was found to be very inequitable, the King, or rather his secretariat, theChancery,
might ask the common law courts to reconsider the case. Later, the Chancery began
to deal with such cases itself, and petitions came to be directed immediately to the
Chancellor (the King’s secretary) rather than to the King. A subsequent Court of
Chancery eventually developed over centuries, creating a separate branch of law:
equity.
Fairness Equity consists of a body of rules and principles that were developed to
mitigate harsh results that might, in some cases, result from the application of
common law. As the term “equity” suggests, this part of the law is particularly
focused on obtaining fair results. Originally, equity may have been intended to be a
correction to common law, where common law remained the starting point when
the decision of cases is at stake. However, some branches of law were only
developed in equity, thelaw of trustsbeing the most prominent example.
The following example illustrates how equity differs from the common law. Angela is an
unmarried woman of means who has a two-year old son Michael. Angela wants to give
£50.000 to Michael, for the unexpected case that she might die. However, Michael is too
young to deal with so much money. Therefore, Angela trusts the money to her friend Jane,
who will act as a safe keeper for Michaels’ money. Under the regime of the common law
Jane would be the only owner of the money and it would depend on her benevolence
whether she keeps the money for Michael. Michael would have no legal remedy if Jane
abused her position. That is unfair, since the money was meant for Michael and Angela was
only trusted with it to keep it for Michael.
In equity it is possible to provide Michael with a more robust legal position. Angela will
be the legal owner of the money (at common law), but acts as a “trustee”. Michael will be
the “beneficiary owner” (owner in equity) of the same money, and has a legal remedy
against Angela if she does not keep the money for him.
Although nowadays it may be correct to state that equity is part of the law in the
common law tradition, originally it was meant as an exception to the law, and
therefore not as part of the law. This difference is still reflected in English
terminology, where the distinction is made between what holdsat law(the common
law) andin equity.
The historic roots of equity, namely that equity was applied by the Court of
Chancery as a correction to what would be decided by “ordinary” common law
courts, explain that equity was originally applied by separate courts. A number of
reforms of the court structure in England in the nineteenth and twentieth centuries
mean, however, that a single court can apply both common law and equitable
principles to resolve disputes.
It is a matter of on-going debate whether this fusion of courts has also led to a fusion of the
common law and equity, or that—as metaphor will have it—“the two streams of jurisdic-
tion, though they run in the same channel, run side by side and do not mix their waters”.12 J. Hage