EQUITY & TRUST 1

MAXIMS OF EQUITY

1.0 Introduction
Maxims of equity are general principles which guide the court in the exercise of its jurisdiction. These maxims :
Are not positive laws of equity to be applied literally,

Do not cover comprehensively the whole field of equity, but

Each maxim embodies some peculiar function of equity.

The maxims often overlap and are inter-related.

1.1 Equity will not suffer a wrong to be without a remedy

This maxim was the basis for the development of the courts equity jurisdiction. No wrong should be allowed to
go unredressed if it is capable of being remedied by a court of justice. A plaintiff can pray for the courts good
conscience by showing how unconscionable it would be if the plaintiff is not given the appropriate remedy. The
wrong here does not mean moral wrong, but a wrong capable of judicial enforcement, but was not enforced by a
court of law. .

In Ashby v. White, wherein a qualified voter was not allowed to vote and who therefore sued the returning
officer, it was held that if the law gives a man a right, he must have a means to maintain it, and a remedy, if he is
injured in the enjoyment of it.
In cases where some document was with the defendant and it was necessary for the plaintiff to obtain its
discovery or production, a recourse to the Chancery Courts had to be made for the Common Law becoming
wrongs without remedies.

1.2 Equity follows the law

Equity follows the law unless there are circumstances disregarded by the common law that warrants equitys
intervention. The court of equity will not over ride the statute.
Where a rule of either of the common or statute law, is direct, and governs the case with all its
circumstances on the particular point, a court of equity is as much bound by it as a court of law, and
can as little justify a departure from it.

At common law, where a person died intestate who owned an estate in fee-simple, leaving sons and daughters,
the eldest son was entitled to the whole of the land to the exclusion of his younger brothers and sisters. This was
unfair, yet no relief was granted by Equity Courts. But in this case it was held that if the son had induced his
father not to make a will by agreeing to divide the estate with his brothers and sisters, equity would have
interfered and compelled him to carry out hi promise, because it would have been against conscience to allow
the son to keep the benefit of a legal estate which he obtained by reason of his promise. This decision was held
in Stickland v. Aldridge. Equity follows the law and even if by analogy law can be followed, it should be
followed.
1.3 He who seeks equity must do equity
To obtain equitable relief, the claimant must be prepared to do equity or to fulfill his obligation towards the
defendant.

Lodge v National Union Investment Co, the facts were as follows. One B borrowed money from M by
mortgaging certain securities to him. M was a unregistered money-lender. Under the Money-lenders Act, 1900,
the contract was illegal and therefore void. B sued M for return of the securities. The court refused to make an
order except upon the terms that B should repay the money which had been advanced to him.

Chillingworth v Chamber,(In a breach of trust by joint trustees, a beneficiary who is also a trustee is required to
pay indemnity to a defendant, to the extent of his share in the trust property.

1.4 He who seeks equity must come with clean hands

This maxim looks to the past conduct of the plaintiff. Not only must the claimant be prepared to do what is right
and fair, but he must also show that his past record in the transaction is clean. Access to the court will be denied
if the plaintiffs actions are fraudulent or unconscionable.

In Highwaymen case, two robbers were partners in their own way. Due to a disagreement in shares one of them
filed a bill against another for accounts of the profits of robbery. Courts of equity do grant relief in case of
partnership but here was a case where the cause of action arose from an illegal occupation. So, the court refused
to help them. The working of this maxim could be seen while giving the relief of specific performance,
injunction, rescission or cancellation.

The clean hands requirement must have a direct relationship with the transaction at hand.
Dering v Earl of Winchelsea, A man must come into a court of equity with clean hands; but when this is said, it
does not mean a genaral depravity: it must have an immediate and necessary relation to the equity sued for, it
must be a depravity in a legal as well as a moral sense.

1.5 Where there is equity, the law shall prevail, Where the equities are equal, the first in
time shall prevail
Where the rights of both parties are the same, the party with the right in law has priority. Where equities are
equal,in the absence of any other factors that determines the rights between the parties, the first in time has
priority.

See: S 206 (1) and (3) the National Land Code 1965
In a claim for land where equities are equal, the court will give priority to the party holding the
registered title.
Case: Langan & Others v Lee Cheng Keat (1886) 4 Ky 154
\
Vallipuram Silvaguru v Palaniappa Chetty [1937] MLJ 59
 Quah Hong Lian Neo v Seow Teong Teck & Ors [1936] MLJ 203
United Malayan Banking Corporation Bhd v Goh Tuan Laye & Ors [1976] 1 MLJ 169
Abigail v Lapin (1934) 51 CLR 58

This maxim is only applicable where equities are equal. It cannot be used against a bona fide purchaser for value
without notice of a prior interest.

Zeno Ltd v Prefabricated Construction Company [1967] 2 MLJ 104

Goh Keng How v Raja Zainal Abidin [1995] 3 MLJ 6
Haroon bin Guriaman v Nik Mah bte Nik Mat & Anor [1951] MLJ 209
Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265

Kitto J held that the maxim que est prior tempore does not apply because it only applies where equities are equal
A bona fide purchaser for value without notice is a good defence..

1.6 Delay defeats equity

The modern application of this maxim is illustrated in the concept of laches and acquiescence. Equitable claims
can be limited by the Limitation Act 1953 directly or by analogy.

Smith v Clay (1767), A court of equity has always refused its aid to stale demands where a party has slept upon
his rights and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience,
good faith and reasonable diligence.

However, delay in itself does not restrict the right to claim where it is not related or relevant to the claim.

Lindsay Petroleum Company v Hurd (1874) LR 5 PC 221 (PC):

The doctrine of laches in the Courts of Equity is not an arbitrary or technical doctrine. Where it would be
practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be
regarded as waiver of it, or where by his conduct and neglect he has, though perhaps not waived that remedy,
yet put the other party in a situation in which it would not be reasonable to place him if the remedy were
afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case,
if an argument against relief, which otherwise would be just, is founded upon mere delay, the validity of the
defence must be tried upon principles substantially equitable. Two circumstances, always important in such
cases, are the length of the delay and the nature of the acts done during the interval, which might affect either
party and cause the balance of justice or injustice in taking the one course or the other, so far as it relates to the
remedy.
1.7 Equality is equity
In circumstances of conflicting claims, where there is not other basis of division, all who are entitled to the
property should the equal division. This maxim is the basis of presumption of tenancy in common and
partnership..

Tai Kwong Goldsmiths & Jewellers (under recievership) v Yap Kooi Hee & Ors, No provision in the
Partnership Act that provide for the order of priority of payment of debts and liability of a partnership. As such,
it should be divided equally. Section 46 (b) (i) and s 47 (1) Partnership Act 1960 refers.

Mac Donald v Mac Donald (equal division between the husband, wife and the mother in law who had
contributed to the purchase of home furnishings.)

1.8 Equity looks to the intent rather than the form

Generally equity does not look to the form but the substance. In certain circumstances equity will not allow a
transaction to be set aside on grounds of technicality.

Parkin v Thorold, Courts of Equity make a distinction in all cases between that which is matter of substance
and that which is a matter of form: and if it finds that by insisting on the form, the substance will be defeated, it
holds it inequitable to allow a person to insist on such form, and thereby defeat the substance.

Yong Nyee Fan v Kim Guan & Co, This maxim is the basis of the equitable doctrine that in construction of
wills or trusts, what is of utmost importance is the intention of the settler or the testator as expressed in the
will.

1.9 Equity imputes an intention to fulfil an obligation

Where a person has undertaken an obligation his later conduct will, if possible, be interpreted as fulfilment of
that obligation.

Sowden v. Sowden, a husband covenanted with the trustee of his marriage settlement to pay to them 50,000 to
be laid out by them in purchase of land in a particular area D. He, in fact, never paid the sum, but after marriage
purchased the land at D in his own name, for 50,000. He died and could not bring the land into settlement.
Equity courts construed that he purchased land to fulfill his obligation.

1.10 Equity looks on that as done which ought to be done

Where there is a specifically enforceable obligation equity regards the parties as already in the position which
they would be in after performance of the obligation. For instance a specifically enforceable contract for sale of
land transfer4s the equitable interest to the purchaser, the vendor holding the legal title on constructive trust until
completion.
If A makes T trustee leaving 50,000 Taka to purchase a land for the use of B. T does not purchase the land and
by the time, B dies leaving all immovable property to X and all movable property to Y. Now, who should get the
50,000 Taka? Equity in such cases would definitely regard the purchase of land which ought to have been made
as made. The money thus goes to X.

Lysaght v Edwards (1876), It appears to me that the effect of a contract for sale has been settled ... it is that the
moment you have a valid contrct for sale the vendor becomes in equity a trustee for the purchaser of the estate
sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase money, a
charge or lien on the estate for the security of that purchase money, and a right to retain possession of the estate
until the purchase money is paid, in the absence of express contract as to the time of delivering possession.

1.11 Equity will not perfect and imperfect gift / Equity will not assist a volunteer.
An undertaking to convey or to transfer something without consideration cannot be enforced because it is a
gratuitous. Unless there has been an outright transfer, the donee cannot enforce the promise. In there is an
agreement to create a trust, the trust property must be vested in the trustee for equity will not perfect an
imperfect gift.

Note:
This is subject to a number of exceptions which will be discussed through the cases under the chapter on
Incompletely Constituted Trusts (Part II, Ch 4). This will be discussed under cases like Milroy v Lord
(1862) 4 De GF & J 264, Inwards v Baker [1965] 2 QB 29, Cheng Hang Guan v Perumahan Farlim [1993] 3
MLJ 352.

1.12 Equity Acts in Personam

This maxims shows the difference between the procedure at equity and common law. The enforcement at
common law is through the writ of execution whereas the Chancery court has jurisdiction over the defendant
personally and the order of the court of equity is directed on the person personally such that the failure to
comply is a contempt of court punishable by imprisonment. Claims at common law is a claim in rem whereas
the claim at equity is in personam.

Penn v Lord Baltimore (1750), (specific performance was ordered of an agreement relating to land boundaries
in Pennsylvania and Maryland the defendant being in England.) Lord Harwicke said: the conscience of the party
was bound by this agreement, and being under the jurisdiction of the court, which acts in personam, the court
may properly decree it as an agreement.