NATURE OF EQUITY
Equity – “Equity” refers to that body of cases,
maxims, doctrines, rules, principles & remedies that
derive from the specific jurisdiction established by
the Court of Chancery before 1873, and which
remains a distinct source of legal authority in
Australian courts.
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Specific doctrines (fiduciary duties, breach of
confidence etc.) and remedies (injunction etc.)
that supplement those available at common law.
Remedies are not a right you are owed, you may
be given a remedy at the discretion of the court.
Common law and equitable doctrines operate side
by side in various branches of the law.
HISTORY OF EQUITY
The history of equity reveals its gradual and as yet
incomplete transformation from a jurisdiction of fluid,
pragmatic, conscience-based decision-making to one
founded much more (but not exclusively) upon the
application of authoritative rules, maxims, principles
and precedents.
• After the invasion of England in 1066 and the
development of the Common Law, Equity
developed largely as a result of the need to deal
with the rapidly increasing number of petitions
made to the Crown, pressing for discretionary
relief from the rigour or deficiency of the
common law and the common law courts.
• Common law had become inflexible, rulebound, rigid and resistant to arguments based on
considerations of moral right and good
conscience.
• Equity is a dispensation from, or supplement to,
a general or "common" law that is inadequate to
deal justly with the petitioner's case. The harsh
or unjust, and therefore unconscionable, results,
which could flow from an application of
common law rules, provided the theoretical and
moral justification for the existence of Chancery
and for its interventions into the legal order.
• Cases were decided according to the "rules of
equity and good conscience". However, where
the particular circumstances of the case were not
such as to make the application of common law
rules harsh or unjust, the Lord Chancellor had
no jurisdiction to interfere with the application
of those rules.
• Adjudication in Chancery was therefore
contextual and pragmatic. There was no doctrine
of binding precedent and, accordingly, no
commitment to the values of continuity,
consistency, uniformity and predictability that
support and justify the common law.
• Rules were not abstracted from previous cases in
Chancery and justice between the parties could
therefore be done in consonance with the
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Chancellor's conscience without fear of
distorting any rule or introducing a new and
dangerous precedent.
While all questions of fact in trials at common
law went to the jury for determination, in equity
the Lord Chancellor tried both fact and law.
There was therefore no need to develop in equity
a sharp distinction between questions of law and
questions of fact.
Equity was primarily pragmatic – objective was
to solve the issue in this case, no commitment to
continuity/consistency
The juristic principle upon which Chancery
relied to release parties from the common law
was that of "conscience". The concept of
"conscience" carried correlative notions of
conduct that were "contrary to conscience or
unconscionable".
In the Earl of Oxford's Case (1615) 1 Chan Rep
1; 21 ER 485 – battle for supremacy b/w equity
and common law – the court of chancery won
out over common law.
The pressures of continuous litigation in
Chancery led to the development in the
jurisprudence of that court of some settled
principles and traditions of consistency in
decision-making in certain areas.
Considerations of certainty, security of property
interests and the public good supplanted the
earlier concern with justice on the facts of the
particular case.
Throughout the 18th and 19th centuries, equity
developed authoritative, positive and coherent
rules, fixed in their application and founded in
precedent.
EQUITABLE MAXIMS
Maxims – fixed and formulaic statements of certain
broad equitable principles NOT rules.
• They cannot supply specific answers to specific
legal problems.
• Represent, reflect and disseminate certain
fundamental moral ideas and themes that are
central to the equitable jurisdiction.
• “Like other maxims of equity, it is not a specific
rule or principle of law. It is a summary
statement of a broad theme that underlies
equitable concepts and principles. Its precise
scope is necessarily ill-defined and somewhat
uncertain.” (Corin v Patton (1990) 169 CLR
540).
Equity looks on that as done which ought to be done
– pretend that something that should have been done
has actually been done, whether it really has or not
Equity follows the law – came about after Earl of
Oxford’s Case (which decided equity was supreme),
but this maxim basically reversing that and making it
subservient to common law. Has recently been stated
by Gummow and others that ‘the law’ means statute,
meaning equity should look to a statute that could
apply based on the facts of the case when deciding,
even if the statute does not actually apply for some
reason.
A person who comes into equity must come with
clean hands – means if you go before a court and ask
for equity’s help, your conduct will be considered as
well as the defendant’s. ‘clean hands’ only relates to
the specific issue being considered in the case,
doesn’t apply to your entire life/previous dealings.
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A person who seeks equity must do equity – HC
looked at this maxim in 1998 ish in a case about a
chicken farm, both P and D acted badly.
Equity does not allow a statute to be made an
instrument of fraud – seems like equity can overrule
any statute. Courts of equity said that’s not what it
means, that they won’t overrule statute except they
do in land law/property but under strict conditions.
Equity sometimes says no you don’t need your
contract for land to be in writing if you satisfy some
specific conditions.
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Equality is equity.
Equity acts in personam
Equity looks to intent not form – common law loves
form/precision, equity says you do not need to
comply precisely, looks to intention not the form.
Equity sometimes says close enough is good enough.
Equity will not suffer a wrong to be without a
remedy.
Where the equities are equal, the law prevails.
Where the equities are equal, the first in time
prevails.
Equity aids the diligent and not the tardy – means
you can’t be too slow in bringing an action/enforcing
your rights.
UNCONSCIONABILLITY
The prevention of unconscionable behaviour seems
to be the essence of equitable principles.
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Cases demonstrate a continuing commitment to
the conscience-based jurisdiction of equity and,
in particular, to the correction in equity of an
errant defendant's conscience by the application
of moral reasoning.
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Legione v Hateley (1983 – the High Court
expressly based the equitable jurisdiction to
relieve against penalties and forfeitures in a
contract on the fact of a defendant's
unconscionable conduct. Mason and Deane JJ
referred to “the fundamental principle according
to which equity acts, namely that a party having
a legal right shall not be permitted to exercise it
in such a way that the exercise amounts to
unconscionable conduct.”
Baumgartner v Baumgartner (1987) – the High
Court founded a constructive trust on the basis
of preventing unconscionable conduct on the
part of the person with legal title to the property
in dispute. The majority judgment of Mason CJ,
Wilson and Deane JJ described that prevention
as "a concept which underlies fundamental …
concepts and doctrines" in equity.
Waltons Stores (Interstate) Ltd v Maher (1988)
– the High Court founded the doctrine of
promissory estoppel on the defendant's
unconscionable conduct. Brennan J said “the
element which both attracts the jurisdiction of a
court of equity and shapes the remedy to be
given is requirement of conscionable conduct on
the part of both parties, and the remedy required
to satisfy an equity varies according to the
circumstances of the case.”
However, Gleeson Cj in “Individualised justice
– the holy grail” (1995) said “A principle of law
may be just, or wise, or convenient, even though
it operates harshly in some cases. What is fair in
the context of one set of facts may be unfair in
the context of another. The law responds to
many impulses in addition to the dictates of
apparent fairness in individual cases, and these
need to be given full weight in any rational
development of the law.”
RESULTING TRUSTS
Beneficial interest – means equitable interest
Resulting Trusts – arise where one person (the
‘settlor’) confers title to property to another person
but retains beneficial (equitable) ownership of the
property in whole or in part. It is not imposed by law
against the intentions of the settlor but gives effect to
his or her presumed intention.
RTs must satisfy:
• Certainty of subject matter
• Certainty of object
However, the statutory formalities which apply to
some express trusts do not apply to resulting trusts
(see Law of Property Act 1936 s 29(2))
vi.
Some statutory formalities don’t apply to resulting
trusts – re land it does not need to be done in writing
unlike in express trusts (s 29(2) Law of Property
Act).
Unlike express trusts, here need to satisfy only cert of
subject matter and objects (not intention obviously
because we’re dealing with presumed intention when
dealing with resulting trusts).
Two main circumstances in which a RT will arise
(Vandervell Trustees Ltd):
1. Presumed resulting trust
a. Where A voluntarily transfers property
into the name of B or in their joint
names, and B provides no
consideration – arises in favour of A
b. Where A purchases property in the
name of B or in their joint names –
arises in favour of A
i. All of these sub dot-points
apply to both ‘where’
situations
ii. A’s equitable interest in the
property under the resulting
trust arises at the moment of
the transfer or purchase
iii. The presumption of resulting
trust is rebuttable by evidence
that B was intended to take a
beneficial interest
iv. No presumption of resulting
trust arises if the relationship
between A and B raises a
presumption that the transfer
or purchase was intended as a
gift to B (the ‘presumption of
advancement’)
v. The presumption of resulting
trust and the presumption of
vii.
viii.
ix.
advancement do not limit the
Family Court’s discretionary
power to alter property
interests on dissolution of
marriage. The de facto or
domestic relationships
legislation enacted in each
State and Territory empowers
the courts to alter interests in
property of parties to a failed
de facto or domestic
relationship without regard to
the said presumptions (for
example, De Facto
Relationships Act 1996 s 11)
The quantum of a person’s
beneficial interest under a
resulting trust arising out of
the purchase of property
corresponds to that person’s
direct financial contribution to
the purchase price as a
proportion of the total
purchase price of the property
in question (Calverley v
Green). Any other contribution
to the property or the
relationship between the
parties will not alter the
quantum of the respective
interests under a resulting
trust.
For the purposes of
determining beneficial
interests under a resulting
trust, the incurring of a legal
liability to pay the purchase
price, for example, by
assuming liability under a
mortgage taken out for the
purchase of the property in
question, constitutes a direct
financial contribution to the
purchase price of the property
(Calverley v Green)
However, mortgage
repayments are not, for this
purpose, taken to be direct
financial contributions to the
purchase price of the property
financed by the mortgage
(Calverley v Green)
Nor can money expended on
improvements to the property
alter the beneficial interest of
contributors under a resulting
trust. Direct contributions to
purchase price in this context
include incidental costs of
acquisition.
x. UNLESS evidence of contrary
intention – The court will not
give effect to a presumption of
resulting trust if this is
inconsistent with the true
intention of the persons upon
whose presumed purpose it
must depend. Hence, the
presumption of resulting trust
may be rebutted by evidence
that, in making a direct
financial contribution to the
purchase price of property put
into the name of another (or in
joint names), a person (‘A’)
intended that the other (‘B’)
should take a beneficial
interest. If both A and B have
so contributed to the purchase
price of the property, the
intentions of both are material.
The evidence admissible to
establish this intention
comprises the acts and
declarations of the parties
before or at the time of the
purchase, or so immediately
thereafter as to constitute a
part of the transaction.
Subsequent declarations are
admissible only as evidence
against the party who made
them. Although this will
commonly require the court to
make reasonable inferences
from the facts, the court cannot
impute to the parties an
intention that they did not
have. Admissible evidence of
an intention to gift or loan the
property in question will rebut
the presumption of resulting
trust in relation to that
property. The testimony of an
agent of the parties involved in
the purchase transaction may
be relevant for this purpose.
The presumption of resulting
trust will also be rebutted by
clear evidence of an intention
to create an express trust, an
express agreement inconsistent
with the operation of the
presumption, or documentary
evidence that the transferor
intended to divest himself or
herself of the beneficial
interest in the property. Proof
of a promise amounting to
consideration in respect of the
property purchased or
transferred may further serve
to rebut the presumption.
However, the mere taking of
legal title, at least in a
husband-wife scenario, is not a
factor to be weighed in rebuttal
of a resulting trust when
assessing where the beneficial
interests lie. The presumption
of resulting trust may be
rebutted in part or
conditionally. For example, the
admissible evidence may show
an intention for a resulting
trust to operate until the
occurrence of a specified event
(such as the death of the
transferor, or the transferee) in
which case the property must
be dealt with pursuant to the
express or inferred intention
! UNLESS the presumption of
advancement – If the
relationship between the
parties to a transaction which
would ordinarily give rise to
the presumption of resulting
trust is such that the
transferor has a natural
obligation to provide for the
transferee, equity presumes
that, subject to contrary
intention, the transferor
intended the transfer to
operate by way of
advancement or gift. applies
with respect to transfers
from: husband to wife (but
not de facto, also consider a
transfer from wife to
husband has not historically
attracted the presumption of
advancement on the basis of
an absence of a natural
obligation to provide,
although this may be queried
in modern societ y
(Muschinski v Dodds), man
to fiancé, parent to child
(including adopted or
illegitimate but not stepchild, NOTE in Australia,
once a child always a child,
even if you’re 50, you’re still
a child of your parents, so if