Distingtion Between Equity and Common Law

Common law, defined by Oxford Dictionary, is law that is derived from custom and judicial precedent instead of statutes. Equity, on the other hand, is a branch of law, which developed alongside common law, and is focused on fairness and justice. But aside from their descriptions, there are other differences between common law and equity. History of common law

Before the 1066 Norman Conquest of England, there was no unified national legal system in the region—just a collection of oral customs which were peculiar to each domain. In 1154, Henry II established a unified system of law, which eliminated local control and arbitrary rulings. Henry II also sent out judges from his own court (thus the origin of “circuit” judges) to resolve disputes throughout England.

The law-educated judges tried cases based on how they understood the customs, then would later return to London and discuss their decisions with other judges. These decisions are then recorded. Eventually, the judges were obliged to follow a decision on a previous case if it had similar facts and issues, creating the concept of precedent and bringing about a mostly “common” law throughout the land. Thus, common law was born. The Writ system was as a result of development of common law( a writ is simply a document that sets out the details of a claim.

They were issued to create new rights and encourage business however over time they became too formal and beset with technicalities such that claims would only be accepted if they fit into an existing writ. The rule was “no writ, no remedy” for example a writ to trespass was only valid if it consisted of use of arms and force if the two were not met one had no claim. If a writ was obtained judges spent more time examining the validity of the writ other than the merits of the claim. Common law also had the following defects

* There were also other faults with the common law courts, for example: * the common law courts used juries which could be intimidated and corrupted. * the common law had only one remedy, damages, which was often inadequate. * the common law paid too much attention to formalities, e.g. if a contract was made which required written evidence for its enforcement, then lack of such evidence meant that the common law courts would grant no remedy.

The only remedy under common law is damages, the plaintiff must establish defendant has breached the contract and show their willingness to be bound to perform contractual obligations According to The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) – ‘A plaintiff must prove on the balance of probabilities, that his or her expectation of a certain outcome, as a result of performance of the contract, had a likelihood of attainment rather than being mere expectation.

The object of damages is usually to put the injured party in the position he would have been had the contract been properly performed. The injured party must show they have suffered actual loss after which the court then takes 2 major considerations; * Remoteness of loss

* The measure of damages The term ‘equity’ in the general sense is associated with notions of fairness, morality and justice, it is an ethical jurisdiction. However equity is that branch of the law that was administered in the court of chancery prior to The Judicature Acts of 1873 and 1875. It evolved to achieve justice and to overcome the rigors and deficiencies of common law. Sir Nathan Wright stated in Lord Dudley vs. Lady Dudley

“”Equity is no part of the law, but a moral virtue, which qualifies, moderates, and reforms the rigor, hardness and edge of the law, and is a universal truth. It does also assist the law, where it is defective and weak inboad the constitution (which is the life of the law), and defends the law from crafty evasions, delusions and mere subtleties, invented and contrived to evade and elude the common law, whereby such as have undoubted right are made remediless. And thus is the office of equity to protect and support the common law from shifts and contrivances against the justice of the law.

Equity, therefore, does not destroy the law, nor create it, but assists it. ” prior to the adoption of the judicature system, the principles of the common law and equity were administered in separate courts. This meant, for example, that equitable obligations were ‘unknown’ to the common law and therefore not amenable to the common law remedy of damages. Thus, in Coroneo v Australian Provincial Assurance Association Ltd

Jordan CJ ruled that a breach of the equitable obligation of a mortgagee exercising a power of sale did not attract the remedy of common law damages. In such a case the mortgagor had to seek appropriate relief from a court of equity On the other hand the common law courts generally had no jurisdiction to award equitable remedies or recognize equitable defenses. Defendants at common law could not plead equitable defences to an action for common law damages. Thus, in an action at common law for damages by a plaintiff for breach by a defendant of a promise to sell property according to a price determined by a third party valuer, the defendant could not raise as a defence to liability the grounds of mistake, fraud or collusion in equity.

This was so even though those grounds may have provided a defence to an application by the plaintiff for a decree of specific performance: as illustrated in Legal & General Life of Australia Ltd v A Hudson Pty Ltd . Furthermore, a defendant in a common law court could not get his or her matter transferred to a court of equity. The remedy for such a defendant was to obtain a common injunction from the equity court to either prevent the plaintiff from setting up an inequitable plea at common law or to restrain such a plaintiff from pursuing and enforcing a judgment obtained at common law.

The use of common injunctions effectively ensured the supremacy of equity courts over the common law courts. However the conflict between common law and equity was resolved by the Judicature Acts which created the Supreme Courts of judicature and it allowed all courts to exercise a common law and equitable jurisdiction. Although both were amalgamated each retained their own distinct features.

One of the most distinct conflicts between common law and equity was The Earl of Oxford case of 1661 where the common law court gave a decision in favor of one party the court of Equity the issued an injunction to prevent the party from enforcing the judgment. The case was referred to the King who in turn asked the attorney general to make a ruling. It was decided that in cases where common law and equity were in conflict equity should prevail. Even so there would be a conflict whereby application of common law and equity would produce different results section 25 of the judicature Act provided that if there was a conflict between the two equity would prevail however since the two principals were not fused they remain as separate bodies of rules.

Maitland stated ‘the two streams have met and flow on the same channel but the waters do not mix’. In recent times however remedies such as Mareva Injuctions which were recognized by the Court of Appeal in 1975 in Mareva v International Bulk carriers

A ship owner let the ‘Mareva’ to a foreign charterer, with payment half monthly in advance. The charterer defaulted on a payment. The ship owner found out that the charterers had money in an English bank and sought an injunction freezing the account. It was held that an order would be granted to stop the charterers from moving the money abroad before the case was heard. Normally the application will be ex parte, which means that one party applies without giving notice to the other side for if the other party did have notice, they could move the assets. In The Due Process of Law (1980) Lord Denning described the Mareva injunction as “The greatest piece of judicial law reform in my time”. Equitable Remedies

It has been said that there are three distinctive features of equitable remedies. There are (a) that they are discretionary in nature rather than available as of right (b) that their availability depends upon the inadequacy of common law remedies- this supports the traditional notion that equity acts as a supplement to the common law and, in that vein, provides relief against the technical limitations of the common law. In the context of remedies the prime remedy at common law is the award of damages. The inadequacy of such a remedy in all cases should be reasonably obvious. (c) that they are governed by the doctrine that equity acts in personam. It has also been said that it is in the area of equitable remedies that equity has shown the greatest degree of flexibility and inventiveness.

Equitable remedies include Specific Performance – is an order of a court which requires a party to perform a specific act, usually what is stated in a contract. While specific performance can be in the form of any type of forced action, it is usually used to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. It is usually the opposite of a prohibitory injunction but there are mandatory injunctions which have a similar effect to specific performance.

Injunction – is an equitable remedy in the form of a court order that requires a party to do or refrain from doing specific acts. his injunctive power to restore the status quo ante that is, to make whole again someone whose rights have been violated, it is essential to the concept of fairness (equity) Restitution – The basic purpose of restitution is to achieve fairness and prevent the Unjust Enrichment of a party.

Restitution is used in contractual situations where one party has conferred a benefit on another party but cannot collect payment because the contract is defective or no contract exists. For instance, assume that a person builds a barn on the property of another person. Assume further that the structure is not erected pursuant to a contract or agreement and that the owner of the property on which the barn sits refuses to pay the builder for the barn. Despite the absence of a contract, a court can order the owner to pay the builder the cost of the labor and materials under the doctrine of restitution.

Courts in seventeenth century England first developed the doctrine of restitution as a contractual remedy Quantum Meruit – “the amount he deserves” or “what the job is worth”. Essentially, quantum meruit is an action for payment of the reasonable value of services performed. It is used in various circumstances where the court awards a money payment that is not determined, subject to what is said below, by reference to a contract. CONCLUSION

Equity administers individual justice and this is reflected in its standards based approach to adjudication whereas common law administers universal justice and this is reflected in its reliance on rules, therefore both common law have equal significance in the legal arena in my opinion it seems as if they complement each other that is to say on one hand common law establishes the rules whereas equity provides a fair way in which those rules are applied. Equity has a very important role because it is flexible, unlike common-law, due to its historically discretionary basis and creativity.

Therefore it is able to fill the voids within the English law in a more efficient manner than the common-law, which is based on years of precedent; whereby if equity never became involved in the law of property and proprietary interest then it would not be satisfying the needs of justice.

ReferencesMichael Haley & lara Mcmultry, Equity and Trusts ( Sweet and Maxwell 3rd Edition) Julie Martin , Modern Equity (18th edition)

——————————————–[ 1 ]. [1705] Birchall, John. “An Introduction to Equity & Trusts” [ 2 ]. 1935) 35 SR (NSW) 391 at 394[ 3 ]. (1985) 1 NSWLR 314 at 336