UNIT 4 CONFLICTS BETWEEN EQUITY AND LAW
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main content
3.1 Effect of the Judicature Acts 1873-1875
3.2 Fusion
3.2.1 Fusion of Rules/Administration
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignments
7.0 References / Further Reading
1.0 INTRODUCTION
In the previous unit, we considered the relation of equity and common law. In this unit, we will further consider the conflict between equity and the common law and the effect of the passage of the Judicature Acts 1873-1875.
2.0 OBJECTIVES
By the end of this unit you should be able to:
(i) Explain the effect of the Judicature Acts 1873-1875; and
(ii) Explain how law was fused with equity.
3.0 MAIN CONTENT
3.1 Effect of the Judicature Acts, 1873-1875
Before the Judicature Act of 1873, there had been certain practical cases in which the application of common law rules and the application of rules of equity with reference to the same matter pro- duced conflicting results. For example, before the Act, the attitude of equity with regard to the ef- fect of stipulations as to the time in contracts could not be reconciled with that of the common law. Similarly, equity rules as to the custody and education of infants were different from relevant common law rules. In addition, equity and common law had long maintained a different attitude to the important question of assignments of choses in action. These and some other particular types of conflict were resolved by section 25, sub-sections 1-10 of the Act. In some cases, rules of equity were made to prevail over those of the common law (subsections 2, 7, 10), in others, com- mon rules (neither those of equity nor common law) were evolved. See subsection 8.
In addition to the settlement of particular conflicts, section 25(11) of the Judicature Act also pro- vides in a general term, for the settlements of conflicts which may arise in the fused administra- tion of common law and equity. Generally in all matters not here-in-before particularly men- tioned, in which there is conflict between the rules of equity and the rules of common law with reference to the same matter, the rules of equity shall prevail.’ This provision is very much similar to section 16(c) of the Federal Supreme Court Act and other similar High Court Laws of the vari- ous States.
The scope of the section has come for judicial consideration in the following cases. (i) Liability of an Executor for assets
Before the Judicature Act of 1873, the common law rule was that an executor was liable for the loss of his testator’s assets when they had come into his hands. Whether the loss was accidental or as a result of wilful default was immaterial. See Crosse v. Smith (1806) 7 East. 246. On the con- trary, equity took a more lenient view; an executor would not be liable for the loss of the testator’s assets, without default in him.
These two varying positions of common law and equity with reference to the same matter came for consideration in Job v. Job (1877) 6 Ch.D. 562. Referring to the common law position, Jessel M.R. said: “The rule there laid down is, however, as I have already intimated, not the rule now, even at law, for the Judicature Act, 1873, provides by section 25 subsection 11, that where ‘there is any conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rules of equity shall prevail.”
The rule at law as well as in equity now is that, an executor or administrator is in the position of gratuitous bailee who cannot be charged with the loss of his testator’s assets without wilful de- fault. Though the Master of the Rolls adopted a ‘common rule’, this common rule was in fact a rule of equity which was held to have prevailed over the common law rule because of the Judica- ture Act of 1873.
(ii) Agreement for a lease
The meaning of ‘conflict or variance’ within section 25(11) of the Judicature Act is also illus- trated by the decision in Walsh v. Lonsdale (1882) 21 Ch.D. 562. By a written agreement, Lons- dale agreed to grant a seven years’ lease of a cotton mill to Walsh. The rent was to be payable in advance if demanded. Walsh entered and took possession without any lease having been granted. Walsh, however, for some time, paid the rent in arrear. Later, Lonsdale, in accordance with the agreement, demanded a year’s rent in advance. Walsh refused to meet this demand. Lonsdale thereby distrained. Walsh brought an action claiming damages for unlawful distress and for an in- junction and for specific performance.
Walsh’s claim or damages for unlawful distress was on the ground that he was a yearly tenant at law, having paid his rent with reference to a year and that ‘to justify a distress there must be a le- gal tenancy and rent in arrear. There can be no such thing as an equitable distress. Distress is a le- gal remedy, and here the payment of rent is evidence of a legal tenancy with a rent not payable by anticipation. The provision in the written agreement, as to rent being paid beforehand is not ‘ap- plicable to the tenancy hereby created,’ since the rent is at so much per loom run, and it cannot be told till the end of the year what is that number of looms run.
In other words, since the rent can be assessed only after ascertaining the number of looms used, the yearly tenancy created by the act of the parties cannot be with rent payable in areas, non- payment of which would justify the legal remedy of distress. On the contrary, Lonsdale contended in his defence that the provision in the written agreement for the payment of rent in advance was enforceable since the written lease was one of which equity would decree specific performance, the effect of which would convert the written lease to a formal lease as if the lease had been granted at law. Delivering the judgement of the Court of Appeal, Jessel M.R. said:
‘There is an agreement for a lease under which possession has been given. Now since the Judicature Act the possession is held under the agreement. There are not two estates as there were formerly, one estate at common law by reason of the payment of the rent from year to year, and an estate in equity under the agreement. There s only one court and the equity rules prevail in it. The tenant holds under an agreement for a lease. He holds, there- fore, under the same terms in equity as if a lease had been granted, it being a case in which both parties admit that relief is capable of being given by specific performance. That being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted; he cannot be turned out by six months’ notice as a ten- ant from year to year. He has a right to say, ‘I have a lease in equity, and you can only re- enter if I have committed such breach of covenant as would if a lease had been granted have entitled you to re-enter according to the terms of a proper proviso for re-entry. That being so, it appears to me that being a leasee in equity he cannot complain of the exercise of the right of distress merely because the actual parchment has not been signed and sealed.’
In Savage v. Sarrough (1937) 13 N.L.R. 141, the plaintiffs were the owners of land and buildings situate at 6 Balogun Square, Lagos. The defendant obtained from the plaintiffs a written agree- ment, not under seal, of lease of property for five years. The plaintiffs, on receiving a higher offer for the lease of the property brought this action to set aside the agreement, contending, inter alia, that the agreement for the lease not being under seal, was void. Adopting the rule in Walsh v. Lonsdale that since 1873 where there is conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rules of equity should prevail. King- dom, C.J. at page 145 said: ‘In equity, the lease is deemed to have been effectively granted, and for practical purposes, the parties are in the same position as if the lease were valid at law.’
Similarly, in Chidiak v. Coker (1954) 14 WACA 506, the West African Court of Appeal observed that: ‘since the Judicature Act, 1873, the lesse may be liable upon an implied tenancy on the like terms and conditions as those expressed in the lease, if the incompletely executed lease is capable of operating as an agreement for a lease which could be specifically enforced, and the tenant who had entered thereunder would be bound in equity by the covenant to repair.’
However, as Maitland remarked in his lecture,
‘an agreement for a lease is not equal to a lease. An equitable right is not equivalent to a legal right; between the contracting parties an agreement for a lease may be as good as a lease; just so between the contracting parties an agreement for the sale of land may serve as well as completed sale and conveyance. But introduce the third party and then you will see the difference. I take a lease; my lessor then sells the land to X; notice or no notice my lease is good against X. I take a mere agreement for a lease, and the person who has agreed to grant the lease then sells and conveys to Y, who has no notice of my merely equitable right. Y is not bound to grant me a lease.’ See Maitland’s Equity (Brunyate Ed.) 1949, pp.156-159.
In Ibeziako v. Chinekwe (1972) 2 E.C.S.L.R. 71 at 79, though Walsh v. Lonsdale (supra) was fol- lowed, Egbuna J., did not loose sight of the fact that it is an essential condition that the agreement be found to be an agreement of which a court of Equity would decree specific performance. For example, specific performance of such agreement will not be granted where the plaintiff is guilty of laches or where he has not come to equity with clean hands.
(iii) Joint Undertaking
The supremacy of equitable rules over common law rules under section 25(11) of the Judicature
Act, is also illustrated by the decision in Lowe v. Dixon (1885) 16 QBD 455. At common law, where two or more persons jointly undertook to be sureties of a debt, and one of them became in- solvent, the remaining solvent sureties were not bound to pay the share of the liability which the insolvent surety would have had to pay had he been solvent. On the contrary, the rule in equity is that the solvent sureties are in addition to their own share of the liability, also liable for the share of the insolvent co-surety. The conflicting rules came for consideration in Lowe v. Dixon (supra) and it was held that the equitable rule now prevails in accordance with the Judicature Act.
(iv) Variation of Deed
Another illustration of the effect of section 25(11) of the Judicature Act 1873 on the conflict be- tween law and equity is the decision of Swift, J. in Berry v. Berry (1929) 2 KB 316. In that case, there was a deed of separation in which the husband covenanted to pay a monetary allowance to his wife. Later there was another agreement in writing, but not under seal, by which the parties agreed to vary the terms of the deed regarding the allowance. The wife brought this action claim- ing arrears of allowance under the original terms of the deed. The court accepted the claim of the plaintiff that at common law a covenant in a deed cannot be varied by a subsequent written agreement not under seal. See also West v. Blakeway (1841) 10 LJ (CP)173, 177.
However, the Courts of equity have always allowed the rescission or variation by a simple con- tract of a contract under seal and such variation or rescission is good defence to an action on the deed. That being the state of the law and of the equitable practice, section 25(11) of the Judicature Act, 1875 provides that the rule of equity should now prevail and the action was dismissed. This ‘variation rule’ was extended in the High Trees Case (1947) KB 130 and in Ajayi v. Briscoe (1964) 3 All ER 556.
SELF ASSESSMENT EXERCISE 1
At common law, can a covenant in a deed be varied by a subsequent written agreement?
3.2 Fusion
The effect of the Judicature Acts on the relation between law and equity is not free from contro- versy. With effect to the provision of the Acts dealing with settlement of conflicts between law and equity, there are two views of the matter.
(i) That there is no appreciable conflict between law and equity and therefore section 25(11) of the Judicature Act 1873 is redundant.
(ii) That rules of equity do conflict with rules of common law and that such cases of con- flict are to be settled in accordance with section 25(11).
Maitland, the chief exponent of the ‘no conflict view’ argues forcefully that the conflict between law and equity was only jurisdictional and has never been of any vital functional significance. He observes that:
“it is important that even at the very outset…we should form some notion of the relation which existed between law and equity in the year 1875. And the first thing that we have to observe is that this relation was not one of conflict. Equity had come not to destroy the law, but to fulfil it. Every jot and every title of the law was to be obeyed, but when all this had been done something might yet be needful, something that equity would require.”
See Lectures on Equity op.cit. at 16-18, 153.
It is his view that since the jurisdictional conflict had been removed by the Judicature Acts, ‘the day will come when lawyers will cease to inquire whether a given rule be a rule of equity or a rule of common law: suffice it that it is a well established rule administered by the High Court of Jus- tice.’ See further Langdell, Brief Survey of Equity Jurisdiction 1 Harv.L.Rev. 58 (1887); Classifi- cation of Rights and Wrongs, 13 Harv. L. Rev. 673 (1900).
On the contrary, Hohfeld maintains that ‘while a large part of the rules of equity harmonise with the various rules of law, another large part of the rules of equity, more especially those relating to the so-called exclusive and auxiliary jurisdiction of equity, conflict with legal rules and, as a mat- ter of substance, annul or negative the latter pro tanto.’ See Fundamental Legal Conceptions –
‘The relation Between Equity and Law’ 11 Mich. L.Rev. 537 (1913).
Chief Justice Stone, sometime the Chief Justice of the United States Supreme Court is also of the view that:
“When one reflects that equity often restrained the prosecution of actions at law, and that the exercise of a large part of its jurisdiction involved for all practical purposes a negation of the rights of the legal owner, it seems extra-ordinary that any writer should ever have as- serted broadly that there was no conflict between the doctrines of law and equity, and that anyone should have found it necessary or desirable to have written a book to assert the con- trary doctrine… That there was a conflict in that equity often adopted a different doctrine other than that of the law courts and based its action upon it, does not now seem fairly open to question.” See Book Review; 18 Col. L. Rev. 97 (1918). See further, Spence, The Equi- table Jurisdiction of the Court of Chancery (1846) p.326.
It is true that the Judicature Acts removed the jurisdictional conflict between law and equity, it is also true that section 25 goes further to settle both particular and general conflicts between the rules of law and the rules of equity. Section 25 (11) which deals with the settlement of general conflict is rarely resorted to, but, as Maitland himself admitted, the provision had been applied to settle some substantive conflicts and variance between the rules of equity and the rules of com- mon law.
Thus, the provision becomes operative where the application of the equitable rule deprives the le- gal rule of some material effect. In addition, the provision becomes operative when the remedy provided in equity involves a negation of the exercise of a right or power which would otherwise be exercisable at law. This is illustrated by a string of cases on the revocability of licences at law and in equity. See the following: Hurst v. Picture Theatres Ltd. (1915) 1 KB 1; Winter Garden Theatre (London) Ltd. v. Millenium Productions Ltd. (1948) AC 173; Thompson v. Park (1944) KB 408, and Evershed, ‘Equity after Fusion – Federal or Confederal’, JSPTL 171, (1948).
The premise of the argument in favour of ‘no conflict doctrine’ is that equity has never been a self-sufficient system of law. ‘It is a collection of appendixes between which there is no very close connexion, at best equity is supplementary to law.’ It is further argued that when the appli- cation of a rule of equity brings about a result the effect of which renders ineffective the enforce- ment of common law rule, there is no conflict in the sense that the rule of equity becomes the op- erative law. This does not appear to be a realistic approach to the conflict between law and equity. For example where the existence of a right depends on law, equity does not destroy the legal right so granted, but equity can prevent the exercise of this right which would otherwise be exercisable at law. In this case, there is conflict and equity prevails.
SELF ASSESSMENT EXERCISE
Equity had come not to destroy the law, but to fulfil it. Discuss.
3.2.1 Fusion of Rules or Fusion of Administration
It remains to mention the perennial controversy on the full effect of the Judicature Acts on the relation between common law and equity. The view is widely held that since the Judicature Acts, there has been only one system of courts administering a common rule which is neither rule of equity nor rule of common law. In essence the exponents of this view claim that, in addition to the fusion of administration of justice, the acts also blurred the distinction between rules of common law and rules of equity and that these two systems of rules have been replaced by a common rule’. In Nelson v. Larholt (1948) 1 KB 339, 343; Denning, J. (as he then was) said: ‘It is no longer appropriate … to draw a distinction between law and equity. Principles have now to be stated in the light of their combined effect.’ See similar pronouncement of Denning L.J. in High Trees Case (1947) KB 130, 135; Errington v. Errington (1952) I KB 290 and Hanbury, Modern Equity (8th Ed.) 1962, pp. 19-21.
On the contrary, there is the view that the effect of the Judicature Acts is merely the creation of a common court for the administration of law and equity and not a fusion of law and equity; and that where the principles of the two conflicts, the principles of equity prevail. In Pugh v. Heath (1882) 7 App. Cas. 235, 237 (one of the earliest decisions on the effect of the Judicature Acts on the relation between law and equity) Lord Cairn’s observes: ‘The court is now not a court of law or a court of equity; it is a court of complete jurisdiction, and if there were a variance between what, before the Judicature Act, a court of law and a court of equity would have done, the rule of the court of equity must now prevail.’
Much as it is desirable to have a body of common rules from the amalgams of the principles of law and of equity, it is preposterous now to suggest that there has been a fusion of the two sys- tems since the Judicature Acts. The distinction between the equitable ownership of a beneficiary and the legal ownership of a trustee under a trust is still well recognised. The maxim that ‘where equities are equal the law prevails’ is of great significance in the determination of priority be- tween a legal and an equitable interest in the same property. See Ajose v. Harworth (1925) 6 NLR 98; Lydia Erinosho v. Owokoniran (1965) NMLR 479; Folashade v. Durosola (1961) 1 All NLR 87; Barclays Bank v. Olofintuyi (1961) WNLR 252.
There may be cases where the application of the conflict or variance provision would give rise to common rules. (Such as in Job v. Job (supra); Lowe v. Dixon, (supra). This is not a sufficient jus- tification for the view that there has been a fusion of law and equity. See further, a scholarly dis- cussion of this topic in Nathan’s Equity Through the Cases (4th Ed.) 1960, pp. 17-20.
The provision of section 16 of the Federal Supreme Court Act, No. 12 of 1960, unlike its coun- terpart in section 25(11) of the Judicature Act 1873 gives a clear recognition to the distinction that would continue to exist between the rules of law and the rules of equity. Among other things, it provides that ‘in all matters in which there was formerly or is any conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rules of equity shall prevail.’ This provision anticipates the development of new equities which may conflict or be at variance with law. However, this does not mean that judges should con- sciously ‘invert new rules of equity for the purpose of superseding the old established rules of law.’ See Evershed, ‘The Influence of Remedies on Rights’ 6 CLP 1,12 (1953)
The observation of Lord Evershed on the full effect of the Judicature Acts on the relation be- tween law and equity is instructive. He said ‘when you speak of ‘fusion’ you may mean one of two things. You may mean that the component parts disappear altogether in the new entity that is created, or you may mean that they have combined for particular purposes or have become sub- ject to some single control, though retaining their separate and original individualities. See ‘Eq- uity After Fusion, Federal or Confederal,’ (1948) JSPTL (NS) Vol. I p. 171 at 175.
Evidently, experience and realities are in favour of the latter meaning of ‘fusion’ in the context of the relation between law and equity since 1873. In Joseph v. Lyons (1884) 15 QBD 280, Cotton L.J. disagreed with the view that the Judicature Acts 1873-1875 abolished the distinction be- tween legal and equitable principles. In the same case, Lindley L.J. observed as follows:
‘…Reliance was placed upon the provisions of the Supreme Court of Judicature Acts 1873, 1875 and it was contended that the effect of them was to abolish the distinction between law and eq- uity. Certainly that is not the effect of those statutes; otherwise they would abolish the distinction between trustee and cestui que trust.’
In the circumstance it is difficult to resist the view of Lord Watson that ‘The main object of the Judicature Act was to enable the parties to a suit to obtain in that suit and without the necessity of resorting to another court, all remedies to which they are entitled in respect of any legal or equi- table claim or defence properly advanced by them, so as to avoid a multiplicity of legal proceed- ings … The Act of 1873 deals with the remedies and not with rights of parties litigant. It was not intended to affect and does not affect the quality of the rights and claims which they bring into court and submit to the judgment of the court, whether as plaintiffs or as defendants.’ See Ind, Coope and Co. v. Emmerson (1887), 12 App. Cas. 300 at 308.
Thus, as Ashbumer put it, the Acts conferred upon one and the same tribunal the jurisdiction which, before the Act, was exercised separately by the Courts of Equity and the Courts of Com- mon Law. The provisions of the Act prevent any collision between the principles by which these courts before the Act were respectively guided. A cause of action which before the Act was an exclusive preserve of the Chancery jurisdiction, can now be lawfully adjudicated upon by any division of the unified High Court of Justice; the apportionments of suits between the different divisions is based upon considerations of convenience and not upon differences of jurisdiction. See Ashbuner’s Principles of Equity (2nd Ed.) p. 17.
Where a man before the Judicature Act became entitled by the same cause of action to two dis- tinct remedies, one of which he could only pursue in a Court of Common Law and the other only in Chancery, he can and must since the Act pursue both his remedies in one proceeding; and if the remedies are cumulative (for example, damages for trespass and an injunction) the same court in one proceeding will give him both, while, if they are alternative, the court will give him that remedy which is adapted to the circumstances of his case.
But the two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters. The distinction between legal and equitable claims-between legal and equitable defences-and between legal and equitable remedies-has not been broken down in any respect by recent legislation. The requirements necessary to sustain before the Act, legal and eq- uitable claims, legal and equitable defences, legal and equitable remedies, are not altered or af- fected in any way by the Act.
4.0 CONCLUSIO
In addition to the settlement of particular conflicts, section 25(11) of the Judicature Act also provides in a general term, for the settlements of conflicts which may arise in the fused admini- stration of common law and equity. The provision becomes operative where the application of the equitable rule deprives the legal rule of some material effect and when the remedy provided in equity involves a negation of the exercise of a right or power which would otherwise be exer- cisable at law.
5.0 SUMMARY
In this unit, we have considered the conflicts between equity and common law. You should now be able to: enumerate the effect of the Judicature Acts 1873-1875; and explain how law was fused with equity.
6.0 TUTOR-MARKED ASSIGNMENT
Briefly explain how law was fused with equity.
7.0 REFERENCES / FURTHER READING
Hackney J., (1987) Understanding Equity and Trusts; London: Fontana press
Jegede M. I. (2007rep.) Principles of Equity; Ibadan: Unique Design/Prints