Property Law and Equity

 

Supreme Court of Judicature Act (Ireland), 1877.

Law and equity to be concurrently administered.

27. In every civil cause or matter commenced in the High Court of Justice law and equity shall be administered by the High Court of Justice and the Court of Appeal respectively according to the rules following:

(1.) If any plaintiff or petitioner claims to be entitled to any equitable estate or right, or to relief upon any equitable ground against any deed instrument or contract, or against any right title or claim whatsoever asserted by any defendant or respondent in such cause or matter, or to any relief founded upon a legal right, which heretofore could only have been given by a Court of Equity, the said Courts respectively, and every Judge thereof, shall give to such plaintiff or petitioner such and the same relief as ought to have been given by the Court of Chancery in a suit or proceeding for the same or the like purpose, properly instituted before the passing of this Act.

(2.) If any defendant claims to be entitled to any equitable estate or right, or to relief upon any equitable ground against any deed instrument or contract, or against any right title or claim asserted by any plaintiff or petitioner in such cause or matter, or alleges any ground of equitable defence to any claim of the plaintiff or petitioner in such cause or matter, the said Courts respectively, and every Judge thereof, shall give to every equitable estate right or ground of relief so claimed, and to every equitable defence so alleged, such and the same effect, by way of defence against the claim of such plaintiff or petitioner, as the Court of Chancery ought to have given if the same or the like matters had been relied on by way of defence in any suit or proceeding instituted in that Court for the same or the like purpose before the passing of this Act.

(3.) The said Courts respectively, and every Judge thereof, shall also have power to grant to any defendant in respect of any equitable estate or right, or other matter of equity, and also in respect of any legal estate right or title claimed or asserted by him, all such relief against any plaintiff or petitioner as such defendant shall have properly claimed by his pleading, and as the said Courts respectively, or any Judge thereof, might have granted in any suit instituted for that purpose by the same defendant against the same plaintiff or petitioner; and also all such relief relating to or connected with the original subject of the cause or matter, and in like manner claimed against any other person, whether already a party to the same cause or matter or not, who shall have been duly served with notice in writing of such claim pursuant to any rule of Court or any order of the Court, as might properly have been granted against such person if he had been made a defendant to a cause duly instituted by the same defendant for the like purpose; and every person served with any such notice shall thenceforth be deemed a party to such cause or matter, with the same right in respect of his defence against such claim as if he had been duly sued in the ordinary way by such defendant.

(4.) The said Courts respectively, and every Judge thereof, shall recognise and take notice of all equitable estates titles and rights, and all equitable duties and liabilities appearing incidentally in the course of any cause or matter, in the same manner in which the Court of Chancery would have recognised and taken notice of the same in any suit or proceeding duly instituted therein before the passing of this Act.

(5.) No cause or proceeding at any time pending in the High Court of Justice, or before the Court of Appeal, shall be restrained by prohibition or injunction; but every matter of equity on which an injunction against the prosecution of any such cause or proceeding might have been obtained, if this Act had not passed, either unconditionally or on any terms or conditions, may be relied on by way of defence thereto: Provided always, that nothing in this Act contained shall disable either of the said Courts from directing a stay of proceedings in any cause or matter pending before it if it shall think fit; and any person, whether a party or not to any such cause or matter, who would have been entitled, if this Act had not passed, to apply to any Court to restrain the prosecution thereof, or who may be entitled to enforce, by attachment or otherwise, any judgment decree rule or order, contrary to which all or any part of the proceedings in such cause or matter may have been taken, shall be at liberty to apply to the said Courts respectively, by motion in a summary way, for a stay of proceedings in such cause or matter, either generally, or so far as may be necessary for the purposes of justice; and the Court shall thereupon make such order as shall be just.

(6.) Subject to the aforesaid provisions for giving effect to equitable rights and other matters of equity in manner aforesaid, and to the other express provisions of this Act, the said Courts respectively, and every Judge thereof, shall recognise and give effect to all legal claims and demands, and all estates titles rights duties obligations and liabilities existing by the Common Law or by any custom, or created by any Statute, in the same manner as the same would have been recognised and given effect to, if this Act had not passed, by any of the Courts whose jurisdiction is hereby transferred to the said High Court of Justice.

(7.) The High Court of Justice and the Court of Appeal respectively, in the exercise of the jurisdiction vested in them by this Act, in every cause or matter pending before them respectively, shall have power to grant, and shall grant, either absolutely or on such reasonable terms and conditions as to them shall seem just, all such remedies whatsoever as any of the parties thereto may appear to be entitled to in respect of any and every legal or equitable claim properly brought forward by them respectively in such cause or matter, so that, as far as possible, all matters so in controversy between the said parties respectively may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters avoided.

 

Cases of conflict not enumerated.

28. [Recital.]

(1.) In the administration by the Court of the assets of any person who may die after the commencement of this Act, and whose estate may prove to be insufficient for the payment in full of his debts and liabilities, and in the winding up of any company under the Companies Acts, 1862 and 1867, whose assets may prove to be insufficient for the payment of its debts and liabilities and the costs of winding up, the same rules shall prevail and be observed as to the respective rights of secured and unsecured creditors, and as to debts and liabilities provable, and as to the valuation of annuities and future and contingent liabilities respectively, as may be in force for the time being under the law of bankruptcy with respect to the estates of persons adjudged bankrupt in Ireland; and all persons who in any such case would be entitled to prove for and receive dividends out of the estate of any such deceased person, or out of the assets of any such company, may come in under the decree or order for the administration of such estate, or under the winding up of such company, and make such claims against the same as they may respectively be entitled to by virtue of this Act.

(2.) No claim of a cestui que trust against his trustee for any property held on an express trust, or in respect of any breach of such trust, shall be held to be barred by any Statute of Limitations. This provision, however, is not to affect the enactments contained in the tenth section of the Real Property Limitation Act, 1874, when the same shall come into effect:

(3.) An estate for life without impeachment of waste shall not confer or be deemed to have conferred upon the tenant for life any legal right to commit waste of the description known as equitable waste, unless an intention to confer such right shall expressly appear by the instrument creating such estate.

(4.) There shall not, after the commencement of this Act, be any merger by operation of law only of any estate the beneficial interest in which would not be deemed to be merged or extinguished in equity.

(5.) A mortgagor entitled for the time being to the possession or receipt of the rents and profits of any land as to which no notice of his intention to take possession or to enter into the receipt of the rents and profits thereof shall have been given by the mortgagee, may sign and cause to be served notices to quit, determine tenancies, or accept surrenders thereof and sue for such possession, or for the recovery of such rents or profits, or to prevent or recover damages in respect of any trespass or other wrong relative thereto, in his own name only, unless the cause of action arises upon a lease or other contract made by him jointly with any other person; and such action suit or proceeding shall not be defeated by proof that the legal estate in the lands the possession of which is sought to be recovered, or in respect of which the rents or profits are sought to be recovered, or in respect to which the trespass or other wrong has been committed, is vested in such mortgagee: Provided always, that a mortgagor shall not be at liberty to exercise any of the powers hereby conferred if an express declaration that they shall not be exercised is contained in the mortgage.

(6.) Any absolute assignment, by writing under the hand of the assignor (not purporting to be by way of charge only), of any debt or other legal chose in action, of which express notice in writing shall have been given to the debtor trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be and be deemed to have been effectual in law (subject to all equities which would have been entitled to priority over the right of the assignee if this Act had not passed,) to pass and transfer the legal right to such debt or chose in action from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor: Provided always, that if the debtor, trustee, or other person liable in respect of such debt or chose in action shall have had notice that such assignment is disputed by the assignor or any one claiming under him, or of any other opposing or conflicting claims to such debt or chose in action, lie shall be entitled, if he think fit, to call upon the several persons making claim thereto to interplead concerning the same, or he may, if he think fit, pay the same into the High Court of Justice under and in conformity with the provisions of the Acts for the relief of trustees.

(7.) Stipulations in contracts, as to time or otherwise, which would not before the commencement of this Act have been deemed to be or to have become of the essence of such contracts in a Court of Equity, shall receive in all Courts the same construction and effect as they would have theretofore received in equity.

(8.) A mandamus or an injunction may be granted or a receiver appointed by an interlocutory order of the Court in all cases in which it shall appear to the Court to be just or convenient that such order should be made and any such order may be made either unconditionally or upon such terms and conditions as the Court shall think just; and if an injunction is asked, either before, or at, or after the hearing of any cause or matter, to prevent any threatened or apprehended waste or trespass, such injunction may be granted, if the Court shall think fit, whether the person against whom such injunction is sought is or is not in possession under any claim of title or otherwise, or (if out of possession) does or does not claim a right to do the act sought to be restrained under any colour of title, and whether the estates claimed by both or by either of the parties are legal or equitable.

(9.) In any cause or proceeding for damages arising out of a collision between two ships, if both ships shall be found to have been in fault, the rules hitherto in force in the High Court of Admiralty, so far as they have been at variance with the rules in force in the Courts of Common Law, shall prevail.

(10.) In questions relating to the custody and education of infants the Rules of Equity shall prevail.

(11.) Generally, in all matters not herein-before particularly mentioned in which there is any conflict or variance between the Rules of Equity and the Rules of the Common Law with reference to the same matter, the Rules of Equity shall prevail.

Land and Conveyancing Law Reform Act 2009

PART 4

Trusts of Land

Trusts of land.

18.— (1) Subject to this Part, where land is—

[[SLA 1882, ss. 2, 59, 60]

(a) for the time being limited by an instrument, whenever executed, to persons by way of succession without the interposition of a trust (in this Part referred to as a “ strict settlement ”), or

(b) held, either with or without other property, on a trust whenever it arises and of whatever kind, or

(c) vested, whether before or after the commencement of this Part, in a minor,

there is a trust of land for the purposes of this Part.

(2) For the purposes of—

(a) subsection (1)(a), a strict settlement exists where an estate or interest in reversion or remainder is not disposed of and reverts to the settlor or the testator’s successors in title, but does not exist where a person owns a fee simple in possession,

(b) subsection (1)(b), a trust includes an express, implied, resulting, constructive and bare trust and a trust for sale.

(3) Subject to this Part, a trust of land is governed by the general law of trusts.

(4) Conversion of a life estate into an equitable interest only does not affect a life owner’s liability for waste.

[LEA 1695]

(5) Where, by reason of absence from the State or otherwise, it remains uncertain for a period of at least 7 years as to whether a person upon whose life an estate or interest depends is alive, it shall continue to be presumed that the person is dead.

(6) If such presumption is applied to a person but subsequently rebutted by proof to the contrary, that person may bring an action for damages or another remedy for any loss suffered.

(7) In dealing with an action under subsection (6), the court may make such order as appears to it to be just and equitable in the circumstances of the case.

(8) Any party to a conveyance shall, unless the contrary is proved, be presumed to have attained full age at the date of the conveyance.

(9) This Part does not apply to land held directly for a charitable purpose and not by way of a remainder.

Trustees of land.

19.— (1) The following persons are the trustees of a trust of land—

[SLA 1882, ss. 38, 39]

(a) in the case of a strict settlement, where it—

(i) exists at the commencement of this Part, the tenant for life within the meaning of the Settled Land Act 1882 together with any trustees of the settlement for the purposes of that Act,

(ii) is purported to be created after the commencement of this Part, the persons who would fall within paragraph (b) if the instrument creating it were deemed to be an instrument creating a trust of land,

(b) in the case of a trust of land created expressly—

(i) any trustee nominated by the trust instrument, but, if there is no such person, then,

(ii) any person on whom the trust instrument confers a present or future power of sale of the land, or power of consent to or approval of the exercise of such a power of sale, but, if there is no such person, then,

(iii) any person who, under either the trust instrument or the general law of trusts, has power to appoint a trustee of the land, but, if there is no such person, then,

(iv) the settlor or, in the case of a trust created by will, the testator’s personal representative or representatives,

(c) in the case of land vested in a minor before the commencement of this Part or purporting so to vest after such commencement, the persons who would fall within paragraph (b) if the instrument vesting the land were deemed to be an instrument creating a trust of land,

(d) in the case of land the subject of an implied, resulting, constructive or bare trust, the person in whom the legal title to the land is vested.

(2) For the purposes of—

(a) subsection (1)(a)(ii) and (1)(c), the references in subsection (1)(b) to “trustee” and “trustee of the land” include a trustee of the settlement,

(b) subsection (1)(b)(iii) a power to appoint a trustee includes a power to appoint where no previous appointment has been made.

(3) Nothing in this section affects the right of any person to obtain an order of the court appointing a trustee of land or vesting land in a person as trustee.

Powers of trustees of land.

20.— (1) Subject to—

(a) the duties of a trustee, and

(b) any restrictions imposed by any statutory provision (including this Act) or the general law of trusts or by any instrument or court order relating to the land,

a trustee of land has the full power of an owner to convey or otherwise deal with it.

(2) The power of a trustee under subsection (1) includes the power to—

(a) permit a beneficiary to occupy or otherwise use the land on such terms as the trustee thinks fit,

(b) sell the land and to re-invest the proceeds, in whole or in part, in the purchase of land, whether or not situated in the State, for such occupation or use.

Overreaching for protection of purchasers.

21.— (1) Subject to subsection (3), a conveyance to a purchaser of a legal estate or legal interest in land by the person or persons specified in subsection (2) overreaches any equitable interest in the land so that it ceases to affect that estate or interest, whether or not the purchaser has notice of the equitable interest.

(2) For the purposes of subsection (1), the “person or persons specified”—

(a) shall be at least two trustees or a trust corporation where the trust land comprises—

(i) a strict settlement, or

(ii) a trust, including a trust for sale, of land held for persons by way of succession, or

(iii) land vested in or held on trust for a minor,

(b) may be a single trustee or owner of the legal estate or interest in the case of any other trust of land.

(3) Subsection (1) does not apply to—

(a) any conveyance made for fraudulent purposes of which the purchaser has actual knowledge at the date of the conveyance or to which the purchaser is a party, or

(b) any equitable interest—

(i) to which the conveyance is expressly made subject, or

(ii) protected by deposit of documents of title relating to the legal estate or legal interest, or

(iii) in the case of a trust coming within subsection (2)(b), protected by registration prior to the date of the conveyance or taking effect as a burden coming within section 72(1)(j) of the Act of 1964 (or, in the case of unregistered land, which would take effect as such a burden if the land were registered land).

(4) In subsection (3)(b)(iii), “registration” means registration in the Registry of Deeds or Land Registry, as appropriate.

(5) Where an equitable interest is overreached under this section it attaches to the proceeds arising from the conveyance and effect shall be given to it accordingly.

(6) Nothing in this section affects the operation of the Act of 1976.

Resolution of disputes.

22.— (1) Any person having an interest in a trust of land, or a person acting on behalf of such a person, may apply to the court in a summary manner for an order to resolve a dispute between the—

(a) trustees themselves, or

(b) beneficiaries themselves, or

(c) trustees and beneficiaries, or

(d) trustees or beneficiaries and other persons interested,

in relation to any matter concerning the—

(i) performance of their functions by the trustees, or

(ii) nature or extent of any beneficial or other interest in the land, or

(iii) other operation of the trust.

(2) Subject to subsection (3), in determining an application under subsection (1) the court may make whatever order and direct whatever inquiries it thinks fit in the circumstances of the case.

(3) In considering an application under subsection (1)(i) and (iii) the court shall have regard to the interests of the beneficiaries as a whole and, subject to these, to—

(a) the purposes which the trust of land is intended to achieve,

(b) the interests of any minor or other beneficiary subject to any incapacity,

(c) the interests of any secured creditor of any beneficiary,

(d) any other matter which the court considers relevant.

(4) In subsection (1), “person having an interest” includes a mortgagee or other secured creditor, a judgment mortgagee or a trustee.

(5) Nothing in this section affects the jurisdiction of the court under section 36 of the Act of 1995.

Materials

The Relations between Equity and Law

(1913) 11 Mich.LR. 537
PROFESSOR MAITLAND, throughout his entertaining series of lectures, maintains, with ever recurring emphasis, that the relation between the rules of equity and the rules of law, with only one or two possible exceptions, “was not one of conflict.” In order to have an adequate statement of Professor Maitland’s views before us, it will be necessary to give a fairly lengthy quotation from his Lectures (p. 17):
“Then as to substantive law the Judicature Act of 1873 took occasion to make certain changes. In its 25th section it laid down certain rules about the administration of insolvent estates, about the application of statutes of limitation, about waste, about merger, about mortgages, about the assignment of choses in action, and so forth, and it ended with these words:
“‘ Generally in all matters not hereinbefore particularly mentioned, in which there is any conflict or variance between the rules of equity and the rules of common law with reference to the same matter, the rules of equity shall prevail.’
” Now it may well seem to you that those are very important words, for perhaps you may have fancied that at all manner of points there was a conflict between the rules of equity and the rules of common law, or at all events a variance. But the clause that I have just read has been in force now for over thirty years, and if you will look at any good commentary upon it you will find that it has done very little-it has been practically without effect. You may indeed find many cases in which some advocate, at a loss for other arguments, has appealed to the words of this clause as a last hope; but you will find very few cases indeed in which that appeal has been successful. I shall speak of this more at large at another time, but it is important that even at the very outset of our career we should form some notion of the relation which existed between law and equity in the year 1875. And the first thing that we have to observe is that this ,·elation was not one of confiict. Equity had come not to destroy the law, but to fulfil it. Every jot and every tittle of the law was to be obeyed, but when all this had een done something might yet be needed, something that equity would require….
“Let me take an instance or two in which something that may for one moment look like a conflict becomes no conflict at all when it is examined. Take the case of a trust. An examiner will sometimes be told that whereas the common law said that the trustee was the owner of the land, equity said that the cestui que trust was the owner. Well here in all conscience there seems to be conflict enough. Think what this would mean were it really true. There are two courts of coordinate jurisdiction-one says that A is the owner, the other says that B is the owner of Blackacre. That means civil war and utter anarchy. Of course the statement is an extremely crude one, it is a misleading and dangerous statement-how misleading, how dangerous, we shall see when we come to examine the nature of equitable estates. Equity did not say that the cestui que trust was the owner of the land, it said that the trustee was the owner of the land, but added that he was bound to hold the land for the benefit of the cestui que trust. There was no conflict here. Had there been a conflict here the clause of the Judicature Act which I have lately read would have abolished the whole law of trusts. Common law says that A is the owner, equity says that B is the owner, but equity is to prevail, therefore B is the owner and A has no right or duty of any sort or kind in or about the land. Of course the Judicature Act has not ;,cted in this way; it has left the law of trusts just where it stood, because it found no conflict, no variance even, between the rules of the common law and the rules of equity.”

As against the proposition that there is no appreciable conflict between law and equity, the thesis of the present writer is this: while a large part of the rules of equity harmonise with the various rules of law, another large part of the rules of equity-more especially those relating to the so-called exclusive and auxiliary jurisdictions of equity-<:onflict with legal rules and, as a matter of substance, annul or negative the latter pro tanto. As just indicated, there is, it is believed, a very marked and constantly recurring conflict between equitable and legal rules relating to various jural relations; and whenever such conflict occurs, the equitable rule is, in the last analysis, paramount and determinative. Or, putting the matter in another way, the so-called legal rule in every such case has, to that extent, only an apparent validity and operation as a matter of genuine law. Though it may represent an important stage of thought in the solution of a given problem, and may also connote very important possibilities as to certain other, closely associated (and valid) jural relations, yet as regards the very relation in which it suffers direct competition with a rule of equity, such a conflicting rule of law is, pro tanto, of no greater force than an unconstitutional statute.
If all this be so, it would seem to follow that the brilliant historian’s discussion of the eleventh and last subdivision of the 25th section of the Judicature Act of 1873 is inadequate and misleading. If this particular sub­ division, considered as an isolated entity, has, as asserted by Maitland, “produced very little fruit,” ,Jne sufficient explanation would be that this last provision was evidently added only out of abundance of caution. Even if it had not been enunciated in ipsissimis verbis, such a provision would have been implicit in the language and intent of the Act as a whole. But, more than that, the full content of subdivision 11 had already been covered, with explicit and industrious formality, by the seven subdivisions of section 24 and the first ten subdivisions of section 25. Although, in these preceding subdivisions, nothing was said in very terms concerning the conflict of law and equity, it is clear that they were intrinsically sufficient for that purpose, and that the framers of the Act thought that they had been regulating precisely that sort of conflict; for do they not say in the final subdivision of section 25:
” Generally in all matters not hereinbefore particularly mentioned, in which there is any conflict or variance between the rules of equity and the rules of the common law with reference to the same matter, the rules of equity shall prevail.”
The reasons already given would seem adequate to explain why subdivision 11, considered as :i separate entity, has appeared to have so little effect. But, in addition, it is well to remember that the Common Law Procedure Act of 1854, in providing both for equitable defenses and for equitable replications had at that comparatively early day brought about a partial “fusion” of law and equity; so that already for two decades prior to their enactment the essential scope and operation of the Judicature Acts, and likewise many of the concrete problems involved, had been made familiar to the Bench and Bar of England. The fundamental idea of subdivision 11 of section 25 was anything but a novelty!

 

Report of the Judicature Commission

THE FIRST REPORT OF THE JUDICATURE COMMISSION 1869
In commencing the inquiry which we were directed by Your Majesty to make, the first subject that naturally presented itself for consideration was the ancient division of the Courts, into the Courts of Common Law, and the Court of Chancery, founded on the well known distinction in our law between Common Law and Equity.
This distinction led to the establishment of two systems of Judicature, organized in different ways, and administering justice on different and some­ times opposite principles, using different methods of procedure, and applying different remedies. Large classes of rights, altogether ignored by the Courts of Common Law, were protected and enforced by the Court of Chancery, and recourse was had to the same Court for the purpose of obtaining a more adequate protection against the violation of Common Law rights than the Courts of Common Law were competent to afford. The Common Law Courts were confined by their system of procedure in most actions,-not brought for recover­ ing the possession of land,-to giving judgment for debt or damages, a remedy which has been found to be totally insufficient for the adjustment of the compli­ cated disputes of modern society. The procedure at Common Law was founded on the trial by jury, and was framed on the supposition that every issue of fact was capable of being tried in that way; but experience has shown that supposition to be erroneous. A large number of important cases frequently occur in the practice of the Common Law Courts which cannot be conveniently adapted to that mode of trial; and ultimately those cases either find their way into the Court of Chancery, or the Suitors in the Courts of Common Law are obliged to have recourse ro private arbitration in order to supply the defects of their inadequate procedure.
The evils of this double system of Judicature, and the confusion and conflict of jurisdiction to which it has led, have been long known and acknowledged.
The subject engaged the attention of the Commissioners appointed in 1851 to inquire into the constitution of the Court of Chancery. Those learned Commissioners, after pointing out some of the defects in the administration of justice arising out of the conflicting systems of procedure and modes of redress adopted by the Courts of Common Law and Equity respectively, state their opinion, that “a practical and effectual remedy for many of the evils in question may be found in such a transfer or blending of jurisdiction, coupled with such other practical amendments, as will render each Court competent to administer complete justice in the cases which fall under its cognizance.”
In like manner the Commissioners appointed in 1850 to inquire into the constitution of the Common Law Courts make, in their Second Report, a very similar recommendation. They report that ” it appeared to them that the Courts of Common Law, to be able satisfactorily to administer justice, ought to possess in all matters within their jurisdiction the power to give all the redress necessary to protect and vindicate Common Law rights, and to prevent wrongs, whether existing or likely to haf pen unless prevented;” and further that “a consolidation of all the elements o a complete remedy in the same Court was obviously desirable, not to say imperatively necessary, to the establishment of a consistent and rational system of procedure.”
In consequence of these Reports several Acts of Parliament have been passed for the purpose of carrying out to a limited extent the recommendations of the Commissioners.
By virtue of these Acts the Court of Chancery is now, not only empowered, but bound to decide for itself all questions of Common Law without having recourse, as formerly, to the aid of a Common Law Court, whether such questions arise incidentally in the course of the suit, or constitute the foundation of a suit, in which a more effectual remedy is sought for the violation of a common law right, or a better protection against its violation than can be had at Common Law. The Court is further empowered to take evidence orally in open Court, and in certain cases to award damages for breaches of contract or wrongs as at Common Law; and Trial by Jury,-the great distinctive feature of the Common Law,-has recently, for the first time, been introduced into the Court of Chancery.
On the other hand, the Courts of Common Law are now authorized to compel discovery in all cases, in which a Court of Equity would have enforced it in a suit instituted for the purpose. A limited power has been conferred on Courts of Common Law to grant injunctions, and to allow equitable defences to be pleaded, and in certain cases to grant relief from forfeitures. These changes, however, fall far short of the recommendations of the Common Law Commissioners, who in their Final Report expressed the opinion, that power should be conferred on the Common Law Courts ” to give, in respect of rights there recognized, all the protection and redress which at present can be obtained in any jurisdiction.”
The alterations, to which we have referred, have no doubt introduced con­ siderable improvements into the procedure both of the Common Law and Equity Courts; but, after a careful consideration of the subject, and judging now with the advantage of many years’ experience of the practical working of the systems actually in force, we are of opinion that ” the transfer or blending of jurisdiction” attempted to be carried out by recent Acts of Parliament, even if it had been adopted to the full extent recommended by the Commissioners, is not a sufficient or adequate remedy for the evils complained of, and would at best have mitigated but not removed the most prominent of those evils.
The authority now possessed by the Court of Chancery to decide for itself all questions of Common Law has no doubt worked beneficially. But the mode of taking evidence orally before an Examiner, instead of before the Judge who has to decide the case, has justly caused much dissatisfaction; and Trial by Jury,­ whether from the reluctance of the Judge or of the Counsel to adopt such an innovation, or from the complexity of the issues generally involved in the suit, or because the proceedings in Chancery do not give rise to so many conflicts of evidence as proceedings in other Courts,-has been attempted in comparatively few cases.
In the Common Law Courts the power to compel discovery has been exten­ sively used, and has proved most salutary; but the jurisdiction conferred on those Courts to grant injunctions and to allow equitable defences to be pleaded has been so limited and restricted,-the former extending only to cases where there has been an actual violation of the right, and the latter being confined to those equitable defences where the Court of Chancery would have granted a perpetual and unconditional injunction,-that these remedies have not been of much practical use at Common Law, and Suitors have consequently been obliged to resort to the Court of Chancery, as before, for the purpose of obtaining a complete remedy.
Much therefore of the old mischief still remains, notwithstanding the changes which have been introduced; and the Court of Chancery necessarily continues to exercise the jurisdiction of restraining actions at law on equitable grounds, and even claims to exercise that jurisdiction in cases where an equitable defence might be properly pleaded at Common Law.
It may be further observed, in illustration of the evils of the double pro­ cedure, that whenever a new class of business arises, such as the litigation arising out of railway and other joint stock companies, proceedings, frequently of an experimental character, are commenced both at Law and in Equity by different suitors, leading to the inconvenience of protracted litigation, and the danger of conflicting judgments. We may refer to the litigation lately pending between the sellers of railway shares and the jobbers on the Stock Exchange, by which the sellers sought to obtain an indemnity from the jobbers against calls. The litigation began in a Court of Common Law. A suit in Equity soon followed, by a different plaintiff against the same defendants, both suits asking for similar redress. The Court of Common Law decided in favour of the plaintiff. The Court of Equity shortly after delivered judgment to the same effect. The defendants appealed in both suits; in the one case to the Exchequer Chamber, in the 0ther to the Court of Appeal in Chancery. Both appeals were pending at the same time, but there was no official machinery by which the Judges of Appeal in Chancery and the Court of Exchequer Chamber could enter into communication with the view of arriving at a common result. The Court of Exchequer Chamber reversed the judgment of the Court below; the Court of Appeal in Chancery, acting independently of the Court of Exchequer Chamber, arrived at the same conclusion, and about the same time delivered its judgment, reversing the decision of the Vice-Chancellor. The Defendants were thus sub­ jected to litigation (at the instance, no doubt, of different parties), carried on at the same time in different Courts, and exposed to the risk of conflicting decisions, those Courts operating under different forms of procedure, and being controlled by different Courts of Appeal.
The litigation arising out of Joint Stock Companies has constituted a very large proportion of the business which has engaged the attention of Courts of Law and Equity for some years. Directors of Joint Stock Companies fill the double character of agents and trustees for the companies and shareholders; and the effect of their acts and representations has frequently been brought into question in both jurisdictions, and sometimes with opposite results. The expense thus needlessly incurred has been so great, and the perplexity thereby occasioned in the conduct of business so considerable, as to convince most persons, who have followed the development of this branch of the law, of the necessity that exists for a tribunal invested with full power of dealing with all the complicated rights and obligations springing out of such transactions, and of administering complete
and appropriate relief, no matter whether the rights and obligations involved are what are called legal or equitable. We are of opinion that the defects above adverted to cannot be completely remedied by any mere transfer or blending of jurisdiction between the Courts as at present constituted; and that the first step towards meeting and surmounting the evils complained of will be the consolidation of all the Superior Courts of Law and Equity, together with the Courts of Probate, Divorce, and Admiralty, into one Court, to be called “Her Majesty’s Supreme Court,” in which Court shall be vested all the jurisdiction which is now exercisable by each and all the Courts so consolidated.

This consolidation would at once put an end to all conflicts of jurisdiction. No suitor could be defeated because he commenced his suit in the wrong Court, and sending the suitor from equity to law or from law to equity, to begin his suit over again in order to obtain redress, will be no longer possible.

Cases

Britain v Rossiter

Court of Appeal (1883) 11 Q.B.D. 123; 48 L.J.Q.B. 362; 40 L.T. 240; 27 W.R. 482
On Saturday, April 21, the plaintiff entered into a parol contract of service for one year with the defendant as clerk and accountant, the contract to com­ mence the following Monday. Since, although the agreement was made on the Saturday, the actual period of service was to run for one year from the following Monday, it fell within section 4 of the Statute of Frauds 1677 (by which no action could be brought upon a contract not in writing which was not to be performed within one year of entering into it) and was unenforceable. The plaintiff argued that the original contract was void and so the court could imply a contract commencing on the Monday which, being a contract to be completely performed within one year, was not caught by section 4. The court held that the contract was not void-only unenforceable-and that a new contract could not be implied.
In the alternative the plaintiff pleaded that there were such acts of part performance that the court should enforce the original contract of April 21.

Counsel FOR THE DEFENDANT: . . . The equitable doctrine of part perform­ ance, whereby the operation of the Statute of Frauds has been defeated, has always been confined to contracts for the sale and purchase of lands, and has not been extended to contracts of other kinds.

Counsel FOR THE PLAINTIFF : A contract falling within the prohibition of the Statute of Frauds, s. 4, is void to all intents and purposes. . . . Therefore the contract of Saturday the 21st of April may be treated as no contract, and a fresh contract of ervice may be implied from the acts of the parties.
As to the doctrine of part performance, it is true that the Court of Chancery formerly applied it only to contracts for the sale of land, and there may have been a difficulty in decreeing specific performance of a contract for personal services: Pickering v. Bishop of Ely ((1853) 3 D.M. & G. 914); fohnson v. Shrewsbury and Birmingham Ry. Co. ( (1843) 2 Y. & C.(Ch.) 249). But the Court of Chancery would not allow the provisions of a statute to defeat a claim, which good conscience required to be carried out: Bond v. Hopkins ( (1802) 1 Sch. & Le£. 413); Morphett v. fones ( (1818) 1 Swan. 172). The defence set up by the defendant is wholly against good conscience. And now by the Judicature S. 25, subs. 7, the doctrines of equity may be applied to cases decided in the Common Law Divisions.

BRETT L.J.: . . . It has been further contended that as the contract of the 21st of April has been partly performed, it may be enforced, notwithstanding the Statute o Frauds, and that the equitable doctrine as to part performance may be applied to it. It is well known that where a contract for the sale of land had been partly performed, Courts of Equity did in certain cases recognise and enforce it; but this doctrine was exercised only as to cases concerning land, and was never extended to contracts like that before us, because they could not be brought within the jurisdiction of Courts of Equity. Those Courts could not entertain suits for specific performance of contracts of serivice, and therefore a case like the present could not come before them. As to the application of the doctrine of part performance to suits concerning land, I will merely say that the cases in the Court of Chancery were bold decisions on the words of the statute.
The doctrine was not extended to any other kind of contract before the Judi­ cature Acts : can we so extend it now? I think that the true construction of the Judicature Acts is that they confer no new rights; they only confirm the rights which previously were to be found existing in the Courts either of Law or of Equity; if they did more, they would alter the rights of parties, whereas in truth they only change the procedure. Before the passing of the Judicature Acts no one could be charged on this contract either at law or in equity; and if the plaintiff could now enforce this contract, it would be an alteration of the law. I am of opinion that the law remains as it was, and that the plaintiff cannot maintain this action for breach of contract.

COTTON L.J.: . . . It has been contended that although the express contract cannot be enforced, nevertheless a contract which can be enforced may be implied from conduct of the parties, and it has been argued that the rule does not apply which forbids a contract to be implied where an express contract has been con­ cluded, because the contract was void under the provisions of the Statute of Frauds, s. 4: but in my opinion that is not the true construction of the enact­ ment, which provides that no action shall be brought to charge any person upon the verbal contract.
In the first place, I may observe that to hold that this enactment makes void verbal contracts falling within its provisions, would be inconsistent with the doctrine of the Courts of Equity with regard to part performance in suits con­ cerning land. If such contracts had been rendered void by the legislature, Courts of Equity would not have enforced them; but their doctrine was that the statute did not render the contracts void, but required written evidence to be given of them : and Courts of Equity were accustomed to dispense with that evidence in certain instances. . . .
It has been further argued that the contract may be enforced, because it has been in part performed. Let me consider what is the nature of the doctrine as to part performance. It has been said that the principle of that doctrine is that the Court will not allow one party to a contract to take advantage of part performance of the contract, and to permit the other party to change his position or incur expense or risk under the contract, and then to allege that the contract does not exist; for this would be contrary to conscience. It is true that some dicta of judges may be found to support this view, but it is not the real explana­ tion of the doctrine, for if it were, part-payment of the purchase-money would defeat the operation of the statute. But it is well-established and cannot be denied that the receipt of any sum, however large, by one party under the contract, will not entitle the other to enforce a contract which comes within the 4th sect. What can be mor contrary to conscience than that after a man has received a large sum of money in pursuance of a contract, he should allege that it was never entered into? The true ground of the doctrine in equity is that if the Court found a man in occupation of land, or doing such acts with regard to it as would, prima facie, make him liable at law to an action of trespass, the Court would hold that there was strong evidence from the nature of the user of the land that a contract existed, and would therefore allow verbal evidence to be given to show the real circumstances under which possession was taken. Does this doctrine, when so explained, apply to the present case? I will first mention the provisions of the Judicature Act, 1873, s. 24, subs. 4, 7. These provisions enable the Courts of Common Law to deal with equitable rights and to give relief upon equitable grounds: but they do not confer new rights: the different divisions of the High Court may dispose of matters within the juris­ diction of the Chancery and the Common Law Courts; but they cannot proceed upon novel principles. Could the present plaintiff have obtained any relief in equity before the passing of the Judicature Acts? I think that he could not. The doctrine as to part performance has always been confined to questions relating to land; it has never been applied to contracts of service, and it ought not now to be extended to cases in which the Court of Chancery never interfered.

THESIGER L.J.: . . . If we turn to Equity, we find that it has been held as regards a sale of land, that when there has been an entry by one party to the contract, that is an overt act apparently done under a contract which entitles the Court to look at the contract to see to what contract the overt act is really referable. I confess that on principle I do not see why a similar doctrine should not be applied to the case of a contract of service, and as the doctrine of Equity is based upon the theory that the Court will not allow a fraud on the part of one party to a contract on the faith of which the other party has altered his position, I do not see why a similar doctrine should not comprehend a contract of service. At the same time I feel that doctrines of this nature are not to be unwarrantably extended, and that we ought not to go further than the decisions of Courts of Equity as to the principles of relief, and as to the instances to which the doctrine of part performance is to be applied. Therefore, as we cannot clearly see that the equitable doctrine of part performance ought to be extended to contracts of service, I think that we ought to keep within the limits observed by the Court of Chancery before the passing of the Judicature Acts, 1873, 1875.

 

Walsh v Lonsdale

Court of Appeal (1882) 21 Ch.D. 9; 52 L.J.Ch. 2; 46 L.T. 858; 31 W.R. 109

 

JESSEL M.R.: It is not necessary on the present occasion to decide finally what the rights of the parties are. If the Court sees that there is a fair question to be decided it will take security so that the party who ultimately succeeds may be in the right position. The question is one of some nicety. There is an agreement for a lease under which possession has been given. Now since the Judicature Act the possession is held under the agreement. There are not two estates as there were formerly, one estate at common law by reason of the payment of the rent from year to year, and an estate in equity under the agreement. There is only one Court, and the equity rules prevail in it. The tenant holds under an agreement for a lease. He holds, therefore, under the same terms in equity as if a lease had been granted, it being a case in which both parties admit that relief is capable of being given by specific performance. That being so, he cannot complain of the exercise by the landlord of the same rights as the landlord would have had if a lease had been granted. On the other hand, he is protected in the same way as if a lease had been granted; he cannot be turned out by six months’ notice as a tenant from year to year. He has a right to say, “I have a lease in equity, and you can only re-enter if I have committed such a breach of covenant as would if a lease had been granted have entitled you to re-enter according to the terms of a proper proviso for re-entry.” That being so, it appears to me that being a lessee in equity he cannot complain of the exercise of the right of distress merely because the actual parchment has not been signed and sealed.

CoTTON L.J.: I am of the same opm10n. The question as to whether the Defendant was right in putting in this distress must depend upon questions which have to be decided at the hearing of the cause, and the only question we have now to consider is what is right to be done between the parties for the purpose of keeping things in statu quo, and preserving their rights until the questions between them can be decided.
This landlord has put in a distress. He is right if the lease under which the tenant must be taken to be holding this land or premises would give him rent beforehand. This is not the time for finally deciding whether he is entitled to any and to what rent payable beforehand, but the question before us is whether we are now at once to deprive the landlord of any security which he has in his hands for the payment of his rent? In my opinion we ought not. Of course, before allowing the landlord to retain the security given by the
distress we must be satisfied that there is a prima facie case in his favour, and
in my opinion there is. It would be wrong for us absolutely to decide now how this lease should be framed, for there are many matters which would require consideration, one clause may depend on another, and the question how one clause is to be dealt with may affect the other provisions in the kase. But it is my present opinion that there ought to be reserved as dead-rent a rent which will correspond to the minimum number of looms which the Plaintiff is to run in any particular year, and after the first year it is to be always 540.

LINDLEY L.J.: . . . I think Mr. Justice Fry has inserted too large a sum in his order, because he has treated the whole rent as payable in advance. l do not think that correct; but to the extent of the minimum rent, which comes to £810, it appears to me we ought not to compel the landlord to withdraw unless
on the terms of the tenant paying that money into Court, and of course the proper form of lease will be settled hereafter if the action goes on in the regular course.

 

 

 

Joseph v Lyons

 

Court of Appeal (1884) 15 Q.B.D. 280; 54 L.J.Q.B. l; 51 L.T. 740; 33 W.R. 145

 

Corron L.J.: The plaintiff sues for goods which, he alleges, have been converted or detained from him by the defendant. The bill of sale to the plaintiff purports to assign the after-acquired stock-in-trade. The first question is whether the plaintiff has acquired any property in that stock-in-trade. In Holroyd v. Marshall ( (1862) 10 H.L.C. 191) it was held, with some doubt on the part of some of the Law Lords, that when future-acquired property is assigned, pursuant to a contract capable of specific performance, that property, when it has been sufficiently ear-marked and identified, may pass to the assignee and become his property; it may be that there was not a valid assignment at law, but where there was a valuable consideration, the assignment might be valid in equity. The law stood in this position before the Supreme Court of Judicature Acts, 1873, 1875. It has been argued before us that the difference between legal and equitable interests has been swept away by those statutes. But it was not intended by the legislature, and it has not been said, that legal and equitable rights should be treated as identical, but that the Courts should administer both legal and equitable principles. I think that the clause enacting that the rules of equity shall prevail (Supreme Court of Judicature Act, 1873, s. 25, sub-s. 11) shews that it was not intended to sweep away altogether the principles of the common law. And it was not intended that a conveyance void at common law should, after the passing of those statutes, become valid as a conveyance at common law. I repeat what I said in Clements v. Matthews ( (1883) 11 Q.B.D. 808, 814). I think that this bill of sale, although it was a deed, gave no legal title. Then reliance was placed upon a contract that the after-acquired property should belong to the plaintiff: it was the rule at common law that the property in future-acquired goods should not pass, except, perhaps, where there was a contract that the property in them should pass : that rule still remains in force; and it follows that the legal title remains as it stood at law; only an interest in equity passed to the plaintiff. Then the defendant had the legal title : he had no notice of the equitable title existing in the plaintiff: at least nothing has been proved shewing that he had notice: here the defendant was a pawnbroker, and he was not bound to search the register of bills of sale: he was not bound to inquire as to goods pledged with him in the course of his business. Of course, if he had been informed of the existence of the bill of sale, he would have been bound to search the register in order to inform himself of its contents; but I think that the doctrine as to constructive notice has gone too far, and I shall not extend it. The appeal is successful, and must be allowed.
Huddleston, B., appears to have relied upon the decision of Lopes, J., in Lazarus v. Andrade ( (1880) 5 C.P.D. 318): I think that the decision in that case was right; but I cannot agree with what I gather to have been the view of the learned judge as to the effect of the Supreme Court of Judicature Acts, 1873, 1875. I do not think that they have abolished the distinction between legal and equitable principles.

LINDLEY L.J.: . . . Reliance was placed upon the provisions of the Supreme Court of Judicature Acts, 1873, 1875, and it was contended that the effect of them was to abolish the distinction between law and equity. Certainly that is not the effect of those statutes : otherwise they would abolish the distinction between trustee and cestui que trust. In the present case, the defendant has the legal title, and he has not had either express or even constructive notice of the plaintiff’s equitable title. It seems to me that the modern doctrine as to constructive notice has been pushed too far, and I do not feel inclined to extend it. This appeal must be allowed.

Cowell v Rosehill Racecourse Co Limited

High Court of Australia (1937) 56 C.L.R. 605; 11 A.L.J. 32; A.L.R. 273

 

LATHAM C.J.: In Hurst’s Case ([1915] 1 K.B. 1) it was held that Wood v. Leadbitter ( (1845) 13 M. & W. 838), even if originally rightly decided, was no longer good law. In Wood v. Leadbitter it was decided that a mere licence, that is, a permission to do something which without permission would be unlawful, was revocable, whether it was under seal or not, but that a licence coupled with an interest was not revocable. Kerrison v. Smith ([1897] 2 Q.B. 445) shows that where a licence is revoked the actual revocation may (if there be a contract) be a breach of contract for which damages are recoverable. Thus a person ejected from a place of entertainment could in such a case at least get back the price of admission which he had paid. It was not suggested in Wood v. Leadbitter that the existence of a contract not to revoke the licence made the licence irrevocable in the sense that it could not be effectually (though possibly wrongfully) revoked.
The doctrine of Wood v. Leadbitter is clear and coherent. If a man creates a proprietary right in another and gives him a licence to go upon certain land in order that he may use or enjoy that right, the grantor cannot divest the grantee of his proprietary right and revest it in the grantor, or simply determine it, by breaking the agreement under which the licence was given. The grantee owns the property to which the licence is incident, and this ownership, with its incidental licence, is unaffected by what purports to be a revocation of the licence. The revocation of the licence is ineffectual. Easements and profits a prendre supply examples of interests to which licences to enter and remain upon land may be incidental.
The majority judgment in Hurst’s Case modified, if it did not reject, the law of Wood v. Leadbitter by holding that a “right to see” a spectacle was an interest which could be granted so that a licence to go into a theatre or a racecourse to see a play or to witness races was, when given for value, irre­ vocable because it was a licence coupled with an interest. Further, the majority judgment held that, in so far as Wood v. Leadbitter rested upon the rule that no incorporeal hereditament affecting land can be created or transferred otherwise
than by deed, the f udicature Act had radically changed the position. The court was now bound to give effect to equitable doctrines and would therefore ignore the absence of a seal and would (as in Frogley v. Earl of Lovelace (1859) Johns.
333) grant an injunction to protect the right granted.
The first ground of the decision, in my opinion, ignores the distinction between a proprietary right and a contractual right. In Wood v. Leadbitter there was obviously a contractual “interest.” The plaintiff had bought and paid for a contractual right to go upon land for the purpose of witnessing a spectacle.

But this fact, which was treated as irrelevant in Wood v. Leadbitter, is made the foundation of the first ground of the judgment in Hurst’s Case. In that case Buckley L.J. interpreted “interest” in a sense quite different from that in
which the word was used in Wood v. Leadbitter. The learned judge said that there was a grant of a right to come to see a spectacle. The licence is described as “only something granted to him for the purpose of enabling him to have that which had been granted to him, namely, the right to see.” The “right to see” is treated as the “interest” which has been “granted.”
It is clear that the learned judge used the word ” grant” in a sense very different from that in which it was used in Wood v. Leadbitter. It was there used in relation to interests in land which were, if they existed at all, clearly proprietary interests. The right to sec a spectacle cannot, in the ordinary sense of legal language, be regarded as a proprietary interest. Fifty thousand people who pay to see a football match do not obtain fifty thousand interests in the football ground. A contrary view produces results which may fairly be described as remarkable. The Statute of Frauds would be applicable. A person who bought a reserved seat might be held to have what could be called ” a term of hours ” in the seat. The ” interest” of persons without reserved seats would, if regarded as proprietary interests, be more than difficult to describe. If the interests were held to be incorporeal hereditaments they would be quite new to the law-notwithstanding the strongly established principle Keppell v. Bailey ( (1834) 2 My. & K. 517). The feat would have been achieved of creating an easement in gross-an easement with a servient tenement, but without any dominant tenement. There is nothing in the majority judgments in Hurst’s Case to show that these consequences were appreciated when the case was decided. For the reasons mentioned, I cannot regard the transaction of buying a ticket for an entertainment as creating anything more than a contractual right in the buyer against the seller-a right to have the contract performed. For the breach of such a right there is a remedy in damages, but the remedies applicable to the protection of proprietary rights are not legally (or equitably) appropriate in such a case. There is, strictly, no grant of any interest. What is created is something quite different, namely, contractual rights and obligations.
The second ground of the decision in Hurst’s Case is based upon the opinion that the plaintiff in Wood v. Lead bitter failed because he did not have a grant under seal of the right which he claimed. It is true that the absence of a seal was a complete reply, in an action at law, to the contention of the plaintiff that he had an interest in the land upon which a race meeting was being held. But in fact the presence of a seal would not have assisted the plaintiff to establish the impossible proposition that he had an easement in gross. It is true that, as the majority judgments in Hurst’s Case state, a grant of an interest in land need not, in order to be effective in a court of equity, be made by deed, and that, since the / udicature Act, this rule is enforced in all divisions of the High Court in England (Walsh v. Lonsdale (1882) 21 Ch.D. 9). But this proposition does not justify the assertion that interests in land can, since the Judicature Act, be created by simple contract even though, before that Act, they were of such a character that they could not be created by deed as interests in land. •
The question is whether there is any principle of equity which prevents the effectual revocation of such a licence even though the revocation be a breach of contract. No authority apart from Hut”St’s Case has been cited to show that this is a principle of equity. Whether the replication is good or bad depends, not upon rules of pleading, but upon whether the facts alleged constitute a good answer in equity to the plea raised by the defendant that the plaintiff was a trespasser. If his licence was effectually revoked, though wrongfully, he was a trespasser, and the removal of him from the racecourse without the use of undue force did Hot constitute an assault. The plaintiff can escape from the position of being a trespasser only by showing that the licence was not effectually revoked. The only argument to support this proposition is to be found in the contention that the defendant cannot be heard to rely upon his own wrongful act in revoking the licence which he had agreed not to revoke. If the principle to be applied is a principle that the defendant cannot rely upon his own breach of contract, then that principle would surely have been mentioned in the reports of decided cases. No reference, however, has been made to any cases decided upon the basis of this principle.
It is common ground that an equitable replication under the Common Law Procedure Act 1899, sec. 97, can be sustained only where the facts pleaded are such that a court of equity would upon the basis of those facts have granted an absolute unconditional and perpetual injunction. (See Stephen’s Principles of Pleading, 7th ed. (1866), at p. 210; Gee v. Smart (1857) 8 E. & B. 313, 319.)
It is clear that equity would never have decreed the specific performance of a contract to provide an entertainment. Equity would never have granted an unconditional injunction restraining the proprietor of a place of entertainment from excluding from that place a person who had bought a ticket of admission. Any injunction granted would necessarily have been subject at least to the condition that the plaintiff coming into equity should behave himself with due propriety during the entertainment.
But it is urged that equity would have granted an unconditional and perpetual injunction restraining the defendant from setting up an unconscien­ tious plea, namely, a plea based upon his own wrongful withdrawal of a licence. This argument is suggested in a note to the article of Sir John Miles criticising Hurst’s Case in the Law Quarterly Review, vol. 31, p. 217. In the first place there is no authority to support the contention in such a case as the present case. The real rule is that an equitable defence to a common law action is admissible under the Common Law Procedure Act only “where it discloses facts which would entitle the party pleading it to an absolute and unconditional injunction in a court of equity against the judgment which the opposite party might otherwise have obtained at law” (Stephen’s Principles of Pleading, 7th ed. (1866), at p. 210). If the suggested principle were sound, it is remarkable that it was never advanced as a practical means of avoiding the law as laid down in Wood v. Leadbitter. Secondly, the contention appears to me to be based upon an idea that equity will always do whatever it can to bring about the specific performance of any contract according to its terms. The argument rests upon a vague assumption that equity would, by limiting the pleading in a common law action of a party who had broken a contract, seek to prevent him from merely paying damages for his breach if an injunction against his pleading would prevent him from gaining some ” unconscientious ” advantage by his breach. There is no such general equitable principle (see per Pollock C.B., Hyde v. Graham (1862) 1 H. & C. 593, 598). In cases of wrongful dismissal, for example, the only remedy for the breach of contract is to be found in damages. Even though the employer admit5 the wrongful dismissal, he cannot be ordered to re-employ his former servant. If the servant under an ordinary contract of service sues for wages in respect of a period after dismissal, the employer would never have been restrained from pleading that he had dismissed him, though wrongfully. In such cases-and there are many others, for example, sale of goods and commercial contracts generally-equity left the parties to their remedies at law. The equitable remedies of injunction and specific performance were never applied merely or generally on grounds of unconscientiousness. They would be used to protect proprietary rights, to enforce negative agreements, and, in special cases only, to enforce affirmative agreements (Doherty v. Allman (1878) 3 App.Cas. 709, 720). These agreements never included contracts to provide an entertainment in a particular place in return for payment. Thus I am unable to accept the contention that equity would at any time have restrained the defendant from pleading the replication in question.
This aspect of the case should be considered in relat_ion to es_tabl_ishe prin­ ciples of equity and not in relation to the arguments ab mconvententt which are so prominent in the majority judgments in Hurst’s Case. There are arguments from inconvenience on both sides. The right to see an entertainment is doubtless a valuable right. It is a right for which people are prepared to pay and which they esteem. There are other rights, the exercise of which involves entry upon land, which are still more valuable from a practical point of view. Consider, for example, the case of a servant who is employed for a term to do work upon certain premises. He is wrongfully dismissed. He is then excluded from the premises. His right to earn a living in accordance with a lawful contract is a right at least as important as a right to witness an entertainment. The principle approved in Hurst’s Case would entitle him to go into and remain upon the premises, although he had been dismissed from his employment, and to obtain damages for assault if he were forcibly removed. Similarly an ordinary building contract enables the building contractor to go upon land for the purpose of conducting building operations so that he can perform his contract and earn his expected profit. This right continues to exist even if the building owner wrongfully repudiates the contract. But the only remedy of the building con­ tractor for an infringement of the right is in damages. If he goes on the land against the will of the owner he may be treated as a trespasser. The adoption of the principle involved in Hurst’s Case would alter these established rules. Consider further a case where a building devoted to entertainment becomes over­ crowded by persons who have bought tickets. This may happen without any default on the part of the person in control of the building. If, however, the legal position is as stated in Hurst’s Case, it is impossible for anyone (except possibly a constable) to remove any of the persons, either for the safety of the audience as a whole or in order to secure the observance of the law, without subjecting himself to the possibility of numerous actions for assault. It is doubtful whether such consequences were realized in Hurst’s Case.
On the other hand it might be said that there is an implied condition that the licence to each member of the audience might be revoked in the interests of the safety of the audience or in order to secure the due observance of the law or for some other lawful reason. Such a view really constructs or invents a complicated contract between the parties and it would raise new and rather diffi­ cult questions. Why, for example, should A be asked to leave the building rather than B? Would it be left to the judgment of the controller of the building to determine how many persons should be asked to leave? In other cases it might be sought to avoid what would be described as an unreasonable extension of Hurst’s Case by saying that the facts show that the parties intended that the licence should be revocable in certain conditions. I refer again to the case of a dismissed servant. Here, it appears to me, it is difficult to suggest in explicit terms an appropriate condition. It would be necessary to attach to the contract an implied condition that the employer might revoke the implied licence to come upon his premises if at any time he should determine the contract of employment even though he did so wrongfully. Such a view appears to me to be an unreal method of dealing with the position. A much more realistic approach is provided by the application of the simple principle of Wood v. Leadbitter, namely, that no “grant” of any proprietary right, that is, of any jus in rem, has been made to the plaintiff. He has simply obtained a contractual right which is enforceable in personam by an action for damages.

Re Nisbet and Potts Contract

Chancery Division [1905] 1 Ch. 391; affirmed by the Court of Appeal [ 1906] 1 Ch. 386
FARWELL J.: . . . Covenants restricting the enjoyment of land, except of course as between the· contracting parties and those privy to the contract, are not enforceable by anything in the nature of action or suit founded on contract. Such actions and suits alike depend on privity of contract, and no possession of the land coupled with notice of the covenants can avail to create such privity: Cox v. Bishop ( (1857) 8 De G.M. & G. 815). But if the covenant be negative, so as to restrict the mode of use and enjoyment of the land, then there is called into existence an equity attached to the property of such a nature that it is annexed to and runs with it in equity: Tulk v. Moxhay ( (1840) 2 Ph. 774). This equity, although created by covenant or contract, cannot be sued on as such, but stands on the same footing with and is completely analogous to an equitable charge on real estate created by some predecessor in title of the present owner of the land charged. Such a charge was created in its inception by con­ tract between A. and B., the lender and the borrower, but when B. has sold the land charged to C., A. cannot sue C. on the contract to repay, but can only enforce the charge against the land. This is the basis of the decision of the Court of Appeal in Haywood v. Brunswick Permanent Benefit Building Society ( (1881) 8 Q.B.D. 403, 409), where it was held that, where land had been granted in fee in consideration of a rent-charge and a covenant to lay out money in building and repairing, the assignee of the grantee of the land was not liable on the covenant to repair, because, as Cotton L.J. put it, “the covenant to repair
can only be enforced by making the owner put his hand in his pocket, and there is nothing which would justify us in going that length.” In other words, effect is given to the negative covenant by means of the land itself. But the land cannot spend money on improving itself, and there is no personal liability on the owner of the land for the time being, because there is no contract on which he can be sued in contract. So in Mander v. Falcke ([1891] 2 Ch. 554) a mere occupier of land was held to be within the principle. In London and South Western Ry. Co. v. Gomm ((1882) 20 Ch.D 562, 583) Sir George Jessel states chat in his view the doctrine is either an extension in equity of Spencer’s Case ( (1583) 5 Rep. 16a) to another line of cases, or else an extension in equity of the doctrine of negative easements, but that, whatever it was, ” the purchaser took the estate subject to the equitable burden, with the qualification that if he acquired the legal estate for value without notice he was freed from the burden. That qualification, however, did not affect the nature of the burden; the notice was required merely to avoid the effect of the legal estate, and did not create the right, and if the purchaser took only an equitable estate he took subject to the burden, whether he had notice or not.” He says also: “If it binds the land it creates an equitable interest in the land.” These passages are cited as correct in the considered judgment of the Court of Appeal in Rogers v. Hosegood ([1900] 2 Ch. 388, 405). It is clear therefore chat the person entitled to the benefit of the restrictive negative covenant over Blackacre has an equitable interest in Blackacre, and that such interest has the same nature and qualities as any other equitable interest in land in respect of priority, notice, and the like, but that notice forms no part of the cause of action in respect of such equitable interest. The plaintiff’s claim depends on the validity and priority of his own charge, not on any notice, unless and until the owner of the land sets up as a defence the plea of purchaser for value without notice and with the legal estate. The fact that the usual contest in such cases is whether the landowner had notice or not has doubtless made it usual to speak of notice as an essential part of the plaintiff’s case in order to enable the Court to bind the defendant’s conscience; but it is quite clear that the equitable charge is created and exists independently of notice, and that no question of binding the defendant’s conscience arises until he sets up the legal estate. Then notice became material, because it enabled the Court of Equity to bind the conscience of the defendant and forbid him to set up the legal estate. Under the old law, “If the legal title were used at law for a purpose inconsistent with good faith, then, undoubtedly, this Court would interfere, on the established principle of preventing a legal right from being enforced in an inequitable manner or for an inequitable purpose “: per Lord Westbury L.C. in Buckland v. Gibbins ( (1863) 32 L.J.Ch. 391, 395).

 

 

Latec Investments v Hotel Terrigal Pty Limited

High Court of Australia (1965) 113 C.L.R. 265; 39 A.L.J.R. 110

Knot J.: . . . In these circumstances the trustee, with the support of its co-appellants, contends that the mortgagor ought not to be given the relief to which, according to the views I have expressed, it would otherwise be entitled. As between the trustee and the mortgagor I am of opinion the contention should succeed. In all cases where a claim to enforce an equitable interest in property is opposed on the ground that after the interest is said to have arisen a third party innocently acquired an equitable interest in the same property, the problem, if the facts relied upon as having given rise to the interests be estab­ lished, is to determine where the better equity lies. If the merits are equal, priority in time of creation is considered to give the better equity. This is the true meaning of the maxim qui prior est tempore potior est jure: Rice v. Rice ( (1853) 2 Drew. 73). But where the merits are unequal, as for instance where conduct on the part of the owner of the earlier interest has led the other to acquire his interest on the supposition that the earlier did not exist, the maxim may be displaced and priority accorded to the later interest. In the present case it seems to me that there is much to be said for holding that, since during the long period of the mortgagor’s delay in setting up the invalidity of the pur­ chaser’s title persons were induced to lend money on debentures in the belief that an unencumbered fee simple in the subject property formed part of the security under the trustee’s floating charge, the mortgagor ought not to be allowed to insist upon its equity of redemption as against the equitable interest of the trustee.
But apart altogether from any question of estoppel by conduct, in my opinion the equitable charge of the trustee for the debenture holders stands in the way of the mortgagor’s success because it was acquired for value and without any notice either of the existence of the mortgagor’s right to set aside the sale or of any facts from which such a right might be inferred. The trustee, of course,
has not the legal estate; its rights are purely equitable; but the case falls within one of the categories described in the judgment of Lord Westbury in Phillips v. Phillips ( (1862) 4 De G.F. & J. 208) in which the legal estate is not required in
order that a defence of purchase for value without notice may succeed. It is the case of a suit ” where there are circumstances that give rise to an equity as distinguished from an equitable estate-as, for example, an equity to set aside a deed for fraud, or to correct it for mistake.” In such a case, his Lordship said, if the purchaser under the instrument maintains the plea of purchase for value without notice “the Court will not interfere.” It is true that if the mortgagor in the present case was entitled to have the mortgagee’s sale set aside it had more than a mere equity: it had, as I have pointed out, an equity of redemption, and such an interest, being in respect of an estate in fee simple, has been considered an equitable estate ever since Lord Hardwicke decided Casborne v. Scarfe ( (1737) 1 Atk. 603). But each of the illustrations Lord Westbury chose was also a case where the equity was accompanied by an equitable interest which might constitute an equitable estate. So much had been shown by decisions of most eminent judges, at least twice in the ten years before his Lordship spoke: see Stump v. Gaby ( (1852) 2 De G.M. & G. 623); Gresley v. Mousley ( (1859) 4 De G. & J. 78), and Lord Westbury’s judgment gives every indication of an intention to state systematically the effect of previous decisions, and not to depart from them in any degree. The illustrations therefore make it clear, it seems to me, that the cases to which his Lordship was referring were not only those in which there is an assertion of an equity unaccompanied by an equitable interest (as was held to be the case in Westminster Bank Ltd. v. Lee [1956] Ch. 7 and National Provincial Bank Ltd. v. Hastings Car Mart Ltd. [1964] Ch. 665 (C.A.); reversed by the House of Lords sub nom. National Provincial Bank v. Ainsworth [ 1965] A.C. 1175 but agreeing with the Court of Appeal on this point)-indeed he may not have had them in mind at all-but those in which an equity is

asserted which must be made good before an equitable interest can be he d to exist. In the latter class of cases the equity is distinct from, because logically antecedent to, the equitable interest, and it is against the equity and not the consequential equitable interest that the defence must be set up. That the defence of purchase for value without notice (in the absence of the legal estate) is a good defence against the assertion of the equity in such a case had been established long before Lord Westbury’s time. In Malden v. Menill ( (1787) 2 Atk. 8), for example, Lord Hardwicke had refused rectification of an instrument for mistake, as against a purchaser of an equitable interest without notice, on the ground that the mistake should not ” turn to the prejudice of a f ir pur­ chaser”. Such cases as Garrard v. Frankel ( (1862) 30 Beav. 445) and Bambngge v. Browne ( (1881) 18 Ch.D. 188) were soon to be decided on the same principle. See generally Halsbury’ s Laws of England, 3rd ed., vol. 14, p. 537, par. 1008. The reason of the matter, as I understand it, is that the purchaser who has relied upon the instrument as taking effect according to its terms and the party whose rights depend upon the instrument being denied that effect have equal merits, and the court, finding no reason for binding the conscience of either in favour of the other, declines to interfere between them. Consequently the party com­ plaining of the fraud or mistake finds himself unable to set up as against the other the equitable interest he asserts; but the fact remains that it is against the preliminary equity, and not against the equitable interest itself, that the defence of purchase for value without notice has succeeded.· The maxim qui prior est tempo1·e is not applicable, for it applies only as between equitable interests, the logical basis of it being that in a competition between equitable interests the conveyance in virtue of which the later interest is claimed is considered, as Lord Westbury pointed out, to be innocent, in the sense of being intended to pass that which the conveyor is justly entitled to and no more. Where a claim to an earlier equitable interest is dependent for its success upon the setting aside or rectification of an instrument, and the court, notwithstanding that the fraud or mistake (or other cause) is established, leaves the instrument to take effect according to its terms in favour of a third party whose rights have intervened, the alleged earlier equitable interest is unprovable against the third party, and consequently, so far as the case against him discloses, there is no prior equitable interest to which his conveyance can be held to be subject.
On the principle to which Lord Westbury referred it seems to me inevitable that the mortgagor’s claim in the present case to have the mortgagee’s sale and the transfer to the purchaser “set aside”, i.e. treated as if they were only a sale and transfer of the mortgage, should fail as against the trustee for the debenture holders, though it should succeed as against the mortgagee and the purchaser. It appears that the mortgage was a second mortgage and that after the sale the purchaser paid off the first mortgage. The purchaser is entitled therefore to stand in the shoes of the first mortgagee. The result is that the mortgaged property is subject, first, to the purchaser’s rights in respect of the discharge of the first mortgage; secondly, to the trustee’s charge; and thirdly, to the pur­ chaser’s rights as notional transferee of the second mortgage under the (other­ wise invalid) sale. The mortgagor is entitled to anything that may remain of the property or its proceeds after these encumbrances have been satisfied. The indications seem to be that after the rights of the trustee have been satisfied there will be nothing left, and for that reason it seems unnecessary to make an order for working out the rights of all parties in detail.
TAYLOR J.: . . . It cannot, of course, be disputed at the present time that the defence of purchaser for value without notice of a prior equitable interest cannot
be generally maintained but it does appear that it has always-that is to say, both before and after Phillips v. Phillips ( (1862) 4 De G.F. & J. 208)—been allowed to prevail where the person entitled to the earlier interest required the assistance of a court of equity to remove an impediment to his title as a preliminary to asserting his interest. In such cases it seems that the court will not interfere and to me it does not seem to matter much whether it be said that this is because, as Lord Westbury’s observations suggest, that a plaintiff seeking to set aside a deed for fraud or to reform it for mistake is, at that stage, asserting an equity as distinguished from an equitable estate, or, because a plaintiff in such cases will be denied the assistance of a court of equity to remove the impediment to his title if, before he seeks that assistance, an equitable interest in the subject property has passed to a purchaser for value without notice of the plaintiff’s prior interest. I prefer the latter as a more precise statement of the law and, indeed, I think this is the true meaning of Lord Westbury’s observa­ tions. But either statement leads to the same result which in the present case means that the interest of The M.L.C. Nominees should be taken to prevail over that of Hotel Terrigal.

MENZIES J.: . . . The second question-that is, the question of priority between Terrigal’s and M.L.C. Nominees’ equitable rights-I find one of sub­ stantial difficulty. If the maxim ” Qui prior est tempore potior est jure” applies, Terrigal’s right to have the conveyance set aside and to be restored to the register, without regard to M.L.C. Nominees’ equitable interest, prevails, but the appellants’ contention is that this right is a mere equity and the maxim has no application when the contest is between such an equity and an equitable interest of the character held by M.L.C. Nominees. This contention rests upon the line of authority based upon Phillips v. Phillips (supra)….
There is, however, as Fry J. said, another line of cases, the authority of which
is beyond question, establishing that where there is an equity to have the voidable conveyance of an estate set aside, there remains in the conveyor, not­ withstanding the conveyance, an equitable estate which may be devised or trans­ ferred. Thus, in Stump v. Gaby ( (1852) 2 De G.M. & G. 623), Lord St. Leonards, speaking of a conveyance by an heir at law to his solicitor, said (at p. 630): ” I do not deny that a deed may be so fraudulent as to be set aside at law; this, however, is not such a case; but I will assume that the conveyance might have been set aside in equity for fraud : what then is the interest of a party in an estate which he has conveyed to his attorney under circumstances which would give a right in this Court to have the conveyance set aside? In the view of this Court he remains the owner, subject to the repayment of the money which has been advanced by the attorney, and the consequence is that he may devise the estate, not as a legal estate, but as an equitable estate, wholly irrespective of all question as to any rights of entry or action, leaving the conveyance to have its full operation at law, but looking at the equitable right to have it set aside in this Court. The testator therefore had a devisable interest. My strong impression is that this very point is concluded upon authority, but if not I am ready to make an authority on the present occasion, and to decide that, assuming the conveyance to have been voidable, the grantor had an equitable estate which he might have devised.” …
If there is a difference between the two lines of authority, that difference
seems to me to arise from concentration upon different aspects of what follows from a voidable conveyance. Thus, Phillips v. Phillips (supra), in so far as it says that a person with the right to have a voidable conveyance set aside has but a mere equity, directs attention to the right to have the conveyance set aside as a right to sue which must be successfully exercised as a necessary condition of there being any relation back of the equitable interest established by the suit. Stump v. Gaby (supra) directs attention to the result of the eventual avoidance of the conveyance upon the position ab initio and throughout of the persons by whom and to whom the conveyance of property was made and says that, in the event of a successful suit (which may be maintained by a devisee), the conveyor had an equitable estate capable of devise and that the conveyee holds, and has always held, as trustee.

Phillips v Phillips

 

Lord Chancellor (1862) 4 De G.F. & J. 208; 31 L.J.Ch. 321; 8 Jur.(N.s.) 145; 5 L.T. 655;
10 W.R. 236

Lord WESTBURY L.C.: . . . Now, the defence of a purchaser for valuable consideration is the creature of a Court of Equity, and it can never be used in a manner at variance with the elementary rules which have already been stated. It seems at first to have been used as a shield against the claim in equity of persons having a legal title. Basset v. Nosworthy ( (1673) Rep.t.Finch 102) is, if not the earliest, the best early reported case on the subject. There the Plaintiff claimed under a legal title, and this circumstance together with the maxim which I have referred to, probably gave rise to the notion that this defence was good only against the legal title. But there appear to be three cases in which the use of this defence is most familiar: –
First, where an application is made to an auxiliary jurisdiction of the Court by the possessor of a legal title, as by an heir at law (which was the case in Basset v. Nosworthy, supra) or by a tenant for life for the delivery of title-deeds (which was the case of Wallwyn v. Lee ( (1803) 9 Ves. 24), and the Defendant pleads that he is a bona fide purchaser for valuable consideration without notice. In such a case the defence is good, and the reason given is, that as against a purchaser for valuable consideration without notice the Court gives no assistance
-that is, no assistance to the legal title. But this rule does not apply where the Court exercises a legal jurisdiction concurrently with Courts of law. Thus it was decided by Lord Thurlow in Williams v. Lambe ( (1791) 3 Bro.C.C. 264) that the
defence could not be pleaded to a bill for dower, and by Sir J. Leach in Collins
v. A1-cher ( (1830) 1 Russ. & M. 284) that it was no answer to a bill for fines. In those cases the Court of Equity was not asked to give the Plaintiff any equitable as distinguished from legal relief. …
Thsecond class of cases is the ordinary one of several purchasers or incum­ brancers each claiming in equity, and one who is later and last in time succeeds in obtaining an outstanding legal estate not held upon existing trusts or a judgment, or any other legal advantage the possession of which may be a protection to himself or an embarrassment to other claimants. He will not be deprived of this advantage by a Court of Equity. To a bill filed against him for this purpose by a prior purchaser or incumbrancer, the Defendant may maintain the plea of purchase for valuable consideration without notice; for the principle is, that a Court of Equity will not disarm a purchaser-that is, will not take from him the shield of any legal advantage. This is the common doctrine of the tabula in naufragio.
Thirdly, where there are circumstances that give rise to an equity as distin­ guished from an equitable estate-as for example, an equity to set aside a deed for fraud, or to correct it for mistake-and the purchaser under the instrument maintains the plea of purchase for valuable consideration without notice, the Court will not interfere.

 

Pilcher v Rawlins

 

Court of Appeal in Chancery (1872) L.R. 7 Ch. 259; 41 L.J.Ch. 485; 25 L.T. 921; 20 W.R. 281

Counsel FOR LAMB : We contend, in the first place, that the mere mention of the fact of the money being trust money was not enough to bind any one to look for the cestuis que trust. Besides, after all, a fair proportion of the mortgage money was actually paid, and to the proper person to receive it; it is true that he has misapplied it, but we are not liable. It was said that the money was paid before the day for redemption, and that only part of it was paid, which rendered the concurrence of Jeremiah Pilcher necessary; but such refinements are shocking to common sense. Any refinements should be on our side, for it was the Plaintiffs, and not we, who, by trusting W. H. Pilcher, and leaving him sole trustee, enabled him to commit this fraud. Carter v. Carter ( (1857) 3 K. & J.
617) went perhaps too far, but this goes still further. We say that we have the legal estate, and that there is no equity to deprive us of it: Maundrell v. Maun­ drell ( (1804) 10 Ves. 246); Bates v. Johnson (1859) Johns. 304). The whole doctrine of attendant terms depends upon this. We had, when we advanced the money, neither actual nor constructive notice of the prior mortgage, and our equity is as good as that of the Plaintiffs-in fact better, for they chose to trust a sole trustee. We trusted no one and took our mortgage in the regular way, and after due investigation of the title. No doubt we were not aware of the reconveyance to Rawlins, but by that means we get the legal estate, and we ought not to be deprived of it. We are purchasers for valuable consideration. We ask no relief; we only ask to be let alone. Ex parte Knott ( (1806) 11 Ves. Jun. 609) was a clear case. In Jones v. Powles ( (1834) 3 My. & K. 581) the trustee was interested, as in this case. Dodds v. Hills ( (1865) 2 H. & M. 424) is in our favour. The Plaintiffs do not venture to ask that the reconveyance should be set aside, but ask that the legal estate conveyed by it may be dealt with to protect them. But why? Why are we to be deprived of it?

Counsel FOR THE PLAINTIFFS: We, too, are innocent, and we have the earliest equity. It was against conscience that our trustee should deal as he did, and legal estates so obtained cannot be set up. The legal estate can be claimed only through a deed which shews the trust, and thus those who take under it are bound by it. Rawlins’ deeds conveyed nothing, because there was a prior deed; and if the deed of 1851 had been produced, as it must be, to make out the title to the legal estate, the mortgagees would have been bound to call for production of the deed of 1830, and then W. H. Pilcher could not have committed these frauds. There is no case in which a trustee has, in derogation of his duty, conveyed the legal estate, and the person taking the legal estate has been allowed to avail himself of it. Carter v. Carter (supra) only followed Willoughby v. Willoughby ( (1756) 1 T.R. 763) and Saunders v. Dehew ( (1692) 2 Vern. 271). No do:.:bt, if you take a conveyance for valuable consideration without notice, you can, when you find out a fraud, protect yourself by getting in a legal estate; but you cannot do so if you have notice at the time; and here the Defendants cannot shew their title without shewing notice. If a man paid his money on a forged deed, he could not afterwards, by getting in the legal estate, protect hi_mself. It is not true that the Plaintiffs have trusted the trustee; on the con­ trary, they gave notice on the mortgage deeds that it was trust money: Phillips v. Phillips (supra); Colyer v. Finch ( (1856) 5 H.L.C. 905). Can the Court allow a trustee, who is the creature of the Court, to injure his cestuis que trust in this way? The mortgagees claim under a fraud; we do not. In Jones v. Powles (supra) the facts could not, by any reasonable diligence, have been discovered.
JAMES L.J.: . . . I propose simply to app!y myself to the case of a purchaser for valuable consideration, without notice, obtaining, upon the occasion of his purchase, and by means of his purchase deed, some legal estate, some legal right, some legal advantage; and, according to my view of the established law of this Court, such a purchaser’s plea of a purchase for valuable consideration without notice is an absolute, unqualified, unanswerable defence, and an unanswerable plea to the jurisdiction of this Court. Such a purchaser, when he has once put in that plea, may be interrogated and tested to any extent as to the valuable consideration which he has given in order to shew the bona fides or mala fides of his purchase, and also, the presence or the absence of notice; but when once he has gon,!! through that ordeal, and has satisfied the terms of the plea of purchase for valuable consideration without notice, then, according to my judg­ ment, this Court has no jurisdiction whatever to do anything more than to let him depart in possession of that legal estate, that legal right, that legal advan­ tage which he has obtained, whatever it may be. In such a case a purchaser is entitled to hold that which, without breach of duty, he has had conveyed to him.
In the case of Carter v. Carter ( (1857) 3 K. & J. 617), which was decided by the present Lord Chancellor, and which was followed by the Master of the Rolls in this case, and with which I am bound to say I am unable to agree, an exception from that rule was, under the circumstances, supposed to exist.
It is very clearly expressed in a few lines of the judgment in that case: “But here the purchaser taking the conveyance under one will, supposed by all parties to be really the last will of the testator, finds himself driven to rely upon another and a second will containing on the face of it all the trusts which the testator has created; “-and that circumstance is supposed to create the exception. To my mind there are to that supposition two short and conclusive answers-the one a matter of principle, and the other a matter of fact. My view of the princi’ple is, that when once you have arrived at the conclusion that the purchaser is a purchaser for valuable consideration without notice, the Court has no right to ask him, and has no right to put him to contest the question, how he is going to defend himself, or what he is going to rely on. He may say, honestly and justly, “I am not going to tell you. I have got the deeds; I defend them, and you will never be able to make me produce them, and you will never be able to produce secondary evidence of them. I am not obliged to produce them at all; probably before you get half way through your action of ejectment you will find a jus tertii which you will not dispose of; the estate is in the hands of a legal tenant to whom I have let it, and no one can determine that tenancy without notice, and no one can give that notice but myself; I will not give that notice, and no Court has any power to compel me to give it. I have a right to rely, as every person defending his position has, on the weakness of the title of the person who is seeking to displace me.” That seems to be exactly the position of such a purchaser as this.

The purchaser in Carter v. Carter (supra) did not rely on the will which created the trust; he relied on another title; for the will formed the title of the adverse party. And the answer to that adverse party is, by the good luck which sometimes attends honest men, ” Though you produce an instrument which points out your title, and gives the property to some one else, yet I am prepared with a legal defence in a conveyance which was executed before.” It appears to me that there is no right in this Court to prevent the purchaser from setting up that defence to the claim so made against him. If there was ever a case in which, according to my judgment, any Court ought to be in favour of a purchaser and against such a title, it is a case in which a testator has, through the grossest negligence, allowed two wills to exist after his death, so that some members of his family produce one will apparently making out a perfectly good title to a mortgagee or purchaser, and then, when a mortgagee or purchaser has been induced unwittingly to pay or advance his money, some other members of the family produce the other will, which has been suppressed or concealed during the whole of that time, and then seek to take the estate away from the mortgagee or purchaser. It seems to me to be a very ingenious device by which a testator would be able to give his property twice over to his family; but, in my opinion, it is a device which ought not to be encouraged in any way in a Court of Equity. I am therefore of opinion that whatever may be the accident by which a purchaser has obtained a good legal title, and in respect of which he has paid his money and is in possession of the property, he is entitled to the benefit of that accident, just as a purchaser would be entitled to avail himself of the possession so acquired, without any reference to the rights of the persons who may be otherwise interested.
In the course of the argument it was sought to draw a distinction in these cases where the object is to ascertain priorities; but even in suits of that nature the legal title is inquired into. I apprehend that when a mortgagee is in posses­ sion of the legal estate there is no equity to make him reconvey (in my judgment that is the test), and he is entitled to hold it until every part of his incumbrance has been paid.
It was said in argument that where a man has a second incumbrance on an estate, but has the legal right of possession, and the legal right to the possession of the deeds, he has been made to produce those deeds. I apprehend that that cannot be right except under these circumstances: If a man, being, as he may well be, second incumbrancer on an estate, and also in law the owner of the deeds, seeks to avail himself of the assistance of the Court for the purposes of giving effect to his charge upon the estate, then it may be right to force him to bring in anything which he may have. I do not say anything about that, if he is
availing himself of the assistance of this Court to redeem the first mortgagee or to be redeemed himself. But where a man has got the deeds, and has got a puisne incumbrance, and says, ” I do not want the assistance of the Court; I disclaim any interference on the part of the Court to deal with the property as it pleases; I am perfectly content to rest on my possession of the deeds “-if he is minded to say that, I apprehend that he has as much right to retain the deeds in his box as he would be entitled to keep possession of a box of diamonds if they had been pledged with him by way of collateral security.

The decision in the case of Carter v. Carter (supra), which has been so much referred to, is a decision which I have considered for some years, and I have more than once thought it right to express my views of that case. I differ in some respects in my views from those of the Lord Chancellor with regard to that case, but I say that the right of a person without notice is absolute and unqualified, when once he has made it out.

 

Leigh & Sullivan Ltd v Aliakmon Shipping Co. Ltd, The Aliakmon

[1986] AC 785,

LORD BRANDON (on the question of equitable ownership): … My Lords, under this head Mr Clarke [for the buyers] put forward two propositions of law. The first proposition was that a person who has the equitable ownership of goods is entitled to sue in tort for negligence anyone who by want of care causes them to be lost or damaged without joining the legal owner as a party to the action. The second proposition was that a buyer who agrees to buy goods in circumstances where, although ascertained goods have been appropriated to the contract, their legal ownership remains in the seller, acquires
upon such appropriation the equitable ownership of the goods. Applying those two propositions to the facts of the present case, Mr Clarke submitted that the goods the subject-matter of the c. and f. con­ tract had been appropriated to the contract on or before shipment at Inchon, and that from then on, while the legal ownership of the goods remained in the sellers, the buyers became the equitable
owners of them, and could therefore sue the shipowners in tort for negligence for the damage done to them without joining the sellers.
In my view, the first proposition cannot be supported. There may be cases where a person who is the equitable owner of certain goods has already a possessory title to them. In such a case he is entitled, by virtue of his possessory title rather than his equitable ownership, to sue in tort for negligence any­ one whose want of care has caused loss of or damage to the goods without joining the legal owner as a party to the action: see for instance Healey v Healey [1915] 1 KB 938. If, however, the person is the equitable owner of the goods and no more, then he must join the legal owner as a party to the action, either as co-plaintiff if he is willing or as co-defendant if he is not. This had always been the law in the field of equitable ownership of land and I see no reason why it should not also be so in the field of equitable ownership of goods.
With regard to the second proposition, I do not doubt that it is possible, in accordance with estab­
lished equitable principles, for equitable interests in goods to be created and to exist. It seems to me, however, extremely doubtful whether equitable interests in goods can be created or exist within the confines of an ordinary contract of sale. The Sale of Goods Act 1893 [replaced in 1979], which must be taken to apply to the c. and f. contract of sale in the present case, is a complete code of law in respect of contracts for the sale of goods. The passing of the property in goods the subject-matter of such a contract is fully dealt with in ss. 16 to 19 of the Act. Those sections draw no distinction between the legal and the equitable property ingoods, but appear to have been framed on the basis that the expres­ sion ‘property’, as used in them, is intended to comprise both the legal and the equitable title. In this connection I consider that there is much force in the observations of Atkin U in Re Wait[l 927] 1 Ch 606, 635-{)36, from which I quote only this short passage:
It would have been futile in a code intended for commercial men to have created an elaborate structure of rules dealing with rights at law, if at the same time it was intended to leave, subsist­ ing with the legal rights, equitable rights inconsistent with, more extensive, and coming into existence earlier than the rights so carefully set out in the various sections of the Code.
These observations of Atkin U were not necessary to the decision of the case before him and repre­ sented a minority view not shared by the other two members of the Court of Appeal. Moreover, Atkin LJ expressly stated that he was not deciding the point. If my view on the first proposition of law is cor­ rect, it is again unnecessary to decide the point in this appeal. I shall, therefore, say no more than that my provisional view accords with that expressed by Atkin LJ in Re Wait ..