1. What is Equity?
Trusts sit in a body of law called equity. Equity was borne out of the fact that the rigid black-and-white of statutory law did not fit all cases, and conscience and intent may need to be considered when it comes to complex cases.
Henry II centralised the legal system back in 1154 which is when the first common law courts were held. However, common law didn’t fit all cases and people would petition the King for mercy. Eventually, the King would pass these cases on to his Chancellor as they required ‘spiritual’ consideration, and since he was the “Keeper of the King’s Conscience” the Chancellor would address unjust judgements.
The rules of equity began to form, and in the 17th century, common law and equity came to blows in the Earl of Oxford’s case (1615) which is when it was first established that, when common law and equity were at odds, equity would prevail.
Now, the Senior Courts Act 1981 (Section 49) states “subject to the provisions of this or any other Act, every court exercising jurisdiction in England or Wales in any civil cause or matter shall continue to administer law and equity on the basis that, wherever there is any conflict or variance between the rules of equity and the rules of the common law with reference to the same matter, the rules of equity shall prevail.” This further entrenches equity as the superior law.
Equity is regulated by the Courts of Chancery and is a distinct legal system in its own right. It doesn’t have rigid statutes to follow but relies on maxims that have been developed over the years. These equitable maxims include:
Equity will not suffer a wrong to be without remedy
- Equity follows the law
- Where there is equity, the law shall prevail
- Where equities are equal, the first in time shall prevail
- Delay defeats equities
- He who comes to equity must come with clean hands
- Equality is equity
- Equity looks to the intent rather than the form
- Equity looks on as done that which ought to have been done
- He who seeks equity must do equity
- 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
- Equity will not assist a volunteer
- Equity abhors a vacuum
