The Future of Equity and Law as Separate Jurisprudential

Introduction

Under Australian law, the existing non-statutory law has been divided into equity and common law. At the time of settlement in 1788, both equity and common law and other applicable Imperial statutes had evidently formed the legal system within New South Wales. This legal system was later adopted by other Australian colonies in existence [1]. Since the inception of the Judicature Acts of 1873 and that of 1875, the future of equity and common law as distinct jurisprudential traditions has been subject to different perceptions. It is thus important to look at the position of common law and equity prior to the Judicature Act of 1873-75, its aftermath and differing perceptions as to whether it was a fallacy or not with regard to Harris v Digital Pulse Pty Ltd [2] .

1.1 Common Law and Equity Prior to the Judicature Act 1873-75

The early development of equity categorized it as a separate system from the then existing common law. By virtue of the Norman Conquest, several common law courts emerged in the following centuries that came. However, Lord Chancellor’s intervention gradually developed a distinct body of law called ‘equity’ which was well established by the fifteenth century. From then on, the Chancellor’s jurisdiction was exercised via what later becomes ‘court of Chancery.’ The existence of these two systems at times conflicted because of the way the two courts operated. By virtue of section 79 of the Common Law Procedure Act of 1854, Common law courts possessed a limited power of issuing injunctions while the Chancery Amendment Act of 1858 gave the court of Chancery power to issue or award damages as opposed to specific performance and injunctions.

The two systems had a lot of conflict to the extent that, by the nineteenth century a number of series of Parliamentary reports resulted to the Judicature Acts 1873 and 1875.The two Acts were responsible for amalgamating the existing superior courts into a single Supreme Court of Judicature. This Supreme Court replaced the courts of Queen’s Bench, Court of Exchequer chamber, Exchequer and Common Pleas as well as the court of Chancery, and the court of appeal in Chancery. The Supreme Court comprised of both the Court of Appeal and the High Court [3] .It administered both equity and rules of common law thus bringing the question as to whether this was an amalgamation of administration or fusion of the rules?

Amalgamation of Administration of Fusion of Rules?

Many academicians have distinct perceptions as to whether the Judicature Acts fused both the rules of equity and common law to make then one, or whether it was just an amalgamation of the two rules so that each of them retains its identity but administered in the same court. Some scholar think that the rules of common law and equity are totally fused and are thus no longer distinguished while others perceive the effect of the Judicature Act to have been procedural. The perspectives discussed below accrue from writers, judges and other scholars that either side on the fact that there was fusion of rules or fusion of only administration.

Fusion of Administration and not rules

In Salt v Cooper [4] ,Sir George Jessel MR, stated to the effect that, the intent of the Judicature Act was not to fuse the two rules , but rather administrating law and equity under a single tribunal. According to Professor Ashburner although equity and common law are streams of jurisdiction running through the same channel, they run side by side without mingling their waters. Professor JH Barker also states that if for historical reasons the law of equity had become peculiar in the court of chancery, equity was a way of gaining justice in particular circumstances not provided under common law [5] .In MCC Proceeds Inc v Lehman Bros International [6] Mummery LJ revealed the fact that, the Judicature Acts intended to gain procedural improvements when it comes to the administering of law and equity. This was thus not to transform the existing equitable rights into legal titles or fuse the equitable rules with common law.

Fusion fallacy has recently been subjected to judicial scrutiny under the decision of the New South Wales Court of Appeal in Harris v Digital Pulse Pty Ltd [7] . In this case, the facts were to the effect that, the defendants breached their contractual as well as fiduciary obligations of loyalties by diverting projects away from their employer who was the plaintiff. In the trial court, the judge held the defendants liable to either make an equitable compensation or account for the profits at the election of the plaintiff. The trial judge also awarded exemplary damages against the defendants for having breached a fiduciary duty. On appeal, this decision was however reversed by the majority. The appeal decision found that there had been no power to award exemplary damages against defendants for breach of a fiduciary relationship. The ratio decidendi in this decision was that, an equitable relief is not supposed to pursue penal objectives because this was inappropriate.

According to Meagher, Gummow and Lehane’s Equity, Doctrines and Remedies [8] , the Australian authority is in support of the orthodox position to the effect that, fusion fallacy represents. The English as well as commonwealth authorities however are divided in this matter. As observed in Re Harris case, there was a cross-over of remedies which accrued because of holding that even under breaches of equitable obligations, exemplary damages could be awarded.

2.2 Fusion of Rules as opposed to mere Administration

Some scholar and judges believe that, the Judicature Act did not merely fuse the administration of the rules of law and equity, but rather fussed the rules themselves. According to Lord Denning in Errington v Errington [9] stated that, the rules of equity and common law have been fussed for almost eighty years by that time. In Tinsley v Milligan [1994] 1 AC 340, Lord Browwne-Wilkinson held to the effect that, English law now has one single law that contains both legal and equitable interests. Therefore, Lord Browne- Wilkinson saw that a person in ownership of either type of estate possessed a right of property that amounted to a right in rem as opposed to merely a right in personam. It was thus held that the equitable principle that governs when property or a title was affected under illegality had now become one after merging the common law rule. Furthermore, in Boyer v Warbey [1953] 1 QB 234, Lord Denning made a clarification of what he meant by ‘fuse’ .He held inter alia that, prior to the Judicature Act 1873 the doctrine of covenants relating to land only applied to those covenants that were under seal as opposed to agreements. However, the judge stated that since the ‘fusion’ of Equity and common law, this position is not different.

In the case of United Scientific c Holdings Ltd v Burnley Borough Council [10] , Lord Diplock explained his perception of Professor Ashburner’s metaphor of how equity and law are two steams flowing in the same channel but never mingling. In his view, the said metaphor has become both deceptive and mischievous. He states that the Judicature Act 1873 brought about the fussing of adjectival law system and the substantive law which were formerly administered under the courts of Chancery and court of law. Lord Diplock says that the ‘two streams’ have certainly mingled now. In the case of In Lord Napier and Hunter [1993]1 ALLER 385 at 401, it was stated by Lord Goff inter alia that, the judiciary task nowadays is to view the two strands of authority vat equity and law, as one coherent whole.

Commonwealth Perception of the Judicature Act

Basing on case laws, it is evident that commonwealth jurisdictions have leaned more on the fact that the Judicature Act did not just fuse the administration of equity and law, but rather fused the two rules. However, decisions of English courts prevail over those from common wealth jurisdictions. In Aquaculture Corpn New Zealand v Green Mussel Co Ltd, [1990] 3 NZLR 299 the court of Appeal in New Zealand dealt with the issue of whether damages that had traditionally been common law remedies ought to be awarded for breach of trust. Canadian courts have also embraced the principle by Lord Diplock in Re United Scientific Holdings case. This was evident in both Le Mesurier v Andrus (1986) 54 OR (2d) 1 and in Canson Enterprises Ltd v Broughton & Co [11] ,where common law principle under remoteness of damage was deemed applicable under equitable claims over fiduciary breach of duty. The commonwealth jurisdiction position thus leans more on the fact that the Judicature Act actually fussed the two rules of equity and common law.

Conclusion

In conclusion, it is true that since their inception, the 1873 and 1875 Judicature Act has brought about differing views on the future of equity and law as distinct jurisprudential traditions. As discussed in the discussion above, some judges and scholars support the fact that the Judicature Act actually fussed the administration of the rules of law and equity as opposed to fussing the rules themselves. Other scholars and court decisions support the fact that, the Judicature Act actually fussed the rules of equity and law as opposed to just its administration. Both views are supported by authorities and strong justification that a lot of confusion as to which side is right occurs. However, despite all the diverse opinions by judges and scholars, the rules of equity and common law are clearly administered in one court and as seen in the cases above, are at times subjected to ‘cross-remedies’ as in Harris v Digital Pulse Pty Ltd [12] .This is to mean that, although not entirely the same, the rules of equity and common law at times apply inter-changeably. This perception accrues from the observation that, the Judicature Act does not authorize any substantive fusion between equity and law; neither does it reveal any prohibition for the occurrence of such a fusion.