1. Development of Equity; the Nature of Equitable Interests
(a) Development of Equity
* In England in 11th century, there was a system of CL courts and it was in its own way a complete legal system. However, 2 things that were wrong with that system – 1) Remedies granted by CL courts were of a limited range. 2) System although complete was very unjust in some cases because it did not act on the D’s conscience.
* Equity then stepped in to supplement range of CL remedies and corrected injustices of CL system E.g. of equity supplementing remedies of CL – Remedy of specific performance which is equitable. At CL if breach of contract for the sale of land, CL could only give innocent party damages but equity could order SP against guilty party.
* Also as e.g. of correction of injustices at CL is an equitable invention called a trust. If someone had accepted property on behalf of another person, CL would only look at legal title and ignore equitable title. Equity would say that the CL owner must pursuant to the trust hold property for benefit of beneficiary of the trust. Also equity courts issued injunctions against P who had succeeded at CL if equity courts thought that P should not have succeeded in the action.
* HAD 2 SYSTEMS OF COURTS – CL AND EQUITY COURTS. Equity courts interfered with CL courts. CL courts were distressed by constant interference. In 1615, in the Earl of Oxford’s case, Lord Ellesmere(Lord Chancellor) granted an injunction forbidding a CL plaintiff from enforcing his action in ejectment. Edward Coke, CJ of King’s Bench had dispute with LC. King James the 1st decided in 1616 that when equity and CL conflicted, equity would always prevail. Supremacy of equity over CL was embodied in s5 (11) Judicature Act 1876 (Qld). Has now been re-enacted in s249 of Supreme Court Act 1995 (Qld). * If 2 persons were to guarantee a debt, CL would say that person called upon to pay up must first pay more than his share of debt before he can call upon co-surety for contribution. Equity said that this was unjust and as soon as one co-surety was called upon to pay debt, could join the other co-surety in action and claim contribution from that person - Wolmershausen v Gullick (1893) 2 Ch 514
* There are 3 categories of equitable jurisdiction – exclusive, concurrent and auxiliary jurisdictions.
* Exclusive jurisdiction – exercised when rights in question are recognised in equity only. Excludes CL altogether. Notion of a trust is an exclusively equitable concept. CL does not know of anything called a trust. When equity enforces a trust, it is exercising its exclusive jurisdiction. Whenever there is a breach of fiduciary duty and equity intervenes, it is exercising its exclusive jurisdiction. Concept of fiduciary duty is an entirely equitable concept and CL does not know of anything called a fiduciary relationship.
* Concurrent jurisdiction – Right in question is recognised by both equity and CL. A good example of a case where there is concurrent jurisdiction is a case of a breach of contract for the sale of land. Assume that the vendor has breached a contract for the sale of land. CL would say breach of contract and award damages to purchaser. Equity will say to purchaser (innocent party) that damages would not be enough because you agreed to purchase a specific parcel of land and to give damages is not to give land for which you have bargained to acquire. Equity will force the vendor to transfer the land to purchaser. Give purchaser SP of contract. If vendor defies order for SP, will be guilty of contempt of court.
* Auxiliary jurisdiction – Equity will come in to give better protection for the infringement of a purely CL right and this will happen where equity orders discovery of documents. If debtor denies that there is debt, creditor can have discovery of documents. Debtor can also say that creditor did not give enough documents....