LLB20503 Maxims of Equity 1 2/11/2021

LEARNING OUTCOMES 2

 Tostudy and understand the various

maxims
TOPIC 2: MAXIMS  Tounderstand the applicability of these
maxims based on decided cases
OF EQUITY (1)
LLD 20503 EQUITY & TRUST
SEM 1 2021/2022

Introduction 3 FUNCTIONS OF MAXIMS 4

 A collection of legal truisms which are used as rules of

thumb to assist/strengthened the reasoning of a
 Maxims are set of general principles which are said to govern the
judge/Court in arriving at a decisions. way in which equity operates, illustrating the qualities of equity.
 Might/not use by judges/lawyers in civil cases, whether in  In contrast to the common law, maxims are more flexible, responsive
matters involving equitable principles or others. to the needs of the individual and more inclined to take account of
the parties ‘ conduct and worthiness.
 Might use only one/more at one time, to support/reject an
argument; also interchangeably between one another.  None of the maxims is in the nature of a binding rule.
 The so-called “maxims of equity” are general principles which the
 As guidelines & not fixed rules of law; illustrating the nature Chancery Courts, and the modern courts apply, in granting and
of equity as being more flexible & responsive to the needs of withholding equitable remedies.
individual.  The maxims are broad principles, applied in the exercise of the
 Follow principles of natural justice; modelled upon Biblical Court’s discretion.
phrases
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DEFINITION 5 The maxims 6

 Mason CJ & Hughes CJ in CORIN V PATTON (1990) 169 CLR 540 at 549: “…like
 Definition: a set of general principles which formed the other maxims of equity, it is not a specific rule or principle of law. It is a summary
basis of jurisdiction for the Chancery Court and said to statement of a broad theme which underlies equitable concepts and
govern the way in which equity operates. principles. Its precise scope is necessarily ill defined and somewhat uncertain.”

 Principles developed by early Lord Chancellors, when  Gopal Sri Ram in EASTERN PROPERTIES S/B v HAMPSTEAD CORPORATION S/B
[2007] 6 CLJ 538: “ It is beyond argument that equitable doctrines are not to be
exercising their extra-ordinary jurisdiction on behalf of
dealt with in a rigid fashion. They are by their very nature flexible and meant to
the King, to relax the rigidity of the CL.
be applied in such a fashion as produces a just result on the facts &
 Applied only when the court feels it appropriate circumstances of each given case.”
 The maxims is NOT in the nature of a binding rule  Many maxims but study only – 13.
 1. Equity acts in personam
 May overlap each other
 2. Equity follows the law
 3. Equity will not suffer a wrong to be without remedy

The maxims
7 1. EQUITY ACTS IN PERSONAM 8
 4. He who seeks equity must do equity
 5. He who comes to equity must come with clean hands
 6. Equity is equality  It is the nature of equitable remedies that they generally operate
against the person. Judgment is made against individual.
 7. Equity looks / regards that as done which ought to be done
 This maxim normally applies with regard to properties & interests held
 8. Equity aids the vigilant and not the indolent; Delay defeats abroad.
equity
 This approach of equity relates back to the essential functioning of
 9. Equity looks to the intent and substance rather than form equity as a correction of the universal law; equity acts in personam
 10. Equity does not allow a statute to be made an instrument of so that it can better relieve the defects of an absolute rule.
fraud  Origin of this maxim -goes back in history. The nature of equitable
 11 and 12 Where the equities are equal, the first in time prevails, remedies that they generally operate against the person of the
where the equities are equal, the law prevails. defendant, contempt - imprisonment
 13. Equity gives account of profit not damages
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1.Equity acts in Personam 9 Application 10

 Relevant in cases where the Plf had some equitable right against
 In personam = against the person; cf. with in rem the Def even though the property in question is situated abroad.
 Operate against the person of the defendant, binding the  Allows the unlimited jurisdiction of granting Mareva injunction
conscience of the person. (freezing of Def’s asset situated abroad)
 Use to establish jurisdiction of the court.  Limitation on its usage :
 Originally, the court of Chancery will not interfere with D’s property  Only applicable if the Def is within jurisdiction of the court.
but merely make a personal order against the D personally. E.g. to
perform D’s part of a contract, to refrain from doing something.  Only if court order can be executed.
 It applies to property outside a jurisdiction provided that a D is within  Refusal to intervene in such situations are only where:
the jurisdiction.  - litigation may be in progress in a foreign court or
 Being enforceable by imprisonment for contempt.  -court’s order may come in conflict with the foreign law properly
governing the property under dispute.

Penn v Lord Baltimore [1750] 1 Ves. 11 Chellaram v Chellaram 1985 1 All 12

Se 444 ER 1043
 Mr. Penn (owner of Pennsylvania) v. Lord Baltimore (owner of  Trust created in India of companies in Bermuda; but administered in
Maryland)- North America London
 Agreement to fix boundaries but not implemented  Trustees – all born in India but lived different places, 4 had British
passports but only 2 lived in London
 Mr. Penn filed specific performance in Court of Chancery in England
 Beneficiaries – never received benefits and file action in London
 Lord Baltimore questioned jurisdiction of court
 Trustees argued that the proper law would be Indian law
 Held: the court acts in personam against the conscience of the
person and thus within the jurisdiction of the court to decree the  Held: the jurisdiction of the court to administer trust is in personam
performance of the agreement. jurisdiction and the court can enforce the personal obligations of
trustees irrespective of geographical boundaries.
 “…the conscience of the party was bound by this agreement; and
being within the jurisdiction of this court, which acts in personam,
the court may properly decree it as an agreement…”
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More cases 13 2. Equity follows the law 14

 EWING v ORR EWING NO 1 1883 9 App. Cas 34 Lord Selborne

said :  Derived from the Latin form : aequitas sequitur legem
“..The courts of Equity in England are and always have been  Subjected to various interpretations.
courts of conscience, operating in personam and not in rem  Equity does not change the law but supplements it – refer to basic
and in the exercise of this personal jurisdiction they have been purpose for introduction of equity; to overcome rigidity of CL.
accustomed to compel the performance of trusts and  Equity respected & adopts & follows the rules of law in cases where
the rules of law may be applicable.
contracts which were not locally within jurisdiction.”
 However, equity would introduce means/remedies to correctly
 BRITISH SOUTH AFRICA COMPANY v COMPANHIA DE redress situation whereby common law remedy (damages) could
MOCAMBIQUE 1893 AC 602 (mining lands in South Africa) not.
 In line with traditional role of equity was to ‘temper and mitigate the
 RE VALIBHOY (trust in Jetpur, India; estates in S’pore & harshness of common law, which implies that equity would
Malaya) intervene and contradict the common law if justice required.

Nature 15 Application 16

 This maxim indicates the relationship between common law and equity.  Equity ensure that its rights and remedies are in line with common
 It however does not attempt to overrule common law judgments. law. In most cases, equity would supplement rather than contradict
 Equity will, where possible, ensure that its own rule are in line with the
the common law.
common law principles  Where an act is legally wrong but incapable of being redressed
 Useful in establishing the need to consider the matter first at common under common law due to inadequacy of its remedies or certain
law, then in equity. technicalities / reasons, then only equity will intervene to ensure
 Equity respected every word of law and recognizes every right therein, justice is carried out.
but would not enforce if they were unconscionable/defective.  For example : in recognizing an equitable interest in land, there is
 Cardozo CJ in his dissenting judgement in GRAF v HOPE BUILDING need to look at the legal estate and interest first.
CORPORATION 1930 254 NY 1 stated:- “Equity works as a supplement for
law and dose not supersede the prevailing law. Equity follows the law,
but not slavishly nor always.”
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Case 17 Case 18

 INWARDS V BAKER [1965] 2 QB 29 – F encouraged son to build a  MUNAH v FATIMAH [1968] 1 MLJ 54 – Involves a question of legal
house on his own land, promising to transfer the said land to the son. interest and beneficial interest over a land. The owner has agreed to
Son lived for 30 years on the land with F’s consent & approval. F sell a piece of land to the P and to that effect received the full
died , but F’s will did not leave land to Son. payment for purchase of the land from the P. P was given
possession and usage of the land upon full payment made, with the
 Held: Personal representatives of father estate was estopped from
evicting son from the land – unconscionable conduct on their part. promise to transfer the land into the P’s name soon afterwards.
Owner died, beneficiaries refused to transfer the said land to P.
 Principle: Equity will only intervene where common law remedy of
 Held : although beneficiaries owned the estate legally, P is
damages would be insufficient to provide justice to the state of
affairs. recognized as having the equitable owner of the said land after
completing her part of the contract and given possession of the
 Legal estate & interest lies with father; and beneficial interest was said land.
given to son.

3. Equity will not suffer a wrong to 19 Nature 20

be without remedy
 Indicates the comprehensive nature of equitable  Equity will not allow the technical defects of the
remedies. common law to prevent worthy plaintiffs from obtaining
 Explains the basis of equity - no wrong goes without redress.
redress, if it is capable of being remedied by a court of
justice.  Referring to rights / wrongs which are suitable for judicial
 Equity will not allow the technical defects of the enforcement but were not enforced at common law
common law to prevent worthy plaintiffs from obtaining due to some technical defects
redress.
 This maxim developed as common law had no new
 This maxim is a restatement of the broad legal principle:
Ubi jus, ibi remedium: where there is a legal right, there is remedies only monetary damages. Equitable remedies
a remedy such as injunctions or specific performance may be
 To prevent failure of justice given if damages is not appropriate.
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Application 21 22
Limitation on Application
 Usage as a mechanism of trust – where equity allows a
beneficiary to enforce a term of trust because it is not
fair & unconscionable to allow a trustee to default from
his earlier agreement with the settlor.
 In contract – for breach of contract ; court may grant
specific performance instead of damages.
 In injunctions – to ensure that D will not sell or dissolve his
asset in order to defeat the P’s judgement – Court can
order freezing of the assets under Mareva injunction.
 Examples: trust, specific performance, injunctions.

Case 23 4. He who seeks equity must do 24

equity
 OTHMAN & ANOR v MEK [1972] 2 MLJ 158 - The appellants, legal  A person who prays for an equitable relief or enforcement of
representatives of the late Haji Ahmad, claimed for a declaration equitable rights must be ready to do equity, meaning, willing to
that the respondent, as registered proprietor of a half undivided abide by the court’s direction to do what is fair and right to the
interest in two parcels of land held the same in trust for the other party.
appellants. Implies that equitable remedies are discretionary and the court will

 Ong Hock J: “duty of the courts to exercise the utmost diligence in not grant them if it feels that the P is unworthy even though prima
applying the maxim ubi jus ibi remedium, so that justice shall be facie he has established an equitable right and interest.
done, unless we are strictly constrained by law to uphold any A person who seeks equitable relief must have perform his own

decision which results in injustice.”
obligations under the transaction, or must be prepared to act
 Held: Applying the maxim, Appellants entitled to the remedy since equitably if the court obliged him to do so.
they have the rights as they were a right owner to the said land.  May be used interchangeably with the maxim ‘he who comes to
Remedy – a the declaration of the title of the disputed land.
equity must come with clean hands’
LLB20503 Maxims of Equity 1 2/11/2021

Nature 25 Application 26

 A remedy will only be provided where you have acted  Focus on the FUTURE conduct of the party concerned to be fair.
equitable in the transaction.  To receive equitable relief, the petitioning party must be willing to
complete all of its own obligations as well.
 This maxim is not a moral persuasion but an enforceable
Rule of Law.  A claimant who seeks for equitable relief must be prepared to act
fairly to the other party.
 It does not require every plaintiff to have an  Lord Eldon LC in DAVIS v DUKE OF MARLBOROUGH 1819 stated:- “The
unblemished background in order to prevail, but the principle of this court is not to give relief to those will not do
court will refuse to assist anyone whose Cause of Action equity…”
is founded on his or her own misconduct toward the  E.g. Sec. 37 of SRA : where Court in making judgement for rescission
other party of a contract, may require the claimant to pay compensation to
the other party ”as justice may require”.

Cases 27 Cases 28

CHAPPELL v TIMES NEWSPAPER 1975 2 All ER 233 - Court of Appeal refused the Ps

prayer for an injunction to prevent the termination of their contracts of
 LODGE v NATIONAL UNION INVESTMENT CO. LTD 1907 1
employment because they themselves failed to established that they intended Ch 300 -a case of illegal loan. P borrowed money from
to act equitably in relation to those contracts.
D, an unregistered moneylender and mortgaged certain
 The court held that by the Ps refusal to undertake to refrain from creating
disruptive action during an industrial dispute, had not shown themselves as securities for it. The contract was illegal and void under
willing to perform their side of the contract of employment. Thus they could not the Money Lender’s Act 1900. P sued D for delivery up of
seek equitable relief when they were not prepared to act equitably.
the securities.
 Facts: 6 newspaper employees who had been threatened that they would be
terminated unless they stopped their strike action applied for an injunction to
prevent their employers from carrying out the threat.
 Parker J refused to make the order except upon P’s
 Court held: To be rewarded such an injunction as remedy, the employees
repayment of the money which had been advanced to
should undertake to withdraw their strike action. him, for P was seeking equitable relief and must
 The doctrine applied. Since they refused to do their part, the injunction was also therefore do was is right and fair.
refused
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Cases 29 Cases 30

 YEOW SOH HWA v LOW LIM CHEW POH [2004] 4 MLJ 147 – D was a ground tenant of a
 KHOO HOCK LEONG v LIM ANG KEE 1888 4 KY 353 - The P land, owned by one Khoo at RM70 per month. D then rented out the whole premises
at RM450 per month to one Lim. Subsequently, the owner transferred the land to her
in this case wanted to recover land which legally daughter, who then sold it to P. P terminated the D’s tenancy and demanded vacant
belongs to him. The D under bona fide belief that the possession of the premises, by notice. D argued that he had a tenancy coupled with
land belongs to no one, has cultivated and improved equity and the notice to quit was insufficient to terminate the tenancy.
the land. The Court recognized P’s legal right over the  Held (Low Hop Bing J) :
land but instructed P to compensate the D for all
 “The defendant who is coming to equity must do equity. The defendant in this case did
improvements made to the land, as the improvements not measure up to the maxim of equity. The defendant actually abused and claimed
had enhanced the value of P’s land. Upon payment the aid of equity for his own profit at the expense and to the detriment of the plaintiff,
then only P can take possession of the said land. since the defendant and his family members had not occupied the premises since
1980 but had rented the premises at RM450 per month which was six and a half times
 This decision was based on the maxim ‘he who comes to the ground rent of RM70 per month. Thus, the defendant could not now claim that he
equity must do equity’. was a tenant coupled with equity.”

5. He who comes to equity must 31 Nature & Application 32

come with clean hands

 Closely related to maxim he who seeks equity must do equity.  Claimant must also show that his past record in the dealings is clean;
with perfect propriety of conduct i.e. must not himself be guilty of
 A.k.a. ‘he who has committed iniquity ; shall not have Equity.’ unconscionable conduct.
 ‘Hands’ are regarded as ‘unclean’ if there is some element of
 Concerns with the PAST conduct of the applicant; pertaining to the dishonesty, illegal or fraudulent behavior of the claimant which relates
issue in dispute – not of his whole general character. to the matter in dispute.
 Immoral conduct not recognized as legal wrong & not connected  DERING v EARL OF WINCHELSEA 1787 1 Cox Eq Cas 318 Eyre LCB: “…A
to the matter in dispute – not taken into consideration. man must come into a court of Equity with clean hands; but when this is
said, it does not mean a general depravity : it must have an immediate
 Court will refuse to give relief to a claimant who has by his prior and necessary relation to the equity sued for, it must be a depravity in a
legal as well as moral sense….”
conduct in relation to the matter litigated, has acted in bad faith or
violated some equitable principles.  Both parties have ‘unclean’ hands, the court should consider only of
the applicant and the court is not concerned with balancing the clean
 Applies to claimant who had acted unjustly in the transaction which handedness as between the Plf and Def: SANG LEE INVESTMENT CO. LTD
v WING KWAI INVESTMENT CO LTD 1983 The Times April 14.
he complains of.
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Cases 33 CASE 34

 PALANIAPPA CHETTIAR v ARUNASALAM CHETTIAR 1962 1 MLJ 143,

 1. CROSS v CROSS 1983 4 FLR 235; Wood J: “He who comes to 1962 1 All ER 494 - F owned the maximum 99 acres of rubber land as
equity must come with a clean hand and any conduct of the allowed under the administrative regulations at that time. F
Plf which would make a grant of specific performance, acquired another 40 acres of land which he transferred under Son’s
inequitable, can prove a bar ” name to avoid tax assessment, on the understanding it was to held
by the son only as a nominee. A receipt of $7000 was produced by
 2. ARGYLL v ARGYLL 1965 1 All ER 611 (immoral conduct of Son even though no money was involved. F subsequently
wife – not legal wrong) contracted to sell the land under Son’s name and requested him to
 3.GASCOIGNE v GASCOIGNE 1918 1 KB 223 (put property sign a power of attorney in favour of the father. Son refused and F
under W’s name to avoid creditors) brought the claim for breach of trust.
 4. COATSWORTH v JOHNSON 1886 54 LT (failed to follow  P Council: Lord Denning dismissed the father’s application on the
ground of ‘unclean hands’. The transfer to the son was made for a
lease agg.)
fraudulent purpose and the Court was not prepared to accept a
 5. KHOO HOCK LEONG v LIM ANG KEE (1888) 4 KY 353 (bona pleading based in illegality
fide clearing of land)

Case 35 6.Equity is Equality 36

 TINSLEY v MILLIGAN 1992 2 All ER 391 - A house was jointly purchased by Tinsley (T) and
Milligan (M) and was registered under the sole name of T to enable M to make fraudulent  A.k.a. ‘equity delights in equality’, equality
social security claims for housing benefit. After an argument, T, moved out and claimed
possession of the house as legally hers. M, who had earlier admitted to the relevant here means proportionate equality
authorities her wrongs, sought a declaration that T held the house on trust for both of them.
T argued that since M’s claim was based on equity and that the transaction was effected according to the risks & burdens
by fraudulent claims, M could not seek equitable relief as she did not come to equity with
cleans hand. undertaken by each party.
Court of Appeal granted M’s application by adopting the most flexible view of public
 Meaning – equity will not play favourites

policy. The appeal Court was of the opinion that by allowing T to keep the house for
herself would have been grossly unfair since she had full knowledge and indirect benefit of
M’s illegality.  Not literal or absolute equality, but in
 However the House of Lords by a bare majority rejected this approach and by a simple
majority reached the conclusion an applicant could assert an equitable title provided that
proportionate equality
he could do so without relying on his own illegality.
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Nature & application 37 Midland Bank PLC v Cooke [1995] 4 38

ALL ER 562
 Applicable in cases where 2< parties are entitled to an  The house was purchased by way of mortgage that was under the
husband name. The wife did not make any direct payment but
interest in the same property and there is no express discharged other household outgoings.
provisions as to how it should be allocated to the parties.  There had been no discussion or agreement between husband and
wife at the time of the acquisition as to the basis upon which the
 If the court finds it impractical to make an accurate property was held by the husband, or as to the extent of their
respective beneficial interests.
division of property among the competing claimants,
 Principles : The fact that a married couple made no express agreement
Equity would give equal shares to those who are entitled as to the proportions in which their home should be beneficially owned
to property if there exist no other basis /evidence for the did not prevent the court, applying general equitable principles,
inferring an agreement that they should own it jointly in equal shares.
court to divide the property.  It is ONLY if no such inference can be drawn that the court is driven to
apply as a rule of law, and not as an inference of fact, the maxim
 Occurs quite frequently in cases of matrimonial property, “equality is equity,” and to hold that the beneficial interest belongs to
joint account, joint ownership. the spouses in equal shares.

Cases 39 References 40

 Zuraidah Ali et al: Equity & Equitable Remedies in

Malaysia
 LAU CHOONG CHOO v CHAU WE CHUAN 1980 1
MLJ 6 (division of matrimonial home which under  Mohsin Hingun & Wan Azlan : Equity & Trust in
H’s name) Malaysia, 2nd edition, 2014.

 RE ROGERS QUESTION 1948 1 All ER 328  Snells on Equity – Chapter 3.

(matrimonial home; W contributed 1/10)  Trusts and Equity 4th Ed. – R. Edwards & N.
 ROBERTS v UMMI KALTHOM (1966) 1 MLJ 163 Stockwell – Chapter 2.
(Harta sepencharian division recognized)  Mallal’s Digest – Vol. 6 – on Equity
 BURROUGH v PHILCOX (1840) (trust for relatives;  Any text book on Equity & Trust, 2010 onwards.
nephews & nieces)
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Next class 41

 Continue with maxim 7-13