Notes on the Prevalence of Equity

(Copy of notes in the English Supreme Court Practice 1970, with the addition of references to New South Wales legislation)

3372 All Matters, etc.
Accord and Satisfaction.- There is no accord and satisfaction binding on the creditor where he merely accepts a lesser sum, whether in cash or by cheque, than the amount of the debt (D. & C. Builders, Ltd v. Rees, [1966] 2 Q.B. 617 7; [1966] 2 W.L.R. 288, C.A.), and see British, etc., Gazette v. Ass. Newspapers, [1933] 2 K.B. 616, and (n.) “Specialty Debt, etc.”, infra.

Admissions: Infancy: Patients under mental disorder.- It is a principle of equity that infants and mentally disordered persons cannot make binding admissions. See 0.80, r. 8 (S.C.R. 1970 Pt 63, r. 9). At common law it seems to have been otherwise as to infants. The equity principle, and also the practice founded upon it, of not allowing interrogatories to be administered to an infant, prevailed until recently (Mayor v. Collins, 24 Q.B.D. 361; Curtis v. Mundy, [1892] 2 Q.B. 178 see now as to discovery and interrogatories by infants and patients, 0.80, r. 9 (S.C.R. 1970 Pt 63, r. 10). As to the guardian ad litem of a patient, cf. Ingram v. Little, 11 Q.B.D. 251).

After acquired Property, Assignment of.- In equity future property has always been assignable if sufficiently described to be identified; cf. Holroyd v. Marshall, 10 H.L. Cas. 191. This rule now prevails (Lazarus v. Andrade, 5 C.P.D. 318; Tailby v. Official Receiver, 13 App. Cas. 523; Re Clarke, 36 Ch.D. 348; cf. Re Lind, [1915] 2 Ch. 345) as to interests on intestacy, Vanneck v. Benham, [1917] 1 Ch. 60.

Assignment, Covenant against, in Lease.- An equitable assignment is not an assignment within tlle ordinary covenant in a lease not to assign (Gentle v. Faulkner, [1900] 2 Q.B. 267); nor, presumably, is a charge by way of legal mortgage, but a licence to assign not acted on may give rise to estoppel against the equitable assignee (Rodenhurst Estate v. Barnes, [1936] W.N. 154, C.A.).

3373 Agreement for.Lease or Licence.- A tenant in possession holding under an agreement for a lease (of which specific performance would be decreed, Swain v. Ayres, 21 Q.B.D., at p. 293) now holds as if a lease had been granted, and there are no longer two estates as formerly (Walsh v. Lonsdale, 21 Ch.D. 9; Lowther v. Heaver, 41 Ch. D. p. 264. Coatsworth v. Johnson, 55 L.J.Q.B. 220; Re Maughan, 14 Q.B.D. 956; Allhusen v. Brooking, 26 Ch. D. 559; Pugh v. Heath, 7 App. Cas., p. 237; James Jones & Sons, Ltd v. Tankerville, [1909] 2 Ch. 440, a case of licence to enter and cut timber). But this doctrine applies only to cases where there is a contract to transfer legal title, and an act has to be justified or an action maintained by force of the legal title to which such contract relates. It involves two questions. Is there a contract of which specific performance can be obtained? If yes, will the title so acquired justify at law the act complained of or support at law the action? (Manchester Brewery Co. v. Coombs, [1901] 2 Ch. p. 617, Farwell, J.). The equitable assignee of a lease is not, however, entitled to the benefit of an option given to the lessee, his executors and assigns (Frairy, etc., Breweries v. Singleton, [1899] 1 Ch. 86; reversed on the facts [1899] 2 Ch. 261; Manchester Brewery Co. v. Coombs, supra, p. 618 of report).

Contract for Debentures.- As to voting right before delivery, cf. Dey v. Rubber, etc., Corp., Ltd, [1923] 2 Ch. 528.

Contract, Rescission of - Misrepresentation.- There was a difference as to this between the rules of equity and the rules of common law which has now disappeared (Redgrave v. Hurd, 20 Ch. D., p. 12; Smith v. Chadwick, 20 Ch. D. 27).

3374 Contracts, Stipulations in.- As to stipulations in contracts as to time and otherwise, see L. of P. Act, 1925, s. 41, (Conveyancing Act, 1919, s. 13).

Contribution - Joint Adventures.- See Lowe v. Dixon, 16 Q.B.D. 455; White & Tudor, L.C., [1928] Vol. 11, p. 503 Smith's L. Cases. Vol. 1; (n.) “Contribution and Indemnity”, O. 16, r. 1.

Conversion, Equitable.- The doctrine of equitable conversion (White & Tudor, L.C., [1928] Vol. 1, p. 300) is now recognized in all Divisions of the High Court (Re the goods of Gunn, 9 P.D. 242; A.G. v. Dodd, [1894] 2 (.B., p. 156).

“The Rules of Equity shall prevail.”- It is now established that this section refers to rules of equity, not to rules of practice. (La Grange v. McAndrew, 4 Q.B.D. 210; Poyser v. Minors, 7 Q.B.D. 329; Dalrymple v. Leslie, 8 Q.B.D. 5; Harrison v. Rutland, [1893] 1 Q.B., p. 149). But the equitable practice is also followed when it results from the adoption of equitable doctrines.

“The Court is now not a Court of Law nor a Court of Equity, but a Court of complete jurisdiction, and if there were a variance between what, before the Judicature Act, a Court of Law and a Court of Equity would have done, the rule of the Court of Equity must now prevail” (per Earl Cairns in Pugh v. Heath, 7 App. Cas., p. 237; Antrim Land Co. v. Stewart, [1904] 2 Ir. R. p. 364). But these Acts do not abolish the distinction between law and equity (see the judgment of Cotton, L.J., in Joseph v. Lyons, 15 Q.B.D., p. 285, C.A.); nor between legal and equitable estates (see Manchester Brewery Co. v. Coombs, [1901] 2 Ch., p. 617, commenting on Walsh v. Lonsdale, 21 Ch. D. 9, and Re Irwin, [1904] 2 Ch. 752) and as to words of limitations, cf. Re Irwin.

3375 “Conflict or Variance.”- If this exists between equitable principles and those of common law, the former are to prevail. So in cases in which the officers of the Court are quasilitigants (and possibly in others, Else v. EE., L.R., 13 Eq. 196), the Court, in spite of a rule of law, will insist on good faith and honesty being shown in the matter: see (n) to s. 37, supra. Compare, with Re Hall, [1907] 1 K.B. 875, C.A.

If there is “no conflict or variance” the section does not apply (The Bernina, 12 P.D., p. 95; Mannerv v. Mew, 29 Ch. D., p. 735; Re Terry, 32 Ch. D., p.23).

Copyright - Infringement.- See Performing Right Society v. London Theatre of Varieties, Ltd, [1924] A.C. 1. The legal owner must join.

Costs, Interest on.- Now, in all Divisions, unless by special order, the interest runs from the judgment. See (nn.) under 0. 62, r. 35 (7).

Costs-Default in giving Security for.- When security for costs is not given when ordered, the action may be dismissed on summons following the rule in equity (La Grange v. McAndrew, 4 Q.B.D. 210), or the order for security may itself provide for the appeal to stand dismissed in case of default. See 0. 59, r. 10. (S.C.R. 1970 Pt. 61 r.11).

Covenants running with Land. Notice.- As to the effect of this subsection on the question of notice with regard to covenants running with the land, see Spencer's Cave, Smith's L.C. Vol. 1. Cf. Manchester Brewery Co. v. Coombs, [1901]2Ch.,p.619;L.C.C.v.Allen,[1914]3K.B.642. SeenowLandCharges Act, 1925, s. 10 (1), D, and L.P. (Am.) Act, 1926, L.P. Act, 1925, ss. 197, 198.

3376 Covenant under Seal.- Although a covenant under seal cannot be varied at law, the covenantee will not be allowed to sue on the original covenant after agreeing to a variation for valuable consideration under hand (Berry v. Berry, [1929] 2 K.B. 316).

Debt, whether Joint or Several.- See Steeds v. S., explained Powell v. Broadhurst, [1901] 2 Ch., p. 164; Re E.W.A., [1901] 2 K.B. 642, C.A.

Ejectment Action.- The plaintiffs may now be entitled to possession without bringing the legal estate before the court, Antrim, etc., Co v. Stewart, [1904] 2 fr. R. p. 364). See (n.) “Mortgagees”, infra.

Executor and Administrator.- “The rule at law as well as in equity now is that an executor or administrator is in the position of a gratuitous bailee who cannot be charged with the loss of his testator's assets without wilful default” (M.R., Job v. Job, 6 Ch.D. 562; and cf. Jobson v. Palmer, [1893] 1 Ch. 71). And as to validity of pledge by executor, see Attenborough v. Solomon, [1913] A.C. 76; and cf. Parker v. Judkin, [1931] 1 Ch. 475, C.A.

Executor, Payment of Debts by, after action, etc.- “The equity rule established by the House of Lords in Darston v. Lord Orford (Prec. Ch. 188) must now prevail both at law and in equity, and therefore if an executor or administrator, after commencement of a creditor's action but before judgment, voluntarily pays any creditor in full, he will be considered as having made a good payment, and will be allowed it in passinc, his accounts” (Re Radcliffe, 7 Ch.D., p. 734, M.R.; Vibart v. Coles, 24 Q.B.D. 364, C.A.; Harris v. H., 35 W.R. 710).

3377 Frustration.- As to right of a party to recover money paid under a contract avoided on the ground of frustration, see Vibrova Spolka, etc. V. Fairbairn, etc., Ltd, [1943] A.C. 32, overruling Chandler v. Webster, [1904] 1 K.B. 403; and now the Law Reform (Frustrated Contracts) Act, 1943.

Interest.- See s.3, L.R. (Misc. Prov.) Act, 1934. In an action against agents at common law for an account of proceeds of sale, interest on such proceeds could not be recovered, but now the principle of equity is to prevail (Harsant v. Blaine, 56 L.J.Q.B. 511).

Laches is still a good defence to actions founded on stale equitable claims, apart from any Statute of Limitations. On this ground an action for foreclosure of a mortgage of an advowson, forty-eight years old, was dismissed (Brooks v. A4uckleston, [1909] 2 Ch. 519, cf. Williams v. Thomas, [1909] 1 Ch. 713, dower).

Merger.- See L. of P. Act, 1925, s. 185 (Conveyancing Act, 1919, s.10)

Mistake.- See (n) “Rectification”, infra. As to defence of a surety on a guarantee of a debt recited to be charged on certain securities in fact invalid, see Greer v. Kettle, [1938] A.C. 156.

Money paid under a Mistake.- It has been sometimes thought that equity would go further than law in ordering the repayment of money paid under the unilateral mistake of the payer as to matter of law. See, however, Sinclair v. Brougham, [1914] A.C. 398; the judgment of Hamilton, L.J., in Stanley Bros, Ltd v. Nuneaton Corporation (1913), 108 L.T., p. 992; Baylis v. Bishop of London, [1913] 1 Ch. 127; Banque Belge v. Hambrouch, [1921] 1 K.B. 321. The mistake must be as to a fact which, if true, would create liability to pay (Morgan v. Ashcroft, [1938] 1 K.B. 49, C.A.).

If paid under a mistake of law, even on threat of legal proceedings, it is not recoverable (Sawyer V. Window Brace, Ltd, [1943] 1 K.B. 32). See also (n.) “Frustration”, supra.

3378 Mortgages.- The rights of a legal mortgagee are assimilated to those of an equitable mortgagee. Per North, J., Fowke v. Draycott, 29 Ch.D., p. 1003. As to suits for possession by a legal mortgagee, see Pugh v. Heath, 7 App. Cas., p. 237. A receiver will be appointed at the instance of a legal mortgagee (Tillett v. Nixon, 25 Ch.D. 238). As to delivery of possession to the receiver, see Pratchett v. Drew, [1924] 1 Ch, 280.

The former Limitation Acts did not apply to mortgage of personalty (Weld v. Petre, [1929] 1 Ch. 33); cf. Re Edward v Trusts, [1937] 1 Ch. 553. See now Limitation Act, 1939, s. 18 (Limitation Act, 1969, ss. 4146).

Notice - Constructive.- This is an equitable doctrine unknown to the com-mon law, but must now be dealt with by all the Courts (English, etc., Investment Co. V. Brunton, [1892] 2 Q.B., p. 708), subject to L. of P. Act, 1925, ss. 2, 27, 197, 198, L.R. Act, 1925, L.C. Act, 1925. The equitable doctrines of constructive notice are not to be applied to purely commercial transactions (Greer v. Downs Supply Co., [1927] 2 K.B. 28, C.A.).

Part Performance.- See this (n.), s. 43.

Parties.- See notes to 0. 15, and Vol. 2, Part 7B, “Parties Generally”.

3379 Partnership.- It used to be stated that in equity partnership debts were several as well as joint, but the H.L. has held that there was no such settled rule in equity as between a creditor of the partnership and the partners (Kendall v. Hamilton, 4 App. Cas. 504).

Penalties and Forfeitures.- See s. 46 (Supreme Court Act, 1970, s. 73), and (n.); Peachey v. Somerset; Sloman v. Walter, and (nn.) White & Tudor, L.C. (9th ed.), Vol. II, p. 212f.

Power Coupled with Interest.- In equity a power coupled with an interest was not revocable by the death of the principal (Lepard v. Vernon, 2 V. & B. 51) ; at law it was otherwise (Watson v. King, 4 Camp. 272); semble, the equitable rule will now prevail.

Principal and Surely.- See Bechervaise v. Lewis, L.R. 7 C.P. 372. In equity a surety might sue the principal debtor before he had paid or been sued on his suretyship, if the liability were ascertained: and the rule still holds (Ascherson v. Tredegar, etc. Co., Ltd, [1909] 2 Ch. 401). This is a form of the old quia timet action.

Purchaser for Value.- See James v. Giles, [1880] W.N. 170; Manners v. Mew, 29 Ch. D. 725; and cf. Cooper v. Vesey, 29 Ch. D. 611, and Re Ingham, [1893] 1 Ch., p. 361; Basset v. Nosworthy, White & Tudor, L.C., Vol. II. The L. of P. Act, 1925, s. 2, in certain cases enables a purchaser for value to acquire a good title irrespective of notice In many cases notice will be implied by virtue of Land Charges Act, 1925; L.P. Act, 197, 198. Notice of a charge void as unregistered under Companies Act, 1948, s. 95 (Companies Act, 1961, s. 100) is immaterial (see Re Monolithic, etc., Co. Ltd, [1915] 1 Ch. 643); so under L.R. Act, 1925.

3380 Quia timet.- See (n.) “Principal of Surety”, supra; Burberry's v. J. C. Cording, etc., Ltd, 101 L.T. 985 at P. 992; Watt v. Mortlock, [1964] Ch. 84; [1963] 2 W.L.R. 626.

Rectification.- The Court can rectify a conveyance on the ground of mutual mistake although the deed exactly conforms to the written contract (Craddock Bros v. Hunt, [1923] 2 Ch. 136; U.S.A. V. Motor Trucks, Ltd, [1924] A.C. 196) ; but cannot rectify Articles of Association (Scott v. Scott, [1940] Ch. 794, C.A.).

Rentcharge and Rent.- Equitable apportionment of remedies for non-payment, see L. of P. Act, 1925, s. 189.

Specialty Debt - Plea of Accord and Satisfaction.- Following the rule in equity, accord and satisfaction may now be a good plea to an action for a specialty debt (Steeds v. S., 22 Q.B.D. 537) ; cf. Powell v. Brodhurst, [1901] 2 Ch. 160; Re E.W.A., [1901] 2 K.B. 642, CA. Hookham v. Mayle, (1906), 22 T.L.R. 241).

Title Deeds.- cf. Manners v. Mew, 29 Ch.D. 725; Re Ingham, [1893] 1 Ch. 352. Where mortgagee's title barred by statute the mortgagor can recover the deeds (Lewis v. Plunket, [1937] 1 Ch. 306).

3381 Time.- As to stipulations in contracts as to time and otherwise, see L. of P. Act, 1925, s. 41 (Conveyancing Act, 1919, s. 13).

Trade Mark - Innocent Infringement.- Where a registered trade mark has been innocently infringed, the old equity rule applies; the owner is entitled to an injunction, but not to damages or an account of profits (Slazenger v. Spalding, [1910] 1 Ch. 257).

Vendor's Lien for Unpaid Purchase Money.- This right depended at law upon possession, and after conveyance executed by the vendor, the right to a lien was gone. In equity the right continued as long as the purchase money was in fact unpaid, and that rule now prevails. See Mackreth v. Symmonv, and (nn.) White & Tudor, L.C., Vol. II. It extends to personal estate (Re Stucley, [1906] 1 Ch. 67, C.A.).

Waste.- Cf. L. of P. Act, 1925, s. 135 (Conveyancing Act, 1919, s. 9).