Equity Winter Session 2009 Alysia Debowski

Subject outline Course description Teaching arrangements Assessment  Examination  Assignment Weekend schools Texts and resources

Today’s class What is equity? History of equity The relationship between Law and Equity The maxims of Equity The nature of equitable interests Equitable interests and Torrens title

What is equity? “the body of principles developed by the Court of Chancery prior to 1873 as since modified by courts administering that jurisdiction”

History of equity Development of the common law Development of the “English” jurisdiction of the Chancellor Recognition of feoffments to uses  Fiscal consequences Doctor and Student dialogue of Christopher St Germain The Earl of Oxford’s Case in Chancery (1615) Mich 13 Jac 1; 21 ER 485 Cook v Fountain (1672) 3 Swanst 600; 26 ER 984

The relationship between Law and Equity Common law courts would not recognise equitable rights, titles and interests  Castlereagh Motels v Davies-Roe (1967) 67 SR (NSW) 279  Robertson v Wait (1853) 8 Exch 299; 155 ER 1360 Equity had no power to decide disputed legal rights and titles  Equity Act 1880, s 4 (Equity Act 1901 s 8) Equity had no power to award damages  Goldsborough Mort v Quinn (1910) 11 CLR 674  King v Poggioli (1923) 32 CLR 222

The relationship between Law and Equity (cont.) The common law courts lacked power to give interlocutory relief The courts of common law had no power to award specific performance, or injunctions The common law courts lacked power to make declarations  Rooke v Lord Kensington (1856) 2 K & J 753; 69 ER 986 No power existed to transfer cases from one jurisdiction to the other  Mines Royal Societies v Magnay (1854) 10 Ex 489; 156 ER 531  Carter v Smith (1952) 52 SR (NSW) 290

The judicature system Judicature Act (Imp) 1873 s 25(11) Law Reform (Law and Equity) Act 1972 (NSW) Key features Fusion fallacies  Seager v Copydex [1967] 2 All ER 415; [1967] RPC 349  Re Pryce (1917] 1 Ch 234  Walsh v Lonsdale (1882) 21 Ch D 9  Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17  Cricklewood Ppty & Invest. Trust v Leighton [1945] AC 221, at 240  Chan v Cresdon (1989) 89 ALR 522  Harris v Digital Pulse Pty Ltd [2003] NSWCA 10

Walsh v Lonsdale (1882) 21 Ch D 9  'He is not, since the Judicature Act, a tenant from year to year, he holds under the agreement and every branch of the court must give him the same rights.... There are not two estates as there were formerly, one estate at common law... and an estate in equity under the agreement. There is only one court and equity rules prevail in it'.  How does this reflect the fusion fallacy?  Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17

Harris v Digital Pulse Pty Ltd [2003] NSWCA 10 per Mason P …this fusion fallacy concept is itself fallacious and historically unsound. … No one to my knowledge advocates incorporation or borrowing by direct force of the enactment of the Judicature Act 1873 (UK) or its Australian counterparts. … Both "Equity" and "Common Law" had adequate powers to adopt and adapt concepts from each other's system well before the passing of the Judicature Act, and nothing in that legislation limits such powers. They are of the very essence of judicial method which was and is part of the armoury of every judge in every "common law" jurisdiction. … Neither system consistently and automatically ignored the other before the Judicature Act; and there is even less justification for suggesting otherwise since the fusion of the administration of law and equity. Do you agree?

The maxims of Equity Equity will not suffer a wrong without a remedy Equity follows the law  Delehunt v Carmody (1986) 161 CLR 464  Tasita Pty Ltd v Papua New Guinea (1991) 34 NSWLR 691 When the equities are equal, the first in time prevails He who seeks equity must do equity  Ryan v Dries [2002] NSWCA 3  Maguire v Makaronis (1997) 188 CLR 449 He who comes to equity must do so with clean hands  Kettles & Gas Appliances v Anthony Horderns (1934) 35 SR (NSW) 108 Equity assists the diligent and not the tardy Equity is equality

The maxims of Equity (cont.) Equity looks to the intent rather than the form Equity regards as done that which ought to be done Equity imputes an intention to fulfil an obligation Equity will not assist a volunteer  Corin v Patton (1990) 169 CLR 540 at 557 Equity will not perfect an imperfect gift Equity acts in personam  Penn v Lord Baltimore (1750) 1 Ves Sen 444; 27 ER 1132  Potter v Broken Hill Pty Ltd (1905) 3 CLR 479  Baker v Archer-Shee [1927] AC 844  Commissioner Stamp Duties v Livingston (1965) AC 694; (1960) 107 CLR 411  N Z Insurance Co Ltd v Commissioner Probate Duties (Vic) [1973] VR 659

The nature of equitable interests Proprietary – rights that can be exercised directly against property Equities – right to obtain certain remedies Mere equity – right to apply to the court for a remedy Commissioner of Stamp Duties (Qld) v Livingston (1965) AC 694; (1960) 107 CLR 411 Re Leigh’s Will Trusts [1970] Ch 277 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; 96 ALR 327 Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Silovi v Barbaro (1988) 13 NSWLR 466 Goldsborough Mort v Quinn (1910) 11 CLR 674 Double Bay Newspapers Pty Ltd v A W Holdings Pty Ltd (1996) 42 NSWLR 409

Commissioner of Stamp Duties (Qld) v Livingston (1965) AC 694; (1960) 107 CLR 411 High Court:  Dixon CJ – widow had beneficial interest in Queensland property; beneficial interest must be somewhere while estate is administered  Windeyer J - widow had interest in Queensland property  Fullagar J (Menzies J agreeing) – widow had equitable interest in assets which gave right to enforce proper administration; location of the right is where it would be exercised ie NSW  Kitto J – widow had interest in assets, but not any particular assets; that interest had the most substantial connection with the forum for enforcing due administration of the estate ie NSW Privy Council:  Widow had chose in action to ensure proper administration of the estate; location was the proper forum for enforcing those rights ie NSW – where the executors were Which judgement do you prefer? Perpetual Trustee v Commissioner Stamp Duties (Shallard’s Case) [1977] 2 NSWLR 472

Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Mortgagee exercised power of sale Sold property to wholly owned subsidiary – later held to be fraudulent Subsidiary granted floating charge over hotel to third party without notice Subsidiary defaulted under charge – the charge crystallised and a receiver was appointed Mortgagor sought to have the sale set aside Whose interest should take priority?

The nature of equitable interests (cont.) The “Deserted Wife's Equity”  National Provincial Bank Ltd v Ainsworth [1956] AC 1175 Confidential Information  Wheatley v Bell [1982] 2 NSWLR 544 Equitable Security Interests  Swiss Bank Corp v Lloyds Bank Ltd [1982] AC 584

Equitable interests and Torrens title Barry v Heider (1914) 19 CLR 197 Breskvar v Wall (1971) 126 CLR 376 Bahr v Nicolay (No 2) (1988) 164 CLR 604 Bogdanovic v Koteff (1988) 12 NSWLR 472 Grgic v ANZ Banking Group Ltd (1994) 33 NSWLR 202 Mercantile Mutual Life Assurance v Gosper (1991) 25 NSWLR 32 Heid v Reliance Finance Corp Pty Ltd (1983) 154 CLR 326 Davis v Williams [2003] NSWCA 371

Looking back What are three key things you will take away from today’s lecture? How has your understanding of equity changed over the last few hours?

Next class Assignments of Property in Equity Equity & Trusts, Chapter 3