The Law of Equity and Equitable Remedies

“Equity Is Not Past The Age Of Childbearing”

Introduction

The law of equity began in the court of chancery which was set up because a fair and just remedy could not be given through common law as monetary compensation was not suitable and sometimes a well deserving plaintiff was denied because the writs where quite narrow and rigid. Courts were guided by the previous decisions and that’s how the twelve maxims were formulated. These maxims limit the granting of equitable remedies for those who have not acted in an equitable manner. The decisions of the court of chancery and common law were constantly conflicting. This rivalry was ended in The Earl of Oxfords case 1615. In which the king stated ‘Where common law and equity conflict equity should prevail’. The two courts are now unified and the same judges give decisions out common law and equity.

The law relating to equity is largely built on precedent. The rules have been built upon by previous situations which they have dealt with. Although there has been a lot of disagreement about changing laws and adding to the law of equity, the rules that have been accepted by proceeding judges became precedent and are now known as maxims and are used as guidelines by the court. I agree with the statement by Denning as equity is born from the interpretation of judges and there problem solving abilities. There are a lot of different rules regarding equity that have all been created through precedent. It is my opinion that although Equity dates back hundreds of years and the law is still just as relevant. There are alterations to the law as recent as the 1975 Eves V Eves case. I am of the opinion that as long as there are judges to create precedent there can be new law created in equity.

The Maxims Of Equity

These are the general legal principles that have been adopted threw following precedent in regard to equity. These maxims are the body of law that has developed in relation to equity and these help to govern the way equity operates. All maxims are discretionary in nature and courts may choose whether they wish to apply these principles.

1. Equity will not suffer a wrong to be without a remedy:

This maxim developed as common law had no new remedies only monetary damages. Maxim must be treated with caution as today’s laws are made by the Oireachtas. Maxim can be used by the beneficiary of a trust whose rights were not recognised by the common law. Equitable remedies such as injunctions or specific performance may be given.

- (Patterson v Murphy 1978 ILRM 85) injunction

Attempts to alter this maxim in recent times by Lord Denning in (Hussey v Palmer 1972) were unsuccessful.

2. Equity follows the law:

Courts will firstly apply common law and if this is not fair then an equitable remedy will be provided. This maxim sets out that equity is not in place to overrule judgements in common law but rather to make sure that parties don’t suffer an injustice.

3. He who seeks equity must do equity: A remedy will only be provided where you have acted equitable in the transaction. This maxim is discretionary in nature and is concerned with the future conduct of the plaintiff.

- (Cheese v Thomas 1994)

4. He who comes to equity must come with clean hands: This maxim is linked to the previous maxim and relates to the past conduct of parties. They must not have had any involvement in fraud or misrepresentation or they will not succeed in equity

- (Overton v Banister 1844) A beneficiary failed in their action against the trustees to pay her back the assets of the trust she had already received as a result of a misrepresentation of her age.

5. Delay defeats equity:

Laches is an unreasonable delay in enforcing a right.

If there is an unreasonable delay in bringing proceedings the case may be disallowed in equity. Acquiescence is where one party breaches another’s rights and that party doesn’t take an action against them they may not be allowed to pursue this claim at a later stage. These may be used as defences in relation to equity cases. For a defence of laches courts must decide whether the plaintiff has delayed unreasonably in bringing forth their claim and the defence of acquiescence can be used if the actions of the defendant suggest that they are not going ahead with the claim so it is reasonable for the other party to assume that there is no claim. (Nelson v Rye 1996)

6. Equality is Equity: Where more than one person is involved in owning a property the courts prefer to divide property equally. Prefer to treat all involved as equals. In the case of a business any funds left over from dissolution should be divided equally.

7. Equity looks to the intent rather than the form:

Principle established in (Parkin v Thorold 1852). This maxim is where the equitable remedy for rectification was established this allows for a contract to be corrected when the terms are not correctly recorded. This maxim allows the judge to interpret the intentions of the parties if the terms aren’t recorded properly.

8. Equity looks on that as done which ought to have been done:

The judges look at this contract from the enforceable side and the situation they would be in had the contract been completed

9. Equity imputes an intention to fulfil an Obligation:

If a person completes an act that could be regarded as fulfilling an original obligation it will be taken as such.

10. Equity acts in personam:

This maxim states that equity relates to a person rather than their property. It applies to property outside a jurisdiction provided that a defendant is within the jurisdiction.

- (Penn v Lord Baltimore 1750) English court ordered specific performance on land in the US.

11. Where the equities are equal, the first in time prevails.

Where two parties have the right to possess an object the first one with the interest will prevail.

12. Where the equities are equal, the law prevails.

Where two parties want the same thing and the court can’t honestly decide who deserves it most they will leave it where it is

Equitable Remedies

Injunctions

This is an order by the court to make a party complete an action or to make them refrain from doing an action. It is awarded to protect a legal right rather than compensate for the breach of one. If a party breaches this court order it is a serious offence and can merit arrest or possible jail sentence. The reason for injunctions is that money would be an inadequate remedy for breaching the person’s right. An injunction is a discretionary remedy which courts will only grant if they feel it is just and equitable in the circumstances to do so. Interim and interlocutory injunctions are temporary and last up until specified date or until a trial hearing. Injunctions can be used to stop trespass, passing off, prevent illegal picketing and to freeze assets.

Conduct of the parties will also affect whether the judge will grant them an injunction (Chappell v Times Newspaper 1975)

Interlocutory Injunction

Granted prior to a court hearing because plaintiff may suffer un-repairable damage if right is breached which cannot be compensated by money. The plaintiff must prove to the judge that there is sufficient reason to believe that the damage will be caused to them.

Three stage test on granting interlocutory injunctions was introduced in the English case (American Cyanamid) this was accepted and followed as law in the Irish case (Campus Oil V The Minister for Energy) :

1. If it is a serious and fair issue that will be tried you need not prove it’ll be a successful claim.
2. Set out if damages would be a suitable remedy. It must be impossible to quantify damages and must give an under taking which means in the event of an injunction not being granted they must compensate the other party for any losses.
3. Whether it is convenient or not to grant the injunction. Need for plaintiff to be protected must outweigh against the right of the other party in order to grant the injunction.

Qui Timet Injunction

Prevents an act before it has been committed it may be feared or could have been threatened. Plaintiff must show that there is a strong possibility of this happening and the consequences of the act will be extremely damaging. The burden of proof is higher than a normal injunction (AG v Rathmines & Pembroke Joint Hospital Board 1904).

Mareva Injunction

This type of injunction can also be known as a freezing injunction. Where one feels that they have a substantial case against the other the can apply to the courts for this only if they feel that the other may move of hide assets. In order to gain this type of an injunction plaintiff must prove that they have a substantial case and must also prove that the assets are at risk. It must also be convenient to grant it.

This type of injunction was introduced in the (Nippon Case 1975) by Lord Denning where defendant owed money to plaintiff he was not allowed to take out the amount he had owed from his account. This became another instrument of law when it was confirmed in the (Mareva Case).

Anton Piller Order

This can also be known as a search order. It was thought of in order to prevent the defendant from destroying anything that could be used by the plaintiff in court to assist their trial. It is granted without the other party’s knowledge in order to maintain the element of surprise. The order requires the defendant to allow the plaintiff or a representative to enter his premises and to collect what is relevant for evidence. If the defendant does not follow the order then he shall be held in contempt of court. It is only granted where it is deemed to be absolutely necessary where it is feared that vital evidence will be destroyed.

The order takes its name from the 1976 Anton Piller KG v Manufacturing Processes Ltd case

Specific Performance

Is a form of injunction where a court orders an individual to complete a specific task which is generally part of a contract. This remedy is discretionary and only used when an individual cannot be compensated by money. If they do not complete the contract they will be held in contempt of court.

Rescission

This remedy aims to return parties to the position they were in before they entered into the contract. The main grounds for rescission are mistake, misrepresentation, undue influence and unconscionable transactions. (Solle v Butcher 1950)