Equity & Trusts
12. Equitable Maxims
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 25 Jul 2015
- In addition to precedent (law derived from previous court decisions) equity is governed by a number of principles or maxims.
- Equitable maxims are derived from natural or universal laws rather than the judge made common law or statutory law made by parliament.
- These maxims have been refined and applied through judicial decisions over history.
- Some of these equitable maxims provide guidance for judges acting in equity and others provide defences to an equitable claim.
- “You must come to equity with clean hands” is possibly the most important equitable maxim. This means equity will not help someone who has behaved improperly in the matter at hand. However, there must be a connection between the wrongdoing and the equitable claim. For example a landlord who is seeking to evict his tenants will be refused relief if he has failed to fulfil his own obligations under that lease but not if he has neglected his obligations to other tenants under a different lease.
- “One who seeks equity must do equity” is a related principle meaning that the court will not help someone who is relying on their own wrongdoing to establish a legal right. You cannot have a cause of action in equity that is based on your own misconduct. In one famous equity case a grandson who killed his grandfather hoping to receive his inheritance sooner lost all rights to that inheritance despite the bequest to him in his grandfather’s will.
- “Equity sees that as done which ought to be done” means that equity focuses on the substance rather than the form of agreements. If an agreement is unenforceable because something has been forgotten or a mistake has been made equity will attempt to correct that. This sits with another equitable maxim that “equity looks to intent not form.” Guided by this principle equity will enforce a trust where it is clear that a party intended property to be held for the benefit of another even if a valid trust was never created.
- “Equity will not suffer a wrong to be without a remedy” refers to equity’s focus on justice. Wrong in this context means a personal or property right that the law recognises as requiring protection. It does not mean that equity will try to fix every complaint of injustice or immoral behaviour.
- “Equity delights in equality” means that unless one party can show that they are in a special position any equitable decision should affect both parties equally.
- “Equity aids the vigilant, not those who slumber on their rights” requires those with a claim in equity to act on it quickly. This is due to the disadvantage suffered by the other party if they have to defend themselves years after the event when details are no longer clear and evidence may be unobtainable. Unreasonable delay is a specific defence to a claim in equity known as ‘laches.’
- “Equity abhors a forfeiture” refers to the principle that equity will not enforce the total loss of something for a minor failure to comply with the relevant conditions. For example if a payment under a contract is made a few days late then equity will say the buyer is still entitled to complete the contract and receive the goods.
- However this maxim does not overturn the more important maxim that “equity follows the law”. This means equity will generally not intervene where a forfeiture occurs under a statutory provision (legislation) such as confiscations under the Proceeds of Crime Act 1987 (Cth) or the Customs Act 1901 (Cth). Equity will also not interfere with contractual terms that have been fairly bargained between the parties so if the contract stipulates that “time is of the essence” in making the payment then a delay of a few days will breach the contract.
- “Equity delights to do justice and not by halves” allows a judge acting in equity to award monetary damages or compensation if that is necessary to ensure justice between the parties is complete.
- “Equity will not aid a volunteer” means that equity will not help someone who provides a benefit regardless of whether the receiver wants it. For example if someone embarks on a course of action such as providing goods or services to you without first obtaining your agreement they will not be able to force payment from you. This is subject to the equitable defence of “estoppel” which will hold you liable if you realised their mistake and knowingly allowed them to continue.
- “Equity will not complete an imperfect gift” is a similar principle that means if someone says they will give you something but changes their mind or does not effectively transfer legal title to you then equity will not enforce their promise unless there are special circumstances making it unconscionable for them not to transfer title to you. This maxim can have devastating consequences for a trust if the settlor does not correctly transfer title of trust assets to the trustee as it can invalidate the whole trust and equity will be unable to help.
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