It is important to appreciate, especially when reading older cases on the law of
trusts, that there were, until 1873 in England, two main separate courts – courts of law
and courts of equity. Trust law was a product of courts of equity. We will thus look at:
(i) the meaning of “equity” that is associated with courts of equity;
(ii) the origins of courts of equity;
(iii) the development of the law of uses and trusts;
(iv) the transfer of equity jurisdiction to Canada;
(v) the current status of the fusion of law and equity.
II. THE MEANING OF EQUITY
Be able to describe four different meanings that might be associated with “equity” and
the definition of “equity” that is important for our purposes.
The word “equity” has several different meanings. Let’s examine some of those
meanings and then focus on the meaning that is important to us in understanding the law
A. Equity as “Fairness”
One meaning of the word “equity” is “fairness” or “justice”. This is often
reflected in expressions such as “employment equity”, “pay equity” or “distributional
equity”. People speak in terms of what is “fair” or “just” but there is often considerable
disagreement as to what is fair or just. This concept of “equity” is not the concept of
“equity” that we mean when we speak of what courts of equity did.
B. Equity as Net Worth
The word “equity” is also used to mean net worth. That is, the amount one retains
after creditors have been paid. For instance, shares in a corporation are often described
as “equity investments”. The shareholders are entitled to what is left over after the
creditors are paid off. Similarly, people speak of having “equity” in their house. For
example, a person might buy a $400,000 house by making a $100,000 downpayment and
borrowing the remaining $300,000 to pay the rest giving the lender a security interest (or
collateral) in the house by way of a... [continues]
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