TOPIC 1 : INTRODUCTION TO

TRUST AND EQUITY

EQUITY AND TRUST (DIL2234)
RELATIONSHIP BETWEEN TRUST AND
EQUITY

The forerunner of trust was the concept of ‘use’ of land. At common law and equity, ownership
of property including land has two parts:
1. Legal ownership: which conveys legal interest
2. Equitable ownership: which conveys equitable interest
Trust is a method of transferring property for the welfare of one or more beneficiaries.
The trust is based on the concept of a settlor entrusting property to a trustee on the
understanding that he shall take care of it for the benefit of a beneficiary, is a creature of
equity.
*Flow chart for trust property.

Person who Give legal

ownership.
transfer Controlled &
property administered.
Answerable to
beneficiaries and can
be sued if there’s
breach of trust

Equitable owner
DEFINITION OF EQUITY

Equity may be defined as fairness.

It derived from Latin term ‘Aequitas’ which means equality, even or fair. Popular definition of equity
refers to the quality of being equal or fair, impartiality, even-handed dealing associated with
conscience or natural justice.
Besides, it is based on a judicial assessment of fairness as opposed to the strict and rigid rule of
common law (based on judicial precedent and stare decisis).
In legal sense, equity represents that body of rules which exist by the side of law and which
supersedes it in case of conflict of the law with justice and fair play.
Henry Maine defined equity as “any body of rules existing by the side of original civil law, founded
on distinct principles and claiming incidentally to supersede the civil law…”
Ralph Newman defined equity as “a body of principles dealing with relief from hardship; principles
which are….a part of….concept of fairness and justice upon which all law is based…”.
Maitland defines equity as “a supplementary jurisdiction and appendix on laws of the common law.”
ORIGIN OF EQUITY

It was undoubtedly based on moral principals designed to remove injustices incapable of being
dealt with Common Law Courts.
Therefore, it comes whenever law causes hardship and injustice.
Equity arose and developed it its early days as a reaction to the rigorous and inadequacies of the
common law. All actions in the Common Law Courts had to be commenced by the issue of royal
writ. If there was no appropriate writ to claim, there could be no action and thus no remedy.
The unavailability of writs, their high costs, their inapplicability to many types of complaint, the
procedural difficulties and the dominance of technicalities meant that the common law was losing
touch with the requirements of the community.
The chancellor was responsible for the issue of writs and to some extent, the problem faced by Common
Law Courts was tempered by the Chancellor’s willingness to develop new writs to cover new complaints.
But this came to an end when the Provision of Oxford 1258 stopped the issue of writs to cover new forms
of action without the consent of the Curia Regis (King in Council).
Therefore, a plaintiff with cause of action which did not fit one of the existing writs would have no remedy in
the Common Law Courts.
The obvious place for him to turn to was the King and the procedure was to present a petition asking him to
do justice.
Since the King was often abroad, the petitions were referred to the Lord Chancellor and eventually the
Chancellor were petitioned directly.
The King’s power was delegated to the Chancellor as the number of cases grew.
The Lord Chancellor was a very important man in the country, second only to the King. He was
responsible for issuing the royal writs and was, at the head of the common law ensuring that the
common law worked on acceptable way.
The Chancellor was a religious person and very well verse in the law. However, because of not
having traits as lawyer, his decision tends to idiosyncratic and based on beliefs, ideas and
conscience of each particular chancellor and becoming what we know as EQUITY.
He administered equity according to his discretion and not according to stare decisis.
As a result of this, the decision in any particular case would be relatively unpredictable and
uncertain.
THE CHANCELLORS IN DEVELOPMENT OF
EQUITY

1. Lord Nottingham (1673-1682)

The equity was being systemized.
He was responsible or setting down the principles upon which equity operated thus moving away
from the era of idiosyncratic.
He was instrumental in developing the law of trust.
He was described as the father of modern equity.
Lord Nottingham
2. Lord Hardwicke (1737)
He further developed the principles of equity and many of his decisions demonstrated the fine
balance that had be held between certainty and the flexibility needed.
He was responsible for laying down the general principles upon which equity operated.
Lord Hardwicke (1737)
3. Lord Eldon (1801)
He stressed that decisions must be based on precedent during the same time lawyers began to
appointed as Chancellor.
And he consolidated the principles previously developed by Nottingham and Hardwicke.
He was therefore known as the consolidator.
Lord Eldon (1801)
PURPOSE OF EQUITY

1. As a source of law to be looked into when the strict rules of law causes hardship and does not
achieve justice.
2. To mitigate the harshness of common law.
3. Equity serves as a means to reach as near as possible to natural or ideal justice.
Next subtopic is your group assignment:
Question 1: EQUITY IN COMMON LAW
Question 2: EQUITY IN ISLAMIC LAW