Full class/revision notes on Equity and Trust Law covering: Equitable remedies, Trusts, Charities, Express Trusts, Beneficiaries, Resulting Trusts, Constructive Trusts, Trustee's responsibilities and Duties, Fiduciary Duties, Stranger/Third party liability and Tracing. Notes include all supporting ...
Introduction
“Equity can be described as the body of rules which evolved from those rules applied
and administered by the Court of Chancery before the Judicature Acts 1873 and 1875”
per Hayton & Marshall
Equity rectifies situations where the common law falls short
Equity does not create or destroy the la, but assists it
Equity is NOT law
*An owner of property can be an owner in Law and/or in Equity*
A B
who owns the land?
A has the legal title to the land – and has claimed ownership – won the case in the
common law courts.
B says that whilst A does possess the title deeds – that A knew that B was the person
intended to actually own and occupy the land.
1400-1500 1850 to present
1530 1650-1850
Middle ages: Equity in Tudor times: Consolidation and Reforms: Judicature Acts.
dissatisfaction with vigorous growth; start then stagnation of Equity begins to revive
common law. of conflict with equity
Beginnings of equity common law
Equity works on the conscious of the legal owner
- In personam (Personal Conscious)
- An Equitable remedy won’t change the law
- If you deny the equitable order you will be in contempt of the court and may face
prison
Patel V Ali [1984] (a contract was made for the sale of a house but during a long delay in
going onto completion, the seller has a leg amputated and she gave birth to her second
and third children. This meant she became reliant on help from friends and relatives.
The buyers sought specific performance to compel the seller to complete. Specific
performance would be refused as there would be hardship amounting to injustice if it
was granted because the seller would lose the help which she relied on if she were to
move).
Earl of Oxfords case (1615) 1 Ch Rep 1
- “the office of the Chancellor is to correct men’s consciences for frauds, breaches
of trusts, wrongs and oppressions of what nature so ever they be, and to soften
and mollify the extremity of the law.” Lord Ellesmere
- “where equity and law conflict, equity prevails”
, Judicature Acts 1873 & 1875
- Removal of two separate courts, to allow one court to hear common law and
equitable cases
Maxims of Equity:
These are signposts to how equitable jurisdiction might be exercise, but they are not fixed
rules
Equity will not suffer a wrong without a remedy
Equity follows the law
Equity will not act in vain
- Where it is impossible to undo the harm already done, the court will not award
an injunction
Where there is equal equity, the law shall prevail
Where the equities are equal, the first in time shall prevail
Delay defeats equity
- An injunction usually seeks to remove the immediate risk to the applicant and it
is therefore said that if an application is delayed unreasonably, they ought to lose
that right
He who seeks equity must do equity
He who comes to equity must come with clean hands
Equality is equity
Equity looks to the intent rather than to the form
Equity looks on as done that which ought to be done
Equity imputes an intention to fulfil an obligation
Equity acts in personam
Equity will not permit statute or common law to be used as an engine of fraud
Where equity and the law conflict, equity shall prevail
Equitable Remedies-
The most typical common law remedy for a breach of contract or the like would be
the award of damages. But in certain cases where damages would be an
unconscionable remedy an equitable remedy will be awarded.
Evans Marshall & Co V Bertola – the standard question in relation to the grant of an
injunction:
- ‘Are damages an adequate remedy?’ – Per Sachs LJ
,Specific performance-
Specific performance relates to the enforcement of contracts. It compels the
defendant to perform their contractual obligations.
Specific performance is made available in relation to contracts where the particular
subject matter of the contract has some significance.
- Will be made in relation to chattels only where a particularly significant chattel,
which is not reasonably capable of being substituted with another chattel.
The remedy of specific performance will not be granted where the claimant has not
kept his side of the bargain
Warmington V Miller (No remedy of specific performance could be granted where
through the enforcement of the oral contract for an under-lease, the landlord would
breach the head-lease)
The sale of Goods Act 1979 S 52(1) – ‘in any action for breach of contract to deliver
specific or ascertained goods, the courts may, if it thinks fit, on the plantiff’s
application, by its judgement or decree direct that the contract shall be performed
specifically, without giving the defendant the option of retaining the goods on
payment of damages’
In relation to land-
Each parcel of land is unique; therefore an award of damages would be insufficient
compensation, allowing for a buyer to impose an award of specific performance.
However, for the seller of land, damages will generally be adequate compensation
when all that the seller sought from the contract was a cash payment in any event.
- Eggelton V Sudbrook trading estate (A lease gave the tenant an option to
purchase the freehold of the property at a price to be agreed by two surveyors
one appointed by the tenant and one appointed by the landlord. The tenant
sought to exercise the option but the landlord refused to appoint a surveyor. The
landlord claimed that the clause was too vague to be enforceable as it did not
specify a price. The clause was not too vague to be enforceable as it put in place
a mechanism to ascertain the price).
In relation to Chattels-
- The underlying principle is that specific performance will be ordered in
circumstances where the chattel has a particular intrinsic value such that it would
not be readily possible to acquire a substitute chattel.
- The possibility of acquiring a substitute chattel would mean that an award of
damages would be sufficient
*Contracts where specific performance is unavailable: where the contract is illegal or
immoral, no consideration, contract involves exercise of some specific skill by the defendant,
contract involves mere payment of money, contract is for some insubstantial interest,
requires supervision or where the contract is not mutually binding*
, Injunctions-
Well used equitable remedy (Sometimes injunctions are used in parallel with other
claims for damages or remedies)
Normally used to make someone perform an action or refrain from an act
There is the Supreme Court Act 1981 Section 37(1) as well as an inherent Jurisdiction
giving the authority to allow for the provision of injunctions
An injunction will be granted on either an interim or permanent basis, either in a
mandatory or prohibitory form
Different types of injunctions:
1) Mandatory injunctions = requires the defendant to take some action.
(Some degree of overlap between mandatory injunctions and specific
performance)
2) Prohibitory injunctions = requires the defendant to refrain from an action
3) Quia timet (he who fears) = ordered to protect the applicant from an
action which is feared may be committed in the future
- Torquay Hotel Co. V Cousins (the defendant’s, members of a trade
union, intended to picket the claimant’s hotel go prevent the delivery
of fuel oil that would interfere with the execution of contracts which
the claimants had made for the supply of that oil).
Lord Nicholls set out the breadth of the powers of the courts to grant injunctions in
Mercedes Benz AG V Leiduck:
- ‘’the court may grant an injunction against a party properly before it
where this is required to avoid injustice...The court habitually grants
injunctions in respect of certain types of conduct. But that does not mean
that the situations in which injunctions may be granted are now set in
stone for all time.’’
The courts have tended to develop strict principles governing the situations in which
injunctions will be awarded in certain types of cases (these principles are ordinarily
expected to be taken into account by the courts when awarding particular types on
injunctions).
In Shelfer V City of London electric lighting co, Lord Bingham considered the four
requirements which must be satisfied before a court will award damages instead of
an injunction:
1. The harm suffered by the applicant must have been comparatively slight;
2. The harm suffered must be capable of being qualified in financial terms;
3. The harm suffered must be such that it can be compensated adequately by
payment of damages; and
4. It must have been oppressive to the respondent to have granted the
injunction sought
Day V Brownrigg (C wanted an injunction to prevent his neighbour (D) from giving his
house the same name as the C. Since no legal or equitable right had been infringed,
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