Equity and Trusts – Introduction & Historical Origins (2). Maitland. Other jurisdictions outside of the corpus of the common law jurisdiction of the British Empire have never had the concept of the trust. Legal ownership.
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Equity and Trusts – Introduction & Historical Origins (2)
Other jurisdictions outside of the corpus of the common law jurisdiction of the British Empire have never had the concept of the trust
In Roman law (from which civil system partly derives) central concept was ‘dominium’: all the rights of ownership concentrated in an individual – essentially the rights to use / to give away / to sell / or to destroy particular property
Whereas English law recognises a complex bundle of rights in respect of particular things that can shared
The shift from merely personal rights to proprietary rights brought beneficiaries considerable benefit
For example: where trustees are insolvent what happens to the beneficiaries’ property? Proprietary rights allowed bens to take priority over other creditors
Beneficiaries also cam to enjoy rights of protection against anyone interfering with the property - when it is given away by mistake or taken deliberately
Fiduciary duties hold trustees (but now also many others) to certain standards of behaviour in the management of trust property
Equity lay took rights that existed at common law and split off from it a new bundle or rights in the form of equitable ownership – so that there were now two separate bundles of rights – one at common law and one in equity.
Judicature Acts of 1873 and 1875 brought equity and law into relation with each other by sharing the same court structure. Since that date arguments using law and/or equity can be heard in the same hearing.
NB – although law and equity are argued together in the same hearing they remain separate system of legal thought.
“Conscience” is essentially a Christian concept.
Asking the court to recognise something in conscience is asking that that the court recognise the moral imperative in a given situation
NB – the equitable maxim – he who comes to equity must come with clean hands
“here we are in the world of doctrine, not of neat and tidy rules ... the court in the exercise of this jurisdiction is a court of conscience. Definition is a poor instrument when used to determine whether or not a transaction is unconscionable. This is a question that depends on the facts of the case.”
Lord Scarman: National Westminster Bank PLC v Morgan  2 WLR 588 at 602. See also Pennington and another v Waine and others  EWCA Civ 227. Tinsley v Milligan  2 All ER 391
It was used to develop new juridical entities specifically the trust
Equity is concerned to do “justice in conscience”
But – concept in practice is subject both to competing claims and is now very different from the position that prevailed before the coming of the modern market economy
NB many different contexts and forms the trust has taken and may yet take – for example pension funds and offshore fiscal devices – but also – it is simply not possible to extrapolate a doctrine of trusts that fits all their various forms
Something to consider: why is it that equity did not become a plank in a wider scheme of social justice?
“There cannot be a more useful set of men to the public nor a more unthinking sort of people than common sailors who, as soon as ever they get on shore, for the sake of a little immediate pleasure are willing to part with their right to anything in expectation, for a very little in possession … I do not say that every contract with a sailor is void, or ought to be set aside, but every contract with them must be fair.” Lord Hardwicke in Baldwin & Alder v Rochford (1748) 1 Wils. KB.229
“It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because if there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting and that their contracts when entered into freely and voluntarily shall be held sacred and shall be reinforced by the Courts of Justice. Therefore you have this paramount public policy to consider that you are not lightly to interfere with the freedom of contract.” Sir George Jessel MR in Printing and Numerical Register Company v Sampson (1875) LR 19 Eq 465
Sailors would sometimes sell future rights rights to e.g. prize money for much less than there value just to realise some cash
The two quotes usefully illustrate a point of contrast between two different views of society: 18th Century paternalism and 19th C Liberalism
“Though in a state of society some must have greater luxuries and comforts than others yet all should have the necessaries of life; and if the poor cannot exist, in vain may the rich look for happiness or prosperity. The legislature is near so well employed as when they look to the interests of those who are at a distance from them in the ranks of society. It is their duty to do so; religion calls for it; humanity calls for it and if there are hearts that are not awake to either of those feelings, their own interests would dictate it. The law has not been disputed for though in an evil hour all the statutes that had been existing for above a century were at one blow repealed, yet thank God, the common laws were not destroyed …”
The paternalistic attitudes expressed by Kenyon came rather late in the day …
Throughout this period conflicting decisions made by chancellors on points of economic liberalism meant the courts were unpredictable on this point
By the mid 19th c it was settled practice that courts would not remake contracts – there must be no interference in the principle of the liberty of the contracting parties and their fictional quality of equal status
“Speculation has said that the fear of such an offence is ridiculous, and a very good man, a learned writer has said that you might as well fear witchcraft. I wish Dr Adam Smith had lived to hear the evidence today, and then he would have seen whether such an offence exists, and whether it is to be dreaded.”
“If he [the poor man] had been told that cattle and corn were to be brought to market and then bought by a man whose purse happened to be longer than his neighbours, so that the poor man who walks the street, and earns his daily bread by his daily labour could get none but through his hands, and at the price that he chose to demand; that it had been raised … would he have said that there was no danger from such an offence.”
Regrating: the offence of buying goods and reselling them in the same market –Forestalling: the offence of buying or selling goods before a market
Engrossing: the offence of buying up goods in order to speculate by forcing up the price
Behind the offences was a simple concept – the ‘just price’
Thus even up to the early 1800’s – to be enforceable a contract had to be fair – as in the example of the sailors above
Equity is a concept inherited from the civil legal system that began with the Greeks
“it is equity to pardon human failings, and to look to the lawgiver and not to the law; to the spirit and not to the letter; to the intention and not to the action; to the whole and not to the part …”
“what creates the problem is that the equitable is just, but not the legally just but a correction of legal justice. The reason is that all law is universal but about some things it is not possible to make a universal statement which shall be correct.”
Equity in clearly a part of what is called natural law from which we derive the term natural justice.
“the prevention of unjust enrichment as a distinct and independent principle tends to be recognised late in the development of any legal system, and has to struggle for a place in the legal firmament because, as a latecomer, it cuts across other principles already expressed in doctrines and reinforced by rules.” John Dawson
Unjust enrichment now a developing area of the law of restitution
Derives originally from Roman law and was the principle underlying the Roman legal device of quasi-contractual relationships
The interventionist courts of equity up to 1800’s took a very broad view of what exactly constituted an unfair contract.
“it was not only fraud or misrepresentation in the modern sense that sufficed it was also any unfair dealing, any form of imposition, any taking advantage of the poverty or distress of another, any weakness of understanding, any mistake …” Patrick Atiyah “The Fall and Rise of Freedom of Contract”
The principles of discretionary justice that had begun with the Greeks and passed into Roman law found their way eventually into English law but is a far more explicit part of the civil legal system practised within continental Europe
Models proposed include for example, the Roman fideicommissum and the Germanic Salmann
What was the old world that the coming of the free market replaced and why was there a need for the application of the equitable jurisdiction to change in order to accommodate it?
Property relationships became individualised and the ecclesiastical courts and later the Court of Equity enforced the Christian conception of property as shared – then possible to conceive as a legal owner owing obligations to the equitable owner