Work sheet 3

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1. Discretionary in nature

◦ Equity not a right

◦ Must be an infringement of right

◦ Must show that equitable relief ought to be granted within the following principles:

Enforcement difficulties

Supervision difficulties

Futility of decision (equity does not act in vain)

Unavailability of evidence

Hardship to the defendant - may not give an injunction it will cause this

Non disclosure of material facts

Conduct of applicant – (clean hands doctrine)

Lack of mutuality (Re Hawthorne)

2) Actions in Personam and its implication

◦ Equity acts in personam – against the person himself (rem is against the thing)

◦ Failure to comply means contempt and imprisonment2

◦ Power of CC, was there pride but terror to Cl court

◦ Equity does not vitiate CL judgements (Earl of Oxford – did not interfere with CL judgement)

◦ It mitigates the harshness of the CL

◦ Effect of notice

Legal right – action in rem good against the world and the BP for value without notice

Equitable interest can assert right against everyone except the BP

Equity acts on the conscience

Right of BP is to take legal estate free from equitable rights.

◦ Tracing:

Not a remedy per se, but available in CL/Equity

Tool to track down assets or there value and return it to the proper owner (its about recovering assets CL deems lost for good)

Property may have been acquired by mistake, breach of fiduciary duty

CL rule: once the property cannot be identified, it is not recoverable eg unless money is placed in a special place, once it mixes in with the others according to CL it not traceable. 3

(CL is rigid, equity came to mitigate this) (Re Diplock: CL operated from materialistic position. Could only appreciate physical identity of a thing...and money was not identifiable if it mixed in with other money: Limitation: because CL does not recognize equitable claims to any type of property)

TUTORIAL 13.2.13

Equity:

Does not have the same CL limitation

Tracing not a remedy but a tool that assist equity

Equity adopts a metaphysical approach (Re Diplock – invalid trust, no fiduciary relationship)

Requirement/limitations: must have fiduciary relationship, and show equitable ownership (Re Diplock)

Allows for transmission of legal claims from original assets to either 1) proceeds of sale of asset or 2) new substituted asset.

Claim in equity is a claim in personam

Impact of Tracing:

Taken from the rule in Hallet’s case:

a) trust funds retained or cleanly substituted by different property- no mixture

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b)tracing into a mixed bank account containing both trustee's and beneficiary's money. Pari passu rule: they can claim share equal to there contribution.

Difficulty: where mixed fund is used to purchase property,

Then Subject to Clayton’s rule: withdrawals from the account are presumed be made in the same order they were paid in.

C) tracing into a into mixed bank account containing the money of 2 different trusts/ one trust and an innocent volunteer. (not confined to the original mixer but the innocent volunteer as well)

◦ Limitations of tracing:

Where there was a fiduciary relationship, claimant takes priority (same thing for volunteer)

Volunteer taking a gift without notice of the mixing from the agent

Volunteer who mixes his money with the claimant can claim back the money he has contributed to the mix fund (pari passu)

◦ Limitation on equitable tracing

1) Recover of EI that has fallen into the hands of a BP for value without notice, no recovery

2) Disipitated funds, equity becomes as helpless as the CL (Re Diplock-invalid trust fund)

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3) Changing position:

is a defence;

the volunteer defendant returns the property back (or takes steps which he would not have taken otherwise), which changes his personal circumstances unjustly;

the act outweighs the injustice to the claimant (National Westminster Bank v Somma International

4) Estoppel by representation

Similar to changing position

Defendant shows that the claimant made some false representations, which he acted upon to his detriment

Originally if successful, the defendant would receive all the property, that was changed where he can only now receive property equalling the loss he suffered (National Westminster Bank v Somma International)

◦ Extra jurisdictional reach

Equity acts in personam, so that the location of the property is not important because the jurisdiction if over the person (EllermanLines v Read – Court does not interfere with the jurisdiction of other court but makes orders over the person).

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◦ Useful where property is located abroad◦ Not dependent on the law of locus(uses mareva injunction), but

rather conduct of the party by virtue of contract or fraud◦ Can order SP/injunction in respect of land outside the jurisdiction◦ Orders are enforceable only if person is within the jurisdiction or

before the court physically (ellerman v Read) 3: Statutory periods of limitation and lapse of time◦ Equitable remedies is not subject to period of limitations (fraud,

breach of trust, setting aside transaction.◦ ER subject to doctrine of laches◦ Doctrine of laches:

Means “out of time” Based on equitable maxim “equity aid the vigilant and not those

who slumber on their rights.” Application of the doctrine (Lindsay petroleum v Hurd)

Where the claimant delayed to bring action that it is impossible to have a fair trial (because critical evidence may be lost or destroyed)

Where the defendant acts believing that the claim will not be pursued

◦ Limitation different from laches. One set by law the other is caused by virtue of neglect

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Maxims of Equity

◦ Defining maxims

Treat them as pinch of salt, do not interpret literally

Judicial shorthand

◦ Maxim 1: He who comes to equity must come with clean hands (Coatsworth v Johnson – c was in breach of several covenants on a least with the LL, next three bullet)

Its not about moral character

Improper conduct connotes illegal and not immoral

Conduct must be related to the equity sued for

Limits of the clean hands doctrine:

Relief sought must have some relation with the blameworthy conduct (Grobbelar v News Group newspaper – sued for libel slander however the doctrine was not applicable because the wrong doing was bribe not fixing of matches).

General or total conduct of C should not be considered

Doctrine not applicable if it will cause hardship on the defendant

TUTORIAL 20.2.13 p57 8

◦ Maxim 2 (17/WS, 72/B): He who seeks equity must do equity:

P must be worthy and act in an equitable manner

P must abide by the principle of mutuality (in restitution, defence of SP

P must still establish prima facie equitable right/interest

◦ Maxim 3 (18/WS, 72B): Equity will not suffer a wrong without a remedy:

Worthy claimants will recover and not be prevented from the technicality of the CL.

Two examples of this are

1) Rectification: Court adjusting agreement to reflect common intention of the parties; Not automatic and is evidence based (Josecelyne v Nissen– agreement with father and daughter to sell business and daughter manage expenses of father) 9

2) contracts for sale of land and part performance: about fairness, must provide evidence.

◦ Maxim 4: Equity follows the law: (74B)

Follows close with equity acts in personam, and comes to fulfil the law

Traditional role of equity to mitigate the rigours of the CL, not to overrule

Acts in personam and comes to fulfill the law

EG, trust, tracing, extra jurisdictional reach (Earl of Oxford, Re Diplock)

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