By the end of this introductory topic you should be able to:-
1. Understand what is meant by the word “equity” and how the law of
equity has developed within the English legal system;
2. Identify the main equitable maxims;
3. Understand equity’s contributions to the English legal system;
4. Understand what a trust is and be able explain the development of the
trust;
5. Understand the use of the trust in modern society;
6. Identify and understand the different classifications of trusts.
What is Equity?
To the layman “equity” means fairness or justice but to a lawyer it means the
body of rules which were originally developed and administered by the Court
of Chancery, and which are now administered by all courts through their
equitable jurisdiction.
“Equity may be described as that part of the law which immediately prior to
the coming into force of the Supreme Court of Judicature Acts 1873 and 1875
was enforced exclusively in the Court of Chancery…” Pettit, Equity & the Law
of Trusts.
Equity developed in response to the injustices caused by the common law
and has been described by Maitland as a “gloss” on the common law.
Equity is used to achieve a result where formalities are lacking, where there is
no common law action possible, or where a common law remedy is available
but not appropriate.
1
, The Development of Equity
Before we consider the development of equity it is important to clarify what we
mean when we refer to the “common law” as opposed to equity. When we talk
of the common law we are usually referring to that law which is judge made as
opposed to law laid down by statute. Although equity is a feature of the
common law (it is derived from judge made decisions), common law also has
another meaning. Common law in this context refers to the laws of contract,
crime and tort which developed and were administered in the Royal Courts as
opposed to equity which developed in the Court of Chancery.
Equity developed to counter the injustices caused by the common law.
In medieval times a claimant could only bring an action in the Courts of
Common Law if their complaint came within the scope of an existing writ. The
range of writs was narrow and the creation of new writs was forbidden without
the approval of the King. As a result injured parties sent petitions to the King
to request relief where the common law did not provide a remedy. The King
then delegated the consideration of such cases to his Lord Chancellor, usually
an ecclesiastic, and who therefore could concern himself with making
decisions based upon conscience.
As the number of cases considered by the Chancellor increased, he soon
began dispensing justice on his own. Decisions were based upon
conscience, which was supposed to be based upon the theory of natural
justice and not the Chancellors own opinion. In practice however, the
standard varied according “to the measure of the Chancellor’s foot” – John
Selden.
As the number of petitions to the Chancellor increased he came to rely on
advisors and this then evolved into the Court of Chancery which operated
separately from the Common Law Courts. They were equal systems covering
the same matters but in a different way.
Earl of Oxford’s Case (1615) 1 Rep Ch 1
“The cause why there is a Chancery is for that mens’ actions are so diverse
and infinite that it is impossible to make general law which may aptly meet
with every particular and not fail in some circumstances. The office of the
Chancellor is to correct men’s consciences for frauds, breaches of trust,
wrongs and oppressions of what nature so ever they be, and to soften and
mollify the extremity of the law” – Lord Ellesmere
Initially the Court of Chancery operated flexibly but from the late 17 th to the
early 19th century it evolved into a system of established rules and authorities
which were almost as rigid as those at common law. However, as Lord Eldon
commented “the doctrines of this Court ought to be as well settled and made
as uniform almost as those of the Common Law, laying down fixed principles
but taking care that they are to be applied according to the circumstances of
each case”.
2
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