Fusion Fallacy

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Equity Essay

1. Introduction
Two jurisdictions of law exist in Australia: equity and common law. ‘Equity is ‘the body of law developed by the Court of Chancery in England before 1873. Its justification was that it corrected, supplemented and amended the common law. It softened and modified many of the injustices at common law, and provided remedies where, at law, they were either inadequate or non-existent.’[1] Common law is ‘the unwritten law derived from the traditional law of England as developed by judicial precedence, interpretation, expansion and modification.’[2] The complete fusion of these jurisdictions has not yet occurred. The two “streams” of jurisdiction have merged in some areas as the law has developed, but are technically still separate. This essay will prove this claim using the equitable doctrines of estoppel and fiduciary obligations and will then discuss remedies.

2. History of Equity
Prior to the enactment of the Judicature Act 1873, the administration of common law and equity was completely separated. The principles of equity developed in the Court of the Chancery where a ‘petitioner could seek relief from the harsh or unjust operation of the law’.[3] The Chancery Court was a court of conscience charged with ‘an extraordinary power to prevent the injustices and supply the deficiencies that were perceived in the operation of the Common Law’.[4] The disadvantage of this system was that courts of law refused to recognise equitable rights or interests. The Judicature Act 1873 was enacted in order to merge the administration of law and equity. The effect of the Act was the abolition of the old courts and the creation of a new High Court of Justice that combined the jurisdiction of the old courts.[5] The judicature system was implemented in WA by enacting in the Supreme Court Act 1880 (WA) provisions equivalent to the Act. These provisions are now located in sections 16(1), 24 and 25 of the Supreme Court Act 1935 (WA).

3. What is the Fusion Fallacy?
The phrase “fusion fallacy” refers to ‘the modification of principles in one branch of the jurisdiction by concepts which are imported from the other and thus are foreign.... Those who commit the fusion fallacy announce or assume the creation by the Judicature system of a new body of law containing elements of law and equity but in character quite different from its components.’[6]

In her article The ‘Fusion Fallacy’ Revisited, Fiona Burns sets out the four view points found in case law as to whether the fusion of law and equity exists.[7] This essay will argue in favour of the third view which is called the empirical approach. This approach argues that: ‘a century of fused jurisdiction has seen the two systems working more closely together; each changing and developing and improving from contact with the other; and each willing to accept new ideas and developments, regardless of their origin. They are coming closer together. But they are not fused.’[8]

4. Equitable Doctrines
4.1 Estoppel
Historically, the law of estoppel has several facets. These include: estoppel by deed, estoppel by judgement, common law estoppel, equitable estoppel by acquiescence and estoppel by representation.[9] Estoppel by representation was ‘a rule of evidence that could be pleaded in certain circumstances as a defence to an action by a plaintiff who was seeking to enforce rights clearly at odds with representations he or she had made.’[10] The House of Lords in Jorden v Money[11] identified the difficulty with relying on such a representation. The House of Lords held that “a representation of future intention was only enforceable when it was accompanied by consideration’.[12]

The case of Central London Property Trust Limited v High Trees House Limited[13] re-examined the principles of equitable estoppel. The case was decided by Denning J who stated that: The courts have not gone so far as to give a cause of action in damages for the breach of such a promise,...
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