| CHAPTER 3 3. MAXIMS OF EQUITY Reading + McGhee J., Snet's Equity (Sweet and Maxwell, 2005) Ch 3 + Hanbury , Maudsley & Martin, Modern Equity (Sweet & Maxwell, 2009) Ch 1 + Dal Pont, G & Chalmers, Equity and Trusts in Australia and New Zealand (LBC Information Services, 2000) Ch 1 3.4. Introduction Maxims of equity are general principles which guide the court in the exercise ofits jurisdiction. These maxims . Are not positive laws of equity to be applied literally, . Do not cover comprehensively the whole field of equity, but : Each maxim embodies some peculiar function of equity, ‘The maxims often overlap and are inter-related, 3.2 Equity will not suffer a wrong to be without a remedy ‘This maxim was the basis for the development of the courts equity |urisdiction. No wrong should be allowed to go unredressed if itis capable of being remedied by a court of justice. A plaintiff can pray for the court's good conscience by showing how unconscionable it would be if the plaintiff is not given the appropriate remedy. The wrong here does not mean moral wrong, but a wrong capable of judicial enforcement, but was not enforced by a court of faw. 3.3. Equity follows the law Equity follows the law unless there are circumstances disregarded by the common law that warrants equity's intervention. The court of ‘equity will not over ride the statute. Where a rule of either of the common or statute law, is direct, and governs the case with allits circumstances on the particular point, a court of equity is as much bound by it as a court of law, and can as little justity @ departure from it 216 seo ta (ehuinas 218 snare easce a |Story, Equity, (3rd Eng Edn) (1920) 34 Case: Abduirahim v Drahman (1867) 1 Ky. 171 3.4 He who seeks equity must do equity ‘To obiain equitable relief, the claimant must be prepared to do equity or to fulfil his obligation towards the defendant. Cases + Lodge v National Union Investment Co. [1907] 1 Ch 300 ‘Avoid contract under the Money Lender's Act 1900. Parker J refused to make the order except upon the terms that B (who borrowed the money from Mt) should repay the money ‘which had been advance to him; for B was seeking equitable relief and must therefore do what was right and fair). + Chillingworth v Chambers (1896) 1 Ch 685 (in a breach of trust by joint trustees, a beneficiary who Is also a trustee is required to pay indemnity to a defendant, to the extent of his share in the trust property : Hardon v Bellios [1901] AC 118 3.8 He who seeks equity must come with clean hands. This maxim looks to the past conduct of the plaintiff. Not only must the claimant be prepared to do what is right and fair, but he must also show that his past record in the transaction is clean, Access to the court will be denied if the plainti’s actions are fraudulent or unconscionable. Cases + Arunaselam Chetty v Mohamed Nina Marican & Anor (1864) Leic 251 + Palaniappa Chettiar v Arunaselam Chettiar (No.2) { 1962] MLJ 143 + Suntoso Jacob v Kong Miao Ming (1986] 2 MLJ 170 + Neo Tai Kim v Foo Stie Wah [1985] 1 MLJ 397 + Gascoigne v Gascoigne [1918] 1 KB 223, DC + Overton v Bannister (1844) 3 Hare 503 217+ Nail v Punter (1832) 5 Sim. 555 + Aik Ming (M) Sdn Bhd & Ors v Chang Ching Chuen & Anor [1995] 2 MLJ 770 + Fusing Construction Sdn Bhd v EON Finance Bhd (2000) 2 AMR 2216 ‘The “clean hands" requirement must have a direct relationship with the transaction at hand, Se Dering v Earl of Winchelsea (1787) 1 Cox Eq. 318, per Eyre LcB ‘Aman must come into a court of equity with clean hands; but when this is said, it does not mean a genaral depravity: it must have an immediate and necossary relation to the equity sued for, it must be a depravity in a legal as well as a moral sense. See also : Tinsley v Milligan [1994] AC 340 HIL — One can insist on an equitable ownership as long as he or she is not claiming or relying on an illegal act. + Bowmaker v Barnet instruments [1944] 2 All ER 579, 3.6 Where there is equity, the law shall prevail Where the rights of both parties are the same, the party with the right in law has priority. See: S206 (1) and (3) the National Land Code 1965 Ina claim for land where equities are equal, the court will ive priority to the party holding the registered tile, Case: Langan & Others v Lee Cheng Keat (1886) 4 Ky 154 3.7 Where the equities are equal, the first in time shall prevail (Qui Prior est tempore, potoir est jure) Where equities are equal.n the absence of any other factors that determines the rights between the parties, the firstin time has priority Cases . Vallipuram Silvaguru v Palaniappa Chetty (1937] MLJ 59 218 Leo 21N Garmin 218 invao19 eam a. Quah Hong Lian Neo v Seow Teong Teck & Ors [1936] MLJ 203 . United Malayan Banking Corporation Bhd v Goh Tuan Laye & Ors [1976] 1 MLJ 169 + Abigail v Lapin (1934) 51 CLR 58 This maxim is only applicable where equities are equal. It cannot be used against a bona fide purchaser for value without notice of a prior interest, Cases + Zeno Lid v Prefabricated Construction Company (1967] 2 MLJ 104 + Goh Keng How v Raja Zainal Abidin 1995] 3 MLJ 6 + Haroon bin Guriaman v Nik Mah bte Nik Mat & Anor {1954} MLJ 209 + Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 Kitto J held that the maxim que est prior tempore does not apply because it only applies where equities are equal A bona fide purchaser for value without notice is a good defence. 3.8 Delay defeats equity The modern application of this maxim is illustrated in the concept of laches and acquiescence. Equitable claims can be limited by the Limitation Act 1953 directly or by analogy. Lord Camden in Smith v Clay (1767) 3 Bro CC 639 said: A court of equity has always refused its aid to stale demands where a party has slept upon his rights and acquiesced for a great length of time. Nothing can call forth this court into activity but conscience, good faith and reasonable diligence See also Yong Nyee Fan & Sons v Kim Guan & Co.Sdn Bhd [1979] 1 MLJ 182 However, delay in itself does not restrict the right to claim where it is not related or relevant to the claim Case: Lindsay Petroleum Company v Hurd (1874) LR 5 PC 224 (Pe): 219 Lxgc at14 etn 218 vivaors ea a39 The doctrine of laches in the Courts of Equity is not an arbitrary or technical doctrine. Where it would be practically unjust to give a remedy, eithor because the party has, by his conduct, done that which might feity be regarded as waiver ofit, or where by his conduct and neglect he has, though perhaps not waived that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, ifan argument against relief, which otherwise would be just, Is founded upon mere delay, the validity of the defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are the length of the delay and the nature of the acts done during the interval, which might affect either party and cause the balance of justice or injustice in taking the one course or the other, so far as it relates to the remody. Delays that are material ~ see the following cases: : Erlanger v New Sombrero Phosphate Co (1878) 3App. Cas 1218 . Re Len Chee Omnibus Co. Ltd. Chin Sow Lan v Lee Chee Omnibus Co. Ltd & Ors (1968) 2 MLJ 202 : Alleard v Skinner (1887) 36 Ch D 145 . Gov't of Selangor v The Reciever of the Estate of Yap Ah Loy (1903) 9 SSLR 26 : Bourne v Swan & Edgar Ltd (1903) 1 Ch 219 . Goh Keng How v Raja Zainal Abidin bin Raja Hussin [1995] 3MLJ6 Laches is a personal disqualification. It does not bind the successors of ile Equality is equity ln circumstances of conflicting claims, where there is not other basis of division, all who are entitled to the property should the equal division. This maxim is the basis of presumption of tenancy in common and partnership, Cases : Tai Kwong Goldsmiths & Jewellers (under recievership) v Yap Kooi Hee & Ors [1995] 1 MLJ 1 220No provision in the Partnership Act that provide for the order Of priory of payment of debts and liabilty of a partnership. As such, it should be divided equally. Section 46 (b)()) and 8 47 (1) Partnership Act 1960 refers. + Mac Donald v Mac Donald ( 1957) 2 All ER 690 {equal division between the husband, wife and the mother in law who had contributed to the purchase of home furnishings.) + Lau Choong Choo v Chau We Chuan [1980] 1 MLJ 6 + Jones v Maynard (1951) Ch 572 + Re Dickens (1935) Ch 267 3.40 Equity looks to the intent rather than the form Generally equity does not look to the form but the substance. In certain circumstances equity will not allow a transaction to be set aside on grounds of technicality. Romilly MR said in Parkin v Thorold (1852) 16 Beav. 59: Courts of Equity make a distinction in all cases between that which is matter of substance and that which is a matter of form: and if it finds that by insisting on the form, the substance will be defeated, it holds it inequitable to allow a person to insist on such form, and thereby defeat the substance. See also: Yong Nyee Fan v Kim Guan & Co [1979] MLJ 182, 190 ‘This maxim is the basis of the equitable doctrine that in construction of wills or trusts, what is of utmost importance is the intention of the settler or the testator as expressed in the will. Cases : Re Adam's and the Kensington Vestry (1884) 27 Ch. D 394 : Wan Naimah v Wan Mohd Nawawi (1974) 1 MLJ 41 3.41 Equity will not permit the provisions of a statute intended to prevent fraud to be used as an instrument for fraud, Although equity will not go against the statutory provisions, it will not allow a party to insist on his legal rights under a statute to cause detriment or to avoid the performance of his obligation to the other party 221 xe 2114 kms 221 ‘suina09 e4eze a342 343 Leo 21 ean 222 Cases + Sia Siew Hong & Ors vLim Gim Chien & Anor [1995] 3 MLJ 141 + Aik Ming (M) Sdn Bhd v Chang Ching Chuen & Ors [1995] 2MLJ770 Equity looks on that as done which ought to be done Where there is a specifically enforceable obligation equity regards the parties as already in the position which they would be in after performance of the obligation. For instance a specifically enforceable contract for sale of land transferds the equitable interest to the purchaser, the vendor holding the legal title on constructive trust until completion. Case: Lysaght v Edwards (1876) 2 Ch D 499 Itappears to me that the effect of a contract for sale has been settled itis that the moment you have a valid contret for sale the vendor becomes in equity a trustee for the purchaser of the estate sold, and the beneficial ownership passes to the purchaser, the vendor having a right to the purchase money, a charge or lien on the estate for the security of that purchase money, and a right to retain possession of the estate until the purchase money is paid, in the absence of ‘express contract as to the time of delivering possession. Re Lind [1916] 2 Ch 354 Napier and Ettrick (Lord) v Hunter {1993] AC 713 AG of HongKong v Reid [1994] 1 AC 324 Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd [1996] 2 CLU 561 Equity will not perfect and imperfect gift / Equity will not assist a volunteer. An undertaking to convey or to transfer something without consideration cannot be enforced because itis a gratuitous. Unless there has been an outright transfer, the donee cannot enforce the promise. In there is an agreement to oreate a trust, the trust property must be vested in the trustee for equity will not perfect an imperfect ait. 202Note: This is subject to a number of exceptions which will be discussed through the cases under the chapter on Incompletely Constituted Trusts (Part Il, Ch 4). This will be discussed under cases like Milroy v Lord (1862) 4 De GF & J 264, Inwards v Baker [1965] 2 QB 29, Cheng Hang Guan v Perumahan Fartim [1993] 3 MLJ 352. 3.44 Equity acts in personam This maxims shows the difference between the procedure at equity ‘and common law. The enforcement at common law is through the writ of execution whereas the Chancery court has jurisdiction over the defendant personally — and the order of the court of equity is directed on the person personally such that the failure to comply is ‘a contempt of court punishable by imprisonment. Claims at common law is a claim in rem whereas the claim at equity is in personam. Case + Penn v Lord Baltimore (1750) 1 Ves Sen 444; ER 1132 (specific performance was ordered of an agreement relating to land boundaries in Pennsylvania and Maryland the defendant being in England.) Lord Harwicke said: the conscience of the party was bound by this agreement, and being under the jurisdiction of the cour, which acts in personam, the court ‘may property decree it as an agreement. See also Ewing v Ewing & Ors (1883) 9 App. Cas 34, 40, Lord Selbourne: The courts of equity in England are, and always have been, courts of conscience, operating in personam, and not in rem; and in the exercise of this personal jurisdiction they have always been accustomed to compel the performance of contracts and trusts to subjects which were not either locally or ratione domial within their jurisdiction. They have done s0 as to land, in Scotland, in Ireland in the Colonies, in foreign countries. 23 | execareuanees 229 nv20t9 eae aM‘These principles are also applied in administration of trusts in the following cases: + Re Valibhoy (1961) MLJ 187 (estate situated oversea whereas the trustee is within the local jurisdiction of the court). . Chellaram & Ors v Chellaram & Ors [1985] 1 Ch 409 3.15 Equity ses that as done what cught tobe done Salimah binti Wan Jaafar v Mahmood bin Omar [1998] 5 MJL 163, . Lease a agreement requstered - but as good as done : ‘Abo Margared Chua v Ho Siew [1961] MJL 173. . Bamerji v chin Cheng Realty [1983] 2 MLJ 18. 224 |) bec eraminas 226 srsnaose ee a