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    10-Where Equities Are Equal First in Time Shall Prevail

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    Esha Javed
    This document discusses the maxim "the prior in time is prior in right" as it relates to equitable interests. It provides that where two parties have equal equitable claims, priority will be given to the party that acquired their rights first. However, the maxim will not apply if the equities are unequal, such as if the later party was a purchaser in good faith without notice of the prior interest. The document outlines exceptions, case examples, and applications of this maxim.

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    10-Where Equities Are Equal First in Time Shall Prevail

    Uploaded by

    Esha Javed
    3K views4 pages
    This document discusses the maxim "the prior in time is prior in right" as it relates to equitable interests. It provides that where two parties have equal equitable claims, priority will be given to the party that acquired their rights first. However, the maxim will not apply if the equities are unequal, such as if the later party was a purchaser in good faith without notice of the prior interest. The document outlines exceptions, case examples, and applications of this maxim.

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    This document discusses the maxim "the prior in time is prior in right" as it relates to equitable interests. It provides that where two parties have equal equitable claims, priority will be given to the party that acquired their rights first. However, the maxim will not apply if the equities are unequal, such as if the later party was a purchaser in good faith without notice of the prior interest. The document outlines exceptions, case examples, and applications of this maxim.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    3K views4 pages

    10-Where Equities Are Equal First in Time Shall Prevail

    Uploaded by

    Esha Javed
    This document discusses the maxim "the prior in time is prior in right" as it relates to equitable interests. It provides that where two parties have equal equitable claims, priority will be given to the party that acquired their rights first. However, the maxim will not apply if the equities are unequal, such as if the later party was a purchaser in good faith without notice of the prior interest. The document outlines exceptions, case examples, and applications of this maxim.

    Copyright:

    © All Rights Reserved
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    of 4

    MAXIMS OF EQUITY

    WHERE EQUITIES ARE EQUAL FIRST IN TIME SHALL PREVAIL


    THE PRIOR IN TIME THE PRIOR IN RIGHT
    (Qui prior est tempore, potior est jure)

    1- INTRODUCTION
     Time is important to equity, reflecting, perhaps, its commercial
    element. Where two claimants have equally strong cases, equity will
    favour the person who acquired his rights first. Thus, if two equitable
    mortgagees and each of them seek to enforce his security rights under
    the mortgage ahead of the other mortgagee, the court will give priority
    to the person who had created his mortgage first.

     This maxim as well as the maxim, “where equities are equal, law shall
    prevail,” is applied in England with reference to legal estates and
    equitable estates. Both maxims govern questions of the priority of rival
    claimants to the same property in equity.

    2- DEFINITIONS OF MAXIMS

    According to Walker D.M


    “Maxims are short, pithy formulations of broad and general principles of
    common sense and justice”.

    According to SNELL
    “These are not to be taken as positive laws of equity which will be applied
    literally and relentlessly in their full width, but rather as trends or principles
    which can be discerned in many of the detailed rules which equity has
    established.”

    3- EVOLUTION OF MAXIMS

    Generally, the maxims of equity evolved from time to time and especially
    began to formulate during the time of Lord Nottingham (1673-82). Lord
    Nottingham is also known as father of modern English equity.

    4- MEANING AND EXPLANATION OF THIS MAXIM

     The maxim is only applied where priority cannot be decided on any


    other principle.

     In the absence of a legal estate in the matter and the contest is among
    the equitable estate only, the rule is that the person whose equity
    attached to the property first will be entitled to priority over the other or

    1
    others e.g., if A enters into a contract, for the sale of his house, with B
    and then with C, the interest of B and C both being equitable, B will
    have priority over C because his equity attached to the property first.

     This rule ‘where equities are equal, the first in time shall prevail’ is
    applicable in cases only when equities are equal. Therefore, if equities
    are unequal in the sense that equity on the side of the person
    otherwise entitled to priority is worse, that is, he is guilty of anything
    unconscionable or unfair, he would lose his priority.

     The true meaning and effect of the maxim have often been
    misunderstood. But the Court of Equity will not prefer the one to the
    other on the mere ground of priority of time, unless and until it finds
    upon an examination of their relative merits, that there is no other
    sufficient ground of preference between them or in other words that
    these equities are in all respects equal and that if the one has on other
    grounds a better Equity than the other.

    5- CASE LAW ILLUSTRATION

    Rice Vs. Rice (1853) 2 Drew. 73

    Vice-Chancellor Kinerdesly says, “As between persons having only


    equitable interests, if these interests are in all other respects equal,
    priority in time gives the better equity. In a contest between persons
    having only equitable interests, priority of time is the ground of
    preference last resorted to i.e., a Court of Equity will not prefer the one
    to the other on the mere ground of priority of time until it finds that
    there is no sufficient ground of preference between them”.

    6- INSTANCES OF APPLICATION OF THIS MAXIM


    In applying the maxim, the courts must consider the nature and condition
    of their respective equitable claims, circumstances and manner of their
    acquisition and the whole conduct of each party with respect thereto. In
    examining these points the Court may apply the test not of any technical
    rule but same broad principles of right and justice which the Court of
    Equity applies universally in deciding upon contested rights.

    a. Purchases in good faith and for valuable consideration

    An equitable interest will be enforceable against the holder of a


    legal title only if the circumstances are such that the suitable claim
    affects the conscience of the legal owner. Hence, inequitable
    interest will not be enforceable against a purchaser of the legal

    2
    estate, for value and without notice of the equitable interest. The
    requisites of a bona fide purchase for value without notice are
    three:
    1. The defendant must have the legal estate vested in himself,
    or in some person on his behalf.
    2. He must have given value.
    3. He must have had no notice of the equitable interest at the
    time which he gave his consideration for the conveyance.

    These conditions having been fulfilled, “a purchaser’s plea of a


    purchase for valuable consideration without notice is an absolute,
    unqualified, unanswerable defence and an unanswerable plea to
    the jurisdiction of the Court”.

    (Pilcher Vs. Rawlins (1872) 7 Ch App259)

    b. Fraud and Gross Negligence (Section 78 of TPA)

    Where through the fraud, misrepresentation or gross neglect of a


    prior mortgagee, another person has been induced to advance
    money on the security of the mortgaged property, to the prior
    mortgagee is to be postponed to the subsequent mortgagee.

    For example
    If A has created a mortgage of his property in favour of B which is a
    first mortgage and then approaches C to create the 2nd mortgage on
    his property. C tells him that he will give him loan only one condition
    that he has not mortgaged his property to anybody else before. A
    and B said nothing on the issue and kept silent. When C became
    aware of the first mortgage he said to A and B that you have
    committed fraud against me and the principle is that if a prior right
    holder became accomplice in crime of fraud, he has no right. So C
    can take protection of the 2nd exception of the general rule.

    c. Registration of an Instrument – A legal requirement?

    Where any instrument relating to the immovable property is


    required by law to be reduced in registration then it is necessary
    that the instrument must be reduced in writing.

    A registered instrument gets priority over a non-registered


    instrument.

    2- LIMITATION OF THIS MAXIM

    3
    For the application of this maxim

     Unequal Equities
    Where equities are unequal, he who has the best equity takes
    precedence.

     Notice to Transferee
    Purchase for value with notice – If the subsequent transferee had
    the prior knowledge of the prior charge, then no priority will be
    given to him.

     Fraud and Gross Neglect


    No relief shall be given where fraud and gross neglect is found. The
    prior mortgage will be postponed.

    3- RECOGNITION IN PAKISTAN

    a. THE TRANSFER OF PROPERTY ACT

    Section 53, 78, 79

    b. REGISTRATION ACT

    Section 50

    c. THE SPECIFIC RELEIF ACT

    Section 27 (b)

    4- CONCLUSION

     In a situation in which there is no clear distinction to be drawn


    between parties as to which of them has the better claim in equity,
    the common law principle which best fits the case is applied.
     So, in circumstances where two people have both purported to
    purchase goods from a fraudulent vendor of those goods for the
    same price, neither of them would have a better claim to the goods
    in equity. Therefore, the ordinary common law rules of commercial
    law would be applied in that context.
     Equity favours a purchaser for value without notice.  A volunteer is
    a person who has not paid consideration.  Exception to the
    application of this maxim is in Trust.

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