These shortcomings include
– Cases not having remedies available in the courts of law
– Remedies made available under common law been insufficient
– Too much formality and remedies been not available on informal contracts to the plaintiff
– One party have more power or influence than the other party over the judges and jury leading to unfair judgments
Therefore equity was developed to supplement common law in avoiding these short comings which could other wise lead to unconscionable behaviour.
When common law remedies were not adequate , a new set of equitable remedies were developed. The more important equitable remedies created were injunctions and specific performance.
An injunction is where a party to the contract is refrained from undertaking a particular type of conduct.This type of remedy will be provided by the courts when the conduct of the party will aggravate the loss of the plaintiff.
Specific performance is when a party to a contract is made oblige to perform a particular conduct to fulfill the contract.Such a remedy is made available when the good or service under consideration is of unique nature where its not availble in the market and a simple compensation payment will not suffice to recover the loss of the claiment.
Rectification and Recission are two other forms of remedies available.
The application of Equitable Remedies are discretionary.Therefore such discretionary jurisdiction could lead to frauds,mistakes and misrepresentations.However the role of equity lies in the way it is applied and not in the way it is created.
For example if courts do not provide the remedy of specific performance under equity. The claimant will still have the right to claim for damages under common law. However if an equitable remedy like recission is exercised ,the parties to the contract will be put back to their original positions and an appeal against a such judgment will not be possible.And even if the parties try to rescind the contract under common law,it will not be exercisable since equity in such circumstance will have a wider discretion to return the parties to their original situations in a more fair way Equitable remedies are of most significance since they are innovative,adaptive and have an ever growing scope for development and thereby been able to provide remedies to situations as they arise.
During the 19th century common law courts and equity courts worked alongside each other in administering justice. Certain new devolopments like the common law procedure Act in 1854 gave the common law courts the power to provide certain equitable remedies and the chancery amendment Act 1858 gave the chancery courts the power to provide for damages in addition to the equitable remedies
However the real transformation as in to how equity and law work together only took place after the enactment of the Judicature Acts of 1873 and 1875 . This Act abolished the existing courts of Queens bench ,Exchequer,Common pleas,Chancery,Probate& Divorce and instead introduced one supreme court with three main divisions.Namely the Queens bench division,Chancery division,Probate divorce and admiralty division laternamed as the Family division.
All these divisions got the power to adjudicate on both law and equity,making it a complete jurisdiction.The Act also foresaw the possible conflicts that could result by having one court to excise both law and equity and made provisions within the Act itself as solutions beforehand.
The effect of the Judicature Act can be understood by the case of Walsh v Lonsdale(1882) .
In this case a landlord granted a mill under a 7 year lease to a tenant requiring him to make lease payments in advance on demand..No deed was prepared although the law requires deeds to be prepared for all leases over 3 years.The tenant failed to make such pre-payments to the demand of the lessor and he brought an action against illegal distress.The appeal was rejected since there had been no such lease agreement at law, but under equity the tenant was liable to pay one years rent in advance and the distress was lawful since an agreement for a lease was considered as equivalent to a lease.The fusion between equity and common law is evident in this case since the uniformed rule of law has been considered in over ruling the common law .
It was the Judicature Act that created the fusion between equity and the administration of the law.However there are different types of veiws on this hence a dispute remains between whether the Act or the subsequent developments caused this fusion.The orthodox view is that only the jurisdictions were fused and no new actions,remedies or defences were introduced by this Act.
As Ashburner said
“the two streams of jurisdiction,though they run in the same channel;run side by side, and do not mingle their own waters”
Therefore the equitable rights and legal rights are administered separate to each other, even though both come under the same court.
However Lord Diplocks comment on Asburners metaphor has been that “It is most mischievous and deceptive. The innate conservatism of English lawyers may have made them slow to recognize that by the supreme court of judicature Act 1873 ,the two systems of substantive and adjectival law formerly administered by courts of law and courts of chancery were fused” .
Most jurisdictions do believe that the Judicature Act fused the two systems of law. However what should be understood is that a distinction remain between the legal rights and remedies and equitable rights and remedies. The new rules developed by the courts today seems to be influenced by the established equitable doctrines and the application of these doctrines have contributed in refining the common law rules.
Even most of the modern law developments like promissory estoppels and proprietory estoppels have evolved without making a distinction as to whether they are derived from equity or common law Common law rules set the basis for decision in cases based on precedent . As a result certain people will be given the legal rights to exercise their powers obtained through entitlement. How equity comes into play is by restricting or limiting the exercise of such powers when it is unconscionable for such legal rights to be excised in full. So this means that equity only intervenes when it is unconscionable to fully exercise the legal rights.
In the case of National Westminister Bank plc v Morgan (1985) it was mentioned that “unconscionably cannot be defined in abstract and that it could only be understood based on the particular facts of a case”
And then again in the case of The commonwealth v Verwayen (1990) it was said that unconscionability “will commonly involve the use of or insistence upon legal entitlement to take advantage of another special vulnerability or misadventure in a way that is unreasonable or oppressive to an extent that affronts ordinary minimum standards of fair dealing” .
unconscionability can be attributed to immoral or anti-social behavior. It is a deliberate attempt to use the shortcomings of common law as a tool to promote the anti-social abuse of legal rights of different individuals.
For example where A a land owner in fee simple absolute in possession of a land (the complete form of ownership in land) gets into an agreement with B to give him a share of ownership if he builds a house in A’s land .Under law B will have no claim on the house or land since the house is built only within the land and A’s got total ownership over that land so if B enters to A’s land without permission he could be charged with the offence of trespass.And in such circumstance equity do have the power to step in and provide a remedy to B so as to ensure that A does not take any undue advantage of the loop holes in this particular area of law
However what should also be understood with regard to equity is that it does not always interfere when a party takes advantage of a legal right in an oppressive manner. An example case would be Liverpool Marine Credit Co v Hunter(1868) 0 where the defendant who was a ship owner, sent a mortgaged ship to Louisiana knowing that louisiana do not accept mortgages of ships where the plaintiff claimed that the defendant has committed a positive crime.but the judge rejected the plaintiffs claim stating that
“I do not…see how equity could properly interfere to restraint the actions which, however oppressive..arose out of remedies employed by the plaintiff for the recovery of his debt ..of which the law entitled him to avail himself ”
Therefore the purpose of equity is to supplement the common law and not to undermine common law by creating exceptions. Even though the neighborhood principle in the common law tort of negligence might have more appropriately been developed in equity rather than in common law, the function of equity should not be to be to judge as in to what form of action does and does not constitutes a justifiable behavior , instead equity should only be concerned with what form of behavior/action gives rise to an unconscionable abuse of the rights and powers vested under common law.
In the case of The Commonwealth v Verwayen (1990) 2 sir Anthony Mason also made the point “The breaking of a promise ,without more, is morally reprehensible,but not unconscionable in the sense that equity will necessarily prevent its occurrence or remedy the consequent loss” 3.
Therefore equity will only cover a limited amount of anti-social types of behaviors and predominantly the abuse of legal rights and there will be a whole lot of cases without a proper remedy in any of the courts of law . Therefore no court of law can be defined as operating with absolute conscience.
A simple distinction that can be made between common law and equity would be that common law operates with a general set of rules been set by the cases within a rigid structure whereas equity seeks to prevent such injustice that will result by applying the common law rules to different types of cases.Equity also acts with a degree of precedent where most of the judges under equity do follow the judgments given for similar types of injustices in the past.Therefore equity can be recognized as a very efficient and a pragmatic system of law.
Equitable remedies or relief shows the judicial discretion to not follow the legal and equitable rules as precedent .Therefore in giving equitable remedies the judiciary would find the maxims or the general principals more suited to be adopted compared to having rules since the maxims will be more easy and flexible in its application. How ever there are certain maxims that does take the form of a rule. For example the maxim ‘that no one can transfer a title that he does not have’ and the maxim that when ‘equitable claims are equal,priority should go to the claim that arose first’ .however overall maxims are a much more flexible than rules. The most useful and sometimes the most dangerous feature of maxims is that it will obtain preference over rules when the two are in conflict. Maxims will define the boundaries for the judicial discretion to be exercised where if not for the maxims the discretion would be broader leading to unconscionably.
When common law does not provide a remedy, equity will not provide a new remedy. But equity will intervene if it leads to an unconscionable reliance on common law. Equity will also intervene if the common law has provided a remedy but is inadequate. This is very much prevalent in cases of trespass and in cases involving breach of contract.where under common law the only remedy available is damages in the form of a monetary compensation .This may not be sufficient since in cases of trespass ,a remedyy like compensation will not prevent the defendant from continuely committing trespass. Therefore an injunction will be required in such cases.
In cases involving breach of contracts especially if the commodity under consideration is a unique item the defendant will deliberately breach the contract as he is aware that he wont be able to recover such an item for the value of the compensation paid leading to unconscionable behavior. The maxim pertaining to this is that equity will not suffer a wrong without a remedy.
The maxim that equity follows the law also do emphasize that the function of equity is to merely supplement common law and not to replace it. For instance equity will award remedies such as specific performance and injunctions only when the the common law remedies provided are inappropriate.
Equity looks into the substance of a transaction rather than form. where looking at the letter of law
and providing remedies is not what equity should be doing and instead equity should look in to the commercial reality of a transaction or the intentions of the parties to a particular transaction. But this does not mean than equity does not follow the law, infact it is a fundamental principal upon which equity operates.And also this does not mean that common law does not look into the substance of a transaction.For example in the case of Street v. Mountford Lord templeman held a form a license to be considered in substance as a lease.
Equity will not permit a statute to be used as an instrument of fraud.It is somewhat conflicting with the principle of parliamentary soveringnity.In certain circumstances this maxim will be used to check the integrity of a statute. In the case of Shah v Shah[2001] 5 the signatory has argued that a particular agreement is not valid since it was not signed in the presence of an attestor. However the court of appeal held that even though the claim was correct ,it would be inappropriate for equity to allow a party disclaim the existence of the deed merely due to the absence of a signature since it leads to unconscionably.
He who comes to equity must come with clean hands. In the case of Lee v. Haley 6 the claimant has made an appeal seeking an injunction to protect their trade as coal merchants. However he was not awarded with the injunction since he did not have clean hands where he has ‘systemically and knowingly’ sold coal of less weight. And have been fraudulent to his customers.since equity is about justice he who behaves unconscionably have no claim in equity.