Equity

From Lawiki - The law notes repository
Jump to navigation Jump to search
Lawiki for and by law students - find us on Facebook if you want to help us edit this Law Wiki.

Not professional advice - LAWIKI cannot guarantee the validity of any information




Literally 'fairness'. In mediaeval times, people could petition the King for redress in cases that could not be dealt with adequately in the common law as it then stood (see: Common law). The process was called 'equity'. Around the end of the 15th century, the Lord Chancellor set up a separate court system to deal with such cases; it became known as the Court of Chancery. Originally equity cases were handled with no particular reference to the common law or to precedent; eventually this gave rise to such problems that subsequent reforms made the equity system much like common law. By the mid-19th century equity cases were handled side-by-side with common law cases, with equity having priority.

The equity system and the Court of Chancery survives to this day as the Chancery Division of the High Court (see: High Court). This court still acts as an appelate (appeal) court from the county courts. So in a sense, the system of equity and the Court of Chancery still exists. However, all courts now have some of the powers that were originally vested in the Chancery Court, notably the right to grant injuctions (see: Injunction).

The whole notion of equity is deeply confusing for many law students and, to be honest, little has ever been done to make it any clearer. It is particularly troubling in the context ofland and property law. Here is an example: what does it mean when a property lawyer says that the burden of arestrictive covenant 'passes in equity but not in law'? There is no question that a Trust is involved; if there were, this would certainly necessitate a consideration of equity. Nor is it true that convenants -- restrictive or otherwise -- are creations of the traditional courts of equity (unlike, for example, Wills and Trusts, which are). The law of convenants was developed by the ordinary common-law courts. So what does it mean to say that the burden of a restrictive covenant 'passes in equity'?

The key to understanding this puzzle is to recognize that all a civil court is ever concerned with is deciding which of two competing claims to accept. A restrictive covenant is simply a right over land that one person may want to enforce against another. For the court, the important question is: 'is this purported right something that we are prepared to enforce, or not'? In deciding the case, the court will have regard to the common law, to the various statutes that affect the matter, and to any equitable principles that have a bearing. In the case of the restrictive covenant, it was decided in tulk v moxhay (1848) that it would be 'inequitable' for the owner of the land burdened by a restrictive covenant to disclaim his knowledge of the covenant and ignore its provisions, even though such a course of conduct would not have been prohibited under the common law of convenants. This case predates the fusion of the jurisdictions of law and equity, and therefore was very much a matter for equity. These days, the court could just as easily enforce the passing of a restrictive covenant 'under the rule in Tulk v Moxhay', and not mention equity at all. However, in deference to the equitable history of the rule, we still say 'the burden passes in equity', rather than 'the burden passes under the rule in Tulk v Moxhay'.

In short, it is not that restrictive covenants are creations of equity, or governed by principles of equity, it is simply that the passing of the burden of the covenant was first recognized by a court of equity. So, do we need to talk about 'equity' at all in these cases? The answer, for the moment, is 'yes'. The reason is that rights and obligations that are 'recongized by equity' are enforced in different circumstances than those recognized 'at common law'. In the case of restrictive covenants, for example, when such a covenant burdens a plot of land, then the person who buys that plot of land may take it subject to the covenant. If the land is unregistered, then he will be subject to it if it has been registered as a land charge. If the land is registered, the covenant must be entered as a notice for it to be enforceable. However, a legal Easement, which is a right recognized traditionally by the common law courts, need not always be registered to be enforceable. Whether the right is legal or equitable makes an enormous difference to its protection and enforcement.

Of course, what could be done is to rewrite all the statutes concerned with land and property, such that the rights the courts must enforce are explicitly stated. The Lpa (1925), for example, gives a list of 'legal' rights, and states that anything not on that list is recognized only as an 'equitable right'. A more modern statute could simply list all rights that must be enforced, and describe how and when they are enforced, and let the principles of equity disappear into the mists of time where they belong. This isn't going to happen any time soon, because it would just be far, far too complicated, and the impact difficult to predict.

UK LAW
Trust Law