1. 1 Historical Sources of Law Equity

2. 2 ‘Equity’ has a number of meanings. For us it is a historical source that still has relevance today. Equitable principles are based on fairness and supplement the strict rules of the common law. Equity originally developed because of problems in the common law.

3. 3 Problems in the common law 1. At the end of the 13 th century the courts of law gradually froze the types of claims they would hear, and the procedure that governed the hearing of those claims. The range of legal claims recognised by the courts was narrow and procedures were very technical.

4. 4 2. If the plaintiff, (the person making the claim, today known as a ‘claimant’), made an error in the writ, (the document containing the claim), the judges threw the case out of court – they refused to hear it.

5. 5 3. The only remedy available from the common law courts was ‘damages’ – a sum of money paid by the defendant to the plaintiff (now claimant) as compensation for loss or harm inflicted.

6. 6 4. Cases were often decided by a jury and jurors were often bribed. The combined result of these problems with the common law system was that many plaintiffs with a good case were denied justice.

7. 7 Disappointed plaintiffs had the right to petition the king, who held residual judicial power. Petitioners were said to throw themselves upon the king’s mercy or conscience. Eventually, the king began regularly to delegate, to the Chancellor, the function of resolving such petitions.

8. 8 The chancellor was an important member of the King’s Council and usually a clergyman. Thus the chancellor was literally the keeper of the king’s conscience. He made decisions in cases according to his ideas of natural justice and fairness, and what seemed to be ‘right’ in the particular case, rather than according to established legal rules (precedents).

9. 9 Chancellors were prepared to look beyond legal documents (considered legally binding by the common law courts) and to take account of the intention of the parties. Chancellors created new procedures to try to ensure fairness in their decisions. Soon litigants began to petition the chancellor himself, and by 1474, the Chancellor had begun to make decisions on his own authority, rather than as a substitute for the king. This was the beginning of the court of Chancery.

10. 10 Litigants appeared before the chancellor, who would question them, and then deliver a verdict based on his own moral view of the question. The court could insist the relevant documents be disclosed, as well as question the parties in person, unlike the common law courts which did not admit oral evidence until the sixteenth century.

11. 11 Because the Court of Chancery followed no binding rules, relying entirely on the chancellor’s view of right and wrong, it could enforce rights not recognised by the common law. The common law courts, restricted by precedent, were failing to adapt to new circumstances.

12. 12 The Court of Chancery could provide whatever remedy best suited the case, and created new remedies such as specific performance and the injunction. Chancery also created the ‘use’ (today known as the ‘trust’), and the ‘mortgage.’ The type of justice dispensed by the Court of Chancery came to be known as equity.

13. 13 The Court of Chancery became popular. This caused some resentment among common lawyers, who argued that the quality of Chancery decisions varied with the length of the chancellor’s foot – meaning that it depended on the quality of the individual chancellor. Because precedents were not followed, however, with each case being considered purely on its merits, justice could appear arbitrary, and it was impossible to predict what a decision might be.

14. 14 The flexibility of the Court of Chancery was seen as the great advantage of equity. Where rules are laid down they will always create injustice in some cases. It was such cases where equity helped by applying the ideas of common sense and fairness. The criticism of this, however, was that it was highly subjective in its application.

15. 15 As equity developed, it began to rival and conflict with the common law. Where the common law gave a litigant a right which, in the circumstances, it would have been unjust to exercise, the Court of Chancery was able to issue a common injunction that prevented the exercise of that common law right. Litigants would go ‘jurisdiction shopping’ and would often seek an equitable injunction prohibiting the enforcement of a common law court order.

16. 16 The penalty for disobeying an equitable ‘common injunction’ and instead enforcing a common law judgement was imprisonment. The Chief Justice of the King’s Bench (common law court) began the practice of issuing writs of habeas corpus, which required the release of people imprisoned for contempt of Chancery orders.

17. 17 Things came to a head in the Earl of Oxford’s Case (1615), where a judgement of Coke CJ was allegedly obtained by fraud. Lord Chancellor Ellesmere issued a common injunction prohibiting the enforcement of the common law order. The two courts became locked in a stalemate, and the matter was eventually referred to the Attorney-General, Sir Francis Bacon, by King James I.

18. 18 Bacon upheld the use of the common injunction. Further, he concluded that in future, in any clash between equity and common law, equity should prevail (win). This was a vital decision. Without it equity would have been worthless. It would not have been able to fulfil its role of filling in the gaps in the common law unless it was dominant.

19. 19 Over the centuries chancellors came to be appointed from the ranks of common lawyers rather than clerics. Not surprisingly this meant that equity too came to be ruled by precedent and standard principles. By the nineteenth century, equity had a developed case law and recognisable principles, and was as rigid as the common law.

20. 20 The Judicature Acts Once equity became a body of law, rather than an arbitrary exercise of conscience, it had no need of its own court. The Judicature Acts of 1873-75 created the forerunner of the court system we have today, and provided that common law and equity could both be administered by all courts.

21. 21 There were no longer different procedures for seeking equitable and common law remedies. The Court of Chancery, however, remained as a division of the High Court. Like all other courts it can apply both common law and equity.