who when they take by measure from others, exact the full;

But when they mete to them or weigh to them, minish…”

 

Application and cases

This maxim has application in the following doctrines-

i) Illegal loans

ii) Doctrine of Election

iii) Consolidation of mortgages

iv) Notice to redeem mortgage

v) Wife’s equity to settlement

vi) Equitable estoppel

vii) Restitution of benefits on cancellation of transaction

viii) Set-off

 

i)      Illegal loans: In Lodge v. National Union Investment Co. Ltd.,the facts were as follows. One B borrowed money from M by mortgaging certain securities to him. M was a unregistered money-lender. Under the Money-lenders’ Act, 1900, the contract was illegal and therefore void. B sued M for return of the securities. The court refused to make an order except upon the terms that B should repay the money which had been advanced to him.

 

ii)     Doctrine of election: Where a donor A gives his own property to B and in the same instrument purports to give B’s property to C, B will be put to an election, either accept the benefit granted to him by the donor and give away his own property to C or retain his own property and refuse to accept the property of A on condition. But B can not retain his property and at the same time take the property of A.

 

iii)    Consolidation of mortgages: Where a person has become entitled to two mortgages from the same mortgagor, he may consolidate these mortgages and refuse to permit the mortgagee to exercise his equitable right to redeem one mortgage unless the other is redeemed. The right of consolidation now exists in England but after the enactment of the Law of Property Act, 1925, it can exist only by express reservation in one of the mortgage deeds.

 

iv)    Notice to redeem mortgage: Notice to a mortgagor to redeem one’s mortgage is an equitable right of the mortgagor.

 

v)     Wife’s equity to a settlement: There was a time when woman’s property was merged with that of her husband. She had no property of her own. Equity court imposed on the husband that he must make a reasonable provision for his wife and her children. But, now, Under the Law Reform (Married Women and Tortfeasors) Act, 1935, married women has full right on her property and it is not consolidated with her husband’s property.

 

vi)    Equitable estoppel: A promissory estoppel arises where a party has expressly or impliedly, by conduct or by negligence, made a statement of fact, or so conducted himself, that another would reasonably understand that he made a promise thereon, then the party who made such promise has to carry out his promise.

 

vii)   Restitution of benefits on cancellation of transaction: It is proper justice to return the benefits of a contract which was voidable, and, equity enforced this principles in cases where it granted relief of rescission of a contract. A party can not be allowed to take advantage of his own wrong.

 

viii) Set-off:  Where there have been mutual credits, mutual debts or other natural dealings between the debtor and any creditor, the sum due from one party is to be set-off against any sum due from the other party, and only the balance of the account is to be claimed or paid on either side respectively.

 

Limitation

i) The demand for an equitable relief must arise from a suit that is pending.

ii) This maxim is applicable to a party who seeks an equitable relief.

 

Recognition

i) Under sec 19-A of the Contract Act, 1872 if a contract becomes voidable and the party who entered into the contract voids the contract, he has return the benefit of the contract.

ii) sec 35 of the Transfer of Property Act embodies the principle of election.

iii) Sec 51 and 54 of the Transfer of Property Act.

iv) In Order 8, Rule 6 of the CPC, the doctrine of Set-off is recognized.

He Who Comes To Equity Must Come With Clean Hands

This maxim is similar to the maxim of 'he who seeks equity must do equity', but they differ in that, 'He who seeks equity must do equity' looks at the future, while 'He who comes to equity must come with clean hands' focuses on the past.

This maxim bars relief for anyone guilty of improper conduct in the matter at hand. This maxim provides that any person, individual or corporate, that wishes to ask or petition a court for judicial action, must be in a position free of fraud or other unfair conduct.

Injunctions

In Lee v Haley

The Claimant sought the discretionary equitable remedy of an injunction, with a view to protecting their trade as coal merchants. The Old Court of Chancery refused to grant the injunction, not because of the coal trade but because the claimant had unclean hands because he had 'systematically and knowingly' sold his customers short on weight. The judge held that equity must not grant a remedy for the protection of a fraudulent trade.

Specific Performance

An applicant will not be entitled to an order for specific performance of a lease if that applicant is already in breach of a material term in the lease. This was shown in the case;

Coatsworth v Johnson (1886-90) All ER Rep 547, AC

Johnson entered into an agreement to lease a farm to Coatsworth for 21 years. The agreement contained a clause, to farm 'in good and husband-like manner'. Coatsworth took possession and within a few months, he had allowed the condition of the land to deteriorate very badly. Johnson took the rather drastic of evicting Coatsworth from the farm. Coatsworth sued for wrongful eviction, contending that the agreement created an equitable lease lasting 21 years. 

It was held that Coatsworth's failure to take good care of the farm was a substantial breach of the contract which meant that he had 'unclean hands' in the sight of equity. He would therefore, be denied the discretionary remedy if specific performance of the contract. He was evicted 

Exceptions to The Maxim

Interest in property

The maxim does not apply where the entitlement to property Is the question. This was demonstrated in the leading case of;

Tinsley v Milligan (1993)3 WLR 126 House of Lords

The Claimant and Defendant were lovers. Together they purchased a property which they jointly ran a business by letting out the rooms in the house. It was agreed that the house be registered in the name of the claimant alone. This was so that the defendant would be able to fraudulently claim social security benefits which would go into their joint account. The relationship broke down and the claimant sought possession of the house asserting full ownership. The defendant sought a declaration that the property was held on trust for both in equal shares. The court of appeal applied the public conscience test to allow the claimant yo keep the whole interest in the house. The claimant appealed to the Lords.

The House of Lords rejected the public conscience test as it was inconsistent with previous authorities and gave too much discretion to the court. They applied the reliance principle;the defendant didnot have to plead the illegality to succed, it was sufficient that she had contributed to the purchase price and there was a common understanding that they would own the house equally. Lord Brown Wilkinson said, "the consequences of being a party to an illegal transaction cannot depend...on such imponderable factors as the extent to which the public conscience would be affronted by recognising rights created by illegal transactions'

Against Public Policy

The application of the Maxim does not take effect in situations where there is a transaction that is against public policy. This was shown in;

Everest v Williams (1725)

Two robbers were partners in their own way. Due to disagreement in shares one of them filed a bill against the other for accounts of the profit of the robbery. Courts of equity do grant relief in case of partnerships but here was a case where the cause of action arose from an illegal occupation. So the court refused to grant the injunction.

However, the Maxim of clean hands should not be taken too deeply as Brandies J. said in Loughran v  Loughran 292 U.S 216 (1934)

"Equity does not demand that its suitors shall have led blameless lives"

EQUITY AIDS THE VIGILANT NOT THE INDOLENT 

Equity in ordinary meaning refers to right doing, good faith, honest and ethical dealings in transactions or relationship between individuals. Equity was developed since common law was rigid and often harsh.

In common law,

1. The plaintiff either had to fit his action into the framework of an existing writ, or show that it was similar to such writ, if he could do neither he had no remedy. 

2. In civil action the only remedy which the common law courts could give was an award of damages.

3. There was also an elaborate rules governing the procedure which had to be    followed in bringing a case, any slight breach of the rules, might leave a plaintiff who had a good case without a remedy.

In 1474 the Court of Chancery was created, the early Chancellors were members of the clergy who were very concerned to the order what was, conscience, and fairness between the parties. The first lawyer to be appointed Chancellor was Sir Thomas More in 1529, at first there were no fixed rules on which the court proceeded, gradually the court began to be guided by its previous decision, and formulate general principles known as maxims of equity upon which it would finally proceed. Finally the court of Chancery evolved a body of law the principles of which were as firm as those of common law.

Maxims of equity developed, these are principles which the Court of Chancery followed when deciding cases, and which are applied today when equitable relief is claimed.

THE ACHIEVEMENT OF THE COURT OF CHANCERY

The court developed law relating to trusts and mortgages and discretionary remedies namely:

(a).Injunction- an order of the court compelling or restraining performance of    some act.

(b).specific performance-an order of the court compelling a person to perform an obligation existing under either contract or trust

(c) Rectification-The alteration of document so that it reflects the true intention of the parties.

(d) Rescission-The restoration of the parties to a contract to their pre contract state of affairs.

EQUITY AIDS THE VIGILANT AND NOT THE IDOLENT (Vigilantabus non dormientibus, jura subveniunt)

A court of equity has always refused to aid stale demands where a party has slept on his rights for great length of time.

Nothing can call forth the court into activity, but conscience, good faith and reasonable diligence, where these wanting the courts are passive and will do nothing.

Delay which is sufficient to prevent a party from obtaining an equitable remedy is called laches.

The doctrine of laches in courts of equity is not arbitrary or technical doctrine. Where it would be practically unjust to give a remedy, either because the party has by his conduct, done that which might be fairly regarded as equivalent to waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material.

Equity in general juristic sense means liberal and humane interpretation of the law in general so far as that is possible without actual antagonism to the law itself (Allen Law in the making 1964).

Effectively therefore equity in general juristic sense refers to judicial body’s power to administer the law justly taking into account special facts of each particular case.

This conception is recognized by the constitution of Uganda 1995.  Article 126 (2) e which says:-

In adjudicating cases of both civil and criminal nature the court shall be subject to the law Article (126e), substantive justice shall be administered without undue regard to technicalities.

In applying Article 126(2) c of the constitution of Uganda, in Stephen Mabasi versus Uganda Revenue Authority 1995 held that a memorandum of appeal which was filed out of time could not be rejected because the appellant could not file it before obtaining the official record of proceedings from the High Court which were released after 60 days period required.

Equity Aids the Vigilant and not the Indolent.

The essence of this maxim is that an equitable relief will not be granted if the applicant unduly delays in bringing an action.

Lord Diplock in Burket Versus James set out principle for the grant of this maxim as follows.

1.  Whether there has been inordinate delay on the part of the plaintiff in prosecuting the case.

2. Whether the delay is intentional, contumelious and therefore inexcusable.

3. Whether the delay is an abuse of court process

4. Whether the delay gives rise to substantial risk or cause serious prejudice to the defendants

5. What prejudice will the dismissal occasion to the Plaintiff

6. Whether the Plaintiff has offered reasonable explanation for the delay.

Dismissal of suit for want of prosecution is discretionary and must be exercised judiciously

In Fitzpatrick Vs Batger & Co. Ltd (1967) Lord Denning citing his decision in Reggentine Versus Bee Cholme Bakeries Ltd said :-

It is the duty of the Plaintiffs advisers to get on with the case.  Public policy demands that the business of the court should be conducted with expedition, the delay is far beyond anything we can excuse.  This action has gone to sleep for nearly two years.  It should now be dismissed for want of prosecution.

And in the celebrated case of Mukhisa Biscuit Manufacturing Company versus West End Distributors (1969) EA 969 the court noted that it is the plaintiff’s duty to bring the suit to early trial and he cannot absolve himself of this primary duty by stating that the defendant consented to the position.

It is indeed clear that the primary responsibility of prosecuting any case lies with the Plaintiff.

In Ramuka Agencies Ltd vs Esther Wanjiru Maina and another Nairobi High Court ELC 1187/2007, the plaintiffs suit was dismissed on 9th January 2009, the Plaintiff even after dismissal of the suit did not file the present motion for reinstatement until ten months later, that is undue laches.

Kimondo J in his ruling had this to say.  “A portrait emerges of a lethargic litigant completely disinterested in prosecution of its suit; the plaintiff has failed to offer any plausible reason for its failure to fix the case for hearing since 23rd November 2009.  Under such circumstances the court was well entitled to dismiss the suit under order 17 rule 2 of the civil procedure rules 2010 and the inherent powers of the court.

The motion to reinstate the suit was therefore devoid of merit and the same is dismissed with costs to the defendant.

The import of order 17 Rule 2(3) is that the defendant should not be vexed by a claim against them indefinitely.  It is against public policy to keep a suit pending needless to emphasize the inconvenience caused by a case which hangs on their necks like the sword of Damocles.

In Nairobi ELC no 529 of 2010 Cecilia wanjiku Njoroge Versus Nema and another, Lady justice Mary Gitumbi in her ruling said “it is clearly in the exercise of power conferred by order 17 Rule  2(3) that the second defendant has brought this application to have this suit dismissed for want of prosecution. This is a relatively straight forward case. It is evident that the plaintiff appears to have lost interest in this matter and has not made any application or set down the suit for hearing since the ruling on her application was delivered on 22nd June 2011 which is now over two years ago. Clearly the time period required in the law cited above has been achieved, thereby giving the court the right to make this ruling. i find the plaintiff has lost interest in this suit and its highly unfair on the defendants to let this suit continue to tax them. Accordingly, I hereby allow the petition and hereby dismiss the suit with costs to the defendants.

Limitations of Actions Act Cap 22

Civil matters and in particular actions of contract tort and certain other actions may not be brought after a certain period of time.

The following may not be brought after the end of six years from the date which the case of action accrued.

1. Action founded on contract

2. Action to enforce a recognizance

3. Action to enforce an award

4. Action, including action claiming equitable relief for which no other period of limitation is provided by this act (cap 22) or any other written law.

Sec 4(2) of the limitation of actions Act provides an action founded on tort may not be brought after the end of three years from the date in which the cause of action accrued.

In civil case no. 2028 of 1997 Felix Dominic Muriungi vs Kenya Commercial Bank

The Plaintiff was an employee of the Defendant since 17th December on or about 29th Nov 1993 the Defendant caused the arrest of the Plaintiff and terminated his services.  The Plaintiff was later acquitted.

The plaintiff filed a suit for malicious prosecution and false imprisonment and cost of the suit and interest at court rate.  The plaintiff claims his services were terminated wrongly on 29th Nov 1993, and the suit was filed on 18th August 1997.  Summons to enter appearance was not served until 4 years later on 11th July 2001 in contravention of order 6 rule 3 (1) of the civil procedure Rules which makes it mandatory requirement that summons shall issue and order v rule I shall be valid for the first instance of 12 months.

Further the validity of summons cannot be extended beyond 24 months the original summons having been issued on 12th August 1999 and therefore there was no proper suit before the court.

Osiemo J ruled that the matter was a tort and therefore statutory time barred.  In cause no. 204 of 2013 Nicodemus Marani Vs Timsales Ltd in the Industrial Court of Kenya at Nakuru Nicodemus Marani filed the memorandum of claim on 1/7/2013 through Nancy Njoroge & Co advocates he claimed for judgement against the respondent for

1.  Underpayment amounting to 1,911,990

2. Overtime payment amounting to 594,000

3. Compensation based on section 49(1) c of the employment act amounting to Kshs 276,000

The respondent filed a preliminary notice of objection on 19/8/2013 that the claim is statutory time barred and is incompetent fatally defective and abuse of court process and offends provisions of section 90 of the Employment Act 2007 laws of Kenya.  The preliminary objection was that the claim was filed on 1/7/2013 being 4 years after the claimant’s termination on 8/6/09.  The case was filed 13 months later.

Ongoya J in dismissing the suit said that the plaintiff had indeed slept on his rights.  The Court holds that section 90 of the employment Act provides for a time limitation of 3 years in appropriate case, exceptions may exist as envisaged in section 5 of the public authorities limitation Act Cap 39 laws of Kenya, the Court however finds the present case has not established any ground for such exceptions. The upshot is that the claimant’s suit is dismissed with costs.

Exceptions to the limitation period

Section 5 of the public authorities’ limitation Act if, on the date when a right of action accrues for which a period of limitation is prescribed by this Act, the person to whom it accrues is under a disability, the action may be brought at any time before the end of twelve months from the date when that person ceases to be under disability: 

Provided that-

1. This section does not apply in respect of proceedings where the right of action first accrues to person who is not under a disability and through whom the person under disability claims.

2. This section does not apply to an action to recover a penalty or forfeiture recoverable by virtue of a written law.

In misc application no 1715 of 2004 Joseph Mugo Mwangi versus the Honorable Attorney General

The applicant herein filed an application for leave to file a suit out of time, section 3(1) of the Public Authorities Limitation Act Cap 39 prescribes time limit of 12 months from the date of cause of action for filing a suit against the government arising out of an action in tort, this application was made more than four years later and the only reason provided for the delay is lack of filing fees. The court found that the delay was highly inordinate and the reason given are not sufficiently good reason for not filing the suit in time in any event it does not constitute disability envisaged by section 5 cap 39 the application was therefore dismissed.

Equity is equality

Introduction

This maxim means that equity will not play favorite. It applies where two or more persons are entitles to the same property. An important principle of equity that is illustrated by this maxim is that in the absence of sufficient reason for any other basis for division those who are entitled to property should have the certainty and fairness of equal division. Equity therefore seeks to effect the distribution of property and losses proportionally. Justice Edward Fry said, “When I say equality, I do not mean equality in its simplest form, but which has been sometimes called proportionate equity.”

Application of this maxim

This maxim applies in a broad circumstance namely

1. Presumption of tenancy in common

2. Severance of joined tenancy

3. Principle of equal division

Presumption of tenancy in common

In joint tenancies as a general rule there is a right of survivorship which means that in a situation where A and B are joint tenants and A dies then B takes the whole property that is the subject of the whole tenancy the estate of A takes nothing. Under equity the right of survivorship is excluded and a presumption of a tenancy in common is included. In a tenancy in common the share of the deceased passes on to whoever is entitled to.

Three main situations have been coined where equity treats joint tenancy at common law as tenancy in common

1. Where property of the parties is bought in unequal shares

2. Issues relating to partnership

3. Matters arising from loan or mortgage

Where property of the parties is bought in unequal shares

In a situation where property is bought by A and B where A contributes 2/3 of the price and B contributes 1/3 of the price and the property is transferred to them as joint tenancy if A dies at common law B will entitled to the whole property, however under the law of equity B would be regarded as a trustee of A’s estate and will only be entitled to his 1/3. Where the purchase money has been advanced in equal shares by A and B, B will be entitled to the whole property both at common law and at equity. The rationale behind this is that where two people have contributed equally to the purchase price the intention is the right of survivorship should operate. This was evidenced in the case of Lake V Gibson where five persons purchased West Thorock Level from the Commissioners of the Sewers, and the conveyance was to them as joint tenants in fee, but they contributed ratably to the purchase, which was made with the intent of draining the level. Several of them died. This matter was brought to court and it was held that in equity they were tenants in common.

Issues relating to partnership

At equity the presumption is that property acquired by partners in business is held by them as beneficial tenancy in common. Where the partnership deed does not specify the number of shares, where the share deed does specify the share of each partner the result is that each partner is entitled to equal share to the asset and liability of the partnership

Matters arising from loan or mortgage

Where A and B advance a loan jointly to C and C mortgages his property jointly as security for the loan, equity presumes it as tenancy in common. This effect is that if A dies then B becomes the trustee for the estate of A of his share on the some let out

Severance of joint tenancy

It is possible to convert a joint tenancy to a tenancy in common through a process known as severance. As we noted earlier where joint buyers advance equal amount, there is a joint tenancy both at common law and at equity example severance would occur in many ways for example; Mutual agreement of the joint tenants, Mutual conduct of all existing joint tenants and a joint tenant can alienates his interest through sale or mortgage, the agreement to alienate such an interest will result into severance

Principle of equal division 

The principle of equal division states that where there’s no basis for distributing property between two or more rival claimants, the court may apply this maxim to divide property equally. The application of this title can be illustrated in the following four scenarios 

Where the trustees are unable to exercise a trust power to divide property the court may divide the trust equally among all the members of the class of beneficiaries, in the case of Jones v Maynard , a soldier H going on active service gave his wife W power to draw cheques on his account. On their subsequent divorce, W claimed half the balance in the account, and her claim was allowed. There was evidence, said the judge that the parties intended to make a common pool of their resources: both H and W paid in their earnings (though H's contribution was greater) and drew cheques, and they spoke of "our savings". W was therefore entitled to half the balance of the account and to half the value of various investments purchased from it in H's name

It has been illustrated that if there is a statement to the effect that a fund should be held in trust for certain people in equal shares and that any share which fails to vest shall accrue to the other shares by way of addition then the accruement will be in equal shares example in the case of McPhail vs Doulton Betram Baden executed a deed settling a non-charitable trust for the benefit of the staff of Matthew Hall & Co Ltd and their relatives and dependants. The objects clause provided that the trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such person in such amounts at such times and on such conditions (if any) as they thought fit. Lord Wilberforce, after noting the facts that the settler had left his property in trust with instructions to distribute according to the trustees choice and therefore not equally among the potential beneficiaries stated the following “… equal division maybe sensible and has been decreed in the cases of family for a limited class, here there is life in the maxim ‘equality is equity’ but the cases provide numerous examples where this has not been so, and a different type of execution has been offered, appropriate to the circumstances.” It was held that so along as any given claimant can clearly be determined to be a beneficiary, or not, a trust is valid       

When a husband and wife divorce or separate but have each contributed to the purchase of the matrimonial home and or operation of a bank account the court will divide the property equally between them irrespective of their contributions example in the case of Jones v Maynard. The principle does not apply while they are still living together, for then their rights in a joint bank account are not meant to be attended by legal consequences

Where a parent has died leaving many children the presumption of equity is that they should all share equally in the property.  

In conclusion, equity underlines the traditional equitable distastes for joint tenancies, the form of co-ownership of land in which each owner is regarded as owning the entire land (not simply an undivided share, as is the case with tenancies in common) and one of the consequences of of which is that, on the death of one joint tenant, the surviving joint tenant or tenants become entitled to the entire property. As seen, equity’s inclination to apply the principle of equality, wherever possible, and therefore it is of long standing.

EQUITY LOOKS TO THE INTENT RATHER THAN FORM

Introduction 

Intent- to have in mind a fixed purpose to reach a desired objective, to have as one’s purpose for example Daniel intended to become a lawyer. It’s the intention to do something.

Form- the model of an instrument or legal proceeding, containing the substance and the principal terms, to be need in accordance with the laws, or it is the act of pursuing, in legal proceedings, and in the construction of legal instruments, the order required by law. 

Form is usually put in contradiction to substance, is the outer shape or structure of something, as distinguished from its substance or matter.

Principle of equity looks to the intent rather than form

This principle does not mean that formalities may be ignored in equity, but rather that equity looks at the substance rather than the form.

This maxim is characteristic of the greater freedom of action of the equity courts, as compared with the common law courts, and of their efforts to do substantial justice rather than enforce technical rules.

 Parkin v Thorold.The parties had exchanged contracts to complete on a day. The vendor requested a postponment and the buyer agreed. On the new day fixed, the title was still complete. The vendor now appealed against refusal of his request for an order for specific performance.
Held: The appeal succeeded. On a contract for the sale of land, the time originally set for completion is not, in equity, of the essence. Either party may however give notice to the other insisting on completion within a reasonable time.it was further held that “Courts of equity make a distinction in all cases between that which is a matter of substance and that which is a matter of form: and if it finds that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person insist on such form, and thereby defeat the substance”.

 This maxim does not tell us very much about the functional distinction between law and equity, unless it is to say that equity will not permit a party to relay upon a legal form or the formal wording of a law, in a way that would be substantially unconscionable.

We should however be clear about what the maxim does not mean. It does not mean that equity looks solely to substance: equity respects the form of legal deeds and contracts, because equity follows the laws. Furthermore, it does not mean that equity never insists upon form, thus statute now provides that equity cannot grant specific performance of a contract to sell land unless the contracting is in writing, containing all relevant terms and signed by both parties. Neither does it mean that the common law always insists upon form. Finally, it does not mean that the common law never looks to substance instead of form. 

 

In Street v Mountford On 7 March 1983, Roger Street, a Bournemouth solicitor, gave rooms 5 and 6 in No 5 St Clements’s Gardens, Boscombe to Mrs. Wendy Mountford for a ‘license fee’ of £37 a week, terminable on fourteen days’ notice. Mrs. Mountford also signed a form saying she understood the Rent Act 1977 did not apply to regulate her rental payments. The Rent Act 1977 at the time applied to leases only, not licenses, and required landlords accept a rent which was deemed fair by an independent officer or tribunal, and also required more than fourteen days’ notice would be given. Mrs. Mountford argued that she had a lease. Lord Templemen held that a form of license to be in substance of a lease. 

 

The effects of the application of this doctrine

The effects of the application of this doctrine are well illustrated in the case of equitable mortgages, thus equity will regard a transaction as a mortgage even though it is not so described ,if in substance it appears that the property was transferred by way of security, as exemplified by Locking v Parker where the question arose whether a real security in the form of a trust for sale of land was or was not a mortgage. The judge held that ‘it is not for a court of equity to be making distinctions between forms instead of attending to the real substance and essence of the transaction. Whatever form the matter took, I am of opinion that this was a solely a mortgage transaction’.

This maxim has also been applied by the courts in the construction of trusts. Conversely the use of the word ‘trust’ does not conclusively indicate the existence of trust. The settlor’s subjective intentions are irrelevant, if he enters into arrangement which have the effect of creating a trust, it is not necessary that he should appreciate that; it suffices that he intends to enter into them. A ‘precatory’ expression of hope or desire, suggestion or request, is not sufficient. The words in each case must be examined to see whether the intention was to impose a trust upon the done.

In covenants agreements as covenant will be regarded as a restrictive covenant if negative in substance even if it worded in a positive form. Although a party to a covenant can enforce the contract at law even though no consideration has been given, equity regards such a party as a volunteer and will not order specific performance. Case of Cannon v Hartley the father upon the breakdown of his marriage covenanted to make provisions for a daughter by settling property expected later to be acquired under the will of his parents. When he finally received the property he refused to transfer the property as agreed. But since the daughter was a party to the covenant, she was able to enforce the contract at common law and obtain substantial damages. She was privy to the covenant. 

This maxim was applied in the case of equitable liens in the case of Badgerow vs. Manhattan Trust Co.where the court said: "It must be remembered that the form of the agreement which creates a lien is not as material as the ultimate intent of the parties. Equity looks through form to substance. If the intent to charge designated property is established the lien follows."

References

• Watt, G  Trusts and Equity 4th edition Oxford (2010)

•  Petit P.H Equity and the Law of Trusts 12th  edition, London ,Sweet & Maxwell (2012)

• Black’s law dictionary.

 

EQUITY IMPUTES AN INTENTION TO FULFILL AN OBLIGATION

 Meaning

Equity considered and estimated acts of parties. Thus where a person is under an obligation to do a certain act, and he does some other act which is capable of being regarded as an act in fulfillment of his obligation. In other words a person is presumed to do what he is bound to do. 

              Also it refers to the refusal to accept that a legal or equitable obligation which has not been meet, when the facts can be interpreted consistently with the obligation having been met. 

                    The maxim was applied in the face of clear evidence that the party subject to the obligation had no intention whatsoever of fulfilling it. This is because the requisite intention is imputed, not merely implied

In Sowden v. Sowden, [1875]1BRO cc 582 a husband covenanted with the trustee of his marriage settlement to pay to them £50,000 to be laid out by them in purchase of land in a particular area D. He, in fact, never paid the sum, but after marriage purchased the land at D in his own name, for £50,000. He died and could not bring the land into settlement. Equity courts construed that he purchased land to fulfill his obligation.

 Application and cases

i) Doctrine of performance and satisfaction

ii) Ademption

iii) Doctrine of presumption of advancement

iv) Relief against defective execution of power of appointment.

1. Doctrine of performance and satisfaction- Sowden v. Sowden and Lachmere 412  Are cases are examples of performance. Satisfaction is the donation of a thing with it is to be taken in extinguishment of some prior claim of donee. This maxim is helpful where the presumed intention of the testator is to be found out; where the intention is express the maxim has no application.

2.  Ademption- Ademption is a transfer of property which operates as a complete or pro tanto substitution for a gift previously made by the will of the donor. 

ie. X by his will leaves his daughter Y one-third of his residuary estate. Thereafter on Y’s marriage X gives Y 20,000 Taka. X dies. 20,000 Taka is an ademption -complete or proportionately to the gift of one-third share of the residuary estate of X.

iii) Presumption of advancement- When a purchase or transfer of property without consideration is made by a father or a person in loco parentis, to or in the name of a child, a presumption arises. And the presumption is that it was for the benefit of the child. Such presumption is known as ‘advancement’. The doctrine applies to cases of parent and child, husband and wife, of mother and child and even to illegitimate child, but not to a man and his mistress.

iv) Relief against defective execution of power of appointment- A power is an authority vested in a person to deal with or dispose of property not his own. A power may be legal or equitable but after 1925 all powers of appointment are necessarily equitable.

e.g. A holds 50,000 Taka upon trust to divide among a certain class of persons. A has no option is this matter He is bound to carry out the trust. On his failing to do so, the court will see that the property is duly divided.

A defective execution will always be aided in equity under the circumstances mentioned, it being the duty of every man to pay his debts, and a husband or a father to provide for child.

 Recognition

I) The Succession Act- Presumption against satisfaction is mentioned here.This was elaborated  in Hasanali v. Popatal  1992, a testator, who had a sum of Rs 9000 as deposit from his brother, gave to is brother a legacy of Rs 9000 and it was held that the brother was entitled to both, the legacy and his deposit. But as decided in Rajmanuar case where a will contained a clear indication that the legacy was meant as a satisfaction of the debt due to X, X could not claim both as the section explains.

ii) The Trust Act- Where a person contracts to buy property to be held on trust for certain beneficiaries and buys the property accordingly, he must hold the property for their benefit to the extent necessary to give effect to the contract. Equity thus imputes an intention to fulfill an obligation.

Source

Maxims of Equity

Published by Rajesh Bhudiah

EQUITY ACTS IN PERSONAM

This maxim in simple terms means that equity does not act generally but affects specific persons, i.e. the parties to a suit, the plaintiff and the defendant. It looks into redressing wrongs committed by a specific individual against another as opposed to the whole world.

It’s been observed that the early development of equity jurisdiction owes much to this maxim. Of all the maxims, none has a more interesting history, none speaks more eloquently of the vortex of jealousy, antagonism and rivalry in which chancery first formulated its doctrines, than “equity acts in personam”

The maxim was employed by chancellors to operate on the conscience of the litigants in the exercise of their common law rights with the aim of ensuring that common law rights were not exercised in an unconscionable manner.

The decrees and orders of the Old Court of Chancery were given “in personam”, that is, against the defendant personally. They were enforceable against the conscience of specified persons. This was a characteristic of the fabric of early equity jurisdiction.

In England there was a distinction between the jurisdiction of the law courts and that of the chancery courts. Courts of law had jurisdiction over property as well as persons and their coercive power arose out of their ability to adjust ownership rights. Courts of chancery had power over persons. 

In Ewing vs Orr Ewing (1883)…Lord Selbourne stated that the courts of equity in England are, and always have been, courts of conscience, operating in personam and not in rem, and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance contracts and trusts which were not within their jurisdiction.

In the case of Fronts did not purport to deprive the legal owner of his property and transfer it to the beneficiary. But it could require the legal owner to acknowledge the right of the beneficiary and could enforce its decrees to punishment including committal to prison for contempt and the sequestration of the defendant’s assets. But although the beneficiary’s rights were property described, because of this as those in personam, they have long ceased to be exclusively such. The right of the beneficiary was recognized as one that could be transferred by him to another and transmitted on death.  

It followed that even in matters peculiar to property, where a person refused to convey property to another under a decree, the court would act against the person by committing him or her to prison.

Whereas the common law courts enforced their judgments by some mode of execution which put the plaintiff physically in possession of the property to which he was adjudged entitled, originally an order made by the court of chancery did not interfere with the defendant’s property but merely made an order against the defendant personally, for breach of which he would be punished by attachment or committal for contempt. Equity could not execute directly against any property, because no property was the subject of any dispute cognizable by equity, or the subject of any order made by equity. But in this sense, the maxim is true only historically.

Sometimes, and for limited purposes, some (but not all) equitable rights are treated as if they were purely rights in personam. Thus for the purpose of private international law, equitable rights are treated as if they were nothing more than rights in personam. In Penn vs Baltimore [1750] I Ves Sen 444; 27 ER 1132, the court of chancery established that it had jurisdiction to enforce an agreement settling boundaries of land situate outside England, since the defendant was properly served with the originating process in England. Objection was taken that since the matter in issue was the title to foreign land, the proceedings were in rem and therefore the court lacked jurisdiction, but Lord Hardwicke said “the conscience of the party was bound by this agreement, and being under the jurisdiction of this court, which acts in personam, the court may properly decree it as an agreement.” 

During the middle of the seventeenth century, equity introduced writs of assistance. In this regard the court of equity would allow its sheriffs to put the plaintiff into possession of the disputed property. The aim here was to get at the specific res, that is, the subject matter of the dispute. By trying to deprive the defendant of the res for the benefit of the plaintiff, it’s argued that the equitable relief here ceased to be a right in personam.

Where after being committed to prison by the Court of Chancery, the defendant continued to be stubborn, the court would issue a writ of sequestration, i.e. it would appoint a sequetrator to take possession of the defendant’s property until the defendant complies with the court’s decree. Again, in this instance the equitable rights in respect of the disputed property ceased to be mere rights in personam.

Grounds of application

1. The defendant must be within the jurisdiction.

2. The maxim cannot be relied upon to grant an order in personam if such will violate legal rules of another court.

3. The maxim will not be relied upon to grant an order which is not enforceable since equity does not act in vain.

Presently, if the defendant fails to comply with a decree of specific performance, the court may appoint another person to execute the transfer in respect of the disputed property. Alternatively, the court may make a vesting order whose effect is to transfer the property from one person to another without a formal conveyance.

The above developments have undermined the maxim. However, the maxim is still important in the sense that it still underlies the rule that a court may make an equitable decree relating to property which is outside its jurisdiction. For instance, the court may enforce a trust relating to land situated abroad if the trustees are present within its jurisdiction. This is in exception to the rule that the courts in Uganda normally entertain only matters within its jurisdiction. 

This doctrine, however, has limits and they include the following:

1. The court can in its discretion, decline to exercise its jurisdiction to adjudicate upon foreign assets on grounds of convenience.

2. Sometimes the court will decline to exercise its undoubted jurisdiction where a foreign element is involved for no better reason then it can’t make orders it cannot enforce: thus in “Morocco Bound” Syndicate vs Harris [1895] I Ch 534, an injunction to restrain the defendant from committing an extra territorial tort was refused.

3. It does not mean that courts of equity will deal with all rights to foreign property if the defendant is served within the jurisdiction. It’s clear from Re Hawthorne [1883] 23 Ch D 743 that they will not do so if no relief would be available where the property locally situates.

In summary of the above, equity enforced its decrees by a personal order against the defendant: breach of the order would be contempt of court, for which he was liable to imprisonment. Provided that the defendant is within the jurisdiction of the court, it does not matter that the subject of the dispute is outside it. 

REFERENCES

1. Equity & Trusts By David J Bakibinga

2. Snell’s Equity Third Edition

3. Equity Doctrines & Remedies by Meagher Gummow Lehane