Concept Of Equity And Its Principles

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Concept Of Equity And Its Principles

Introduction

Equity is accepted as a wonderful creation of court of chancery which expects the perfection of the justice for all, surpassing the boundaries of Common law and it came to ensure the fairness in Common law system where justice delivered through rigid and inflexible series of actions. The concept of equity derived from of natural justice because it mainly encompassed unbiasedness and equal access to the tribunal and documents cited as evidence enshrining fairness, reasonableness and the very idea of justice.

The general and broad principles of equity are formulated in statements of maxims of equity. Mainly, 12 statement of maxims are revered and act in advisory capacity to deliver the justice through principles of equity and those are interrelated or incorporate each other in judicial operation.

Remedies in equity

It is apparent that distinction of Common-law and equity mostly based on the fact that equity provides different remedies for various instances. Common law remedies are basically based on awards of money for losses incurred by damages. In claims such as breach of contract, negligence and fraud, Common law also provides remedies of damages, common law tracing or money had and received. On the contrary, equity provides variety of remedies for claims such as breach of trust, tracing property and property on insolvency. At discretionary of courts, the specialty of remedies provided by equity is that those are tailor-made and contextual .

Mainly, remedies in following jurisdictions are available in equity to be enjoyed by both parties involved in litigation at discretionary powers of the court. Equity plays an important role to rectify or cure defects of the Common law and there, three types of jurisdictions under which remedies are delivered can be recognized in equity. Those are namely, exclusive jurisdiction, concurrent jurisdiction and axillary jurisdiction.

Exclusive Jurisdiction

A property which had been conveyed by a settlor to a trustee for use of another designated beneficiary for limited time and limited purposes is not recognised in Common law.

Not being recognized this fiduciary relationship, a settlor did not have a remedy to imposed by Common law courts and trustee was recognized as absolute owner of the previously conveyed property.

Quite the opposite, court of chancery recognize equitable right of person though Common law does not. So, fiduciary obligations between both parties are recognized only in the equity and remedies are enforced for the very meaning of the justice.

For cases, such as Valliyammai Atchi v. Majeed (1944) and Muttamah v. Thiyagarajah (1960) where agreement of reconveyance are not notarially executed (as per the section 2 of the prevention of frauds) the transferor do not have the right of claim in common law but resort to equity that enable transferor to create trust in accordance with Trust Ordinance which give rise the equitable interest of the transferor. So, recognition of trust and imposition of constructive trust are remarkable exclusive remedy which is attributed as exclusive jurisdiction provided by equity

Concurrent Jurisdiction

In a case, facts might bring about both equitable and common law actions simultaneously. For instance, where contractual obligations are breached in the agreement the plaintiff can sue against defendant claiming damages in Common law and Specific performance in equity concurrently. In Walsh v. Lonsdale (1882) , Yet Jessel MR stated that there were two estates because one estate is at Common law and the other at equity. he further stated that both jurisdictions are exercised by only one court and the equity rules prevails in it. In that case, the court held that a leasehold agreement was enforceable in equity.

Auxiliary Jurisdiction

In the adjudication process, equitable actions are to support to the attainment of justice. Equity doesn’t either accept plaintiff’s claim or defendant’s claim as it is and initiate doctrine of discovery so that find and disclose relevant documents in involved parties’ possessions, power or custody. This assists the court to determine of legal rights of involved parties of the case.

Where plaintiff’s rights are infringed plaintiff can pray for an order of injunction under auxiliary jurisdiction which is to enforce legal rights of plaintiff if the damage is inadequate remedy , and refrain from apprehension or continuing infringement of rights. When exercising auxiliary jurisdiction in equity, the equitable remedy of account derived from chancery as a pecuniary remedy for profit resulted from a breach of equitable obligation in aid of common law rights.

Furthermore, equitable compensation, estoppel, rescission, rectification, imposition of resulting trust, subrogation, lien, charge and specific restitution are ordered by court according to principles of equity to protect equitable rights of people. Of those remedies, specific performance is considered as an exceptional remedy in English law

Specific performance and its application in the law

Briefly, it can be stated that specific performance is a decree made by the court to compel parties to perform their contractual obligations formulated in terms of contracts on goods, lands or services when a party on whom the contractual obligations rest on do not honour the performance. Noncompliance of the decree by the court considered as contempt of court and thus, defendant can be imprisoned upon those charges.

Specific performance is cannot be recognized as the default remedy and only be available for particular circumstance of the justice. Since, specific performance would be invoked as some sort of last resort by the court at its discretion it has been attributed to characteristics of residual and discretionary remedy. however, Specific performance used along with Common law and because facts of the case give rise to both legal and equitable actions.

If pecuniary damages can resolve the matter adequately in common law order specific performance is not granted by the court. This is the instance where the application of the statement of maximum that equity follows the law can be observed because equity is not going to circumvent Common law actions.

Generally, a decree of specific performance given by the court to enforceable contracts. Nonetheless, if agreements are of part performance principle or of promissory estoppel may be considered to award specific performance for anticipatory breach or to prevent the unfair denial of the agreement.

As equity acts in personam, hence, specific performance also acts in personam and affects defendants personally despite that fact where properties in the issue, locates. Therefore, agreement in USA and real and personal assets located in Scotland were subjected to order of specific performance in courts in England.

As per the statements of maxims “he or she who comes into equity must come with clean hands and “he or she who seeks equity must do equity” reflects the position of equity. Hence, in case of Nelson v. Nelson (1995) due to defrauding acts committed by the plaintiff she was about to lose her property. Hence, before she got her equitable relief as specific performance, she had to pay back the government. the bottom-line is that a person who does not have integrity cannot seek remedy of specific performance.

The point is in Walsh v.Lonsdale claimant sued to nullify Common law distress and damages on the ground that both parties did not have valid lease agreement. By considering, facts in the issue, court determined to award specific performance to create equitable lease agreement between them upon the maxim that equity looks to intent rather than form, and equity looks on as done that which ought to be done. By considering equitable lease, claim was rejected.

Specific performance, as an equitable remedy, awarded where appropriate remedy at law must be inadequate in other words, to provide complete remedy. In the case of Co-operative Insurance Society Ltd v. Argyll Stores (Holdings) Ltd plaintiff leased out its unit of shop to defendant for a period of 35 years. As a contractual clause, defendant was expected to open that shop for trading during regular business hours. Due to loss incurred by the defendant they wanted to the shut down the operations at the shop in issue.

Although plaintiff sued defendant on damages and specific performance the lower court judge found in favour of damages but rejected awarding of specific performance. Later, the court of appeal also held same position because order of specific performance would be inequitable when considering the background of both parties (unfair bargaining positions of both parties i.e. uncertainty of contractual terms, financial and non-financial hardship, and other contextual hardships deemed fits etc.) and that may cause higher magnitude of injustice to the defendant and third parties.

Aforementioned judgment determined how the court should manage its discretionary power in determining award of specific performance. The House of Lords observed that plaintiff was automatically entitled to right of damages provided breach of contract is established. However, if the court goes further for specific performance there should be an assurance of rationalization that Common law was not adequate for perfect remedy.

As per the House of Lords, court is not going compel running business which runs at a loss and it needs continuous supervision because it would not be practical . Non-performance of court order causes them to be punished on contempt of court and in that manner forcing someone to carry on a business against his wish is unfair.

In breach of contractual obligation in sales of lands or chattels, commonly claimant would be granted damages in Common law. Therefore, to obtain specific performance, plaintiffs have to prove that either sales of parcel of land or chattels should be unique, come up intrinsic value, irreplaceable and not substitutes. In addition, if the plaintiff has either difficulty of having those things due to unitability at the market or higher prices .

In De Francesco v. Barnum (1890), inability of application of specific performance can be observed in agreement of services such as agreement of providing innovative creations, art works etc. it is deemed that someone to be compelled in performing something cannot be done under a threat of punishments of court and only pecuniary damages are awarded under common law .Otherwise, court only provide damages in Common law.

Conclusions

The established practice of awarding specific performance is based on sound reasoning and it may have dramatic impact on parties. Based on principles of equity and precedents cases outline those practices. Awarding damages is not a rule of thumb for every breach of enforceable agreement. However, specific performance is not primary remedy in law but together those help to make justice more perfect and adjust according to context forging inflexibilities of common law. by considering above arguments specific performance is an exceptional in Common law.

References

CILEx Law School Limited, 2018. Chapter 2: Equitable Remedies: Specific Performance. In: Bedforsd: CILEx Law School Limited, pp. 19-22.
Dagan, H. & Heller, M. A., 2020. Specific Performance. Columbia Public Law Research Paper No 14-674.
Hepburn, S., 2001. Principles of Equity and Trusts Law. 2nd ed. London: Cavendish Publishing Limited.
Hudson, A., 2005 . Equity & Trust. London: Cavendish Publishing Limited.
Jayaratnam, N., 1988. Principles of Equity (Block I & II). Colombo: The Open University of Sri Lanka.
Shavell, S., 2005. Specific Performance versus Damages for Breach of Contract. In: The Harvard John M. Olin Discussion Paper. Cambridge: Harvard Law School, pp. 1-37.