Maxims of Equity

MAXIMS OF EQUITY

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What we will learn

What are Maxims Types of Maxims Functions of maxims

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Maxims – Maxims  – general  general guidance a collection of legal truisms which are used as "rules of thumb" it is an established principle principle or proposition. Framework of reference within which the broader conception of conscience and fairness can be considered. 11/5/2013

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Equitable maxims One of discretion and moral  judgment They are not binding but only provides guidelines for every situation in which equity developed. Maxims of Equity are of useful guide. Maxims are the principles developed by Lord Chancellors exercising on behalf of the Crown. 11/5/2013

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con’t

an extra-ordinary jurisdiction to relax the rigidity of the common law so as to recognize and reward the merit and deserts of individual One of the historic criticisms of equity as it developed was that it had no fixed rules of its own and each Lord Chancellor gave judgement according to his own conscience.

John Selden. 

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"Equity varies with the length of the Chancellor's foot". Dr.Bashiran/Dr.S. Zubaidah/Dr. Nor

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Equitable maxims Such maxims follow principles of universal  justice. Chancellors were originally the "keepers of the King's conscience" with the authority to do whatever "good conscience and good reason" required in a particular case. Hanbury –the fruit of observation of developed equitable doctrine

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Pearce : The Law of Trusts and Equitable Obligations  Are an attempt to formulate in short pithy phrases the key principles which underlie the exercise of the equitable jurisdiction. Provide useful illustrations

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maxims Examples of such maxims includes equity will not suffer a wrong with a remedy", "those who seek equity must do equity", and "equity requires diligence, clean hands, and good faith". These maxims are a form of the Biblical phrase, "do unto others as you would have them do unto you" and the old doctrine of "clean hands, pure heart". 11/5/2013

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maxims In Chancery Court these maxims refer to civil matters mostly involving businesses, family law, workers' compensation, land, probate matters, and more recently , discrimination cases.

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 Among the traditional maxims are: Equity looks regards as done which ought to have been done. Equity will not suffer a wrong without a remedy. Equality is equity. Equity regards substance rather than form Equity looks to the intention rather the the form 11/5/2013

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Where the equities are equal, the first in time will prevail. Where equities are equal, the law will prevail. Equity follows the law. He who seeks equity must do equity. He who seeks equity must have clean hands. Equity aids the vigilant, not those who sleep on their rights 11/5/2013

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Delay defeats equity. Equity will not concern itself with abstract wrongs. Equity abhors a forfeiture. Equity does not require an idle gesture. Equity will not permit a party to profit by his own wrong. Equity delights to do justice, and not by halves. Equity will take jurisdiction to avoid a multiplicity of suits.

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1) Equity will not suffer a wrong without a remedy 

Philosophical foundation of equity

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Wrongs should be redressed by the courts if it possible

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Defects of the common law to provide relief

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Meaning- Where there is a right, there is a remedy

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In Latin – Ubi jus ibi remedium

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Sometimes the Common courts owing to some technical defect unable to enforce a remedy, therefore equity intervenes and provides for judicial enforcement- injunction, recognition of trust

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means no wrong should go unattended if it is capable of being remedied by courts

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This is the basis on which the structure of equity rests.-it is a duty of the Court of Chancery to prevent a failure of justice

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Limitation -non-application if it includes moral wrong

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- it is remedied by common law courtsat present there is remedy in damages

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- due to his own negligence destroy the evidence

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 Application

and Recognition:- The Civil Procedure Code and the Specific Relief Act have incorporated this maxim. The Code entertains all kinds of suit unless it is prohibited and the Act provides equitable remedies like s.p. , injunctions, rectification, etc.

 Allows

the beneficiary to enforce their obligation to use the property against the trustee

 In

contract- escape from the contract if it is led by mistake or misrepresentation

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The maxim also applies to rights which are suitable for judicial enforcement but were not enforced at common-law owing to some technical defect. For example, during the trial process, common-law did not impose any duty on the defendant to make disclosure through discovery of documents. Equity then provided the remedy by prescribing the process of discovery of documents.

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2) EQUITY ACTS IN PERSONAM The courts of equity operate primarily in personam, attacking and binding the conscience of a person. It was used as a weapon to establish  jurisdiction Equity enforces its decisions by means of a personal order against the defendant. Example: order to perform a contract, observe a trust, refrain from building the wall, etc.

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If the def. refuses, he will be in contempt of court and punishable by imprisonment The court may exercise jurisdiction over the person within the power of the court, even though the property is outside the  jurisdiction. 11/5/2013

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Penn v. Lord Baltimore [1750] Ves. Sen. 444 The plaintiff filed a suit in the court of Chancery for specific performance of an agreement in respect of property situated in North America. The defendant challenged the jurisdiction of the court to grant the remedy as the property was outside England. “…the conscience of the party was bound by this agreement; being within the jurisdiction of this court, which acts „in personam‟,  the court may properly decree it as an agreement.” 11/5/2013

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Swiss Bank Corpn v Lloyds Bank Ltd[1979] Ch 548 Historically the courts of equity acted in personam. Whether equity was supplementing the common law by giving additional remedies or correcting the common law by imposing a different legal result, the courts of equity intervened by directing the defendant personally to do, or refrain from doing, a specific act. In deciding whether or not to intervene, the courts of equity required first, that the plaintiff should have some enforceable right and, secondly, that the conscience of the defendant was affected in some way so as to make the failure of the defendant to give effect to the plaintiff's rights contrary to justice. 11/5/2013

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Chellaram v Chellaram [1985] 1  All ER 1043 at 1053

Scott J. The jurisdiction of the court to administer trusts …is in a personam jurisdiction. Case: Re Valibhoy (Dcd.) (1961) 27 MLJ 187 11/5/2013

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3) Equity follows the law The Court of Chancery will not override the Common Law Courts except: To remedy an injustice Equity could never depart from statute.

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3) Equity looks to the intention rather the the form  Another maxim with similar nature is “Equity regards substance rather than form” Romilly MR in Parkin v. Thorold (1852) 16 Beav 59 at 66 Courts of Equity make a distinction between that which is matter of substance and that which is matter of form; and if it finds that by insisting on the form, the substance will be defeated, it holds it to be inequitable to allow a person to insist on such form, and thereby defeat the substance

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Foskett v McKeown [1994] 1 AC 324 Sir Richard Scott V-C „The availability of equitable remedies ought….to depend upon the substance of the transaction in question‟ Equity will look at the substance rather than the form or the wording used. 11/5/2013

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Margaret Chua v Ho Swee Kiew & Ors. [1961] 1 MLJ 173 a lease which is not registered is void as a lease under the law but is good and valid as an agreement for a lease and may be enforceable in equity by a decree of specific performance.

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Equity will not grant an injunction to enforce a negative covenant entered by an employee agreeing not to work for others if in substance this would amount to an order of specific performance of their contract of employment since Equity will not enforce contracts of personal service.-employees intention

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5) Equity looks at that as done which ought to be done

The maxim that equity looks upon as done that which ought to be done applies as a general rule of equity, outside the law of contract. Where the contract is specifically enforceable, equity regards the promisor as having already done what he has promised to do.

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Mountney v. Treharne [2003] Ch. 135 Where any court directs a person to transfer property, equity treats the transfer as having already been executed. The husband became a constructive trustee of the property for the wife on the coming into effect of the order

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HL Banerji v Chin Cheng Realty (Pte) Ltd. [1983] 2 MLJ 18 the parties had signed a 10 year lease of the resp‟s premises with a provision for renewal if the App made a request three months before the expiration of the lease. When the app requested for renewal of the lease for 10 years, the resp refused. The app sued for SP and succeeded. Ct hd. that the App always had an equitable right to renewal of the lease as equity looks upon as done what ought to have been done. 11/5/2013

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 A-G for Hong Kong v Reid [1994] 1 AC 324 The maxim has the implication that the fiduciary who receives an unauthorised profit in breach of his duty of loyalty will hold the profit on constructive trust for his principal because he is subject to an equitable duty to account for the profit he received.

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In other words, what would the position have been if what should have been done had been done? Equity acts on the conscience of a person. Walsh v. Lonsdale(1882) 2 Ch D 9 2 principles –evidence of the contract Suit within the time Concept of bare trust –Temenggong Securities 11/5/2013

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6) He who comes to equity must come with clean hand Does the plaintiff come into the court with clean hands? Court will refuse relief where the plaintiff, by prior conduct in relation to the matter in litigation, has acted in bad faith or violated some equitable principle The clean hands doctrine only applies when the plaintiff has acted unjustly in the very transaction of which he complains. 11/5/2013

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This maxims look at the past conduct of the Plaintiff. However the maxim does not apply to conduct in general, but only that which has „an immediate and necessary relation to the equity sued for‟

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Chettiar v Chettiar  [1962] 1 MLJ 143 A father had owned a maximum acreage of rubber land allowed under regulations at that time. In order to avoid tax assessment over ownership of an extra 40 acres of rubber land, the father transferred the 40 acres to his son as nominee. A receipt of $7000 was obtained from his son when actually no money was involved. Subsequently, the father contracted to sell this land but the son refused to give him the power of attorney. The father brought an action for a declaration that the son held the land on trust for him. The Privy Council dismissed the father’s action on the ground of ‘unclean hands’ as the transfer was made for a fraudulent purpose. 11/5/2013

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Timber Master Complex (sabah) Sdn Bhd v Top Origin Sdn Bhd [2002] 1 MLJ 33

Operator entered into agreement on manufacturing operation for 2 years with an option to renew Resp gave a notice to renew but no further action

Ct hd: The claim by the R that they had acquired rights over the extended period would remain empty claim if it was not met by the corresponding duty to pay rentals. He comes to equity must come with clean hands.

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7) Delay defeats equity Equity aids the vigilant and not the indolent. Persons who seek equity must not sleep on their rights. This is the foundation of the doctrine of „laches‟ where a party who has delayed cannot obtain equitable relief. The Limitation period-the statutory rules 11/5/2013

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Smith v Clay (1767) 3 Bro CC 639, 640 Lord Camden LG …equity has always refused its aid to stale demands, where a party has slept upon his right and acquiesced for a great length of time. Nothing can call forth this court into activity, but conscience, good faith, and reasonable diligence, where these are wanting, the Court is passive and does nothing.

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Goh Heng Kow & Ors. v. Raja Zainal Abidin [1995] 3 MLJ 6 In 1993, land sold to def. (Long) The P, a beneficiary of the previous registered proprietor(settlor), caveated the land in 1994 which prevented the def. from registering the transfer. When the P applied to extend his caveat, the def. sought to set aside the order of extension. The court found that the P had acquiesced to long‟s title for almost 30 years and they were thus, estopped and barred by laches from asserting their alleged interests. Order set aside. 11/5/2013

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Nelson v Rye [1996] 2 All ER 186 It was held that a musician could not claim an account of earnings wrongfully retained by his manager in breach of fiduciary duty because he had waited for more than six years before commencing an action.

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8) He who seeks equity must do equity. Looks at the Plaintiff‟s future conduct If the plaintiff seeks an equitable relief he must be prepared to act fairly toward the person against whom it is sought. Eg, in the case of injunction, before a Court can grant an interlocutory injunction, the plaintiff must first take an undertaking.

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Mohamed Syed Fathima d/o Shahul Hammed & Ors v MMS Syed Aliyar [2004] 5 MLJ 168 Facts – P & D are partners and co-owners of restaurant and staying together on the same floor –obtained order agst trespass P‟ was asked to pay damages to def for discontinued injunctive orders agst the def P appealed agst the damages P relied on s 343 of the NLC – as co-owners, def has no right for damages Ct hd: since P relied on s 343 thus shd also realized that he also has no right to obtain injunction agst the def. He who seeks equity must do equity 11/5/2013

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8) Equity imputes an intent to fulfill an obligation Equity places the most favourable construction on a man‟s acts. If he does something which could be construed as fulfilling an obligation he owes, equity will regard it as having this effect. Eg; If a debtor leaves a legacy to his creditor, this is presumed to be a repayment of debt.

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 Application in Malaysia- Specific Relief Act 1950 Object of the SRA 1950 is confined to the class of remedies which a suitor seeks to obtain and a Court of justice seeks to give him the very relief to which he is entitled‟ There is the existence of a legal duty binding upon the defendant and unfulfilled by him. What a man ought to do by a rule of law, he ought to be made to do by the force of law. 11/5/2013

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„the relief provided under this Act is a relief in specie, that is, the performance of a specific act or the delivery of particular articles and not relating to the payment of money” Per Kamalanathan R., JC in Arab Malaysian [1998] 6 MLJ 136

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How it is given? Taking possession Ordering the person to do the act Preventing him to do the work- SRA s 5 Determining and declaring the rights of the person  Appointing the receiver

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