UNDERSTANDING THE MAXIMS OF EQUITY

The law of equity has maxims/principles that have been fashioned over time by the courts of law/ equity to cure the inadequacies of the common law courts. They have evolved since the fusion of common law courts with that of chancery by a decree in 1474 that officially recognised a two court system for the (the court of chancery and that of common law. Though this distinction has faded over time the principles of equity have since developed till now.

Courts have stated;

Maxims of Equity

• Equity denotes the spirit and habit of fairness justice, and fair dealings that regulate the intercourse of man to man (Gilles v Department Of Human Resources Development )
• Equity intervenes in instances which it has historically intervened and equity will not invent remedies (Re Diplock )
• Courts are courts of law non conscience ( Re National Assurance Co) as per Jessel MR.

The feeling of effect of equity was felt in the case of Walsh vs Lonsdale where the court employed the rules of equity to mend an otherwise uncontainable bargain between a husband and a wife it implied a verbal agreement into a contract that was drafted in a manner to exclusively to her benefit and the detriment of the husband. The court ended up implying a term that cured the imbalance. Indeed this is the role of equity and not to invent remedies .or employ conscience.
Equity in Kenya was received through the Section 3(1) CAP 8 Laws of Kenya. Which provides that “the High Court and all subordinates courts shall in exercise of their jurisdiction act in conformity with inter alia doctrines of equity” and thus the decision of the Court of Appeal stating that there is no distinction between equity and common law they are one and the same thing.

The following are some of the equity maxims that have elicited prominence and brief explanation to show their scope in the Kenyan legal system.

1. Equity will not suffer wrong to be without a remedy. (ubi jus ibi remedium) it expresses one of the core factors that triggered development of equity, namely that the common law lacked sufficient or appropriate remedies, in invoking the maxim, the court of chancery was expressing the position that there should be sufficient remedies to cover or redress all wrongs. The court of chancery therefore insisted that it will not let a wrong to go without being redressed. It is in this spirit that the many remedies that constitute what is referred to as equitable remedies were devised or developed. Through this maxim, the court of chancery is not however insisting that there must be a remedy for each and every conceivable wrong. The maxim does not negate the principle that was expressed in the case of Re Diplock, the position still remains that even as it invokes this maxim, equity concerns itself only with those wrongs capable of actually being redressed.

Critics of this maxim, have dismissed it of being historical significance, according to them equity long reached its menopause and it’s not capable of bearing no other offspring’s, meaning it can’t invent any new remedies.(NOT TRUE IS STILL AS FERTILE AS EVER SINCE MOST OF THE JUDGES COULDN’T THINK OUTSIDE THE BOX. WERENT FLEXIBLE)

The critics are wrong because there is evidence in recent history, that the jurisdiction of equity has been applied to invent new and foreseen remedies as recently as in the 1960s and in the 1980s.

E.g. in the case of Bendall v Mc Whiter denning as he was then used the equity jurisdiction to devise the deserted wives interest in the matrimonial home.

Nagel v Fielden, lord denning devised the equitable remedy to work as recently as 1980, the courts were able to invent the very useful injunctions of mareva injunctions and Anton pillar orders.

Similarly in the late 1970s to the early 1980s, the Kenya court of appeal was able to come up with a concept of customary trust in respect of land ownership.

2. Equity follows the law. It may tempt one to think that equity does not follow the law the true position is that equity respects the law in the case of Dudley v Dudley the court stated that expressed the position that equity does not necessarily disagree with the law. On the contrary, it exists merely to assist the law and in doing so it will not unnecessarily part from position adopted by the law. Evidence of how equity follows the law may be seen in several cases including the case of Re Bostocks Settlement where the court held that in the event that equity creates an interest or a right or estate in land, equity will not give it an interpretation that will meet its extent if it were created by the law. Similarly in the case of Sextorn v Horton the court held that if technical words are used in the creation of an interest in land, then equity will give those technical words the same interpretation they would have been given by the common law.
In applying this maxim the courts have sounded the warning that they may refuse to follow the law if the circumstances of the case refuse, they may refuse e.g. if to follow the law would lead to an outright injustice, Graf v hope building corporation, court stated “equity follows the law but not slavishly, not always”. Examples of cases where equity has refused to follow the law include Gibb v Guid & Hunter v Gibbons, where the courts declined to uphold the plaintiff’s application because the plaintiff had fraudulently concealed certain information from the other party.

3. He who comes to equity must come with clean hands. This maxim, expresses the position in equity that a party who seeks the favours of equity must on his part be blameless. In applying this maxim, equity examines the past conduct of the applicant and if that past conduct is found to be blameworthy, then it is said the plaintiff has come to court with unclean hands and therefore not deserving the favours of equity, he will only get an equitable relief if that past conduct is found to be blameless and therefore qualifies him to have come to court with clean hands. 
In applying this maxim the court is not interested in the entire past conduct of the plaintiff, on the contrary the court is interested only in the past conduct that may have a necessary connection with the cause of action. On the basis of this maxim the courts had adopted the general precision, that a plaintiff who is a party to a contract may not be granted an equitable remedy on the basis of the contract if he has also breached certain terms of that contract. E.g. in Coastworth v Johnson, the court declined to grant the plaintiff tenant the equitable remedy of specific performance against the landlord because the tenant had also breached certain terms of his tenancy. 
In the following cases, the plaintiffs had been infant beneficiaries of certain trusts, which had provided that the trustees were not to release any moneys until they attained the age of majority, they lied to the trustees that they had already attained the age of majority, later when they attained the age of majority, they sued the trustees for having released the moneys to them while they were still infants. The court held that by their conduct of having lied, they had tainted their hands, and they lost their protection of infancy {Cory v Gartken and Overton v Bannister}. Similarly in  the case of Cadman v Horner the court held that the plaintiff will not get an equitable remedy if the contract has been vitiated by his own misrepresentation. 

4. Where equities are equal the law shall prevail. This maxim applies in instances where there are conflicting claims over the same matter, but in circumstances that the claims are such that one claim is founded in law while the other is founded in equity. In such circumstances, if the claim founded in law has been acquired or has arisen without notice of the existence of an earlier claim based on equity, then it is said that the equities (claims) are equal and in such case, the claim that is based on law shall prevail over the claim based in equity.

It means that claims based on law are superior to those based on equity, particularly where the claim based on law was not aware that there was another claim based on equity.

5. Where the Equities are equal, the first in time shall prevail. This maxim also operates in instances of competing claims over the same subject matter, but the circumstances are such that both or all the claims are based on equity and none of them is based on law. In such circumstances, the claim that came into existence first in time shall prevail.

Common points about the 2 above:

i)                    They are used to resolve disputes in circumstances where the dispute raises issues of priority of interest. Such have commonly arisen in respect of land matters but the relevance of the maxims in land matters has significantly been diminished by the statutory provisions that now require land transactions to be evidenced in writing.

ii)                  The law relating to charges and mortgages, if funds are available to satisfy only one of the competing mortgages, then the mortgages will be satisfied on the basis as to whether it is a legal or equitable mortgage or whether it accrued first in time.

iii)                In instances where there is a dispute as to whether or when the other party has had adequate notice of the existence of an early right or claim, the courts are guided by the following 3 approaches

v  Approach in Stocks v Dobson which is to the effect that equities shall take priorities according the order in which notice of existence was given.

v  Rule in Caliseh v Forbes, if notices are issued or received, substantially at the same time, then the equities will rank in the order in which they were created.

v  Rule in Mutual life Insurance Society v Lananley, that a party who advances his money towards the purchase of a claim, while aware of the existence of another competing claim does so at his own risk.

iv)                The rules laid down by the two maxims are subject to the following exceptions:

a.       If the owner of the legal or the first equity is so negligent that he fails to obtain evidence of his equity, then he may lose his priority.

b.      If the owner or the claimant of the legal or first equity, in some way aids in the creation of the second equity, then the doctrine of estoppel will be used to deny him the opportunity to claim the equity.

c.       Where a person is guilty of misconduct in relation to the claims in question, then he may lose his priority. (Northern Counties of England Fire Assurance Co. v Whip)

6. Equity is equality.This maxim also applies in instances where two or more persons lay competing claims over the same subject matter but the circumstances are such that it is not clear which of the parties is entitled to a particular portion of the subject matter. In such instances, equity adopts the position that the parties should be equal and therefore should adopt equal portions of the subject matter. This therefore means that where this maxim is imposed, the subject matter will be divided equally between the competitors.

This maxim does not mean that equality should be equality in the mathematical sense. In the case of Re Steele, the court explained: “we are not in most cases talking of mathematical equality. Mathematical equality is resorted to mainly as a last resort and mainly when its simplicity is preferred to any process of proportionate distribution.”

7. Delay defeats Equity (Equity aids the vigilant and not the Indolent). This maxim means that equity requires parties to take immediate action to protect their rights whenever those rights are threatened. Equity dislikes parties who merely sit back and take too long before they take steps to protect their rights. A party who takes too long is said to have been indolent/ have sat on his rights and therefore not worthy of remedy by equity.

This maxim has been justified by courts in the case of Smith v Clay: “equity has always refused its aid to stale demands where a party has slept upon his right for a great amount of time. Nothing can call forth this court into activity but conscience, good faith and reasonable claims. Where these are wanting, the court is passive and does nothing.”

This maxim operates in 2 ways:

      a) By upholding the common law restrictions on time limitations (statutory timelines) within which causes of action are required to be instituted. Those statutory timelines have been drawn from the common law and are contained in legislation commonly referred to as statutes of limitation. In Kenya the relevant statute is the Limitation of Actions Act CAP 22. Under that Act, the following time limits are prescribed for the following types of actions:

1) An action seeking to enforce a right or interest in land, it should be filed in court within 12 years from which the cause of action was accrued.

2) If it is based on contract, should be presented in court within 6 years from which the date it accrued but if the case is directed for a government department then it must be brought in court within 3 years

3) If the cause of action is based on tort then it must be brought to court within 3 years but if it is against the government then it must be brought within 1 year

4) Cause of action based on the tort of defamation must be commenced within 12 calendar months.

5) If the claim is Seeking to enforce an equitable right or interest must be commenced within 6 (six) years.

6) Where a cause of action doesn’t fall within the 5 categories, the courts will apply the foregoing time limits by way of analogy.

      b) In instances where there is no applicable time limit, the court will apply the doctrine of laches, laches is defined [long period of delay] as an unreasonable delay from which a party should not be allowed to benefit, it arises when a party excessively delays before instituting his case in court, such a person will be said to be guilty of laches and therefore not permitted to proceed with his case if the following circumstances are obtained:

1) If his delay has been substantial or excessive.

2) If in the course of the delay he has given an indication that he intends to abandon his cause of action

3) If as a result of his delay and conduct there has been a loss of evidence

4) If the defendant relied on his delay and conduct and thereby significantly altered his position to his detriment.

It must be shown further that at the time the party was delaying he had knowledge of his cause of action but he voluntarily decided to delay even though the circumstances were such that he should have acted. In the words of the court in Erlanger v New Sombrero Phosphate Co. Ltd “a court of equity requires that those who come to ask its aid to give them relief should use due diligence after there has been such notice or knowledge to make it inequitable to lie by”

In the event that it is established that the plaintiff’s delay was occasioned by reason of the defendant having fraudulently concealed the course of action, then the defendant will be estopped from raising an objection on the plaintiff’s delay. Gibb v Guid; Hunter v Gibbons

N.B.: Situations may arise where the cause of action is hidden from the plaintiff as a result of a fraudulent intention on the part of the defendant, such situations amount to concealed delay and don’t operate against the plaintiff because the doctrine of estoppel will be applied to deny the defendant the opportunity to raise laches against the plaintiff. By express provisions of section 26-31 CAP 22, concealed delay does not operate against a plaintiff.

Refer to Gibb v Guid and Hunter v Gibbons, in both cases the defendant were estopped from pleading laches against the plaintiff because they had fraudulently hidden the cause of action from the plaintiffs notice.

Equity looks to the spirit and not the letters

8. Equity looks to the intent rather than the form.  Equity attaches greater significance to the intent as opposed to the form. It applies in instances where persons have agreed on a certain state of affairs and they have expressed their intention in relation to that state of affairs through a written document, but the document has failed to accurately express their intention. [A mistake has occurred in the making of the document thereby forcing the document not to accurately capture the information it is required to]. In such case, equity will disregard the mistake of the document and instead give effect to the intention of the parties. 

The maxim does not mean that equity attaches no importance at all to the form of documents. It only means that given a conflict between the form and the substance of the document, and the conflict is likely to negate the substance, then equity will overlook the form and uphold the substance. It also means that equity does not like to entangle itself in the technicalities of form but instead prefers substantive justice.

On the basis of this maxim, the courts have accepted that the failure of a party to a contract to perform his obligation within the agreed time does not necessarily defeat the whole contract. If the party is still willing to perform but has only been prevented from doing so by certain circumstances, then the court will still allow him time to perform.

This is thus regarded to be the foundation of Equity of Redemption which allows the mortgagor in default to redeem the mortgage even after the expiry of time.

Equity Looks on that as done which ought to be done

9. Equity looks on that as done, which ought to be done. The maxim means that if there is an obligation that a party is expected to discharge, then equity will consider that obligation as though it has already been performed right from the moment that the party came under obligation to perform it. The maxim applies in instances where parties have entered into a contract by reason of which they have incurred certain obligations which are capable of being specifically performed or capable of attracting the equitable remedy of specific performance.

The rationale behind this maxim is that if a party fails to perform his obligation, then equity will order him to do so by way of and order of specific performance. It is therefore fair to assume in the eyes of equity, that that party is as good as having performed his obligation right from the moment that the contract became binding on him.

This maxim has in practice been applied in the following instances:

i)                    Contract of sale and transfer of property: once the seller executes the transfer he is deemed to have converted himself to a mere trustee to that property until the purchaser takes physical possession.

ii)                  generally in the law of contracts where a party has made a promise to fulfil an obligation, his obligation is deemed as good as fulfilled e.g. in case of Fredrick v Fredrick the defendant had promised to assign certain rights to the plaintiff, the court held that the assignment was as good as done right from the time the contract was concluded.

iii)                In the law relating to trusts, it has been applied in relation to the trustee’s discretionary power of assignment to the effect that once the trustee sets out to exercise that power and he does so in good faith but he does it in a manner that is defective, he will be deemed to have effectively exercised that power.

iv)                In instances where there is an obligation for real property to be converted to personal property and vice versa, the property in question will be dealt with as though it had already been converted right from the moment the obligation arose.

It is the foundation of the rule in Howe v Earl of Dartmouth (1802), the rule is that if residuary personalty (residue of an estate when every other property has been distributed) is given for the benefit of beneficiaries who are to enjoy it in succession, then the trustee is under obligation to convert such part of it as may be of a wasting or reversionary nature or consisting in an unauthorised investment into property of permanent and income bearing nature or into authorised investment.

10. He who seeks Equity must do Equity. This maxim demonstrates that equity may attach conditions to its favours or remedies, it may require the person seeking its favour to also do equity. That is to say that a plaintiff or applicant who seeks an equitable relief against the defendant or respondent may be required to also act equitably towards that defendant or respondent. This maxim focuses onto the future conduct of the plaintiff or applicant and if that future conduct indicates that the plaintiff is willing to treat the defendant equitably then it is said that he is willing to do equity and therefore deserving the favours of equity. If on the other hand, that future conduct indicates that the plaintiff is not willing to act equitably towards the defendant it is said that he is not willing to do equity and therefore not deserving the favours of equity. On the basis of this maxim, the courts have been able to attach conditions to their orders, they have e.g. required the beneficiary of their order to give an undertaking of forbearance, or to even deposit moneys into courts or bank accounts. (Order 26 of Civil Procedure Rules 2010)

In the law relating to charges and mortgages, this maxim has been applied, in the case of Inglis v Commonwealth Trading Firm of Australia, in that case, the court held a mortgagor in default may not be granted the equitable remedies of injunctions against the mortgagee unless he deposits the outstanding instalments and interest into court, similarly in Campbell Discount Ltd v Bridge the court held that even where the hirer is in default he may still obtain an equitable injunction against the owner on condition that he deposits the outstanding instalments into court.

11. Equity Acts in Personum. This means that equity operates through orders and directives which target or are directed at a person in such a way that if a person fails or refuses to comply with the order, then equity will proceed against the person’s person by seizing the person and placing him in confinement/custody until he is willing to comply.

This maxim is today dimmed to be essentially of historical significance. In the earlier days, it was designed to demarcate the boundary between equity and the common law by demonstrating that equity acted in personum as distinguished from the common law which operated in Rem. Orders of the common law were orders in rem while orders in equity were orders in personum.

The idea that equity operates in personum has been used to support the claim that equity has transboundary jurisdiction. This is to say that its orders may affect matters beyond the geographical jurisdiction of the court.

 Before an order is issued in personum, the court has to satisfy itself that the person targeted is within its jurisdiction. It does not matter where the subject matter is located.

Penn v Lord Baltimore- the court of chancery issued an order requiring the performance of certain obligations in respect of boundaries of land located outside the court’s jurisdiction.

Richard West Partners v Dick- the court directed the specific performance of the contract of sale of land outside the court’s jurisdiction.

Webb v Webb- European Court of Justice acknowledged that equity has extraterritorial jurisdiction.

N.B. In modern times it is not necessary to distinguish orders of the court whether they are in rem or in personum.