Study Unit 2

Common Law, Equity and Statute Law

Contents

A. Custom

General Customs

Particular Customs

Conventional Usage

Advantages and Disadvantages of Custom

• B. Case Law

• History of Case Law

• Present Position

• Classification of Precedents

• Reversal, Overruling and Disapproval of Precedents

• Advantages and Disadvantages of Case Law

• Law Reporting
C. Nature of Equity

Definition

History

Basis

Superiority of Equity
D. Application of Principles of Equity
Uses (Trusts)
The Statute of Uses
Mortgages
Specific Performance
Injunctions

E. Equity and Common law

Relationship equity and common law
Contribution equity to English law
F. Classification of equity
The exclusive jurisdiction
The concurrent jurisdiction
The auxiliary jurisdiction
G. Legal and Equitable Rights
H. Nature of Statue Law
History
Records of Statues
The Sovereignty of Parliaments
L. Interpretation Of Statues
Rules of Construction
Aids of Construction
A. CUSTOM
We have already referred to custom as a historical source of law. Customary

law, which is the foundation of our common law, predominates at the beginning

of all social history. Before the Norman Conquest, the various local laws were

made up of rules of human conduct, established by usage, and administered in

the popular courts by the freemen of the district.

Common law was long identified with customary law, even after the binding

decisions of judges (precedents, or case law) had become the true bulk of

English common law. Custom, in the legal sense, may be defined as:

“those rules of human action established by usage which are adopted by the

courts because they are followed by the political society as a whole or in

part”
 General Customs
There is a distinction between customs that are general and customs that are particular or
local. The former prevail over the country as a whole, and are effective as the common law.
Certain requirements are necessary before a custom can become a particular source of law.
 It must be reasonable – that is, it must conform to the general view of right and reason
prevailing in the community. The courts are not at liberty to override a custom because it
falls short of their own ideal of right and justice.

 It should not be in conflict with statute law. No custom can take away the force of an Act
of Parliament, which cannot be set aside by the development of a custom to the contrary.

 It must be generally followed and observed as of right by the members of the

community. Should members of a community consider themselves free to depart from
the custom, and thereby deny their obligation to accept it as binding, the custom has no
legal significance.
 In English law, at any rate, a local, though not a trade, custom must be
“immemorial” – it must have existed for so long a time that the “memory
of a man runneth not to the contrary”. This refers to the legal memory of
man, which has long been supposed to date back to the beginning of the
reign of Richard I (1189-1199). So, if a disputant can prove that a custom
did not exist at any time after this date, this custom will not receive legal
validity. Note that the upholder of a custom need not prove it did exist in
1189: if he can prove that it has existed for a substantial period, to rebut it
the disputant must prove its non-existence, as above. In other words, the
presumption of time immemorial can be raised by proving that it has been
observed for a long time; to be void, its beginning must be proved later
than the 12th century, e.g. by showing that it originated from legislation of
a later date.
 Particular Customs
Particular customs need not be in conformity with
common law, provided that they do not conflict with any
other particular custom in the locality.
Mercantile customs were a form of particular custom, and
have been accepted as a source of law generally. In their
case, time immemorial yields to universality of usage.
They are still a possible, though not frequent, source of
law, and show that the Law Merchant is not dead.
 Conventional Usage
Distinct from the two varieties of custom is a third type, which we may term

conventional usage. This is not strictly “custom”. A usage is an established

practice, the effect of which is to incorporate, expressly or impliedly, a term in

the contract between the parties concerned. There are usages particular to a

special trade, or a special market. The law assumes that, in the absence of any

expressed declaration to the contrary, the contracting parties intended to

contract in reference to the established usages in the trade, which usages are

binding as part of the contract. Therefore, the effect of any established usage is

to add a binding term to the contract. Any such usage must be clearly

established in the particular trade, and when once judicially recognised – by the

courts – it cannot be changed by a later contradictory usage.

Advantages and Disadvantages of Custom
In comparison with statute law, custom has a number of disadvantages:
 It is not quickly made, but requires time to evolve.
 It is definite, and therefore more difficult to prove.
 It is difficult to repeal, unless by statute.
 Fresh customs are rare.

On the other hand, as a custom has evolved from a consensus of the people following

it, it is more likely to be generally acceptable, and ethically good. Generally

speaking – that is, apart from the continued existence of a few purely local customs

– the common law of the realm no longer consists of the common custom of the

realm. Practically all the general customs have received judicial notice or

parliamentary codification, and they have therefore become either case law or statute

law.
 B. CASE LAW
The old theory was that the common law was simply a species
of customary law applicable to the whole kingdom; in fact, the
term “law” was considered synonymous with the term “common
custom”. As we have seen, this identification was very early
rescinded, for the royal judges began to formulate a body of
common law built up on their decisions, which sometimes were,
and sometimes were not, in accordance with particular or general
customs. These duly-recorded decisions, called precedents, are
responsible for the bulk of English common law.
We may regard precedents as a distinguishing
feature of English law, and also its real core. The
term refers to those decisions of judges which are
authoritative and binding. They are sometimes
termed judiciary law; judicial precedents;
precedents; case law; adjudication; but in all cases
the term refers to the rule of conduct enshrined in
the decision or judgement of a judge, or judges.
History of Case Law
In our historical review of the growth of English law, we
mentioned how the royal judges, during the first two centuries after
the Norman Conquest, gave their judgements either in the royal
court at Westminster or on their journeys. We further suggested that
their decisions would normally be based on existing or assumed
customs. As their aim was to unify the law, they probably circulated
to each other “reports” of their decisions, in order that later
judgements in similar cases would be framed similarly. There were
also the “Rolls” of the courts, to which the judge could refer.
Towards the end of the 13th century, some anonymous reporters began to

record the arguments of the pleaders and the judge’s ruling, and the

members of the legal profession found these notes so interesting for

reference and study that Year Books (annual volumes), of such records

arose. Reports of cases by anonymous reporters continued from Edward

I’s reign to Henry VIII’s, probably written by students or practising

lawyers attending the courts. These were succeeded by reports compiled

by professional lawyers, and published in printed volumes bearing the

author’s name. They contained a statement of facts in the issue, a

summary of the pleaders’ arguments, and the verbatim judgements of the

judges.
Naturally these Year Books were not so complete or
accurate as modern Law Reports, but they assumed an
ever-increasing importance. At first, they possessed
persuasive authority only; they were evidence that such
was the law, but judges were not bound to accept the
decision as binding on them. Still, the mere fact that the
judges admitted the principle of uniformity of law led to
the playing of an increasingly important role by these
reports, and greater weight was attached to the citation of
decided cases.
Thus, in time, greater regard came to be paid to former decisions,
but it was only towards the end of the 18th century that the
doctrine of the binding force of precedent became accepted by
the judges. About this time, Continental countries were
codifying their respective legal systems, with a view to making
the law more certain and ascertainable. England did not resort to
a codification of the law but, in its place, adopted the doctrine
of the binding force of precedent, which has the effect of
making rules of law of more certain authority, so far as they
have come before the courts in litigation.
 Present Position
The current position is that courts are always bound by
decisions of higher courts, and sometimes by those of courts
of equal status.
Case law enjoys merit, in the sense that it is usually of finer
workmanship than statute law, for the following reasons.
 Judges know more about the law than Members of
Parliament.
 When a judge is laying down new law in pronouncing his
decision in an action, his judgement is based upon the
concrete facts of the case before him. Parliament, on the
other hand, legislates more for the future.
Note that judicial precedent is a source of law, and not merely
evidence of the law.
 Operation of the Doctrine of Precedent
A judge is obliged to decide the case before him by
reference to a previous decision when the conditions for
the operation of the doctrine of precedent are satisfied.
These are that the previous decision is, so far as its ratio
decidendi is concerned, relevant to the determination of
an issue of law in the case in question, and that the prior
court's decisions are authoritative for his court, e.g. it is
a court superior to his in the hierarchy.
 Function of the Doctrine of Precedent

The function of case law is to develop the law, whether

common law or statute law. For centuries the prevailing view
was that judicial decision was merely a declaration of what the
existing law was; a judge is “not delegated to pronounce a
new law, but to maintain and expound the old law”
(Blackstone). He and his predecessors regarded the judges as
the repositories of the entire body of customary principles that
had existed from time immemorial, and their decisions as
evidence of such customary rules of conduct.
 Their decisions, although evolutionary, are never revolutionary, but
are developments of existing rules, and always conform to the
general principles of the law of the land as a whole. So-called
innovations are simply extensions and modifications, and are natural
expressions of the growth of the common law, in consonance with
the current ideas and the changing needs of society.

A judge cannot decide, as a legislator does, as he pleases. He must

apply some standard, whether it be that of a previous decision, or
the opinions of legal writers, or the Roman law, or equity, or some
other consideration.
 Although in strict legal theory judges do not make law, it can

be argued that they make law in the following limited ways:

(a)Where there is no existing precedent which is directly

relevant to the case before them, then they must extend the

existing law to cover the new situation by analogy.

(b)Where they overrule an existing precedent, frequently

because there are other conflicting precedents.

(c)Where they distinguish precedents cited before them, and so

limit the scope of the previous rule.

 Classification of Precedents
Precedents can be conveniently divided into three
classes, according to the nature of their binding force.

(a) Authoritative or Absolutely Binding

In these cases precedents are legal sources of law,
and must be followed without question. Absolute
authority is accorded to the decisions of the House
of Lords, the highest English court.
 However, in 1966, by a formal Practice Statement, the House of Lords
judges announced that in future they would not regard themselves as
necessarily bound by their own decisions. The Practice Statement said:

“Their Lordships regard the use of precedent as an indispensable

foundation upon which to decide what is the law and its application
to individual cases. It provides at least some degree of certainty
upon which individuals can rely in the conduct of their affairs, as
well as a basis for orderly development of legal rules. Their
Lordships, nevertheless, recognise that too rigid adherence to
precedent may lead to injustice in a particular case and also unduly
restrict the proper development of the law. They propose, therefore,
to depart from a previous decision when it appears right to do so”.
(b)Conditionally Binding

While a lower court cannot question the decisions of a

court of superior authority, it is not bound to accept the
judgement of a court of equal status. Generally speaking,
however, conditional precedents will be followed by
courts of equal status, unless they are clearly undesirable.
Consequently, in course of time, conditional precedents
acquire almost absolute authority and, being followed by
subsequent decisions, ultimately become binding.
(c) Persuasive
• Persuasive precedents are those that do not intrinsically establish the law, but
may be followed by courts because they are considered truly to state the law.
There is no obligation to follow them. Examples of such precedents are:
 The decisions of inferior courts on superior courts.
 The decisions of the Judicial Committee of the Privy Council in
appeals from the Commonwealth or any English court.
 The decisions of other courts of the Commonwealth.
 Foreign judgements.
 Statements of law by British judges, which go beyond the case in point
– these are called
• obiter dicta (remarks by the way).
(d)Declaratory and Original Precedents

A further distinction is often referred to – declaratory precedents,

or those which merely declare the existing law, and original

precedents, or those which, by applying a new rule, create or

make new law. The old theory was that all precedents are

declarations of customary law but, as we have seen, the common

law is not, by any means, customary only. Moreover, as regards the

principles of equity, these were not to be found in either custom or

statute, but had their source entirely in judicial decisions, the

various Chancellors making new law in their judgements.

Strictly speaking, there is no fundamental contradiction between the
“declaratory” and the “original” theory of precedents. Precedents
both declare the law and make it. Every legal decision is a step
forward in the development of the law. Even when judges profess
openly that they are merely declaring the law by applying an
acknowledged rule, since no two sets of facts are precisely the
same, the judges by their decisions are adding to the existing rule
and, therefore, are developing the law as they administer it.
Therefore precedents are declaratory as being evidence of old
law, but are original as sources of new law.
E. Extending and “Distinguishing” Precedents

We must note another factor which makes for flexibility

under the doctrine of precedent (and sometimes,
perhaps, for uncertainty and the possibility of
confusion). Judges have some latitude to modify the
effects of even authoritative or absolutely binding
precedents by “extending” the effect of a decision of
which they approve, and by restrictively
“distinguishing” precedents of which they disapprove.
As an example of the latter we may consider the case of Priestley v.
Fowler (1837) which laid down the rule that a master should not be
liable for injuries suffered by his servants in the course of their
employment if the injury was caused through the fault of a fellow-
servant. This doctrine of common employment as it came to be
called, was from the outset unpopular with lawyers and it became
increasingly disliked. The judges were bound by the decision, but
they restricted its effect by confining its application as far as
possible. (The doctrine was modified by statute in 1880, and finally
abolished by the Law Reform (Personal Injuries) Act 1948.)
A precedent is said to be “distinguished” when the court sitting to
decide a later case finds that the facts of the case before it are
sufficiently different from those of the original precedent to make
the precedent inapplicable. Since the facts of no two cases can be
exactly alike, you will see that the power given by this device is a
considerable one.

Conversely, when a precedent is regarded by lawyers as being

desirable and beneficial in its effect, judges may be persuaded to
enlarge its application as far as possible by extending the principle
concerned to cases where the facts are not strictly similar.
 Reversal, Overruling and Disapproval of
Precedents
You will appreciate, therefore, that the effect of
“distinguishing” is that a precedent may not continue to be
binding indefinitely. A precedent can also cease to be binding
and a judge can refuse to follow it as a result of:
 Reversal: the decision of the case is reversed on appeal
because the appeal court disagrees with the principle laid
down by the lower court and finds for the other party.
 Overruling: where similar facts come before the
court in a later case, then the higher court may
decide the case on a different legal principle, thus
“overruling” the previous precedent. A precedent
may also be overruled by a subsequent statutory
provision which reverses its effect.
 Disapproval, where a higher court in a judgement
expresses doubts about the validity of a previous
rule but does not expressly overrule it.
 Advantages and Disadvantages of Case Law
We can now set out the comparative merits and defects of case law. The

advantages are:
 Case law is practical and concrete; this is because it is the product of a set

of facts upon which a decision must be reached. It is not the result of

academic theorising, but of actual everyday difficulties.

It is more flexible than legislation. Further, because of its binding nature,

people can regulate their conduct with confidence in its certainty.

It is more easily and quickly made than legislation, and this is

particularly important where adaptation of the law to minute differences

of circumstances is required.
It acts as the best preparation for statute law.
Codifications such as the Sale of Goods Act 1979 and
the Bills of Exchange Act 1882 are the outcome of
judicial decisions, and are models of statute law.
Its detail is much richer than any code of law (but
against this must be set its complexity).
Unlike statute law, there is harmony between new
precedents and existing law, which grow concurrently.
The disadvantages can be listed as follows:
 It is not made by the community but by the judges.
However, Parliament can, and does, overrule judicial
decisions, and the judges are strictly impartial and highly
expert – probably more so than a body of legislators.
As case law adds an increasing number of exceptions to
unwanted rules, it is notorious for its bulk and complexity.
It is a difficult form of law to handle but, as legislators
now endeavour to anticipate judicial decisions, the statute
law itself tends to become more bulky and involved, too.
Case law is often criticised as being retrospective in effect
or “ex post facto”. Theoretically, of course, judicial
decisions merely give effect to principles that have always
existed in the body of the law. This peculiarity does not
always operate fairly, for a decision may upset long-
standing interests by its retrospective operation.

Finally, it is difficult to disentangle that part of the judicial

decision which is strictly a binding source of law (the ratio
decidendi) from “things said by the way”, i.e. obiter dicta.
 Law Reporting
The system of case law, as you will see, depends on there being available

accurate reports of all the important decisions of the superior courts. A full

law library runs to some thousands of volumes of reported cases, with all of

which the practising lawyer is, in theory, familiar. (In practice, of course,

the best that even the best lawyers can achieve is to know how and where to

seek the authorities they require.)

The earliest period of reporting is that of the Year Books, from 1283 to 1535.

Many were written in “law-French”, the language of medieval lawyers.

Today, they are of more interest to the legal historian than to the practising

lawyer, because it is not often necessary to go so far back for an authority.

 From 1535 to 1865 was the period of “private” law reporting. Barristers and judges

would report and publish cases considered to be of legal interest, and the law reports of

this period are “labelled” according to the name of the lawyer reporting them. Like the

Year Books, these reports are somewhat uneven in quality: the reports of the famous Sir

Edward Coke, covering the years 1572 to 1616, enjoy very high repute.

In 1865, the period of “official” law reporting began, with the creation of the General

Council of Law Reporting. The Council is responsible for issuing reports of important

decisions of the superior courts, and these are labelled according to the year and the

court making the decision. The official reports are “authorised”, i.e. the barrister

making the report must submit his notes for examination and amendment by the judge

making the decision. Private, commercially-sponsored reports continue to be issued,

however, and enjoy considerable popularity among law practitioners and students.