What is Equity?

I noticed while reading the Free Speech and Music thread that there was considerable confusion about the nature of remedies available in defamation cases. This post should be read as an adjunct to my comment on that thread, and – it is hoped – it should make arguments about reputation, rights and compensation a little clearer.

Equity is that body of rules developed by the Court of Chancery before the Judicature Acts and since then in courts exercising equitable jurisdiction. It first emerged from under the common law due to inadequacies in the latter. By the late Middle Ages, the common law had become rigid, particularly in its procedure. Justice was not available to a petitioner whose grievance fell outside the established system of writs, or who sought to bring a claim against a locally powerful defendant. Importantly, in a time when common law judges supposedly ‘declared’ the law, equity openly admitted its judges made law. At least initially, it was unencumbered by precedent and decided cases according to ‘rules of equity and good conscience’, leading to Seldon’s jest that ‘equity is a roguish thing […] they should make the standard for its measure the chancellor’s foot’.

Even once its governing precepts became more settled, equity retained characteristics (apart from its autonomous court) distinguishing it from the common law. Most notable was the discretionary nature of equitable remedies. Common law damages — expressed solely in financial terms — were awarded ‘as of right’; to win the case was to win the remedy. Equity, by contrast, engaged in a complex balancing act to determine whether providing a remedy — usually non-monetary — was appropriate.

Many jurists — including Maitland — saw Equity as a ‘gloss’ on the common law, called in aid where the latter fell short by virtue of its universality:

The Cause why there is a Chancery is, for that Mens Actions are so divers and infinite, That it is impossible to make any general Law which may aptly meet with every particular Act, and not fail in some Circumstances.

Owing to this supplementary nature, equity is not a complete system of law. Only when the common law proved harsh or maladapted did equity assume a role. Maitland also raised a further distinction between the two jurisdictions: absent the common law, and equity would be insufficient to govern any sort of civil society. Abolish equity, by contrast, and the common law would have limped along all right; less fairly perhaps, but ultimately successfully. ‘At every point,’ Maitland notes, ‘equity presupposed the existence of common law’.

Whether all general law rights and remedies could have evolved through a single system of courts is a moot point. Wesley Newcomb Hohfeld discusses the peculiar circumstance of Pennsylvania, which between the years 1679 and 1836 administered justice without a ‘grant’ of chancery powers. At that time, Pennsylvania was populated largely by thrifty, commercially minded Quakers and developed rapidly. Hohfeld notes that — in time — the Pennsylvanian common law courts began to develop what look suspiciously like equitable principles.

However, it’s important not to view common law and equity as ‘two rival systems’. Only rarely have the jurisdictions been in active conflict, and this (to take the best known example) because James I sought to undermine the powers of parliament and the common law courts. The King wished to preserve the Crown’s prerogative powers, and his use of a popular and skilled Lord Chancellor to this end ensured that where rules of the common law and equity conflicted, equity prevailed. Nonetheless, such a close link between equity and the crown was not always pronounced, and cannot be presumed. In 1535, Henry VIII sought to abolish the whole law of trusts because people were using them to defraud the revenue.

Jurists have long drawn a distinction between equity and common law, a divergence that — as I have shown — is due to equity’s historical evolution. This does not mean that equity fails to be ‘law’ as traditionally defined. Hohfeld saw equity as a necessary part of law ‘in the broad sense’. It was needed, he argued, to make that law characteristic of western English speaking democracies a complete system.

Although early positivists like Jeremy Bentham were suspicious of the incremental nature of much law in common law countries, John Austin later accepted that judges had a genuine, if limited legislative role derived from the sovereign, be it parliament or the crown. H L A Hart’s sophisticated positivism accorded equity a special role historically in hard cases, where the law ‘ran out’. Even Ronald Dworkin — who denies judicial discretion — could argue that equity’s ‘weighty’ principles are essential in helping judges reach ‘right’ decisions. Sir Anthony Mason notes that equity’s broadly drafted maxims encompass a wider range of human behaviour than common law rules, underpinning equity’s capacity to ‘fit’ modern liberal democratic society.

If equity’s status as ‘law’ is not in dispute, the argument that it and the common law are now so similar that retaining a distinction between them is not useful has led to calls — both judicially and extra-judicially — for jurisdictional fusion. This latter form of fusion is contrasted with the administrative fusion effected by the Judicature Acts. By contrast, equity specialists like Patricia Loughlan argue that both jurisdictions are still developing substantive law; mix them at all and one engages in ‘fusion fallacy’.

Sir Anthony Mason — although not advocating jurisdictional fusion — points out that the Judicature Acts have allowed equity to influence the common law productively. Arguably, the latter is becoming more flexible even as equity solidifies and sets. When considering the relationship between equitable compensation and common law damages, for example, there are strong similarities now emerging between the two, and it can be difficult to draw meaningful distinctions between them.

Andrew Burrows calls on all lawyers ‘to take fusion seriously’, asserting that the historical distinction remains useful in only some areas of the law. In other areas (like Mason, he discusses the issue of damages and compensation) the distinction is unhelpful and the jurisdictions should be fused — legislatively, if necessary. Judges have also fuelled the debate; in Seager v Copydex Lord Denning treats the remedies available in both jurisdictions as a buffet, to be chosen from at will.

As a matter of evolutionary gradualism, fusion does seem to be occurring in some areas, especially in the ‘concurrent’ jurisdiction. A substantive doctrine of estoppel has evolved in Australian law. Mason points out that we have progressed a long way towards ‘recognition of an over-arching unity embracing the various classes of estoppel’. In a Hayekian sense, any fusion that does occur is best left to the incremental processes of the courts.

12 thoughts on “What is Equity?

  1. No it is not a bad thing at all. It shows that you have a love of knowledge and strong motivation to share insight with others. I think those are good qualities.

    Equity sounds like a catch all for a judge to cover rules made “because I thought it was a good idea at the time”. Although perhaps I am missing something from this concept.

  2. Thanks, Terje.

    Equity certainly started out in a highly discretionary fashion, but solidified over time – too much, some would argue. For a great picture of everything that was wrong with the equitable jurisdiction, check out Dickens’ Bleak House, with the interminable Jarndyce v Jarndyce law suit. Thought provoking stuff.

  3. It sounds to me like giving the court the power to legislate. In other words a form of judicial activism that causes so much upset in the USA these days. So long as you have a body dedicated to legislation (parliaments) why do judges need to retain this power?

    More significantly how do us regular suckers live within the rules if the judges can retrospectively make stuff up?

  4. Hate to be a pain SL, but the debate was really about common law versus statutes. Equity didn’t really get a run.

    However, to continue the lesson, equity survives primarily in the form of remedies such as injunctions, writs (habeus corpus and mandamus) and specific performance (eg of contracts). In practical terms the origins of these are largely lost, even within the court environment.

    Common law, with or without equitable remedies, is by contrast still a significant part of the law. It includes the torts of negligence, defamation, trespass, assault and battery (now mostly statutory) and nuisance (uncommon).

    It is judge made law based on principles established in cases. The judgements of appeal courts are binding on the courts below.

    The alternative to common law is statutes. This is so-called “black letter” law passed by parliament or in subordinate regulations. Courts can interpret statutes but cannot rewrite them, as they sometimes do with the common law.

    In libertarian terms I don’t believe there is any inherent advantage in equity, common law or statute. In democratic terms statute is to be preferred as it supposedly reflects the values of society However, judges are elected in the US and juries are used for many common law cases, putting it on a more democratic footing.

  5. There was also a great deal about ownership of reputation, and questions as to whether ‘protecting’ that reputation constituted an attempt to dick with what’s in other peoples’ heads. I was trying to point out ownership isn’t the issue, damage is. I then tried to give people a sense of the relevant remedies (almost always an injunction in defo cases).

    Hayek makes a very persuasive case for what lawyers call ‘the general law’, that is, common law and equity combined – judge-made law. HIs argument is spread out over three volumes, although I’ve condensed a fair bit of it in this post on Hayekian jurisprudence over at Catallaxy.

  6. inthe early days there was no equity inthe westren, but there was confortable state that our islamic system provaded us, because it is the complete system. and there is no equiy without islamic conistitution.

  7. I think Ali is demonstrating what we are up against if we want to live in a world of freedom and democracy! Like I keep saying: ideological battle of our time.

  8. Ali, I am curious about one point- what are your views on dhimmitude? In your ideal Islamic world, would non-muslims still be second-class citizens, without real rights if a muslim thinks he or she has been insulted in some way? If so, then your idea of a just and equitable world is warped! If a difference of opinion means automatic inequality, then your version is one I will fight against.

  9. I don’t think he’ll be back, Terje. And FWIW, I think Sharia has serious problems even meeting the definition of ‘legal system’, in a positivist sense at least. There may be some possibility if viewed through a natural lawyer’s spectacles – certainly room for debate.

    I should also point out that the courts of Chancery never developed a criminal jurisdiction, unlike Sharia. This was an early recognition that the King’s Courts (ie the secular arm) had jurisdiction on behalf of the broader community, rather than contending parties.

Comments are closed.