Equity and Law

This article discusses the origins and concepts of equity and common law, and explores the application of the doctrine of estoppel in both systems. It highlights the differences between equity and common law and how they complement each other.

Running head: EQUITY AND LAW
EQUITY AND LAW
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Introduction:
In jurisdictions where English Common law system is followed, equity is the system of
law which was the outcome of the English Court of Chancery and it is now administered
simultaneously with the common law (Klinck 2016). On the other hand, common law is the
system of law which had its origin in the judicial decisions given by the courts and similar
tribunals. The most prominent characteristic of common law is that it has arisen from the
precedent. In cases where the court is not sure on what the law is or parties do not argue on the
same point, the common law court may refer to the past decisions of the relevant courts and
incorporate those decisions in the present case. From the basic source of equity and common
law, there lies a difference between the two; which was held in Black’s Law Dictionary 10th ED.,
definition 4. In the following part of this writing, this has been discussed besides referring to the
application of the doctrine of estoppels in common law and equity.
Discussion:
The common law is one of the oldest laws that have been followed in the courts and
tribunals since ages. The common law had developed in the royal court of King’s Bench, the
Court of Common Pleas and the Exchequer. By the 14th century, a gap in law was observed that
the common law could not address. The Courts of Chancery introduced the law of equity to
bridge the gap between the common law and its scope. Besides this, equity provided a kind of
flexibility in the law as the common law approach was very strict and rigid where governed the
judgment system.

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Equity remains a keystone of the Australian private law. Numerous cases in the 1980s
saw that the High Court of Australia validated the application of traditional equitable doctrines.
The state of New South Wales is famous for the strength of its Equity jurisprudence (Ryan
2016). Equity is fair and just rule and looked into providing fair judgment to the individuals
based on the rules of equity and the circumstances of the particular case. The common law
provided only monetary remedies when adjudicating the cases of the parties to determine which
party can become successful in the case. This puts a bar on the ability of the courts of law to
refer other issues that were outside the ambit of monetary compensation. In the doctrine of
equity, the judges weighed and shifted the particulars of the case to analyze and adjudicate the
matter by allowing remedies in the form of damages or injunctions or any other remedies
suitable for the situation. The judges in the Common law system on the other hand, refer to the
legislations, previous judgments to adjudicate any case.
The term equity as used in any legal discussion must not be confused with equity used in
the context of natural justice; on the other hand the term is used to indicate a particular division
of law. The fundamental characteristics of equity are discussed in the following paragraph.
In the early development of equity the controlling factors were conscience, good faith and
reason. The doctrine of equity is mainly controlled by a set of maxims that are of some
significance while determining cases not covered by any law or precedents. They are not set of
strict rules but are general principles that can be deviated from in certain cases. Snell’s Equity, a
treatise in English holds that maxim does not cover the entire ground in general, they usually
overlap and one maxim covers provisions covered by others. However all the maxims of equity
can be summed up under two main maxims of ‘Equity will not suffer a wrong to be without a
remedy’ and ‘Equity acts in personam’.

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As discussed above the origins as well as the concept of equity and common law are quite
different from one another. As stated above, common law is developed in many cases and over a
long period. The law courts have referred to cases and illustrated what must be done in each of
the cases. Common law has developed over time as judge made law. The rules are formal and
strict whereas that of equity are very flexible and can be modified as per the requirements of the
cases. Equity refers to a body of legal principles that supplement the common law where their
application is not available. Equity does not oppose the common law but it focuses to provide
justice where common law fails to do.
Equity is not a law as it is neither codified nor put under any legislation. Common law is
an independent legal system when it is compared to equity. But equity has no independent
existence, it always pre supposes the presence of common law and if it is abolished, common law
system will apply as it was before, however it was not possible for equity to operate alone in
absence of common law. If there is any conflict between the two principles, rules of equity
would operate in favor of the common law. The main objective of equity system is that it
complements and supplements the common law as per the notions of justice and fairness.
As discussed above, equity is not a law but it follows the law. It has been a very common
and versatile maxim on the basis of which many legal issues have been decided. This maxim is
also indicated as Aequitas sequitur legem which means that “equity will not follow a remedy that
is contrary to law”. The chancery courts never tried to override the provisions of common law
but it tries to fill the gap between common law and administration of justice.
The differences between common law and equity can be demonstrated in the light of
doctrine of estoppel in equity and at common law. Estoppels is a doctrine which stops a person

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from denying or asserting something contrary to the previous action or statement made by that
person or by a previously available judicial determination upon which another person has relied
or acted upon to their detriment (Fauvarque-Cosson 2017). The term of estoppel is denoted to
mean stop. This doctrine is used or raised to stop a party from acting inconsistently with his
previous acts or representations. At common law, estoppels is used as a defence and in equity it
is used either as a cause of action or as a defence.
Estoppels can be categorized in two ways mainly; firstly the common law estoppels of
record and secondly, estoppels arising from conduct. The first one can be again divided into
estoppel by judgment, issue estoppel and estoppel by deed.
Estoppel by judgment includes the famous doctrine of res judicata that prevents a party to
litigation from denying in any later litigation between that party and another party to the original
litigation, anything that is decided between the parties by judgment in that first matter.
Issue estoppel stops a party from raising issues of facts or law that has been already
determined or decided between the parties by some judgment, decree or order in previous or
earlier proceedings.
The term deed means an official document that can be used to make either an
independent promise or a bilateral contract as well as other transactions. In estoppel by deed
parties to a particular deed are estopped or prevented from denying any allegation of fact
mentioned in the deed already. For example, a person declares the grant of lease in respect of a
land to which he has no title. Later on, when such land is gifted to him by his father and he
becomes the owner of such land, he is estopped from declaring that he has no title previously.

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Estoppel by record or Estoppel per Rem Judicatan is a type which arises as a matter of
judicial estoppel or action estoppel where the verdict made in the previous legal proceedings
avert the same parties from taking legal actions again on the same matter or cause of action.
The second category is estoppels arising from conduct where it covers a number of
different categories of estoppel that are applicable both at common law and in equity. In the case
of Discount Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598, 602-3, Jordan CJ
tried to list the different types of estoppel as common law estoppel, estoppel by representation
and equitable estoppel by acquiescence. However, most useful categorisation of estoppel can be
done into common law estoppel and equitable estoppel.
At Common law, besides estoppel of record, there is another type of estoppel known as
‘estoppel in pais’ or common law conventional estoppels. It comprises of the followings;
ordinary common law estoppels by representation and estoppel by representation. The first
category of ordinary common law estoppel by representation is founded upon the actions of the
party against whom it is held and not on representations made by that party. This type of estoppel
stops a person from denying a presumption that is based on legal relation between him and other
as observed by Mason and Deane JJ in Legione v Hateley (1983) 152 CLR 406, 430.
In estoppel by representation a person who by representation of existing fact has led other
to change his position, is prevented from denying that the fact exits as represented. Estoppel by
representation has emerged after the common law estoppel in pais, having its origin in Chancery.
This type of estoppel arises from a representation of an existing fact and when a relation is
present between the parties as found in Jorden v Money (1854) 10 ER 868. In both types of

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common law estoppel, there must be a legally enforceable agreement or contract between the
parties.
In equitable estoppel, there are mainly three categories; estoppels by representation,
promissory estoppels and proprietary estoppels (Lee 2015). Estoppel by representation first
originated in equity and it was incorporated in common law. In cases of earlier time,
representation by any act or words supported by consideration or detriment to party was not
needed. Moreover, representation could be in the form of future intention or present fact. In the
case of Hammersley v de Biel (1845) 12 Cl & Fin 45; 8 ER 1312, a father made a suitor marry
his daughter in lieu of a promise to leave huge money in his will. The suitor married the girl but
the father died without leaving anything for the suitor. He sued the executor of the estate for
enforcing the promise alleging that the executor was stopped from denying the statement made
by his father in law. The House of the Lords held that the father’s estate has to pay the legacy
promised to the son in law.
However, later in the 19th century, two limitations were imposed on the estoppels by
representation. The House of the Lords limited estoppel by representation to representation of
existing facts only instead of intention or some future matter and held that it is limited to
defensive use only at common law.
It is known that estoppel by representation is recognized at common law and in equity
both. It was observed in Discount Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW)
598, 603 that in estoppel by representation prevents an individual, who by representation of fact
has caused another to act in response of that representation to alter his position, from denying the

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fact represented. This type of estoppel is established in common law in the case of Pickard v
Sears.
The effect of estoppel by representation is that once estoppel by representation has been
accepted in the court, the party against whom it is applied cannot assume his former position and
assert former legal rights.
Promissory estoppel operates when a party to some previous legal relation, assures o
makes some representation that rights available under such relation will not be allowed to be
enforced in future thereby causing the other party to act on such assurance (Gan 2015). This
doctrine has been accepted and applies by the High courts in Australia in the cases of Legione v
Hateley (1983) 152 CLR 406; 46 ALR 1, Waltons Stores (Interstate) Ltd v Maher (1988) 164
CLR 387; 76 ALR 513, Giumelli v Giumelli (1999) 196 CLR 101; 161 ALR 473, Sidhu v Van
Dyke (2014) 251 CLR 505; 308 ALR 453.
There have serious suggestions that instead of separate categories of common law and
equitable estoppels, there must be one unified doctrine that will include both common law and
equitable estoppels. In the case of Foran v White White (1989) 168 CLR 385; 88 ALR 413, both
Mason CJ and Deane J, held that equitable estopple and common law estoppel must be fused
together to form a unitary doctrine. In Commonwealth v Verwayen (1990) 170 CLR 394; 95 ALR
321, similar suggestion was proposed. In the case of Grundt v Great Boulder Pty Gold Mines
(1937) 59 CLR 641 at 674, it was held by McHugh J that the objective of both the equitable
doctrines and common law is to prevent any loss to the party asserting estoppel by forcing the
other party to stick to the presumption on which the former had acted or had abstained from
acting. However the common law doctrine of estoppel in pais is a regarded as a rule of evidence,

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it works to stop a party from denying any assumption of fact required to determine the rights of
the parties. Again, as the equitable doctrine creates rights, it prohibits the party stopped from
contradicting the assumption of law or fact only as long the equitable rights are present.
In the case of Commonwealth v Verwayen Mason, it was attempted by Mason CJ and
Deane J to introduce a single overarching doctrine which was not supported by Dawson J and
McHugh J. this differences of opinions was continued in Rogers v The Queen (1994) 181 CLR
251; 123 ALR in which it was held that the issue of estoppel related to matters of law or fact
decided by earlier court order is only applicable to civil proceedings.
The majority of the High Court in Waltons Stores v. Maher indicated a type of equitable
estoppel by representation that is comprised of cause of action and is applicable in cases related
to representations as to intention and other future matters.
The major difference between the concept of estoppels in equity and at common law is
that at common law, there will be presence of existing fact whereas equitable estoppel will apply
even when it includes matters related to future intention or conduct.
In some cases, the Australian High Court judges have made questions related to the
boundaries between the categories of estoppel. In Waltons Stores v Maher (1998), Mason CJ and
Wilson and Brennan JJ tried to merge proprietary estoppel and High Trees estoppels into a single
doctrine of equitable estoppel. However, in Commonwealth of Australia v Verwayen (1990) 170
CLR 394; 95 ALR 321, Deane J tried to differentiate between the estoppel by conduct from
proprietary estopple.
Conclusion:

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The majority of the decisions of the High Court have preferred the maintenance of the
traditional difference between the two types. Moreover, in respect of ‘fusion fallacy’ and the
Judicature Acts, there lies the question whether the fusion of numerous types of estoppel is
purely for academics. In practice, it is usually mentioned the type of equitable estoppels being
raised as the foundation of the cause of action. When the estoppel is raised as adefence, it is
normally regarded that the defendant is stopped from relying on act , statement or document the
defendant was trying to use.

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References:
Fauvarque-Cosson, B., 2017. Estoppel. In Encyclopedia of Private International Law (pp. 675-
681). Edward Elgar Publishing Limited.
Gan, O., 2015. The Justice Element of Promissory Estoppel. . John's L. Rev., 89, p.55.
Klinck, D.R., 2016. Conscience, Equity and the Court of Chancery in Early Modern England.
Routledge.
Lee, R., 2015. Promissory Estoppel and Proprietary Estoppel: A Response to the Myth of a
Unifying Approach. King's Student L. Rev., 6, p.iii.
Ryan, P.A., 2016. Equity: System or Process?. The Catholic Lawyer, 3(1), p.10.