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The Supreme Court of New South Wales was established in 1823 with equity jurisdiction.
With the enactment of the Judicature Act 1873 (UK), the administration of the two systems
was fused, but not the principles themselves. It also ensured:
1. All branches of the court have the power to administer equitable remedies.
2. Equitable defences can be pleaded in all branches of the court and appropriate relief
given.
3. All branches of the court must recognise equitable rights, titles and interests.
4. All branches of the court have a general power to determine legal rights and titles.
5. The common law injunction was abolished
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The Lord Chancellor in effect, the Kings Secretary and in Charge of the Great Seal
In medieval times, when people were dissatisfied with the common law, they would petition
the King to provide justice. In the 14th century, the King began to delegate the matters ot
the Chancellor.
Chancellors were often archbishops with previous legal training; they were considered well
placed to consider claims on moral and legal grounds. The Chancellor (Court of Conscience)
performed an executive, rather than a judicial, function. The Chancellor provided remedies
like injunctions or specific performance. Courts of Chancery had exclusive jurisdiction over
trusts and uses, and concurrent jurisdiction over estoppel, fraud and misrepresentation.
Trusts are a prime example of a fiduciary relationship.
The Earl of Oxfords Case (1615)
Coke asserted the supremacy of the Common Law over Equity. He released people
imprisoned for contempt of Chancery by using habeus corpus. The suit was settled in favour
of Equity: the Chancery could set aside judgments at common law where they were against
conscience to do that. Equity prevails when it conflicts with the Common Law.
The Court of Chancery is a Court of Conscience?
In Cook v Fountain (1676), Lord Nottingham refuted the idea that the conscience which
guided equity was some arbitrary measure. In the 1800s, equity took a rigid form and was
bound by precedent like the common law.
Westdeutsche Landesbank v Islington LBC [1996] AC 669
In this case, Lord Browne-Wilkinson nicely sets out the following (emphasis added):
The Relevant Principles of Trust Law
i.
Equity operates on the conscience of the owner of the legal interest. In the case of a
trust, the conscience of the legal owner requires him to carry out the purposes for
which the property was vested in him (express or implied trust) or which the law
imposes on him by reason of his unconscionable conduct (constructive trust).
ii.
Since the equitable jurisdiction to enforce trusts depends upon the conscience of the
holder of the legal interest being affected, he cannot be a trustee of the property if
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and so long as he is ignorant of the facts alleged to affect his conscience, i.e. until
he is aware that he is intended to hold the property for the benefit of others in the
case of an express or implied trust, or, in the case of a constructive trust, of the
factors which are alleged to affect his conscience.
iii.
In order to establish a trust there must be identifiable trust property. The only
apparent exception to this rule is a constructive trust imposed on a person who
dishonestly assists in a breach of trust who may come under fiduciary duties even
if he does not receive identifiable trust property.
iv.
Once a trust is established, as from the date of its establishment the beneficiary has,
in equity, a proprietary interest in the trust property, which proprietary interest will
be enforceable in equity against any subsequent holder of the property (whether
the original property or substituted property into which it can be traced) other than
a purchaser for value of the legal interest without notice.
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The concurrent jurisdiction involves the availability of a claim both at law and in equity: for
example, an equitable claim for specific performance of a contract, or a common law claim
for damages for breach of contract.
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In Aquaculture Corp v New Zealand Green Mussel (1990), a New Zealand case, it was held
that the court may award exemplary damages (a common law remedy) in respect of a
breach of confidence (an equitable action). The decision is regarded as a fusion fallacy. The
question of punitive damages was examined in Harris v Digital Pulse (2003):
Spigelman CJ: Damages are a remedy at common law. The issue before the Court
is whether a punitive monetary award can be made in equity The fact that
compensatory damages at common law and equitable compensation have a similar
justification does not necessarily indicate that a different kind of monetary award at
common law, which has come to be referred to as a form of damages, can or
should be reflected in equity.
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Declarations of Right
A declaration from the court is a statement of the law or the rights of the parties. It is a way
of resolving disputes where other remedies or relief would not be effective, such as in
disputes over title or possession, or the extent of contractual obligations, see Johnco
Nominees v Albury-Wodonga (1977). The procedure is also more simple than bring an action
for other remedies.
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Courts of Common Law have often recognised trusts, especially where leases have been
held on trust.
Equity had not power to decide disputed legal rights and titles
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The Judicature Acts, by providing for the administration of both common law and equity in
the same courts, naturally encouraged the convergence of the two bodies of law, per Cooke
P in the New Zealand case Day v Mead (1987).
Fusion Fallacies
These are the erroneous assumption that the Judicature Acts had united the Common Law
and Equity into one bundle of principles. For example, Sir George Jessel MR in Redgrave v
Hurd (1881) suggested the distinction had disappeared.
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The most famous case decided upon a fusion fallacy was Walsh v Lonsdale (1882). Yet the
existence of trusts shows that fusion did not occur.
Unconscionability is a concept unknown to the common law.
Declaration of Trust
The act by which an individual acknoweldge that property, the title to which he holds in his
own name, in fact belongs to another, for whose use he holds it.
Maxims of Equity
When the equities are equal, the first in time will prevail.
Equity is equality.
Set-Offs
A set-off is the right to balance mutual debts of a creditor and a debtor: reconciliation. They
are only recognised in equity, and only apply to debts of a definite character parties
cannot set-off their debts against damages claimed, nor equitable claims or demands.
The principle is the prevention of injustice in permitting one person to enforce a claim, while
leaving unenforceable an equally meritorious claim.
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