Maxims
1.3.1 The maxims
Equity has developed a number of maxims under which it operates.
These maxims are more in the nature of principles rather than rigid rules and have exceptions; sometimes conflicts or inconsistencies occur with each maxim.
‘He who comes to Equity must come with “clean hands” ’
s The person seeking an equitable remedy must have behaved to a standard consistent with the remedy that he/she is seeking. It is therefore relevant to conduct before the court action (Argyll v Argyll (1967); Cornish v Brook Green Laundry (1959)).
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1.3 THE CONTRIBUTIONS OF EQUITY
‘Equity will not assist a volunteer’; ‘Equity will not perfect an imperfect gift’
These two principles are very similar:
s The first principle means that equity will not award a remedy where the claimant has not given any consideration. It is similar to the law of contract – there must be consideration for a valid contract (see Chapter 4).
s For the second maxim, where the proper legal formalities have not been followed equity will not step in to make the gift valid (see Jones v Lock (1865) and Milroy v Lord (1862) in Chapter 4).
s Similar principles apply regarding gifts in void wills (known as ‘testa-mentary gifts’).
‘Equity follows the Law’
s Generally, where there is a legal interest or principle there will be a corresponding equitable interest or principle (see Stack v Dowden (2007) in Chapter 8).
‘Where there is a conflict between Law and Equity, Equity prevails’
s In Bull v Bull (1955) a mother and son purchased a house together, the legal title being held in the son’s name only. The law therefore only recognises the son’s interest.
s However, due to the contribution to the purchase price, equity rec-ognised the mother’s beneficial interest.
s Hence a conflict between law and equity: the maxim is that equity prevails, therefore the son was unable to evict the mother from the house.
‘Equity looks on as done that which ought to be done’
s In some instances equity will award a decree of specific performance to force a party to a contract to comply with their legal obligations.
s In other circumstances the maxim means that equity will regard the legal obligation as having been undertaken to allow legal remedies to be used (Walsh v Lonsdale (1882)).
‘Equity looks at the intent not the form’
s This means that equity will look at the substance of an agreement to see what the parties really intended. It will not rely on the ‘label’ or name given to the relationship by the parties (Street v Mountford (1985)).
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EQUITY AND TRUSTS – AN OVERVIEW
‘Where the equities are equal the law prevails’
s Here ‘equity’ or ‘equities’ means not just a right in equity but any sort of right, legal or otherwise.
s It usually focuses on the state of mind of the holder of the right. If someone with a claim in equity to an asset has an innocent (bona fide) state of mind and someone with a legal claim to the same asset also has a bona fide state of mind, the ‘equities’ are equal and the person with the legal interest prevails.
s This appears to conflict with the earlier maxim of ‘where there is a conflict between law and equity, equity prevails’.
Workpoint
T is a trustee of trust property on behalf of B; the trust property is an ancient artefact. T wrongfully sells the artefact to X, who pays full market value and has no knowledge that it is trust property.
Consider who has the right to the artefact.
Trustee (T)
Third party X (bona fide purchaser) Sells artefact
Beneficiary (B)
( "!&!! est in the artefact.
( "!&! $ ! !!.
( ! ! "! "
( ! !%!$ # $ ! !!
( ! $ "!& ' " $! "!
notice that it is trust property.)
‘Equity acts in Personam’
s Equitable remedies generally operate against the person rather than the property itself.
s At common law the courts will not consider claims of title to land outside the jurisdiction (Norris v Chambres (1861)).
s However, the in personam nature of equity means that specific per-formance can be granted where the defendant is within the jurisdic-tion and the law of the country where the land is situated does not prevent the defendant from being forced to comply (Re Courtney ex parte Pollard (1840)).
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1.3 THE CONTRIBUTIONS OF EQUITY
‘Delay defeats Equity’ (see Chapter 15)
s Normally the Limitation Act 1980 applies to time- bar actions brought at law or in equity if commenced outside the limitation period.
s If there is no limitation, the ‘doctrine of laches’ applies to time- bar claims in equity where there has been excessive delay.
s Limitation Act 1980 s 21 states in part that no time limit shall apply to a beneficiary bringing an action against a trustee for fraud or to recover trust property or its proceeds as a result of fraud by the trustee.
s Hence the doctrine of laches can apply in this context.
s Any significant delay by the beneficiary can be evidence of acquies-cence – that the beneficiary has accepted or agreed to the breach.
This will always be a matter of fact and degree in each case.
s The length of the delay is important as is the nature of acts done during the delay period.
s As equity is based on fairness and unconscionability the delay and surrounding circumstances must be such as to make it unconscion-able to permit the claimant to bring his claim.
s The court can by analogy with the time limit for a corresponding common law claim regard the claim as time barred.
s Authority is given to apply such analogy under the Limitation Act 1980 s 36: for example, claims against a fraudulent fiduciary (common law period for fraud of six years applied – see Coulthard v Disco Mix Club Ltd (2000)).
Research Point
Consider what these other maxims mean:
s Where the equities are equal the first in time prevails.
s Equity will not allow a statute to be used as an instrument of fraud.
s Equity imputes an intention to fulfil an obligation.
s He who seeks equity must do equity.
s Equity will not suffer a wrong without a remedy.
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EQUITY AND TRUSTS – AN OVERVIEW