Equity Notes Feb 2023 PDF

J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE UNIVERSITY OF NAIROBI SCHOOL O...

J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE UNIVERSITY OF NAIROBI SCHOOL OF LAW GPR 222 LAW OF EQUITY COURSE INSTRUCTORS: J.K. ASIEMA NATURE, HISTORICAL ORIGIN AND DEVELOPMENT OF EQUITY IN ENGLAND INTRODUCTION Definition of Equity Equity has two meanings: 1. Ordinary or popular meaning 2. Technical meaning Ordinary Meaning Equity in the ordinary sense is equivalent to natural justice, morality or fair play. For example, before a person is pronounced guilty of an offence by a court of law, he must be given a chance to defend himself. Equity in this sense means to do good. Technical Meaning Equity in the technical sense refers to the body of rules or principles which are not and are distinct from the common law. It is a body of rules or principles which form an appendage to the general rules of law. These two meanings are further expressed below. According to Hanbury and Maudsley, Modern Equity (16th Edition, Sweet & Maxwell), page 3: “Equity is a word with many meanings. In a wide sense it means that which is fair, just, moral and ethical; but its legal meaning is much narrower. Equity is the branch of law which, before the Judicature Act of 1873 came into force, was applied and administered by the Court of Chancery.” 1  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Equity is also defined as: “those principles of natural justice administered at first by the King-in-Council, and later by the Chancellor, first as a member of that Council and afterwards as an independent judge, to correct and supplement the common law.” The word “equity” is derived from the classical Latin word “aequitas”, which means fairness or reasonableness. In its practical application, “aequitas” signified the following of the spirit of the law, as opposed to the strict letter. It connoted reasonable modification of the letter of the ordinary law. The common law followed the strict letter of the law while equity followed the spirit of the law. In order to understand the distinction between common law and equity, it is necessary to examine the historical origin and development of equity in England. Historical Origin and Development of Equity in England Before the evolution of equity, common law was the prevalent law in England. Common law developed over the years through case law. It was administered in the old royal courts by the King’s justices. There were three common law courts, namely, King’s Bench, Common Pleas and Exchequer. 1. The Court of King’s Bench: This court takes its name from the original concept of the monarch sitting with his judges “in banco”, that is “on the bench”. It dealt with both civil and criminal cases in which the King had an interest. 2. The Court of Common Pleas: This court heard civil cases brought by one individual or citizen against another. 3. The Court of Exchequer: This court’s principal jurisdiction dealt with cases involving the royal revenue. Later it acquired jurisdiction in cases of debt between one citizen and another citizen. It eventually took many cases of debt which should have been heard in the Court of Common Pleas. The common law was rigid because before a person could get redress for his grievance, he had to be issued with a writ disclosing a cause of action. The King’s Chancellor issued this writ. Being an ecclesiastic, the Chancellor was the “keeper of the King’s conscience” and represented the “moral attitude” of the Crown. Fetters to the Common law The common law courts were fettered by precedent. In addition, a statute referred to as the Provisions of Oxford of 1258 restrained the Chancellor from issuing new types of 2  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE writ on his own initiative. These fetters prevented the common law from developing fast enough to do justice in all cases. Moreover, in the rough days of the 13th century, a plaintiff was often unable to obtain a remedy in the common law courts even when he should have, owing to the strength of the defendant, who would defy the court or intimidate the jury. Petitions to the King Due to the constraints of the common law, plaintiffs began to petition the King in Council to exercise his extraordinary judicial powers on one of two grounds, either: (a) that there was no remedy available; or (b) that there was a failure to administer the available remedy. Thus, where the rigidity of the common law worked unfairly or provided no remedy, an appeal was made to that higher justice called “equity”, which resided in the King, as the “fountain of all justice.” The King’s residuary power permitted him to temper the inflexibility of the ordinary law and to do justice according to reason, good faith, good conscience and the current ideas of morality, when he was petitioned to do so. Equity was therefore developed to mitigate the defects of ordinary law. Establishment of the Court of Chancery The practice of petitioning the King continued, giving rise to the establishment of a Court of Chancery as an institution independent of the King and his Council. Equity may therefore also be defined as “those principles of natural justice administered at first by the King-in-Council, and later by the Chancellor, first as a member of that Council and afterwards as an independent judge, to correct and supplement the common law.” In the Middle Ages, the Chancellor’s jurisdiction was undefined. He exercised his powers on the ground of conscience. In theory, conscience was based on universal and natural justice rather than the personal opinion or conscience of the Chancellor. In practice, however, the standards varied with each Chancellor, hence the phrase “Equity is as long as the Chancellor’s foot.” The Chancellor pronounced a remedy where the common law did not provide for one. For example, the common law courts had no power to order specific performance or grant an injunction. The Chancellor would also provide a remedy where a common law rule produced substantial injustice in a particular case due to some unforeseen set of facts. Justice required that the rule be amended or modified. If the rule could not be amended or modified, justice required that there be a new rule to mitigate the harshness and severity of the common law rule. This new body of rules is what came to be known as equity. The rigidity and deficiency of the common law led to the evolution of equity. In this sense, equity can be seen as supplementing or filling in the gaps left by the common law. 3  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Equity is distinguishable from the general body of law and from the common law, in particular, not because it seeks to achieve a different end, since both equity and the common law seek to achieve justice. Rather, equity is distinguishable because it appears at a later stage of legal development. Systematization of Equity With time, Chancellors began to apply the same principles in all cases instead of following the inclination of the moment necessitated by circumstances under the notion of conscience. The Court of Chancery also became more highly organized. More judicial officers were appointed and a Court of Appeal in Chancery was established. What had begun as an irregular process of petitioning the Crown in extraordinary circumstances had become a regular system of courts with a recognized jurisdiction. Rigidity of Equity The systematization of the rules of equity in turn produced rigidity (“rigor aecquitatis”). They became as fixed as those of the common law. One of the most famous Chancellors, Lord Eldon (1801-1827) said the following in Gee v. Pritchard (1818) 2 Swans 402 at 414: “The doctrines of this court ought to be as well settled, and made as uniform almost as those of the common law, laying down fixed principles, but taking care that they are to be applied according to the circumstances of each case. I cannot agree that the doctrines of this court are to be changed with every succeeding judge. Nothing would inflict on me greater pain, in quitting this place, than the recollection that I had done anything to justify the reproach that the equity of this court varies like the Chancellor’s foot.” It must not therefore be assumed that every injustice was the subject of equitable intervention. Initially, it was never certain when equity would apply since the Chancellor’s powers were wide but vague. Eventually, the Chancellor had to rely on well-settled principles of equity. Per Jessel, M.R. in Re National Funds Assurance Co. (1878) 10 Ch.D 118 at 128: “This is not, as I have often said, a Court of Conscience, but a Court of Law.” According to the Court of Appeal in Re Diplock Ch. 465 at 481: If the claim being made did exist, 4  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE “it must be shown to have an ancestry founded in history and in the practice and precedents of the courts administering equity jurisdiction. It is not sufficient that because we may think that the ‘justice’ of the present case requires it, we should invent such a jurisdiction for the first time.’ Harman, L.J. said the following in Campbell Discount Co. v. Bridge 1 Q.B. 445 at 459: “Equitable principles are, I think, perhaps rather too often bandied about in common law courts as though the Chancellor still had only the length of his foot to measure when coming to a conclusion. Since the times of Lord Eldon the system of equity for good or evil has been a very precise one and equitable jurisdiction is exercised on well known principles.” The law of equity is therefore more concerned with the technical rather than the ordinary meaning of equity. Any definition of equity must have regard to two things, namely, firstly, form and history, and, secondly, substance or principle of equity. However, it is to be noted that today some aspects of equity are strict and technical, while others leave considerable discretion to the court. Equity versus Natural Justice It is not entirely accurate to define equity solely in terms of natural justice. The principles of equity administered in the courts are distinct from the rules of natural justice. When the rules of natural justice enforced by the courts are examined, it will be seen that many of them are rules of the common law, many others are statutory, and some are derived from ecclesiastical and other sources. Only a small fraction of the whole can be said to be rules of equity in the technical sense. Illustration: The Rules of Natural Justice: Luganda Proverbs: “Enkima tesala gwa kibira”: “The monkey does not decide an affair of the forest.” No man shall be a judge in his own cause. This is the rule against bias, “Nemo judex in causa sua.” “Tosala gwa kawala nga tonnawulira gwa kalenzi”: “Do not decide the girls’ case until you have heard the boys’.” No man shall be condemned unheard. This is the right to a fair hearing, “Audi alterem partem.” From the above, it can be said that equity in the technical sense encompasses more than the traditional rules of natural justice. 5  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Disadvantages of Separate Courts of Common Law and Equity The Court of Chancery which was established following the systematization of equity was separate from the three common law courts – King’s Bench, Common Pleas and Exchequer. Soon the practice of having different courts became cumbersome and inconvenient. Often in the course of the same litigation, parties were driven to and fro between common law and equity courts. For example, the common law courts had no power to order specific performance or grant an injunction. On the other hand, the Court of Chancery could not award damages. A plaintiff who had obtained a judgment in his favour in a common law court could be prevented from enforcing it by an injunction granted by the Court of Chancery because in the opinion of the latter court, the plaintiff obtained the judgment unfairly. This practice had earlier evoked the bitter hostility of the common law courts, until the dispute was resolved in favour of the Court of Chancery by King James I after the Earl of Oxford’s Case (1615 1 Rep. Ch. 1 and App.; Holdsworth H.E.L. Vol. 1 pp. 459-469. Mitigation of the Disadvantages Some of the disadvantages of having separate courts were mitigated by the common law courts themselves. For instance, when a rule of equity differed from a common law rule, the common law courts applied the rule of equity in order to save the parties the expense of separate proceedings in equity. However, this would be done only when it was plain in the proceedings at common law what equity would do. Other disadvantages were mitigated piecemeal by statute. For example, the Common Law Procedure Act 1854 gave the common law courts a limited power of granting injunctions. The Chancery Amendment Act 1858, commonly known as Lord Cairns’ Act, gave the Court of Chancery power to award damages either instead of, or in addition to, an injunction or specific performance. The situation was therefore ripe for a merger of the three common law courts and the Court of Chancery. Merger of Common Law and Equity Courts The merger was accomplished through the enactment of the Judicature Acts of 1873 and 1875. The main purpose of these Acts was to amalgamate the numerous courts into one Supreme Court of Judicature. Consequently, the Queen’s Bench, Common Pleas, Exchequer, Court of Chancery and Court of Appeal in Chancery were all replaced by one Supreme Court consisting of: 6  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 1. the Court of Appeal; and 2. the High Court. The High Court had five divisions: a) Queen’s Bench b) Common Pleas c) Exchequer d) Chancery e) Probate Divorce and Admiralty These were reduced to three by the 1880 Order in Council. The three were: a) Queen’s Bench, replacing the King’s Bench, Common Pleas and Exchequer; b) Chancery; and c) Probate Divorce and Admiralty. By the Administration of Justice Act 1970, Probate, Divorce and Admiralty became the Family Division. Admiralty matters were taken to an Admiralty Court within the Queen’s Bench Division. The Supreme Court Act 1981 affirmed the three divisions, namely: (a) Queen’s Bench; (b) Chancery; and (c) Family Division. The Supreme Court was directed to administer both law and equity. Rules of equity remained distinct from those of the common law but both systems were administered in the same courts. Per Lord Cairns, “The court is now not a court of law or a court of equity; it is a court of complete jurisdiction.” Pugh v. Heath (1882) 7 App. Cas. 235 at 237. In the words of Pollock in Leading Cases Done into English (1892), p. 57: “The courts that were manifold dwindled to diverse divisions of one (court).” For the sake of administrative convenience, cases were allocated to the Divisions according to their general subject matter. The Kenyan court system derived from this English system. 7  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Contribution of Equity to English Law Equity has made the following contributions to English law: (a) Trusts and settlements in respect of property (b) The doctrine of “undue influence” in respect of contracts (c) Property for the separate use of married women which the common law did not recognize (d) Superior remedies, e.g. specific performance and injunction Classification of the Jurisdiction of Equity The jurisdiction of equity can be divided into three classes: (a) Exclusive jurisdiction –new rights. This category refers to the rights that the Court of Chancery created which the Common Law courts failed to enforce e.g. trusts, mortgages, partnerships, administration of estates, bankruptcy. (b) Concurrent jurisdiction – new remedies. Equity developed a wide range of remedies for the enforcement of common law rights which were available in addition to the remedies provided by the common law. This jurisdiction therefore covered cases which were known to the common law, but which the Court of Chancery would also adjudicate on, e.g. doctrine of estoppel (promissory and proprietary estoppel at common law and in equity). The remedies are e.g. specific performance, injunction, an order for an account. (c) Auxillary jurisdiction –new procedure. The Court of Chancery created procedural rules relating to e.g. discovery of documents, testimony on oath, subpoena of witnesses and interrogation (now referred to as disclosure, witness summons, requests for further information). Equity did not come to replace or supplant the common law but to assist it. See: Lord Eldon in Lord Dudley v. Lady Dudley (1705) Pre. Ch. 241: “Equity is no part of the law, but a moral virtue, which qualifies, moderates and reforms the rigour, hardness and edge of the law, and is a universal truth; it does also assist the law where it is defective and weak…and defends the law of crafty evasions, delusions and subtleties, invented and contrived to evade and delude the common law…Equity therefore does not destroy the law nor create it but assist it.” Equity is as long as the Chancellor’s foot. See: 8  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE John Selden, Talk of John Selden (ed. Pollock, 1927) quoted in Holdsworth, H.E.L., pp. 467-468: “Equity is a roguish thing. For law, we have a measure…equity is according to the conscience of him that is chancellor, and as that is longer or narrower, so is equity…Tis all one as if they should make the standard for the measure a chancellor’s foot.” Distinction Between Equity and Common Law Per John A. Finch, Baron Finch of Fordwich (17 September 1584 – 27 November 1660), an English Judge and Speaker of the House of Commons: The difference between the common law and equity is that: “At common law you are done for at once. In equity you are not so easily disposed of. The former is a bullet which is instantaneous and charmingly effective. The latter, is the angler’s hook, which plays its victim before it kills him. Common law is prussic acid (cyanide), equity is laudanum.” Per Sir William Blackstone (1723-1780), on the limitations of equity and its discretionary nature (Public Courts of Common Law and Equity, Volume Three, Chapter Four): “Law without equity, though hard and disagreeable, is much more desirable for the public good than equity without law, which would make every judge a legislator and introduce most infinite confusion, as there would be almost as many different rules of action laid down in our courts as there are differences of capacity and sentiment in the human mind.” Excerpt from A.K.R. Kiralfy, Potter’s Outlines of English Legal History (5th Ed.) p.1 “English law is like a river. The channel widens and deepens as it flows through the course of years and tributaries join it from time to time. It was first fed by the springs of the common law, but the fountain of equity and the wells of the law merchant and ecclesiastical law have increased the waters of the growing current…The English law is practical, not theoretical, pragmatic, not dogmatic; it is built up day by day by the courts in deciding disputes between living people and with full knowledge of the effect the decision of the court will have on their destinies. The legislature…must deal with wholly new situations not covered by the older judge-made rules, but Parliament can only enact abstract propositions of law; it is for the courts to translate them into reality.” 9  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE MAXIMS OF EQUITY There are certain general principles upon which the court of equity exercises its jurisdiction. Many of these principles have been embodied in the so-called “maxims of equity.” Some of the maxims overlap. A particular maxim may contain by implication what another maxim contains. These maxims do not cover all the situations in equity. The most notable maxims are as follows: 1. He who seeks equity must do equity. 2. He who comes to equity must come with clean hands. 3. Equality is equity/Equity is equality. 4. Equity looks to the intent/substance rather than the form. 5. Equity regards as done that which ought to be done. 6. Equity acts in “personam”. 7. Equity will not assist a volunteer. 8. Equity will not suffer a wrong to be without a remedy; where there is a wrong there is a remedy (“Ibi jus ibi remedium”). 9. Equity does not act in vain. 10. Delay defeats equity; equity aids the vigilant and not the indolent (“Vigilantibus non dormientibus jura subveniunt”). 11. Equity follows the law (“Acquitus sequitur legem”). 12. Where the equities are equal, the first in time shall prevail. 13. Where there is equal equity, the law shall prevail. 10  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 1. He who seeks equity must do equity This maxim means that a person who comes to seek the aid of a court of equity to enforce a claim must be prepared to submit in such proceedings to any directions which the court may deem fit to give. He must do justice as to the matters in respect of which the assistance of equity is sought. The plaintiff must be prepared to do equity in its popular sense of what is right and fair to the defendant. For instance, a person seeking an injunction will not succeed if he is unable or unwilling to carry out his own future obligations. This maxim is the foundation of the equitable doctrine of election. Illustrations of this maxim are as follows: (i) Contracts of employment and strikes Chappell v. The Times Newspapers Limited 2 All E.R. 233 The plaintiffs sought an interlocutory injunction to restrain their employer from terminating their contracts of employment after a strike. The court refused to grant the injunction because the plaintiffs refused to give an undertaking not to engage in activities that were disruptive to their employer’s business. The Court of Appeal stated that in seeking an equitable remedy, the plaintiffs had to be prepared to do equity. By refusing to give an undertaking not to disrupt newspaper production, they were in effect telling the employers that they must keep to their part of the contract even though the plaintiffs were not themselves ready or willing to keep to theirs. Accordingly, the plaintiffs were not entitled to the relief claimed. (ii) Illegal Loans Lodge v. National Union Investment Company Limited (1907) 1 Ch. 300 B borrowed money from M and mortgaged certain securities to M. M was not a registered moneylender as required by law. The transaction was therefore illegal and void. B sued M for delivery up of his securities on this basis. The court refused to make the order unless B repaid the loan. Since B was seeking equitable relief, he had to do what was right and fair, that is, first repay the money owed by him to M. Contrast: Kasumu v. Baba-Egbe A.C. 539 at 549. The Privy Council in this case stated that the case of Lodge “cannot be treated as having established any wide general principal that governs the action of courts in granting relief in moneylending cases.” See also Barclay v. Prospect Mortgages Ltd 2 All ER 672 11  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Although courts do not enforce illegal contracts today, the case of Lodge v. National Union Investment Company Limited is still important as an illustration of the early application of the above maxim. (iii) Consolidation: This applies where a person has lent money and is entitled to two mortgages made by the same mortgagor. The lender may consolidate the mortgages and refuse to permit the mortgagor to exercise the equitable right to redeem one mortgage unless the other mortgage is redeemed as well. See: Pledge v. White A.C. 187 For a detailed discussion on consolidation, particularly as to the conditions to be satisfied before a mortgagee can consolidate, see: SNELL, Chapter on Securities (26th Edition, pp. 425-426). (iv) Notice to redeem mortgage: A mortgagor who wishes to exercise his right to redeem his mortgage before the due date of redemption must give his mortgagee reasonable notice of his intention. Reason: This gives the mortgagee reasonable time to find some other investment before payment is made by the mortgagor. The mortgagor would otherwise be required to pay interest in lieu of notice. (v) Election: Where a donor gives his own property to E and in the same instrument purports to give E’s property to X, E will be unable to claim the whole of the gift to him unless he allows the gift to X to take effect. This is referred to as the doctrine of election. ( SNELL 26th Ed. P. 532 et seq) (vi) Equitable estoppel: There are two types of estoppel, namely, promissory and proprietary estoppel. Promissory Estoppel Promissory estoppel arises where by his words or conduct, one person, A, makes some representation or promise to another person, B, and B relies on that representation or promise and acts to his (B’s) detriment. Here, equity will preclude A from resiling from his representation or promise. Example 1: If a landlord tells his tenant towards the end of the term that he intends to demolish the leased premises after the term expires, the landlord cannot subsequently claim damages from the tenant for leaving the premises unrepaired or failing to 12  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE re-decorate the premises at the expiry of the term. See: Marquess of Salisbury v. Gilmore (1942) 2 KB 38. Example 2: If a landlord agrees to accept a reduced rent and the tenant acts on this agreement to his detriment (eg he spends the extra money), the landlord cannot thereafter demand the full rent. See: Central London Property Trust Limited v. High Trees House Ltd (1947) KB 130. See also: Combe v. Combe (1951) 2 KB 215 Notice to resile from the promise The promisor can resile from his promise by giving the promisee notice so that the promisee has a reasonable opportunity to resume his former position. It is only if resumption of the former position is impossible that the promise becomes final and irrevocable. See: Ajayi v. R.T. Briscoe (Nigeria) Ltd (1964) 1 WLR 1326 at 1330. In the case of Tool Metal Manufacturing Co. Ltd v. Tungsten Electric Co. Ltd (1955) WLR 761, it was Held: That where a patentee grants a licence to a manufacturer in return for certain periodic payments and later agrees not to enforce the payments, he may nevertheless again enforce the payments when a reasonable time has elapsed, after giving notice of his intention to do so. To the extent that the promisor can resile from his promise on giving notice, promissory estoppel at equity is temporary. In contrast, promissory estoppel at common law is permanent. Proprietary Estoppel Proprietary estoppel arises where one person, A, knowing that another person, B, is acting under some mistaken belief that he (B) has some right to A’s property, actively or passively encourages B’s acts. Here, equity will restrain A from acting contrary to the belief on which B has acted. A will thus be precluded from denying B’s supposed rights in A’s property. Promissory estoppel at equity may be temporary and merely provides a defence (shield). On the other hand, proprietary estoppel is permanent in its effect and can confer a substantive right of action (sword). Four conditions must, however, be satisfied for proprietary estoppel to apply: (a) Expenditure B must have incurred expenditure or otherwise prejudiced himself. Eg. B may have spent money on improving property which in fact belongs to A, for instance, by building a house on A’s land. See: Inwards v. Baker (1965) 2 QB 29. 13  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE (b) Mistaken Belief B must have acted in the belief, and A must have actively or passively encouraged B to believe either that he (B0 owns a sufficient interest in the property to justify the expenditure, or that B will obtain such an interest. See: Michaud v. City of Montreal (1923) 129 LT 417; Inwards v. Baker Thus if B improves A’s land believing that A will grant B a sufficient interest in it, A cannot then evict B on the ground that no rent or price has been agreed upon and therefore that there cannot be a contract between them. See: Duke of Devonshire v. Eglin (1851) 14 Beaver 530. (c) Conscious Silence A must have known that B was incurring expenditure in the mistaken belief, and that A was entitled to object but nevertheless stood by or participated in the expenditure without enlightening B. See: Hopgood v. Brown (1955) 1 WLR 213. (d) No bar to Equity No proprietary estoppel will arise in equity if enforcing the right claimed would contravene a statute. See: Chalmers v. Pardoe (1963) 1 WLR 677. Contrast: Ward v. Kirkland (1966) 1 WLR 601 at 631. 2. He who comes to equity must come with clean hands The distinction between the first maxim, “He who seeks equity must do equity” and the second maxim, “He who comes to equity must come with clean hands” is that the first maxim applies to a future obligation while the second maxim refers to the past conduct of the plaintiff. E.g. A tenant whose lease has been forfeited by the landlord for non-payment of rent cannot expect relief against forfeiture if he has committed a breach of covenant such as using the leased premises for a purpose other than that allowed under the lease. See: Gill v. Lewis 2 Q.B. 1 at 13, 14 & 17 Mountford v. Scott Ch. 258 Litvinoff v. Kent (1918) TLR 298 Hubbard v. Vosper 2 QB 84 The plaintiff must not only be prepared to do what is right and fair (as in the previous maxim), but he must also show that his past record in the transaction is clean, for "He 14  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE who has committed Iniquity…shall not have Equity.” See: Jones v. Lenthal (1669) 1 Ch. Ca. 154 (SNELL p. 35) Limit to this rule: Where the plaintiff’s breach was only trifling or where he has broken a much less important covenant than the one he seeks to enforce, the maxim will not apply. See: Besant v. Wood (1789) 12 Ch.D 605 Chitty v. Bray (1883) 48 LT 860 Meredith v. Wilson (1893) 69 LT 336 Hooper v. Bromet (19030 89 LT 37; affirmed: (1904) 90 LT 234, CA The unclean conduct of the plaintiff should be closely connected with the relief being sought. See: Duchess of Argyll v. Duke of Argyll Ch. 302 at 332; 1 All ER 611 at 626; 2 WLR 790 The Duchess and Duke of Argyll had been married and were divorced. During their marriage, they had exchanged certain confidential information. After the divorce, the Duke sought to publish the information. The Duchess applied for an injunction to restrain the Duke from publishing the information, i.e. to restrain a breach of confidence by her husband. The Duke argued that his wife had committed adultery and was the cause of the divorce and in view of this the court should not grant her the relief she sought. The court Held: That the wife’s alleged conduct had no connection with her application for an injunction and allowed her application. The court remarked that her conduct did not license the husband “to broadcast unchecked the most intimate confidences of earlier and happier days.” NOTE: What bars the success of the plaintiff’s claim by using the maxim is not a general depravity but rather, a depravity which has an immediate and necessary relation to the equity sued for. The depravity must be a depravity in a legal as well as moral sense. The maxim must therefore not be interpreted too widely as allowing any unclean conduct to defeat a plaintiff’s claim. “Equity does not demand that its suitors shall have led blameless lives.” Per Brandeis J. in Loughran v. Loughran (1934) 292 US 216 at 229. 15  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 3. Equality is Equity/Equity is Equality This maxim applies to a situation where two or more persons are entitled to the same property. An important principle of equity which is illustrated by this maxim is that in the absence of sufficient reasons for any other basis for division, those who are entitled to property should have the certainty and fairness of equal division. Equality in this sense does not mean literal equality but proportionate equality. Equity therefore seeks to effect a distribution of property and losses proportionately to the several claims or liabilities of the persons concerned. This maxim has been applied in relation to property in a variety of ways: A. Presumption of a tenancy in common Equity leans in favour of a tenancy in common as opposed to a joint tenancy. In a joint tenancy, when one joint tenant dies, the whole estate belongs to the surviving joint tenant. The estate of the deceased inherits nothing. There is no equality here. Equity will, therefore, in a number of instances, treat persons who are joint tenants at law as tenants in common. Although at law the survivor is entitled to the whole estate, he will hold in part as trustee for the estate of the deceased. Three of these instances are as follows: A (i) Purchase in unequal shares If A and B purchase property with purchase money provided by both of them in unequal shares, and they hold the property as joint tenants, on A’s death, B becomes entitled to the whole of the property at law. In equity, however, B is treated as a trustee for A’s estate proportionately to the share of the purchase money contributed by A. Had the purchase money been contributed in equal shares, B would have been entitled to the whole property in equity and at law. This is because where two purchasers contribute the money in equal shares, they may be presumed to have purchased with a view to the benefit of survivorship. A (ii) Purchase in equal shares: Severance of joint tenancy Even where the property is vested in the parties as joint tenants in equity as well as at law, e.g. where they contribute money in equal shares, equity will treat the joint tenancy as severed so as to exclude the incidence of survivorship. A (iii) Partnership property Where partners acquire property, they are presumed to hold it as beneficial tenants in common. 16  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE B. Equal division As stated above, the maxim will be applied whenever property is to be distributed between rival claimants and there is no other basis for division. Illustrations: B (i) Husband and Wife The court will, after a divorce, refuse to dissect meticulously the joint bank account which both the husband and wife drew upon and paid their income into. Meticulous dissection here refers to division of funds in the account proportionately to the amount drawn or deposited by each spouse. The court will therefore divide the balance equally between the spouses. Note: This principle does not apply where the husband and wife are still living together. Reason: Their rights in a joint bank account are not meant to be affected or interfered with by the court. B. (ii) Trusts Where property has been settled in unequal shares with a provision that any share which fails to vest shall accrue to the other shares by way of addition, the accrual takes place in equal shares and not in the proportions laid down by the settlor for the original shares. See: Re Bower’s S.T. Ch. 97 This is the case notwithstanding that equality is attained at the price of altering the proportions prescribed by the settlor. See: A Critique in (1942) 58 L.Q.R. 311. B. (iii) Copyright Where an author bequeaths the manuscript of a work to A and the copyright to B, and publication of the work is made possible only by using the manuscript, the proceeds of sale of the copyright will be divided equally between A and B. See: Re Dickens Ch. 267. For another example of the operation of the maxim, see: Re Kavanagh (1949) 66 T.L.R. 65. 4. Equity looks to the intent/substance rather than the form The court makes a distinction between matters of substance and form. Whenever there is a contradiction between the two, equity presumes that matters of substance prevail over matters of form. This maxim can be applied to trusts. For a person to create a trust, it is not necessary to use technical words. The intention to create a trust can be inferred from conduct. A court 17  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE of equity will hold the existence of a trust even if the word “trust” is not mentioned. E.g. “I hope he will hold the property safely for my son’s benefit.” The court looks at the substance rather than the form. Another illustration is the equitable remedy of rectification where the court, in ordering rectification of an instrument, looks at the intention of the parties as per their agreement so that the instrument correctly reflects and records their intention or agreement. See: Webster v. Cecil (1861) 30 Beav. 62 5. Equity looks upon as done that which ought to be done This maxim is applied mostly to contracts, particularly agreements for lease. Equity treats a contract to do a thing as if the thing were already done. It does so only in favour of persons entitled to enforce the contract specifically and not in favour of volunteers. E.g. if there is an agreement for a lease of property and the lease requires to be registered, equity will presume that the agreement is valid, notwithstanding the absence of registration. See: Walsh v. Lonsdale (1882) 21 Ch.D 9 FACTS: The defendant, a landlord, entered into a written agreement to grant the plaintiff (tenant) a lease of a mill for 7 years. The agreement provided that rent was payable in advance if the tenant so wished. The law provided that if a grant for a lease exceeded 3 years, in order for it to be enforceable, a deed must be prepared ( i.e. a lease as distinguished from an agreement). In this case, there was no deed. The tenant also paid rent in arrears, not in advance. The landlord demanded the year’s rent in advance. It was not paid and the landlord sought to obtain possession of the premises. The tenant argued that the landlord’s suit to recover possession of the premises was illegal as no 7-year lease had been granted and therefore the agreement was not in accordance with the law. As such, he was not bound to pay the rent demanded by the landlord. HELD: The agreement for the lease was as good as the lease itself. The court would treat as done that which ought to be done. Distinction between English law and Kenyan law regarding the application of Walsh v. Lonsdale Souza Figuerido v. Moorings Hotel (1960) EA 926 FACTS: By a lease, the respondent landlord let certain premises to the appellant tenant. The applicable law required such a lease, being for a period of more than 3 years, to be registered. A lease was drawn but was not registered. The tenant defaulted in payment of rent and the landlord sued for recovery thereof. The tenant argued that he should not pay 18  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE the money as the lease was unenforceable since the provision requiring registration had not been complied with. HELD: An unregistered lease cannot create any interest, right or confer any estate which is valid against third parties. HOWEVER, the unregistered lease operates as a contract inter partes, is valid as between the parties and can therefore be specifically enforced. The tenant was therefore liable to pay the arrears of rent. The Kenyan position modifies or limits the application of the maxim. The agreement for lease or unregistered lease, as the case may be, is not equated with the registered lease, but is regarded as a contract between the parties which gives a right to either party to sue for specific performance of the contract. See: The Land Registration Act No 3 of 2012 and the Land Act No 6 of 2012 Other English Cases Zimbler v. Abrahams 1 KB 577 Gray v. Spyer 2 Ch. 22 (CA) Manchester Brewery Company v. Coombs 2 Ch. 608 6. Equity acts in personam A court of equity operates primarily “in personam” and not “in rem”. A right in rem is a right in a specific piece of property. A right in personam is a right that can be enforced only against a specific person rather than a thing. Originally, the court of Chancery did not itself interfere with the defendant’s property. Instead, it made an order against the defendant personally. If the defendant failed to comply with the order, the court punished him for his disobedience by committal for contempt. In this way, equity acted in personam. The same case applies today both in England and Kenya. However, in some cases, imprisonment was ineffectual to compel a defendant to comply with an order of the court of equity. Accordingly, the court of Chancery got the power to issue a writ of sequestration, under which sequestrators were appointed to take possession of the property in dispute, and eventually of all the defendant’s property, until he did the act which he had been ordered to do. This power of enforcing orders by committal of the defendant or sequestration of property has been supplemented by statute. See: The Civil Procedure Rules on Execution of Decrees and Orders. (The rules refer to attachment rather that sequestration.) 19  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Although at present equity is not confined to acting in personam, its jurisdiction is still primarily over the defendant personally. It is therefore immaterial that the property in question is not within the reach of the court, provided that that the defendant himself is within the court’s jurisdiction. Accordingly, in the leading case of Penn v. Lord Baltimore, specific performance was ordered in respect of an agreement relating to boundaries of land in America, with the defendant being in England. Penn v. Lord Baltimore (1750) 1 Ves. Sen. 444 FACTS: The plaintiff and defendant had entered into an agreement as to how the boundaries of certain lands were to be drawn. The land was in the USA (Baltimore, Maryland), while both the plaintiff and defendant resided in England. The suit was filed in England. The defendant argued that the court in England had no jurisdiction since the subject matter of the dispute was in the USA. HELD: That the defendant was nevertheless liable to perform his part of the agreement. The court reasoned that the person on whom the order was made, the defendant, was in England. In this way, the court acted in personam. 7. Equity will not assist a volunteer/Equity favours a purchaser for value without notice A volunteer in this sense is a person who has not paid consideration for a gift or property. As a general rule, a court of equity will not give any assistance to a person who has not paid valuable consideration. It will only grant an equitable remedy to a purchaser for value without notice. The remedy of specific performance, for instance, can only be granted to a person who has paid valuable consideration. Exceptions to the application of this maxim Trusts Claimants of rights under a trust constitute an exception to the application of this maxim. Trusts are a creation of equity. In a trust, property is conveyed by the donor to the trustee to hold on trust for the beneficiary even though the beneficiary has not paid any consideration. A beneficiary can seek the assistance of the court of equity to order a trustee to convey property to that beneficiary. 20  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 8. Equity will not suffer a wrong to be without a remedy “Ibi jus, ibi remedium.” (If there is a wrong, there is a remedy for it.) The meaning extracted from this maxim is that no wrong should be allowed to go unredressed if it is capable of being remedied by courts of justice. It must not, however, be assumed that every moral wrong should be redressed by equity. The maxim refers only to rights which are suitable for judicial enforcement, but were not enforced at common law owing to some technical defect. E.g. Enforcement of a trust: Where A ( a donor) conveyed land to B (a trustee) to hold on trust for C (a beneficiary), and B kept the benefit of the land for himself, C had no remedy at law. Yet such an abuse of confidence was clearly a wrong capable of redress in a court of justice. The court of Chancery therefore applied this maxim to enforce the trust in favour of the beneficiary. 9. Equity does not act in vain The court of equity will not grant a remedy which cannot be enforced. This also applies where there has been a change of circumstances such that the remedy is rendered nurgatory or is overtaken by events e.g. “force majeure”. 10. Delay defeats equity; Equity aids the vigilant and not the indolent “Vigilantibus, non dormientibus, jura subveniunt” A court of equity “has always refused its aid to stale demands where a party has slept upon his right and acquiesced for a great length of time. Nothing can call forth this court into activity, but conscience, good faith and reasonable diligence; where these are wanting, the court is passive and does nothing.”: Per Lord Camden in Smith v. Clay (1767) 3 Bro. C. 639n at 640n Delay which is sufficient to prevent a party from obtaining an equitable remedy is called “laches”. This maxim does not apply to equitable claims to which the Limitation of Actions Act (Cap 22) applies, either expressly or by analogy. Express Limitation: The act itself contains provisions on equitable claims which are subject to limitation. 21  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Implied Limitation/Limitation by Analogy Where a claim is not expressly covered by any statutory period but is closely analogous to a claim which is expressly covered, equity will act by analogy and apply the same period. The class of cases to which the Act will be applied by analogy is, however, extremely small. In all cases where the Act applies expressly or by analogy, delay which is within the statutory limitation period will not be a bar to a claim whether legal or equitable. The doctrine of Laches Laches essentially consists of the lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. For instance, delay will be fatal to a claim for equitable relief if the plaintiff has so acted as to induce the defendant to alter his position on the reasonable faith that the claim has been released or abandoned. See: Allcard v. Skinner (1887) 36 Ch.D 145 Ignorance, disability (lack of legal capacity), undue influence will be a satisfactory explanation of delay and will not bar a plaintiff from obtaining equitable relief. In addition, laches, unlike estoppel, is a personal disqualification and will not bind successors in title. See: Nwakobi v. Nzekwu 1 WLR 1019 Delay may also bar claims for equitable remedies such as specific performance, rescission, rectification and injunctions other than final injunctions to which a party is entitled as of right. Delay-Action not barred: Williams v. Greatrex 1 WLR 31; 3 All ER 705 The plaintiff (purchaser) brought an action for specific performance of a contract made 10 years previously. HELD: The purchaser was entitled to specific performance of the contract notwithstanding the 10-year delay. Delay-Action barred: Lolkilite ole Ndinoni v. Netwala ole Nebele (1952) 19 EACA 1 The appellant was the son of a deceased who was alleged to have committed homicide- he had killed another person. Some 35 years later, a claim was made in the Native Tribunal for compensation for the killing. The Native Tribunal rejected the claim but the 22  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Supreme Court supported it. The Court of Appeal, however, HELD, inter alia: That it is repugnant to natural justice to entertain a claim of this nature after so long. See the judgments of: Edwards C.J. and Sir Barclay Nihill. Note: This maxim does not apply to cases to which the Limitation of Actions Act (Cap 22) applies, either expressly or by analogy. 11. Equity follows the law (“Acquitus sequitur legem”) This maxim means that equity treats the common law as laying the foundation of all jurisprudence and it does not necessarily depart from legal principles. Where a statutory or common law rule is direct and governs the case, equity applies the rule of law as the appropriate system. In such cases, the rules of law are in fact binding in equity as they are in common law. Where equity has to regulate the equitable interests which it has created, it acts, so far as possible, on the analogy of the legal rules applicable to the corresponding legal interests. It is only when there is some important circumstance disregarded by the common law that equity interferes. Equity follows the common law as regards limitation of action. It applies the Limitation of Actions Act as a bar to equitable claims either by way of analogy or because the Act is binding on a court of equity. 12. Where the equities are equal, the first in time shall prevail 13. Where there is equal equity, the law shall prevail These two maxims govern questions of the priority of rival claimants to the same property in equity. See: SNELL (26th Ed.) Chapter 4 pp. 46-71 Illustrations: Mortgages and charges Purchasers of property (land) each of whom is claiming a prior right to purchase the property 23  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE EQUITABLE REMEDIES INTRODUCTION Equitable remedies have three features or characteristics: 1. They are discretionary. 2. They are remedies in personam. 3. They are granted only where the common law remedy of damages is inadequate. 1. Discretionary The court looks at the conduct not only of the defendant but also the plaintiff in exercising its discretion to grant or refuse an equitable remedy. The court also takes into account circumstances surrounding the case. The court will therefore refuse to grant relief to a plaintiff: (a) who had unclean hands; or (b) who was not willing to do equity; or (c) who slept on his rights; or (d) whose claim would produce unfair results. In addition, if a plaintiff has an adequate remedy at law that in itself will be a ground for refusing equitable relief. This is perceived as part of the discretionary nature of equity. 2. Equity acts “in personam” Primarily, equity acts on the person rather than on the subject matter. The defendant is ordered to perform his part of the obligation failing which he is charged with contempt of court. See: Penn v. Lord Baltimore (1950) 1 Ves. Sen. 444 ; [1558-1774] All E.R 99 Richard West & Partners (Inverness) Ltd. v. Dick 1 All E.R. 289; affirmed 1 All E.R. 943; 2 Ch. 424 C.A. 3. Equity cures the inadequacies of the common law Equitable remedies are granted where the common law remedy of damages is inadequate to compensate a plaintiff for his loss or injury. The rigidity of the common law also contributed to its inadequacy. Equity therefore evolved to provide a diversity of remedies to supplement the common law and cure its inadequacies. In the words of Barton, J. in: Gilligan v. National Bank Limited 2 I.R. 513 at 542: 24  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE A remarkable feature of equity is “the ability and willingness of equity to grant elastic remedies…. which were not obtainable at law.” Two characteristics are discerned from the above quote: (a) elastic, ability and willingness – discretionary nature (b) not obtainable at law – inadequacy/rigidity of the common law which equity cures. SPECIFIC PERFORMANCE The remedy of specific performance is an order of the court requiring the defendant to carry out his obligations under an instrument according to its terms, e.g. a contract of sale/agreement for sale. However, not all contracts are specifically enforceable. The contracts are therefore divided into two categories, namely, contracts which are specifically enforceable as a general rule and contracts which are not specifically enforceable. Even in the case of contracts that are specifically enforceable, the court may exercise discretion and decline to grant specific performance. The discretion is, however, exercised on well settled principles. Specific Performance a Discretionary Remedy As a general rule specific performance is only available where the common law remedy of damages is inadequate. Therefore, equity will not interfere where damages at law will give a party full compensation to which he is entitled and will put him in a position as beneficial to him as if the agreement had been specifically performed. On the other hand, there are also cases where the court will not grant specific performance even if the remedy of damages is inadequate. The court may take into account certain matters such as the conduct of the plaintiff or the hardship which an order of specific performance would inflict on the defendant. This is because specific performance is a discretionary remedy. The discretion is a judicial discretion which must be exercised on well settled principles. Specific Performance a Remedy in Personam In Penn v. Lord Baltimore, Lord Hardwick, L.C. granted specific performance of an English agreement relating to boundaries between Pennsylvania and Maryland, USA, despite the fact that the property was outside the jurisdiction of the court. The defendant was within the court’s jurisdiction. Similarly, in Richard West’s case, specific performance was granted in respect of a contract for the sale of land outside the court'’ jurisdiction against a defendant within the jurisdiction. The land was in Scotland. 25  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Parties to an Action for Specific Performance It is only parties to the contract or their representatives who can sue or be sued for specific performance. In a contract for the sale of land, for instance, only the seller or buyer can be sued. However, if the seller has agreed to sell land to a purchaser and subsequently sells to a third party, then unless the third party shows that he was a bona fide purchaser for vale without notice, he should be joined as a co-defendant. Ensuring Observance Equity as distinguished from the common law can be characterised as a proud system of law – it does not want to be embarrassed. One way in which a court can be embarrassed is if it issues an order and that order cannot be observed or enforced. To avoid possible embarrassment, equitable remedies, in general, and specific performance, in particular, will never be granted by the court unless the court is sure that they will be observed or enforced – that the defendant is in a position to comply with the court order. This is based on the principle that “equity does not act in vain.” See: Tito v. Waddell (No. 2) (1977) Ch. 106 Positive Contractual Obligations Specific performance is ordered for the enforcement of positive contractual obligations. This is similar to a mandatory injunction which orders the defendant to take positive steps to undo an act done or to do an act omitted to be done in breach of a contract. It is different from a prohibitory injunction which restrains a defendant from committing an act in breach of a negative contractual agreement. Where a plaintiff wishes to enforce a positive contractual obligation, he may sue for an injunction instead of specific performance. The advantage of such a course is that an injunction can be obtained on an interlocutory basis while specific performance cannot. Note, however, that specific performance cannot issue against the Government. See: the Government Proceedings Act (Cap 40 S.16). The proper remedy here would be a declaration. SPECIFICALLY ENFORCEABLE CONTRACTS 1. Contracts relating to Land This is the most common situation where the court grants specific performance. The contract may be for the sale of land or the grant of a lease, charge or mortgage of land. Land is property which has a fixed location. It is of special or unique value as no two pieces of land are alike. It is therefore accepted as a general rule that an award of damages is not adequate compensation for the purchaser or lessee. The court, treating 26  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE each person equally, will also give specific performance to the vendor or lessor, even though in most cases damages would be adequate. See: Cogent v. Gibson (1864) Beav. 557. If, for instance, a vendor fails to comply with an order of specific performance, the purchaser may apply to the court for an order nominating another person to execute the conveyance/transfer in the vendor’s name. 2. Contracts relating to Personality/Chattels In the case of chattels, the rule is that the court will not grant specific performance unless it is shown that damages recoverable at law will not in the particular case afford a complete remedy. This exception applies to a contract for the sale of an article of unusual value, beauty or rarity. Below are illustrations: Unique value: damages inadequate – specific performance granted: See: Falcke v. Gray (1859) 4 Drew 651 (Two china flower vases) Thorn v. Commissioners of Public Works (1863) 32 Beav. 490 (Stone from the old Westminster Bridge) Phillips v. Lamdin 2 KB 33 (Adam door in a house) Behnke v. Bede Shipping Co. 1 KB 649 at 661 The judge made an order for specific performance of a contract for the sale of a ship, being satisfied that the ship was of “peculiar and practically unique value to the plaintiff”. Sky Petroleum Ltd v. V.I.P. Petroleum Ltd 1 All ER 594; 1 WLR 576 A contract had been entered into where the plaintiff company would buy all the petrol needed for its garages from the defendant company and the defendant would supply the plaintiff with all its requirements. The defendant, alleging breach, purported to terminate the contract in November 1973, at a time when petrol supplies were limited so that the plaintiff would have little prospect of finding an alternative source. An interlocutory injunction was granted to restrain the withholding of supplies. The judge acknowledged that it amounted to specific performance but HELD: That the court had jurisdiction to order specific performance of a contract to sell chattels, although they were not specific or ascertained, where the remedy of damages was inadequate. Further, the usual rule that specific performance was not available to enforce contracts for the sale of chattels was well established; but it was based on the adequacy of damages, and was therefore not applicable to the present case, where the plaintiff might be forced out of business if the remedy was not granted. 27  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE No unique value: damages adequate – specific performance refused: See: Cohen v. Roche (1827) Ch. 169 The plaintiff agreed to purchase from the defendant a set of 8 Hepplewhite chairs. The judge refused to order specific performance and instead awarded damages on the ground that the chairs were ordinary articles of commerce and were of no special value or interest. In the case of a contract to deliver “specific or ascertained goods” within the meaning of the Sale of Goods Act (Cap 31, S. 52), the court is given the power to order specific performance of such a contract either unconditionally or upon such terms as it may think fit. This power is discretionary and it must be shown that damages are inadequate. In Cohen v. Roche, the contract was for the sale of specific goods, but the court nevertheless refused to grant specific performance. 3. Where the contract is to pay money to a third party Unless specifically enforced, damages awarded will probably be nominal. See: Beswick v. Beswick (1968) AC 58 Peter Beswick was a coal merchant who wished to retire from the company. He made arrangements with his nephew under which the business would be transferred to the nephew. It was agreed that Peter would be employed as his consultant. Peter was to be paid a wage of Stg 5 a week and after his death, the payments were to be made to his widow for her life. Payments were made to Peter but after his death no payments were made to his wife. The widow sued both as administratrix and in her own right under the contract. The defendant contended that the agreement was for the payment of money and was not the type of contract whose breach is usually remedied by a decree of specific performance. The House of Lords nevertheless HELD: That she was entitled, at least as administratrix, to specific performance. The court said: “The court ought to grant a specific performance order all the more because damages are nominal. She had no other effective remedy.” 4. Where there is a contract for a secured loan (mortgage) and money is lent before the mortgagor executes the mortgage instrument Specific performance may be obtained by the mortgagee to enforce execution of the mortgage instrument. The remedy of damages would clearly be inadequate here. 5. Where a contract is with a company to take up and pay for debentures The contract is specifically enforceable under the Companies Act (Cap 486). 28  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE CONTRACTS NOT SPECIFICALLY ENFORCEABLE There are certain contracts which equity will not specifically enforce, as a general rule. The following are examples: 1. Contracts requiring constant supervision The general rule is that a court will not order specific performance of a contract to do continuous successive acts which would require constant supervision by the court to ensure that the decree is obeyed. Reason: Supervision would be impracticable and since “equity does not act in vain”, the court will not issue a decree when it is not certain that the decree can be enforced. See: Ryan v. Mutual Tontine Westminster Chambers Association 1 Ch. 116 A lease of a flat in a block of flats contained an agreement by the lessor to keep a resident porter who should be in constant attendance and perform certain specified duties. The lessor appointed a person who got his work done by deputies and absented himself for hours at a time working as a chef at a neighbourhood café. The lessee applied for an order of specific performance but the court HELD: That it could not make such an order because supervision would be impracticable. Modern decisions, however, indicate a relaxation of this principle. The real question is whether there is a sufficient definition of what has to be done in order to comply with the order of the court. In Beswick v. Beswick, specific performance was granted in respect of a contract to make regular money payments to the plaintiff for her life. Building contracts as contracts requiring constant supervision The general rule is that specific performance will not be granted in respect of a contract to build or repair. This is because enforcement of the order would require constant supervision. Agreements to construct buildings are often indefinite and require the performance by the parties of a very large number of individual acts. Exceptions: The court will order specific performance of a contract to build if 3 conditions are satisfied. The conditions were stated in: Wolverhampton Corporation v. Emmons (1901) KB 515 The conditions are that: 29  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 1. The building work must be sufficiently defined by the contract, e.g. by reference to detailed plans. 2. The plaintiff must have a substantial interest in the performance of the contract of such a nature that damages would not compensate him for the defendant’s failure to build. Hanbury states that if the building is to take place on the plaintiff’s land, damages will normally be adequate because another contractor can be paid to do the job and any increase in price can be recovered as damages. 3. The defendant must be in possession of the land so that the plaintiff cannot employ another person to build without committing a trespass. The plaintiff cannot enter upon the land in order to do the work himself or through agents. See also: Carpenters Estates Limited v. Davies Ch. 160, explaining Wolverhampton. 2. Contracts for personal services/involving personal skill Contracts whose performance involves personal skill, knowledge or inclination will not be specifically enforced. Reasons: (i) The court is not prepared to assume the burden of deciding on subsequent applications whether there has been a proper performance of the obligation in question. Hanbury p. 457 – singing contract. Megarry J. suggests that the reasons are “more firmly bottomed on human nature”. See: C.H. Giles & CO. Ltd v. Morris 1 All E.R. 960 at 969. (ii) If proceedings are successfully brought to force a defendant to maintain the relationship of employer and employee, the inconvenience and mischief to the defendant would be greater than anything which could possibly happen to the plaintiff if the court declined to order specific performance. The second ground (ii) appears to be based not merely on inconvenience or hardship to a particular defendant but rather upon a general undesirability from the view of public policy to force persons to maintain certain personal relationships even though they had earlier agreed to do so. “The courts are bound to be zealous lest they should turn contracts of service into contracts of slavery.” See: Fry, L.J. in De Francesco v. Barnum (1890) Ch.D 430 at 438. See also: Lumley v. Wagner (1952) 1 De G.M. & G 604; (1852) Vol. 19 LTR 127 and 264 Opoloto v. A-G (1969) EA 631 30  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 3. Contracts lacking Mutuality Where a decree of specific performance is available to a purchaser or lessee, the remedy will also be available to the vendor or lessor. The vendor or lessor can compel the purchaser or lessee to purchase the property or accept a lease as the case may be even though damages may be adequate compensation. The basis of the vendor, purchaser, lessor or lessee obtaining an order of specific performance is the doctrine of mutuality. The rule states that in order to be specifically enforceable, a contract must be mutually binding. The court will therefore not grant specific performance at the suit of one party when it could not do so at the suit of the other party. For a contract to be specifically enforced, it must be such that it can be enforced by either of the parties against the other. If the contract cannot be enforced against one party for any reason, such as personal incapacity, that party will not be able to enforce the contract against the other. E.g. An infant/minor cannot obtain an order of specific performance because the court cannot compel specific performance against him: Flight v. Boland (1828) 4 Russ. 298. On mutuality, See: Price v. Strange (1978) Ch. 337; (1977) 3 all ER 37 Abdulzak Mbarak v. Faraj bin Ahmed el-Aweni (1956) EA 120 Mawogola Farmers Ltd v. Kayanja & Others (1971)EA 272 4. Contracts specifically enforceable in part only Generally, where an agreement comprises two or more matters, some of which are enforceable, the court will not enforce the enforceable matters if they are dependent on the others. See: Ryan v. Mutual Tontine Westminster Chambers Assoc. 1 Ch. 116 Barnes v. City of London Real Property Co. 2 Ch. 18 Ogden v. Fossick (1862) 4 De G.F. & J. 426 Frith v. Frith A.C 254 Where the terms of an agreement are legal and the others are illegal, the court will sometimes specifically enforce the legal terms if the illegal terms are clearly severable. See: Odessa Tramways Co. v. Mendel (1878) 8 Ch.D 235 On severance, see: Mohamed Hussein v. Abdulla bin Salim (1955) EA 84 D’Silva v. Rahimtulla (1968) EA 287 31  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE 5. Agreements without consideration Equity will not enforce an agreement which is merely voluntary, even if it is contained in a deed. “Equity does not aid a volunteer”. Trusts are, however, an exception to this rule. DEFENCES TO AN ACTION FOR SPECIFIC PERFORMANCE The general rule is that equity will hold the defendant to enforcement of his bargain. Defences are exceptions. 1. No Effective Contract There can be no specific performance unless there is a complete and definite contract. There is a complete and definite contract where an offer has been accepted without qualification and the letters of offer and acceptance contain all the terms agreed on between the parties. 2. Absence of Writing for Land Transactions In order that an action may be brought for the specific performance of a contract for the sale of land, there must be a written memorandum of the contract, signed by the defendant or his duly authorized agent. In the case of an oral contract, this means that no action may be brought in respect of that oral contract until a memorandum is signed. The contract is not void, but merely unenforceable – it is valid as between the parties (valid ‘inter partes’), but no action can be brought on it in court. The so-called contract inter partes must, however, satisfy the requirements of S.3 (3) of the Law of Contract Act (Cap 23) as amended by Act No. 21 of 1990 and Act No.2 of 2002. Both Acts came into effect on 1st June 2003 vide Legal Notices No. 188 and 189 of 22nd November 2002. The amended S.3 (3) of the Law of Contract Act provides as follows: “(4) No suit shall be brought upon a contract for the disposition of an interest in land unless - (a) the contract upon which the suit is founded – (i) is in writing; (ii) is signed by all the parties thereto; and (iii) incorporates all the terms which the parties have expressly agreed in one 32  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE document; and (b) the signature of each party signing has been attested by a witness who is present when the contract was signed by such party”. Repeal of the doctrine of part performance as an exception to the requirement of writing: Previously in Kenya, where there was an oral agreement and the plaintiff had wholly or partly performed his part of the agreement in the confidence that the defendant would do the same, the court would order specific performance. The applicable rule was the English doctrine of part performance. This doctrine states that where the intending purchaser or tenant has in part performance taken possession of the property, the oral agreement coupled with part performance constitutes an effective disposition. This means that the contract can be specifically enforced. Note, however, that by virtue of the amendments to the Law of Contract Act in Kenya, if a party to such a transaction involving land wishes to bring an action in court, the requirement of writing must be met. 2. Conduct of the Plaintiff/Default For the plaintiff to be granted an order of specific performance, he must show: That he has performed all his obligations (he has “clean hands”) That he is ready and willing to perform his obligations ( he must “do equity”); That he has not acted in contravention of the essential terms of the contract; and That he has not delayed unreasonably to come to court (laches). 3. Hardship Specific performance will usually be granted to the plaintiff even if this causes inconvenience or hardship to the defendant. However, if the hardship suffered by the defendant if specific performance is granted will be greater than the detriment which will be suffered by the plaintiff if specific performance is not granted, it will be unreasonable and oppressive to grant specific performance. The court will therefore refuse to grant it. See: 33  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Patel v. Ali (1984) Ch. 283 The seller and her husband were co-owners of a house which they contracted to sell in 1979. The husband’s bankruptcy caused a long delay in completion of the sale transaction for which neither the seller nor the purchaser was to blame. After the contract had been entered into, the seller got bone cancer and had her leg amputated. She later brought forth her second and third children. The purchaser obtained an order of specific performance against which the seller appealed on the ground of hardship. She pleaded that she spoke little English and relied on help from nearby friends and relatives, hence it would be hard to leave the house and move away. The court allowed the appeal, stating that although a person of full capacity before the contract took the risk of hardship, the court in a proper case could refuse to grant specific performance on the ground of hardship occasioned subsequent to the contract even if it is not caused by the plaintiff and is not related to the subject matter of the suit. On the facts of this case, there would be hardship amounting to injustice and therefore the appropriate remedy was damages. Hardship to either the plaintiff or defendant: See: Warmington v. Miller Q.B. 877 Mountford v. Scott Ch. 258 Hardship to a third party: See: Earl of Sefton v. Tophams Ltd Ch. 1140 Sullivan v. Henderson 1 W.L.R. 333 Watts v. Spence 2 W.L.R. 1039 Financial inability to complete is not hardship: See: Nicholas v. Ingram N.Z.L.R. 972 4. Fundamental Mistake The mistake may be of such a nature that it precludes the “consensus ad idem,” that is a meeting of the minds, which is required in every contract. Such a mistake is a good defence to an action for specific performance. In Webster v. Cecil (1861) 30 Beav. 62, A, by letter offered to sell some property to B. He intended to offer it at Stg 2,250 but by mistake wrote Stg 1,250. B agreed to buy at Stg 1,250. A immediately gave notice of the error and was not compelled to carry out the sale. 34  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Hardship and mistake: Even if the mistake is that of the defendant himself and is not in any way induced by the plaintiff, specific performance will be refused if its imposition would cause the defendant hardship amounting to injustice. See: Malins v. Freeman (1837) 2 Keen 25 Specific performance was refused where the defendant purchaser bid for and bought one lot at an auction in the belief that he was buying a totally different lot. The court stated that it would have been a great hardship on him to compel him to take the property. The court further stated that intoxication of the defendant when the contract is made is a ground for refusing specific performance even though it is not induced by the plaintiff. Contrast: Tamplin v. James (1880) 15 Ch. D 215 A purchaser agreed to buy an inn and a shop at an auction in the mistaken belief that two pieces of land (garden plots) at the back of the shop formed part of the purchased property. The particulars of sale and the reference plans exhibited at the auction described the property correctly. The garden plots were not included in the sale as they did not belong to the vendor, even though they had commonly been occupied with the inn and the shop. The defendant was acquainted with the property and knew that the garden plots were occupied along with the inn and shop and he did not therefore look at the plans. Instead, he agreed to buy in the belief that he was buying the inn and shop together with the two garden plots. The vendors brought an action for specific performance. The defendant pleaded mistake as a defence. HELD: The purchaser could not resist specific performance on the ground of mistake in this case. The lower court (Baggallay, L.J.) ordered specific performance and his decision was affirmed by the Court of Appeal (Chancery Division – James, LJ.). Baggallay, L.J. said at pp. 217-219: “Where there has been no misrepresentation, and where there is no ambiguity in the terms of the contract, the defendant cannot be allowed to evade the performance of it by the simple statement that he has made a mistake… The defendant appears to have purchased in reliance upon his knowledge of the occupation of the premises without looking at the plans…but is a person justified in relying upon knowledge of that kind when he has the means of ascertaining what he buys? I think not. I think that he is not entitled to say… that he was under a mistake, when he did not think it worthwhile to read the particulars and look at the plans. If that were to be allowed, a person might always escape from completing a contract by swearing that he was mistaken as to what he 35  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE bought, and a great temptation to perjury might be offered. Here the description of the property is accurate and free from ambiguity.” James, L.J. said at 221: “If a man will not take reasonable care to ascertain what he is buying, he must take the consequences. The defence on the ground of mistake cannot be sustained…it would open the door to fraud if such a defence was to be allowed… The cases where a defendant has escaped on the ground of mistake not contributed to by the plaintiff, have been cases where a hardship amounting to injustice would have been inflicted upon him by holding him to his bargain, and it was unreasonable to hold him to it … If a man makes a mistake of this kind without any reasonable excuse he ought to be held to his bargain.” Cotton, L.J. said at 222: “There is no injustice in holding a man to a contract which specifically describes the property sold in a way not calculated to mislead.” Where the mistake is in the written record of the contract, the plaintiff may obtain rectification and specific performance in the same action. See: Craddock Bros. V. Hunt 2 Ch. 136 Where the plaintiff has contributed to the defendant’s mistake, however unintentionally: See: Denny v. Hancock (1870) 6 Ch. App. 1 Wilding v. Sanderson 2 Ch. 534 Mistake that of the defendant: See: Stewart v. Kennedy (1890) 15 A.C. 75 at 105 per Lord Macnaghten Van Praagh v. Everidge 2 Ch 266; Reversed: 1 Ch 434 Unilateral mistake: See: Mountford v. Scott 3 WLR 884 at 885, per Brightman, J. Riverlate Properties Ltd v. Paul Ch 133 at 140, per Russel, L.J. Other Cases: Solle v. Butcher 1 KB 671 Grist v. Bailey Ch. 532 Hartog v. Collin & Shields 3 All ER 566 36  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE OTHER DEFENCES 5. Misrepresentation by plaintiff 6. Misdescription 7. Lapse of time/Laches/Delay 8. Trickiness/Deceit/Fraud 9. Illegality 10. Defective Title 37  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE INJUNCTIONS INTRODUCTION An injunction is an order by the court directing a party to the proceedings to do or refrain from doing a particular act. Types of Injunctions 1. Prohibitory 2. Mandatory 3. Perpetual 4. Interlocutory/Temporary/Interim/Ex Parte 5. “Quia Timet” 1. Prohibitory It is restrictive. A person is ordered to refrain from doing or continuing to do a particular act. 2. Mandatory There are two broad categories of mandatory injunctions: (i) Restorative injunction – requires the defendant to undo a wrongful act. This applies where an unlawful act has been committed and an order restraining its commission is therefore meaningless. (ii) Mandatory injunction – compels the defendant to carry out some positive obligation in order to remedy a wrongful omission. Specific performance is more usual in this situation, but an injunction may be granted ( e.g. where there is no contract but there is a wrongful omission requiring remedial action). Until late in the 19th century, all injunctions were couched in prohibitive form. This was due to doubts as to the jurisdiction to grant mandatory injunctions. The order, even though mandatory in substance, had to be drafted in prohibitory form. Thus, previously, a court would not, for instance, make an order directing wrongfully erected buildings to be pulled down. Instead, the court would order the defendant not to allow them to remain on the land. SNELL comments that the doubts as to the court’s jurisdiction to grant mandatory injunctions seem odd in a jurisdiction which traditionally looks to the substance rather than the form. Now, however, a mandatory injunction is issued in a positive form. See: Jackson v. Normandy Brick Co. 1 Ch 438 38  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Note the distinction between specific performance (which is granted under an instrument or contract) and a mandatory injunction (which may be granted even there is no instrument). 3. Perpetual A perpetual injunction is so called because it is granted at the final determination of the rights of the parties and not because it will necessarily operate forever. It means that the order will finally settle the dispute between the parties. It is granted only after the plaintiff has established his right and the actual or threatened infringement of it by the defendant. 4. Interlocutory/Temporary This is granted before the hearing (trial) of an action. Its purpose is to maintain the status quo until the dispute between the parties is determined. The damage or injury to be suffered by the plaintiff could be such that it would be unjust to make him wait until the trial is over in order to obtain relief. The damage may be irreparable. In such a case, the court may grant an interlocutory injunction pending the outcome of the main suit. For instance, where a person wants to sell a piece of land in respect of which there is a dispute, an interlocutory injunction may be granted to restrain him from selling that land until the dispute is heard and determined. Usually, the plaintiff, when filing an application for the main suit, will also serve a notice on the defendant that on the next motion day he will apply to the court for an interlocutory injunction. The service of this notice will enable the defendant (through his advocate) to be heard where he wishes to object to the application for the interlocutory injunction. However, the decision after the hearing will not be a final decision on the merits of the case. If the plaintiff’s affidavit has made out a sufficient case, the judge will grant an interlocutory injunction which will last until the trial of the action. 4A. Ex Parte Injunction Sometimes a plaintiff cannot wait until the next motion day. He therefore applies for an ex parte injunction, which will last until the next motion day. By this time, notice will have been served on the defendant who will then have an opportunity of opposing the plaintiff’s application for an interlocutory injunction. The phrase “ex parte” signifies that the court has not had an opportunity of hearing the other party to the suit. 4B. Interim An interim injunction restrains the Defendant, not until the trial, but until some specified date. An interim injunction is usually, but not always ex parte. For example, if a notice has been served on the Defendant, but he is not given sufficient time to prepare his case, 39  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE then an interim injunction until the next motion day is more likely to be granted than a full interlocutory injunction until trial. 5.Quia Timet(Anticipatory) A Quia Timet injunction is issued to prevent a threatened infringement of the plaintiff’s right. The infringement is threatened but has not yet occurred. It is anticipatory. Courts take great care before granting this remedy. The plaintiff must show a very strong probability of a future infringement (that the danger is imminent) and that it will cause substantial or irreparable damage (that the damage will be of a most serious nature). Summary Prohibitory or mandatory injunctions may be perpetual or interlocutory. Mandatory injunctions are less frequently granted than prohibitory injunctions. An ex parte injunction may be interim, mandatory or prohibitory (it cannot be perpetual). An interim injunction may be mandatory or prohibitory. A quia timet injunction may be mandatory or prohibitory. 40  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Prohibitory/Mandatory Interlocutory Interim Perpetual Ex - parte Interim Mandatory Prohibitory Quia Timet Mandatory Prohibitory 41  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE PERPETUAL INJUNCTIONS A perpetual injunction is intended to relieve the plaintiff from the necessity of bringing a series of actions to protect his right each time it is infringed. See: Martin v. Nutkin. General Rules 1. The plaintiff must establish a right There must be a right to be protected. The plaintiff must therefore establish some legal or equitable right. Mere inconvenience cannot be protected. See: Day v. Brownrigg (1878) 10 Ch.D. 294 The Plaintiff lived in a house which he called “Ashford Lodge”. The Defendant lived in a smaller house called”Ashford Villa. “The Defendant changed the name of his house to “Ashford Lodge,” whereupon the Plaintiff sued for an injunction. The Court of Appeal refused to grant an injunction to prevent the Defendant from calling his house by the same name as the Plaintiff’s house even though the parties lived next door to each other and the Plaintiff had used the name “Ashford Lodge” for sixty years. The court reasoned that there is no legal or equitable right to the exclusive use of the name of a private residence. (Contrast this with commercial premises – right to use a trade name.) 2. Discretionary remedy The granting of an injunction is discretionary, this being an equitable remedy. However, the discretion must not be exercised according to the fancy of the court. It must be exercised judicially according to the rules established by precedent. As a general rule, a party who establishes his right and its violation will be entitled to an injunction. However, a number of circumstances may be taken into consideration by the court in determining whether or not to grant the remedy. These are as follows: (a) Nominal damage The general rule is that the fact that the Plaintiff has suffered nominal damage does not disentitle him to an injunction. However, as an exception, the court may take that circumstance into account. See: Doherty v. Allman (1878) 3 A.C. 709 Armstrong v. Sheppard & Short Ltd. 2 Q.B. 384; 3 W.L.R. 84; 2 ALL E.R. 651 42  J.K. ASIEMA GPR 222 EQUITY AND TRUST LAW FEBRUARY 2023 NOT FOR SALE Behrens v. Richards 2 Ch. 614 – Here, the plaintiff merely suffered trespass by the public which did not injure him. (b) Compliance difficult The fact that compliance will be inconvenient and expensive affords no defence to an action for an injunction. However, the court will not make an ineffectual order (“Equity does not act in vain”). E.g. Wher