EQUITY AND TRUST 1.2 MAXIMS OF EQUITY

• Isochukwu
• 13
• Equity and Trust I

MAXIMS OF EQUITY:

The exercise of equitable jurisdiction was based on certain principles which are now embodied in the “maxims of equity”[1]. These maxims reflect the nature and essence of equity in pithy phrases which guide the application of its rules.

Some are fund of numbering these maxims. This at best amounts to an indirect way of cramming and rigidifying the maxims of equity. The truth is that the total number of maxims are innumerable. What matters is that you are able to decipher the maxims at work in examination questions and real life situations.

EQUITY WOULD NOT SUFFER A WRONG TO BE WITHOUT A REMEDY:

This is the root of equitable jurisdiction as the chancery sought to (and indeed equity seeks to) provide remedy to litigants where the ordinary rules of law denied them.

For example at common law, the rights of beneficiaries under a trust were not recognised. However, equity now recognises the rights of beneficiaries under a trust and compels the trustees to hold the property for the benefit of the beneficiaries[2].

Equity introduced certain remedies which would assist the court in deciding a case. E.g. the Anton Pillar Order which enables the plaintiff to discover facts within the knowledge of the defendant as was seen in the case of Anton Pillar KG. V Manufacturing Processes where permission was granted to the plaintiff to search the defendant’s premises to help him discover facts and evidence that would help him prove his case. At common-law, the only remedy for breach of contract was damages. Equity however added the remedies of specific performance, injunction, etc. where damages would not be sufficient. All these were done to provide a remedy where there is a wrong.

EQUITY FOLLOWS THE LAW

Kayode Eso JSC noted in Trans Bridge Co Ltd V Survey international Ltd that equity does not exist in vacuo. Equity was developed to supplement and mitigate rather than override common-law rules. Equity and common law should not be seen as always fighting.

• Estates and interest in land which existed at common-law also exist in equity. For example restrictive covenants- Tulk V Moxhay.
• Just like common-law interests, an equitable interest can devolve on intestacy.
• Just like common law, equity acknowledges that legal estate is vested in trustee but compels him to act in the interest of the beneficiary.

Although equity follows the law, it may divert/deviate from following the law where doing so would amount to injustice. This is done by utilising doctrines like; secrecy, part-performance, estoppel, amongst others to fill the gap in law and prevent injustice. Equity seeks to prevent fraudulent use of the law[3] See Archibong V Duke, Chidiak V Coker, Udolisa V Nwanosike, etc.

WHERE EQUITIES ARE EQUAL, THE LAW PREVAILS.

Meaning that a legal interest in property takes priority over an equitable interest in the same property[4]. Except:

• The legal encumbrancer had notice of an equitable interest in the property before purchase. (Notice may be actual, constructive or implied).
• There has been fraud, duress or misrepresentation in connection with the acquisition of legal title.
• The transaction has been set aside by a competent court of law.

 

In Pilcher V Rawlins: Legal estate in trust property was conveyed to the defendant by way of legal mortgage. The court held that since the defendant was an innocent purchaser for value without notice, his legal title prevailed over the beneficiary’s equitable interest in the trust property.

Joseph V Lyons: “A” assigned his after-acquired-stock to B and later pledged same to C. The court held that C (being a bona fide purchaser for value without notice) had priority over B.

WHERE THE EQUITIES ARE EQUAL, THE FIRST IN TIME PREVAILS.

Equitable interest is ranked in order of creation. An earlier equitable interest in the property prevails over a later equitable interest in the same property except:

• The prior holder is guilty of fraud or gross negligence. In Rice V Rice, the court noted that issuance of purchase receipt without collecting payment facilitated the creation of a subsequent equity… thus the vendor’s equity was postponed due to his negligence.
• In the case of assignment of choses in action[5]. In Dearle V Hall, the court noted that priority in assignment of choses in action was to be determined by the order in which notice reached the debtor.

In Cave V Cave, A trustee purchased land with trust money and conveyed the land to his brother. The brother then mortgaged the land to “A” by way of legal mortgage and then to “B” by way of equitable mortgage. The court held: “A’s” legal mortgage prevailed… then, the beneficiary’s[6] equitable interest (being first in time) prevailed over B’s equitable mortgage.

HE WHO SEEKS EQUITY MUST DO EQUITY.

Meaning that the plaintiff must be prepared to act justly towards the defendant. In Brown V Adebanjo, the plaintiff who had agreed to collect compensation in respect of a trespass to his land was estopped from turning around to sue the defendant for trespass. See also Re Leslie. This maxim is made manifest in the following situations:

• Election: No one should claim a benefit under a document and at the same time evade an obligation under the same document. Ker V Wanchope
• Consolidation and mortgages: the power to make sure both/all mortgages are redeemed rather than one alone. Consolidation therefore looks at a joint rather than sequestered redemption of mortgage.
• Illegal loans: In Lodge V National Union Investment Co, the loan granted to the plaintiff was illegal, but the court (instead of dwelling on the illegality) held that he can only recover his securities where the amount borrowed was repaid… he cannot rely on the fact that the loan was illegal to evade obligation. See also Kasumu V Baba Egbe.

HE WHO COMES TO EQUITY MUST COME WITH CLEAN HANDS.

An applicant should have a clean record and must have conducted himself in a fair and proper manner (in relation to the transaction alone). He who has committed iniquity (immorality, illegality…) shall not have equity. ex turpi causa non oritur actio. See Viatonu V Odutayo.

In Craig V Craig: the petitioner’s suit for dissolution of her marriage on grounds of adultery was rejected because she was also guilty of adultery. In Oilfield Supply Centre ltd V Joseph Lloyd Johnson, the plaintiff was estopped from suing for the winding up of the defendant company because he got into the employment of the company by irregular means. In Gills V Lewis, the relief against forfeiture of premises was refused as the plaintiff has been using the premises for immoral purposes. See also Overturn V Bannister.

DELAY DEFEATS EQUITY / EQUITY AIDS THE VIGILANT AND NOT THE INDOLENT.

Where the applicant has slept on his right or is guilty of unreasonable delay. Limitation periods are utilised to bar access to courts. See Section 4 of the Limitation Act. Section 27-redemption of mortgage payment-16 years limitation, Section 31-breach of trust 6 years. Note however that in cases of fraud there is no limitation.

In Allcard V Skinner, the plaintiff joined the “Church of England Sisterhood” and made gifts and donations to the “mother” (of the sisterhood) under circumstances that may amount to undue influence. After about six years of leaving the sisterhood, she sought to recover the sums. The delay for 6 years vitiated her claim.

Note that the doctrine of laches can be used where the limitation period does not apply- Akpan Awo V Cookey Gam (prescription[7]), Nwakobi V Nzekwu. Laches occurs where the plaintiff discovered the facts and neglected to enforce his right for a long period of time.

Time begins to run where the facts have occurred and there exists a person that can sue and another that can be sued-In Board of Trade V Cayner Irvin and co.

Generally, the limitation period under the limitation statute does not apply to a customary landowner. However, the case of Akpan Awo V Cookey Gam elucidated upon circumstances that may give rise to the right of prescription under customary law. In that case, the court noted that the defendant must establish all the following:

• That he is an adverse possessor: meaning that he does not derive the right of possession from the owner of the land-Epelle V Ojo. E.g. a tenant is not an adverse possessor.
• That he took possession of the land under a mistaken belief that he had title to it. In Nwakobi V Nzekwu, since the defendants knew that they were trespassers, they had no right of prescription.
• The plaintiff (owner) had knowledge of his (the defendant’s) adverse possession but acquiesced[8] in it. Knowledge may be actual, constructive or implied. In family land, the family may be presumed to have knowledge where the important members of the family have knowledge of adverse possession.
• Relying on the acquiescence, the defendant has altered his position[9].
• There is no justification for the plaintiff’s acquiescence: the silence or inaction of the plaintiff (owner) could be due to intimacy, blood ties, family relationships… with the adverse possessor.

There must be sufficient lapse of time capable of establishing acquiescence on the part of the plaintiff: it all depends on the facts of each case. In this case (Akpan Awo V Cookey Gam) 21years sufficed. In Okiade V Morayo, 5 years was sufficient.

EQUALITY IS EQUITY.

Equity prefers fairness of equal division of property between people that are entitled to it. Except justice dictates otherwise. This maxim shall be illustrated in the following headings:

• Equity prefers tenancy in common to joint tenancy. Under joint tenancy, full title in property passes to the last surviving joint tenant. However, under tenancy in common, each tenant has a distinct share in property which he can dispose as he wishes. Upon death, the surviving tenant holds the deceased’s contribution in trust for the deceased’s representatives-Lake V Gibson: Lake V Craddock.

Joint tenancy can be severed 1. where the parties advance amount in equal proportions- Rimmer V Rimmer. 2. Where (in the absence of fraud) a joint tenant disposes or alienates his share-Ipaye V Aribisala.

• Loan on Mortage: A tenancy in common shall be implied where A and B lend money to C who mortgages his property to them jointly. If B dies, A would be a trustee for the estate of B to the tune of A’s contribution.
• Partnership: it is presumed that any property acquired by partners in their business is held by them as beneficial tenants in common rather than as joint tenants.

Where there is no basis for division of property among two or more people, equity prefers equal division. In Jones V Maynard, the court divided the funds in the spouses joint account (including the investments traceable to the finance of the joint account) between the husband and wife equally upon divorce.

EQUITY LOOKS ON THE INTENT (SUBSTANCE) RATHER THAN FORM.

The court in Ezekiel V Nwankwo noted that equity would not allow a matter of form to defeat that of substance.

• In the sale of land, equity allows completion within a reasonable time after the date of completion expires.
• Equity allows a mortgagor to redeem his mortgaged property notwithstanding that redemption date has passed.
• Performance of contract (time): At common-law, time would usually be of the essence and a defaulting party may be liable to pay damages upon default. However, equity can order specific performance in deserving situations. Except the parties or the nature of the goods make time of the essence.

EQUITY LOOKS ON THAT AS DONE WHICH OUGHT TO BE DONE.

This maxim is relevant in the area of property. This maxim is made manifest in:

The Doctrine of conversion: Where property is directed to be converted from one form to another, the property is regarded as converted in equity the moment the trust directive becomes effective notwithstanding that it has not yet been actually converted. In Fletcher V Ashburner the court noted that contracting parties can make money land or land money all depends on the directive given.

Contractual Agreements: Equity treats a contract to do a thing as if the thing were already done. In Iragunima V Rivers State Housing and Property Development Authority, the government leased a land to Nwosu for a term of seven years. Nwosu leased the same land to Okoro who applied for a renewal for 60 years. Okoro paid all the requisite fees but the deed was not drawn up. Okoro built a house on the land which he sold to x. later the government sought to sell the property as abandoned property. The Supreme Court contended that since okoro had done all that was necessary to renew lease and it just remained the part of the government, Equity would assume that the lease has been granted. See also Walsh V Lonsdale.

EQUITY IMPUTES AN INTENTION TO FULFIL AN OBLIGATION.

Where a person under an obligation to do a thing does some other act capable of being regarded as a fulfilment of that obligation, it can be regarded as fulfilling the obligation. The basis of this maxim can be found in the doctrine of performance and satisfaction (discussed later).

EQUITY ACTS IN PERSONAM.

This is the foundation of all equitable jurisdiction where it is directed against a person as opposed to property-Ayinde V Abimbola. Exparte Polland[10].

This maxim is useful in methods of enforcing judgment. Like mareva injunction (to prevent judgment debtor from siphoning/disposing his property abroad) to prevent frustration of court’s judgment[11].

EQUITY WOULD NOT AID A VOLUNTEER.

A volunteer is one who enters into a contract without furnishing consideration. Except a trustee. See Oba Akezua V Benin Divisional Council.

 

[1] J.O. Fabunmi (Equity and Trusts in Nigeria).

[2] The right of the beneficiaries is enforceable against all but a bona fide purchaser for value without notice of the existing trust.

[3] See for example: Savannah Bank V Ajilo, where the litigant was able to evade his responsibility because the consent of governor was not sought in accordance with Section 22 of the Land Use Act.

[4] See Section 16 of the Land Instrument Registration Law, all document registration in law creates a legal interest. An example of an equitable interest is a sales receipt or deposit of title deeds to secure loan (mortgage).

[5] This shall be discussed later.

[6] I.e. the beneficiary of the trust.

[7] This has been discussed in the la

[8] Acquiescence meaning that the plaintiff (landowner) did not protest.

[9] Maybe by making improvements on the land or spending money on the property.

[10] However equity can go beyond the person where justice demands. For example, tracing (right to follow property except it gets into the hands of a bona fide purchaser for value without notice) Also in equity mixed funds can be resolved into its component parts.

[11] But note that equity does not act in vain as such it will not be granted where the order cannot be enforced abroad.