TRUST AND EQUITY

MAXIMS OF EQUITY
1. EQUITY WILL NOT SUFFER A WRONG TO BE WITHOUT A REMEDY
Meaning:
 Where there is a right there is a remedy. This idea is expressed in the Latin
Maxim ubi jus ibi remedium. It means that no wrong should go unaddressed if
it is capable of being remedied by courts.
 This maxim indicates the width of the scope and the basis of on which the
structure of equity rests.
 This maxim imports that where the common law confers a right, it gives also a
remedy or right of action for interference with or infringement of that right
 E.g., Trust – A beneficiary of an incomplete trust has no right, at law, to have
the terms of the trust enforced, but the court will require the trustee to carry
out the terms of the trust, nevertheless to prevent the trustee from committing
what would be a wrong against the beneficiary
Application and cases:
 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.
Limitations:
 If there is a breach of a moral right only.
 If the right and remedy both were in within the jurisdiction of the Common Law
Courts.
 Where due to his own negligence a party either destroyed or allowed to be
destroyed, the evidence in his own favour or waived his right to an equitable
remedy

2. EQUITY FOLLOWS LAW – notes

3. HE WHO SEEKS EQUITY MUST DO EQUITY
Meaning:
 Equity looks to do justice between the parties. Equity examines not just the
claimant’s prior conduct, but also their future behaviour in respect of the
claim.
 Therefore, if a claimant is unwilling or unable to fulfil their own future
obligations to the defendant, equitable relief will not be granted
 Eg,. Plaintiff who seeks equitable relief must be prepared to act fairly towards
defendant
Application:
 This maxim has application in the following doctrines-
i. Illegal loan
 ii. Doctrine of election
iii. Consolidation of mortgages
iv. Equitable estopple
v. Set off
Case:
 This maxim was attracted in the case of Lodge v. National Union Investment
Company Limited where Lodge borrowed money from an unregistered
moneylender and thus upon an action by him to recover the securities, the
court refused to make an order except upon the terms that Lodge should repay
the money which had been advanced to him.
Limitation:
 The demand for an equitable relief must arise from a suit that is pending.
 This maxim is applicable only to a party who seeks an equitable relief

4. HE WHO COMES INTO EQUITY MUST COME WITH CLEAN HANDS –

notes
5. DELAY DEFEATS EQUITIES
Meaning:
 The Latin maxim for this principle is “Vigilantibus non dormientibus aequitas
subvenit” which means that Equity assists the vigilant and not those who sleep
on their rights. Unreasonable delay in bringing forth a claim is known
as laches.
 Laches may also result in dismissal of the claims. Thus, a party must assert an
action within a period of reasonable time.
 There are certain situations where the law of limitation is expressly applied, in
such cases, there is a particularized legal situation where a time period, which
has been expressly prescribed, has elapsed and the party is barred from
bringing a suit of action.
Case:
 In case of laches, the defence of acquiescence can be applied by the court and
the plaintiff may be disallowed from seeking an equitable remedy as the court
would assume that he has acquiesced to the questionable actions of the
defendant.
 The equitable rule of acquiescence and laches was first introduced in the case
of Chief Young Dede v. African Association Ltd.
Limitation:
 This maxim does not apply when-
i. where the law of limitation expressly applies
ii. where it applies by analogy, and
iii. where the law of limitation does not apply but the cases are governed
by ordinary rules of laches
6. EQUALITY IS EQUITY:
Meaning:
 This principle is expressed by the Latin maxim Aequitas est quasi
aequalitas which means equality is equity.
 This maxim implies that as far as possible, equity strives to put the litigating
parties on an equal level and equate their rights and responsibilities.
 The ordinary law may give one party advantage over the other but the court
of equity, wherever possible, puts the parties on an equal footing.
Application:
 Application of this maxim can be understood from the following
i. Equal distribution of joint funds and joint purchases
ii. Contribution between co-trustees, co-sureties and co-contractors
iii. Marshalling of assets

7. EQUITY LOOKS TO THE INTENT RATHER THAN THE FORM

Meaning:
 This is the maxim by the means of which an equitable remedy was established
which allows for the terms of a contract to be interpreted by taking into
account the intention of the parties.
 The common law was very rigid and could not respond favourably to demand
of time, this meant regarding the form of the contract more important than the
substance.
 Equity, on the other hand, looks to the spirit and not the letter of the contract.
 Eg., in a situation where a trust was intended but has not been expressly
created through compliance with the formal requirements, if sufficient
evidence of an intention to create trust can be proven, equity will enforce the
intention of the parties despite the absence of any express wordings
Application:
 This principle is enshrined in the provision for relief against penalty and
forfeitures which states that the object of a contract is to perform it and not the
compensation, thus the compensation must be proportionate to the damage and
not benefit the receiver (Section 74 of the Indian Contract Act provides for
claiming reasonable compensation)
Case:
 In the case of the contract for the sale of land, if the party fails to complete
within a fixed period, equity allows reasonable time to the party to complete it
(Parkin v. Thorold).
 Wan Naimah v Wan Mohd Nawawi
The land has been sold to the parties’ father but the land was transferred to the
daughter (appellant). The Resp was the son of the purchaser, still an infant.
There was evidence showing that the father had intended to create a trust of an
undivided half share in the land in favour of his son, the Resp but there was no
creation of a trust in writing
 Held: there was a declaration showing that he wanted to give the half share to
his son. The intention of the deceased was paramount and need not be in
writing as long as it was clear and unequivocal that there was conclusive
evidence which is the deceased’s intention.

8. EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE.

Meaning:
 This maxim states that in cases where individuals are required, by law or by
agreement, to perform any act of legal significance, equity will regard that act
as having been done as it ought to have been done even before it actually
happened.
 Where there is a specifically enforceable obligation, equity regards the parties
as already o=in the position which they out be in.
 Equity courts therefore look to the acts of the person bound by his conscience
and interpret and construe them in such a way that they amount to what ought
to be done
Application and case:
 This principle results in the legal phenomenon of equitable conversion under
which the buyer obtains the equitable title to the property even before the sale
has been legally effected.
 The working of maxim can also be seen in Executory contracts-
a. Assignment of future property: When an assignment of property was made
for consideration equity treated it as a contract to assign. When the
property came into existence in such a contract it was treated as a complete
assignment. As a leading case on this point, Holroyd v. Marshall can be
cited.
b. Agreement for a transfer: In Walsh v. Lonsdale, it was decided that an
agreement for lease could be treated as a lease in equity.
 HL Banerji v Chin Cheng Realty
The parties had signed a 10-year lease of the respondent’s premises with a
provision for renewal if the applicant made a request 3 months before the
expiration of the lease. When the applicant requested the renewal, the
respondent refused. The court held that the applicant always had an equitable
right to renewal of the lease.

9. EQUITY IMPUTES AN INTENTION TO FULFILL AN OBLIGATION

Meaning:
 This maxim means that if a person is obligated to do one act and does another,
the act done by him will be taken as a close enough approximation to the
fulfillment of the required obligation.
 For example, if a debtor leaves a legacy to his creditor which is equal to or
greater than the debt owed by him, then equity would regard such legacy as
the fulfillment of the obligation of the payment of the debt owed by the
person.
 Case:
 In 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 fulfil his obligation.
Recognition:
 The Trust Act- Where a person contracts to buy property to be held on trust
for certain beneficiaries and buys the property accordingly, he must hold the
property for their benefit to the extent necessary to give effect to the contract.
Equity thus imputes an intention to fulfil an obligation

10. EQUITY ACTS IN PERSONAM

Meaning:
 This maxim states the equity applies to a person rather than a property.
 In England, the Court of Common law and Chancery Courts were
distinguished by the fact that the former had authority over the person as well
as property but the latter only acted over people.
 The Equity court’s coercive power arose from their authority to hold the
violator in contempt of court and punish accordingly.
 Since the law of equity was applicable to the persons and not the property, it
could also apply to the property outside a jurisdiction, provided that the person
was within the jurisdiction.
Cases:
 Penn v Baltimore
P owned the area of Pennsylvania and B was the owner of the state of
Maryland. Both entered in to an agmt to fix boundaries between their
respective lands. The agmt was not implemented.
P filed a suit for specific performance against B in the court of Chancery in
England. B questioned the jurisdiction of the court as the properties were
situated in North America. However, an order of specific performance was
granted to P as equity can make orders affecting property outside its juris by
making orders against the person of the defendant in the juris.
Negatives:
 Swiss bank copn v Lloyd Bank Ltd
In deciding whether or not to intervene the court of equity required:
i. That the plaintiff should have some enforceable right
ii. That the conscience of the defendant was affected in some way as to
make the failure of the defendant to give effect to the plaintiff’s right
contrary to justice.
TYPES OF EQUITABLE INTEREST
i. Estate contracts.
- An estate contract is an agreement for the sale of land.
- Common law used to reward damages for failure to transfer land.
- Basing on Walsh v Longsdale, an agreement for sale of land is as good as the
sale thus a decree of specific performance would be given. A purchaser
acquires an equitable interest which is enforceable against everyone but a
bonafied purchaser. Specific performance converts an equitable interest into a
legal interest. Receipt + Possession = Equitable Interest.

ii. Restrictive covenants.

- It is a clause in a lease agreement which restricts the use of land to certain
purposes.
- In equity such a term runs with the land but cannot be enforced against a bona
fied purchaser for value without notice.

iii. Mortgagor` s equity of redemption.

- Equity allows a mortgagor to redeem his land even after a specific period had
passed.

iv. Equitable Mortgage.

A. Mortgage of an Equitable interest- An owner of an equitable interest
can create an equitable mortgage. A beneficiary of a trust can create
an equitable mortgage. A person who creates a legal mortgage retains
an equitable interest.
B. An agreement to create a mortgage- A court decree of specific
performance converts an equitable mortgage created under
agreement into a legal mortgage.
C. Deposit of title deeds- Deposit of title deeds with the intention to
create a mortgage leads to its creation.
D. Equitable charge- Where land is treated as security without deposit
of title nor agreement.
E. Equitable Lien- Where a person transfers land before payment of the
purchase price. It can be enforced by selling the property under a
court order.