Equity : Maxims of Equity

B.A. LL.B (Hon) Semester VII

Dr. Krishna Pal Malik Asst. Prof. in law, Institute of Law Nirma University, Ahmedabad

What is equity
In its primary sense equity is fairness, or that rule of conduct which in the opinion of person or class ought to be followed by all other persons. Osborne says it is primary fairness or natural justice. Sir Henry Maine said it is a fresh body of rules by the side of original law, founded on the distinct principles and claiming to supersede the law by virtue of a superior sanctity inherent in those principles.
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Equity..
The term equity is derived from the Roman term aequitas, which means equalization or leveling down any arbitrary preferences or denial of justice. It is a means to reach as near as possible to natural or ideal justice, but one cannot forget that equity is not natural justice. The equity means to do unto all men as we would they should do unto us. Equity is not part of the law, but a moral virtue, which qualifies, moderates and reforms the rigour, hardness and edge of the law, and is a universal truth; it does also assist the law where it is defective and week in the constitution and defends the law from crafty evasions, delusions and new subtleties, invented and contrived to evade and delude the common law, whereby such, have undoubted right, are made remediless. [Sir Nathan Wright in
Dudley v. Dudley, (1705) Prec Ch. 241]

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Equity.
In progressing societies social necessities and social opinions are always more or less in advance of law. The gulf that is created between the social opinions and the existing law is bridged by three instrumentalities, namely, (i) Legal Fictions, (ii) Equity and (ii) Legislation. When law become fixed, legal fiction liberalized it, when legal fictions also becomes outdated, equity softens the rigorous of law, till finally a point is reached when expansion of equity ceases.

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Definition of equity
Equity is a necessary element supplementary to the imperfect generalization of legal rules Plato The equitable is just and better than one kind of justice not better the absolute justice, but better than the error that arises from the absoluteness of the statements ; it is a correction of legal justice Aristotle It is the soul and sprit of all law. Positive law construed and natural law is made by it. In this equity is synonymous with justice, in that it is the true and sound interpretation of the rule. Blackstone Equity is a portion of natural justice which along with of a nature suitable for judicial enforcement, was for historical reasons not enforced by the common law courts, an omission which was supplied by the court of chancery. Snell
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Maxims of equity
Courts of Equity were created to hear and determine disputes in which the Courts of Law could not grant the requested relief. The King's chancellor, who "held the king's conscience", heard the complaints for equitable relief. Over the centuries, a body of law or jurisprudence developed which was time and again phrased in the form of maxims, some are commonly known among laymen. The maxims of equity evolved, in Latin and eventually translated into English, as the principles applied by courts of equity in deciding cases before them. Some of the maxims of equity are as follws KPM-Equity 6

Equity regards as done that which ought to be done Equity will not suffer a wrong to be without a remedy Equity delights in equality One who seeks equity must do equity Equity aids the vigilant, not those who slumber on their rights Equity imputes an intent to fulfill an obligation Equity acts in personam Equity abhors a forfeiture Equity does not require an idle gesture One who comes into equity must come with clean hands Equity will not permit a party to profit by his own wrong Equity delights to do justice and not by halves Equity will take jurisdiction to avoid a multiplicity of suits Equity follows the law Equity will not aid a volunteer Between equal equities the law will prevail Between equal equities the first in order of time shall prevail Equity will not complete an imperfect gift Equity will not allow a statute to be used as a cloak for fraud Equity will not allow a trust toKPM-Equity fail for want of a trustee

Equity regarding what ought to be done :

This maxim means that when individuals are required, by their agreements or by law to have done some act of legal significance, Equity will regard it as having been done as it ought to have, even before it has actually happened. This makes possible the legal phenomenon of equitable conversion. The consequences of this maxim, and of equitable conversion, are significant in their bearing on the risk of loss in transactions. When parties enter a contract for a sale of property, the buyer is deemed to have obtained an equitable right that becomes a legal right only after the deal is completed. Example : Thus, in one case, premiums on a life policy were overdue. The insurer's letter to the policyholder warning him of this fact was never received by the policyholder, who died shortly after the policy consequently lapsed. It was clear that if the notice had been received by the policyholder, he or his wife would have taken steps
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Equity will not suffer a wrong to be without a remedy

When seeking an equitable relief, the one that has been wronged has the stronger hand. The stronger hand is the one that has the capacity to ask for a legal remedy (judicial relief). In equity, this form of remedy is usually one of specific performance or an injunction (injunctive relief). These are superior remedies to those administered at common law such as damages. The Latin legal maxim is ubi jus ibi remedium ("where there is a right, there must be a remedy"). The maxim is necessarily subordinate to positive principles and cannot be applied either to subvert established rules of law or to give the courts a jurisdiction hitherto unknown, and it is only in a general not in a literal sense that maxim has force. Case law dealing with this maxim is include Ashby v. White and Bivens v. Six Unknown Named Agents, 403 US 388 (1971).
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 Equity delights in equality : Where two persons have an equal right, the property will be divided equally. Thus Equity will presume joint owners to be tenants in common unless the parties have expressly agreed otherwise. Equity also favours partition, if requested, of jointly-held property. One who seeks equity must do equity :To receive equitable relief, the party must be willing to complete all of their own obligations as well. The applicant to a court of equity is as subject to the power of that court as the defendant. This may also overlap with the clean hands maxim.
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Equity aids the vigilant, not those who slumber on their rights
Equity aids the vigilant, not those who sleep on their rights (Vigilantibus non dormientibus aequitas subvenit). According to this maxim, once the party knows they have been wronged, they must act relatively swiftly to preserve their rights. Otherwise, they are guilty of laches. Laches is a defense to an action in equity. This maxim is often displaced by statutory limitations, but even where a limitation period has not yet run, equity may apply the doctrine of "laches," an equitable term used to describe delay sufficient to defeat an equitable claim. In Chief Young Dede v. African Association Ltd. the equitable rule of laches and acquiescence was introduced.

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Equity imputes an intent to fulfill an obligation

Generally speaking, near performance of a general obligation will be treated as sufficient unless the law requires perfect performance, such as in the exercise of an option. Text writers give an example of a debtor leaving a legacy to his creditor equal or greater to his obligation. Equity regards such a gift as performance of the obligation so the creditor cannot claim both the legacy and payment of the debt.

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Equity acts in personam :

In England, there was a distinction in the type of adjudicatory jurisdiction of the courts and the chancery. Courts of law had jurisdiction over property, and their coercive power arose out of their ability to adjust ownership rights. Courts of equity had power over individuals. Their coercive power was the ability, on authority of the crown, to hold a violator in contempt, and take away his or her freedom (or money) until he obeyed. This distinction helped preserve a separation of powers between the two courts. Nevertheless, courts of equity also developed a doctrine that an applicant must assert a "property interest." This was a limitiation on their own power to issue relief. It does not mean that the courts of equity had taken jurisdiction over property. Rather, it required that the applicant be asserting a right of some significance, as opposed to emotional and dignitary interests.
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Equity abhors a forfeiture

Today, a mortgagor refers to his interest in the property as his "equity." The origin of the concept, however, was actually a mirror-image of the current practice. At common law, a mortgage was a conveyance of the property, with a condition subsequent, that if the grantor paid the secured indebteness to the grantee on or before a date certain (the "law" day) then the conveyance would be void, otherwise to remain in full force and effect. As was inevitable, debtors would be unable to pay on the law day, and if they tendered the debt after the time had passed, the creditor owed no duty to give the land back. So then the debtor would run to the court of equity, plead that there was an unconscionable forfeiture about to occur, and beg the court to grant an equitable decree requiring the lender to surrender the property upon payment of the secured debt with interest to date. And the equity courts granted these petitions quite regularly and often without regard for the amount of time that had lapsed since the law day had passed.
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Equity does not require an idle gesture Equity will not compel a court to do a vain and useless thing. It would be an idle gesture for the court to grant reformation of a contract and then to deny to the prevailing party an opportunity to perform it as modified.

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One who comes into equity must come with clean hands
It is often stated that one who comes into equity must come with clean hands (or alternately, equity will not permit a party to profit by his own wrong). In other words, if you ask for help about the actions of someone else but have acted wrongly, then you do not have clean hands and you may not receive the help you seek. For example, if you desire your tenant to vacate, you must have not violated the tenant's rights. For instance, in Riggs v. Palmer (1889) 115 N.Y. 506, a man who had killed his grandfather to receive his inheritance more quickly (and for fear that his grandfather may change his will) lost all right(s) to the inheritance.
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 Equity delights to do justice and not by halves : When a court of equity is presented with a good claim to equitable relief, and it is clear that the plaintiff also sustained monetary damages, the court of equity has jurisdiction to render legal relief, e.g., monetary damages. Hence equity does not stop at granting equitable relief, but goes on to render a full and complete collection of remedies. Equity will take jurisdiction to avoid a multiplicity of suits : Thus, "where a court of equity has all the parties before it, it will adjudicate upon all of the rights of the parties connected with the subject matter of the action, so as to avoid a multiplicity of suits." Burnworth v. Hughes, 670 P.2d 917, 922 (Kan. 1983). This is the basis for the procedures of interpleaded and the more rarely used bill of peace.
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Equity follows the law

Equity will not allow a remedy that is contrary to law. The court of Chancery never claimed to override the courts of common law. In Story on Equity third English edition 1920 page 34,"where a rule, either of the common or the statute law is direct, and governs the case with all its circumstances, or the particular point, a court of equity is a much bound by it as a court of law, and can as little justify a departure from it." it is only when there is some important circumstance disregarded by the common law rules that equity interferes. As per Cardozo in Graf v. Hope Building Corporation, 254 N.Y 1 at 9 (1930), "Equity works as a supplement for law and does not supersede the prevailing law."
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Equity will not aid a volunteer :

Equity cannot be used to take back a benefit that was voluntarily but mistakenly conferred without consultation of the receiver. This maxim protects the doctrine of choice. This maxim is very important in restitution. Restitution developed as a series of writs called special assumpsit, which were later additions in the courts of law, and were more flexible tools of recovery, based on Equity. Restitution could provide means of recovery when people bestowed benefits on one another (such as giving money or providing services) according to contracts that would have been legally unenforceable.
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Between equal equities the law will prevail

Equity will provide no specific remedies where the parties are equal, or where neither has been wronged. The significance of this maxim is that applicants to the chancellors often did so because of the formal pleading of the law courts, and the lack of flexibility they offered to litigants. Law courts and legislature, as lawmakers, through the limits of the substantive law they had created, thus inculcated a certain status quo that affected private conduct, and private ordering of disputes. Equity, in theory, had the power to alter that status quo, ignoring the limits of legal relief, or legal defences. But, they were hesitant to do so. This maxim reflects the hesitancy to upset the legal status quo. If in such a case, the law created no cause of action, equity would provide no relief; if the law did provide relief, then the applicant would be obligated to bring a legal, rather than equitable action. This maxim overlaps with the previouslymentioned "equity follows the law."
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Between equal equities the first in order of time shall prevail

This maxim operates where there are two or more competing interests, one legal and the other equitable. Where the claims of both parties are fair and meritorious, precedence will be given to the legal interest. This maxim was developed in connection with interests in lands. When a purchaser acquires property bona fide without notice of a defect in the vendors title, the equities are equal and the legal estate will prevail. If the purchaser takes title with notice of the defect, the earlier title, if valid, will prevail. The force of this maxim has largely been displaced by legislated systems of land title registration.
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 Equity will not complete an imperfect gift : If a donor has made an imperfect gift, ie lacking the formalities required at common law, equity will not assist the intended donee. A subset of equity will not assist a volunteer. Note the exception in Strong v. Bird (1874) LR 18 Eq 315. If the donor appoints the intended donee as executor of his/her will, and the donor subsequently dies, equity will perfect the imperfect gift. Equity will not allow a statute to be used as a cloak for fraud : Equity prevents a party from relying upon an absence of a statutory formality if to do so would be unconscionable and unfair. This can occur in secret trusts and also constructive trusts and so on. Equity will not allow a trust to fail for want of a trustee : If there is no trustee, whoever has title to the trust property will be considered the trustee. Otherwise, a court may appoint a trustee, or in Ireland the trustee may be any administrator of a charity to which the trust is related.

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Principle of Equity in India

It was maintained even under smiritis that ones own satisfaction to the source of dharma. It was also ordained that any decision should be arrived based upon Yukti or Nayaya. These aspects under ancient law amply cover the modern concept of justice equity and good conscience. In absence of any specific law, the principle of justice, equity and good conscience shall apply. In the smriti or in the event of a conflict between the smrities, what would be most fair and equitable in the opinion of judge would be done in particular case. Narad, Brispati and now Supreme Court supported this source of law. Where the law analogically deduced is in adaptable to the present needs of society or where it is such that its rigid application would result in hardship to the public then rule of equity should become applicable. Abu Hanifa, the great jurist (Mughal period) called this Istihasan (literally translated as juristic preference).

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 According to Maine the most useful of instruments in the maturity of jurisprudence is the most dangerous of shares in its infinity. The Allahabad Court held that where there is a conflict of opinion, and there is no specific rule to guide the court. The court follows that opinion which is more in accordance with justice, equity and good conscience. [Aziz Bano v. Muhammad, (1925) 47 All 823] Again, Allahabad High Court held that when there is no clear authority available on a point or where the authorities available are of conflicting nature, it is open to the jurists even according to a school of Muslim law to resort to principle of equity for the purpose of deciding a particular question at issue before them, particularly it would be open to the courts to draw upon this source where rigidity or narrowness of rules suggested need for adjustment in the light of changes brought about by the altered conditions of life and society in a particular age. [Hazi Mohammad v. Abdul Ghafar, AIR 1955 All 688]

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Judicial Interpretation
The Honble Supreme Court while referring the decision of Privy Council held, in absence of any clear shastric text, the courts have the authority to decide cases on the principles of justice, equity and good conscience. On this principle the Privy Council also had decided a case that murderer was disqualified from succeeding in the property of the victim.[Gurunath v. Kamlabai, AIR 1955 SC 206] The Honble Supreme Court held that, the principle of governance has to be tested on touchstone of jus-tice, equity and fair play and if decision is not based on jus-tice, equity and fair play and has taken into consideration other matters, though on face of it decision may look legitimate but, as a matter of fact, reasons are not based on values but to achieve popular accolade, that decision cannot be allowed to operate. [Onkar Lal Bajaj v. Union of India, AIR 2003 SC 2562]

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SC opinion on equity
Three judges bench of Supreme Court has observed that The English doctrine of conversion of reality into personality cannot be bodily lifted from its native English soil and transplanted in statute-bound Indian Law. Many of the principles of English Equity have taken statutory form in India and have been incorporated in occasional provisions of various Indian Statutes such as the Indian Trusts Act, the specific Relief Act, Transfer of Property Act, etc., and where a question of interpretation of such Equity based statutory provisions arise, the Court will be well justified in seeking aid from the Equity source. Bai Dosabai v. Mathurdas Govinddas, AIR 1980 SC 1334 : 1980 (3) SCC 545
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SC
The concept and creation of quality of ownership, legal and equitable, on the execution of an agreement to convey immovable property, as understood in England is alien to Indian law which recognises one owner, i.e., the legal owner. The ultimate paragraph of Section 54 of Transfer of Property Act expressly enunciates that a contract for the sale of immovable property does not, of itself create any interest in or charge on such property. But the ultimate and penultimate paragraphs of section 40 of the Transfer of Property Act make it clear that such a contract creates an obligation annexed to the ownership of immovable property, not amounting to an interest in the property, but which obligation may be enforced against a transferee with notice of the contract or a gratuitous transferee of the property. [Bai Dosabai v. Mathurdas Govinddas, AIR 1980 SC 1334 : 1980 (3) SCC 545]
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SC.
Thus the Equitable ownership in property recognised by Equity in England in translated into Indian law as an obligation annexed to the ownership of property, not amounting to an interest in the property, but an obligation which may be enforced against a transferee with notice or a gratuitous transferee. Bai Dosabai v. Mathurdas Govinddas, AIR 1980 SC 1334 : 1980 (3) SCC 545

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