Equity is as Long as the Chancellor’s Foot. Critically Discuss this Statement (2017), by Sean Gabb

Equity is as Long as the Chancellor’s Foot.
Critically Discuss this Statement

Note: One of my duties in the various places where I teach is to show students how to write essays – something most young people are not nowadays taught to do. What I like to do in class is to choose a question at random, discuss possible approaches, and then dictate an answer one paragraph at a time. Some of these answers are very short. Some amount to small dissertations. In this latter case, the students take turns at looking on-line for the information we decide is needed. It they cannot find it, I show them how to change the structure of what has already been written, or to strike out in a new direction.

It is a “writing masterclass” approach that makes use of my own strengths, and is often a welcome alternative to formal teaching. It fills up a long morning session. Everyone learns something, and the more attentive will improve their final grades by at least one step.

Here is an example of the finished product. Do not take it as a statement of personal opinion. It is an answer produced for a specific question, and it bears in mind what a possibly unknown examiner will appreciate, and what can be written to incorporate the sources found in class. SIG

PS – If anyone wants to engage my services as a teacher of these skills, please click on the image to the left. Though they are my niche subjects, Greek and Latin are not my exclusive focus as a teacher. I do much else besides.

PPS – If you are a student, and you have come across this in a frantic last minute search, I advise you not to copy and paste and submit. You will be found out in three clicks of a mouse. Examiners were not born yesterday.


One approach to answering this question is to locate and explain its statement.

John Selden (1584–1654) was a famous lawyer, politician and historian of the Common Law. In his Table Talk, he is recorded as saying:

Equity is a roguish thing. For Law we have a measure, know what to trust to; Equity is according to the conscience of him that is Chancellor, and as that is larger or narrower, so is Equity. ’T is all one as if they should make the standard for the measure we call a “foot” a Chancellor’s foot; what an uncertain measure would this be! One Chancellor has a long foot, another a short foot, a third an indifferent foot. ’T is the same thing in the Chancellor’s conscience.

What he is saying expresses the fear that many students of the Common Law have of uncertainty and unlimited executive power. The Common Law is based on precedent. What has been decided in one case will, and must, be applied to all future cases where the facts are substantially the same. Because the facts of each case are always different, there may need to be argument over which precedent applies best to a new set of facts. But the accumulation of precedents will gradually give rise to general principles and rules that any reasonably informed person can use to guide their conduct.

One obvious example of such principles is laid down in Donoghue v Stevenson [1932] UKHL 100. In his judgment, Lord Atkins said that “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour.” The questions of who is your “neighbour,” and what is “reasonable care” and what you can “reasonably foresee,” have required further discussion. But the generality of the law is clear. You must avoid negligent acts that cause harm to others.

Otherwise there are the rules of offer and acceptance by post in the Law of Contract, or the need for consideration is the formation of a contract, or the need for certain kinds of contract to be evidenced or made in writing. These principles and rules are reasonably clear, and give reasonable guidance of what your rights and obligations are as you go about your business.

The problem with any system of law based on conscience is that it may lead to judgments generally regarded as just. Or it may be an excuse for judges to impose their own prejudices on others. Whatever the case, it may bring about a situation in which rights and obligations are unknowable in advance. Such uncertainty of property relationships may impose far greater social costs than a system of law that, while slow and expensive and often unjust, is at least predictable.

This is the point made by Selden, and it had particular relevance in the main dispute of his day, which was between a King who believed that he was above the law and could do justice according to his conscience, and a Parliamentary interest that was committed to the idea of an fixed and ancient Constitution that was superior to any of its officers.

Or, in brief, “the Chancellor’s foot” has become acknowledged shorthand for the contention that value is an unjustified and deplorable impedance in the customary course of the guideline of law, and as there is many different foot sizes among Chancellors there is as many different opinions when making a decision

This being said, let us now move the quotation from its particular historical context, and see what can be said in favour of a system of law that is to some extent based on a commitment to fairness.

  1. The Defects of the Old Common Law.

The Common Law as we know it dates from the time of Henry II (1154-89). As part of his plan to centralise power in the Crown, he appointed Judges to go about England hearing cases. The plan was a success in its own terms. Within a few years, all the local courts of law were falling into disuse, and it was accepted that disputes over property should be heard in the King’s courts. It was a further success in that it made England unique among mediaeval states in having a single law for the whole country. Having no pre-existing code of law to administer, the Judges in the first instance asked Juries what the local custom was in disputes. When one custom seemed better than others, this was applied in all other areas. Once this work was complete, further sources of law became the recorded judgments in earlier cases – that is, the birth of the precedent system that distinguishes the Common Law from other systems based on the Roman Law. [1]

The problem with this system was that, over time, it became very technical, with so great an emphasis on formalities that cases could often turn on whether they had been complied with. Also, it failed to keep up with the changing needs of English society. For example, the Common Law had only one remedy, which was damages. These were often inadequate in cases where it was more desirable for a Defendant to be required to do as he had promised. Again, the Common Law was unable to recognise the existence of trusts. Some quiet adaptation to changing circumstances was made by the creation of legal fictions. But these themselves only multiplied the formalities of the Law.

However, if changes were not quick enough, or if decisions by the judges were regarded as unfair and unjust, then litigants could still appeal directly to the King, who, as the sovereign, was seen as the “fount of justice” and responsible for the just treatment of his subjects the idea of equity prevailing in such situations where there the Common Law would lead to an absurd decisions.

It is believed by people that equity is a system of enforcing a handful of well-established equitable institutions, such as mortgages, trusts, etc. and forgets that the Court of Chancery was originally established to produce a fair and just resolution of those controversies which the Common Law Judges could not, or would not, resolve.[2]

Similarly, the origin of Equity lies in the deficiencies of the Common Law, where the Common Law was lacking remedies in a sense that such remedies were unavailable or simply inadequate to the particular loss of a Plaintiff. Equity therefore provided remedy where the Common Law provided none or provided a more suitable remedy than the common law. Equity also intervened to ensure that the available remedy was enforceable; Moreover Equity worked alongside the Common Law and provided different solutions to problems.[3]

The early Lord Chancellors tended to be churchmen who knew little of the common law and its veneration for precedent, but who tried to do justice in each individual case. So far as this was the case, Selden’s complaint is justified. On the other hand, the Common Law was defective. In an age that had not discovered the use of Acts of Parliament for correcting these defects, the system of Equity as it emerged during the middle ages was the only solution to a problem that would otherwise have held back the development of English society. It would be hard to argue with the equitable maxim that no wrong can be without a remedy – especially when the ordinary courts of law will often provide no remedy.

  1. Equity is not Arbitrary

As said, the early Lord Chancellors were churchmen. After the Reformation, they might be lawyers – for example, Sir Francis Bacon in the reign of James I. Or they might be politicians without legal training – for example, Lord Shaftsbury in the reign of Charles II. From the end of the 18th century, however, the custom emerged of appointing only Lord Chancellors who had an adequate legal training. This led to a development of Equity as a separate but parallel branch of English law, and the importation of many of the assumptions of the Common Law. This development culminated in the early 19th century, when Lord Eldon was Lord Chancellor for over twenty years. He found Equity still a rather vague sort of law. He made it a fully developed body of legal principles.

At this point, it is worth emphasising that Equity and the Common Law are not equal in the differences from each other. The Common Law is a complete system in itself. Though its complete primacy might produce great injustice, it does generate an answer of sorts of every question put before it. Equity, on the other hand, is a sort of commentary on the Common Law. This is expressed thus by the 19th century lawyer and legal historian F.W. Maitland:

We ought not to think of common law and equity as two rival systems. Equity was not a self-sufficient system, at every point it presupposed the existence of common law. Common law was a self-sufficient system.[4]

This being so, the efforts of Lord Eldon were to make Equity as close as he could to a complete body of law. His entire approach can be summarised in one statement from his judgment in Gee v Pritchard (1818) 2 Swans 402, 414:

The doctrines of this court ought to be as well settled and made as uniform almost as those of the common law, laying down fixed principles, but taking care that they are to be applied according to the circumstances of each case. I cannot agree that the doctrines of this court are to be changed with every succeeding judge. Nothing would inflict on me greater pain, in quitting this place, than the recollection that I had done anything to justify the reproach that the equity of this court varies like the Chancellor’s foot.

By now, Selden’s old complaint was obsolete. Like the Common Law, Equity had its own fixed rules and its own formalities. The discretion of the Lord Chancellor was contained within predictable limits.

The problem with this development was that, though no longer arbitrary in any meaningful sense, Equity had become rigid. Also, with the continued and accelerating growth of English society, giving all cases in Equity to be decided only by the Lord Chancellor and the Master of the Rolls led to long delays. The result was that cases could go on for years on end, and involved endless technicalities. This was parodied in the Charles Dickens novel Bleak House, in which the case of Jarndyce v Jarndyce is the background against which all action takes place. Dickens describes the case as follows:

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated, that no man alive knows what it means. The parties to it understand it least; but it has been observed that no two Chancery lawyers can talk about it for five minutes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause; innumerable young people have married into it; innumerable old people have died out of it. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce, without knowing how or why; whole families have inherited legendary hatreds with the suit. The little plaintiff or defendant, who was promised a new rocking-horse when Jarndyce and Jarndyce should be settled, has grown up, possessed himself of a real horse, and trotted away into the other world. Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; there are not three Jarndyces left upon the earth perhaps, since old Tom Jarndyce in despair blew his brains out at a coffee-house in Chancery Lane; but Jarndyce and Jarndyce still drags its dreary length before the Court, perennially hopeless.

To be sure, novelists exaggerate. But this does not seem an unfair description of Equity as Lord Eldon had left it. In real life, the was the case of Jennens v Jennens, which began in 1798, and was abandoned in 1915, when legal fees had exhausted the disputed estate of funds.[5]

  1. The Fusion of Law and Equity

For over five hundred years of its legal history, England had two distinct kinds of law – the Common Law and Equity. These had different forms and different remedies. They were administered in different courts. These different courts could sometimes reach different conclusions. The resulting uncertainty was mitigated in 1615, when it was decided that, in any dispute, the decision of the Court of Equity would take priority over those of the Common Law courts. But this was not an end to uncertainty or expense. It was still the case that there were two different kinds of law.

Take, for example, a dispute in which the Plaintiff wanted damages for non-performance of a contract to date and an injunction of specific performance in the future. The Common Law Courts could only award damages. The Court of Chancery could only issue an injunction. Therefore, a Plaintiff had to begin actions in each court, and fight these according to the rules and timings of each. It was possible to lose in one court and win in the other. Or victory in both courts could be several years apart. As for delays, as said, the Court of Chancery had only two Judges, the Lord Chancellor and the Master of the Rolls, while the Common Law Courts had twelve – though these were not sufficient for the massive increase in litigation during the 19th century. [6]

All these difficulties were addressed in a series of legal reforms that began in the 1830s and culminated in the Judicature Acts of the 1870s. The latter abolished all the historic courts of law and replaced them with a single High Court of Justice. Though divided into different branches for convenience – at present they are Chancery, Queen’s Bench and Family – these administer the same system of law. Any High Court Judge is able to apply the rules of Equity or of Common Law exactly as seems convenient to the case in hand.

Since then, Common Law and Equity have been fused. This is to say that Common Law and Equity retain their different approaches, but have the same procedure. In Principles of Equity Ashburner says “the two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters.”

There are alternative views of this fusion. According to Diplock LJ, in United Scientific Holdings Ltd v Burnley Borough Council [citation needed]:

The innate conservatism of English lawyers may have made them slow to recognise that by the Supreme Court of Judicature Act 1873 the two system of substantive and adjective and adjectival law formerly administered by courts of law and Courts of Chancery were fused.

Otherwise, according to Mummery LJ, in MCC Proceeds Inc. v Lehman Brothers [citation needed], the Judicature Acts were intended to achieve procedural improvements and not to get rid of the rules of common law.

Yet again, according to Browne-Wilkinson J, in Tinsley v Milligan [citation needed]:

More than 100 years has elapsed since the fusion of the administration of law and equity. The reality of the matter is that, in 1993, English law has single law of property made up of legal estates and equitable interests.

Whatever the case, Common Law and Equity are no longer in dispute, and Equity cannot be seen as an intrusion into the normal courts of law, but as an integral part of English Law.

  1. Equity Today

The main functions of Equity today are to provide new remedies in a society that continues to change, and also to infuse the law in general with a certain humanity. To see this function at work, let us consider these three examples.

The Mareva Injunction

The traditional view of the Common Law is that a Defendant cannot be deprived of assets until after judgment has been entered. This can lead to situations were a Defendant will, once process is served, or known to be in contemplation, remove assets from the jurisdiction.

In Mareva v International Bulkcarriers [1975] 2 Lloyd’s Rep 509, the Court of Appeal upheld a High Court injunction, restraining the Defendant from removing or dissipating its assets in advance of judgment. The Judge in the Chancery Division had granted this novel remedy using the rules of Equity. Because an Equitable remedy, it must be used in a reasonable manner. Inevitably, it must be sought ex parte. But the Plaintiff or Claimant must show a reasonable cause of action, and show that justice might be frustrated if such an order is not granted, and must give a cross-undertaking in damages – that is undertake to pay all reasonable costs imposed thereby on the Defendant if the main action is lost.

The Anton Piller Injunction

The Common Law view of entry and search for papers is enshrined in Entick v Carrington & Ors [1765] EWHC J98 (KB), (1765) 2 Wilson (2 November 1765) Search warrants can only be issued when the property to be entered and the things to be searched for are specified in the application. Anything else is a “fishing expedition,” and the Common Law will treat an unwarranted entry as trespass.

The problem with this approach is that, in many civil cases, especially those involving breaches of intellectual property, the things to be searched for cannot be specified in advance. Also, an inter partes application for search and seizure may lead to the removal or destruction of evidence.

And so, in Anton Piller v Manufacturing Processes Ltd [1976] Ch 55, the Court of Appeal upheld the creation in the Chancery Division of a new Equitable remedy. On an ex parte application – again with reasonable cause shown, and cross-undertakings given, the courts will grant a civil search warrant for execution before the service of process.

Contracts with Poor and Ignorant Persons

In the enforcement of contracts, the Common Law is mostly interested in what was agreed by the parties, and to what extent the agreement has not been performed. Humanity has no place in such proceedings. However, in Lloyds Bank Ltd v Bundy [1974] EWCA Civ 8, Denning MR imported to contract law the Equitable doctrine that “poor and ignorant” people are not to be held strictly liable for their contracts if some dishonourable advantage has been taken of them.

The facts of this case are less important than the words of the judgment. According to Denning MR:

Now let me say at once that in the vast majority of cases a customer who signs a bank guarantee or a charge cannot get out of it. No bargain will be upset which is the result of the ordinary interplay of forces. There are many hard cases which are caught by this rule. Take the case of a poor man who is homeless. He agrees to pay a high rent to a landlord just to get a roof over his head. The common law will not interfere. It is left to Parliament. Next take the case of a borrower in urgent need of money. He borrows it from the bank at high interest and it is guaranteed by a friend. The guarantor gives his bond and gets nothing in return. The common law will not interfere. Parliament has intervened to prevent moneylenders charging excessive interest. But it has never interfered with banks.

Yet there are exceptions to this general rule. There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms – when the one is so strong in bargaining power and the other so weak – that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the court.

Conclusion

In terms of the constitutional disputes of his own time, Selden had a case when he deplored the influence of Equity in English Law. Even then, however, he seems to have underrated the injustice and irrationality of the Common Law as it had developed, when not humanised by some set of external principles. Since then, Equity has been developed into a valuable – indeed, an essential – part of English Law. It is not arbitrary. At the same time, it is not clogged with technicalities. Since the 1870s, it has fully transcended its origins as a mere corrective and become as much a part of the Law of England as the Common Law and Acts of Parliament.

Notes

[1] You supply

[2] You supply

[3] R. Edwards & Nigel Stockwell, Trust and Equity (10th, Pearson Education, England 2011) 2-3

[4] Frederick William Maitland, Equity Also the Forms of Action at Common Law: Two Courses of Lectures, Cambridge University Press, 1932, p.19.

[5] Patrick Polden, Stranger than Fiction? The Jennens Inheritance in Fact and Fiction. Part Two: The Business of Fortune Hunting – http://www.moonzstuff.com/jennings/poldenarticle.pdf

[6] R.Edwards & Nigel Stockwell, Trust and Equity (10th, Pearson Education, England 2011) 5

 

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