THE RELATIONSHIP BETWEEN LAW AND EQUITY
The administration of Law and Equity was fused into a single system as a result of the Judicature Acts 1873-1875, but this did not result in the fusion of the substantive law. Consequently, the substantive rules of Law and Equity remain distinct, and this has proved to be highly significant within the law of restitution. It follows that it is still often necessary to consider whether a claim is brought in Equity or at Law, since the applicable rules are subtly, sometimes even fundamentally, different. This difference between legal and equitable claims is probably most important in the context of restitutionary proprietary claims. For the purposes of such claims it is vital to determine whether the claimant is seeking to vindicate a legal or equitable proprietary interest, since this will affect the claimant’s ability to trace his or her proprietary right into substitute assets[1] and will also affect the nature of the claim and the remedy which is available.[2]
One of the most important challenges facing the contemporary law of restitution is to determine to what extent the disparate approaches of Law and Equity to the award of restitutionary remedies can and should be assimilated. Such assimilation is particularly difficult because of the different policies, principles, and terminology in these different areas, but there is a growing recognition that assimilation is vital. This was recognized by Deane and Dawson JJ in the decision of the High Court of Australia in Baltic Shipping Co v Dillon:[3]
In a modern context where common law and equity are fused with equity prevailing, the artificial constraints imposed by the old forms of action can, unless they reflect coherent principle, be disregarded where they impede the principled enunciation and development of the law. In particular, the notions of good conscience, which both the common law and equity recognised as the underlying rationale of the law of unjust enrichment, now dictate that, in applying the relevant doctrines of law and equity, regard be had to matters of substance rather than technical form.
Such assimilation of legal and equitable regimes is increasingly being advocated in this country, most notably in the context of the tracing rules for the identification of the claimant’s proprietary interest in substitute assets.[4] There is also evidence that assimilation is taking place in discrete pockets of the law. For example, the old rule that compound interest was only available for equitable claims has now been rejected, so that compound interest is available regardless of whether the claim originates at Law or in Equity.[5]
But the demands for assimilation go further than this, with Burrows in particular advocating complete assimilation.[6] There is, however, a danger that rapid assimilation of rules which have existed for a long time will mean that the deep-rooted nuances and subtleties of the different parts of the law will be lost. Where there is no need for separate rules then assimilation is appropriate, but often the historical roots of the rules remain valid even today.[7]
A further controversy relating to the law of restitution arises from the growing perception that much, if not all, of the law of restitution can be considered to be equitable. This has proved to be particularly significant in Australia[8] and Canada[9] with the focus being placed on conscience and unconscionability, but equitable notions have also been emphasized in England as well.[10] Clearly substantive notions of Equity are relevant to restitution for wrongs, where the relevant wrong is equitable, and as regards the vindication of equitable property rights. When considering the unjust enrichment principle there has certainly been an equitable influence in the development of the principle,[11] but using the language of Equity today when describing unjust enrichment creates the danger that the law of restitution is perceived to be discretionary and dependent on the exercise of the judge’s arbitrary choice, when in fact it is highly principled.
- [1] claimant’s equitable proprietary right, whereas such a claim would have been available had there been
- [2] interference with a legal proprietary right. 6 (1992) 176 CLR 344, 376.
- [3] 46 See, for example, Trustee of the Property ofFC Jones and Sons (a firm) v Jones [1997] Ch 159, 170 (Millett
- [4] LJ). See Chapter 21. For a note of caution see K Barker, ‘Equitable Title and Common Law Conversion: TheLimits of the Fusionist Ideal’ [1998] RLR 150, 156.
- [5] Sempra Metals Ltd v IRC [2007] UKHL 34, [2008] 1 AC 561. See p 30, above.
- [6] AS Burrows, Hochelga Lectures, Fusing Common Law and Equity: Remedies, Restitution and Reform(2002); AS Burrows, ‘We Do This At Common Law But That In Equity’ (2002) 22 OJLS 1.
- [7] See further GJ Virgo, ‘Restitution Through the Looking Glass: Restitution Within Equity and EquityWithin Restitution’ in J Getzler (ed), Rationalizing Property, Equity and Trusts: Essays in Honour of EdwardBurn (London: Lexis Nexis, 2003), 106.
- [8] Roxboroughv Rothmans of Pall Mall Australia Ltd (2002) 185 ALR335; Australian Financial Services andLeasing Pty Ltd v Hills Industries Ltd [2014] HCA 14.
- [9] Garland v Consumers’ Gas Distributors Inc [2004] 1 SCR 629.
- [10] See, for example, Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221, 237 (Lord Clyde).
- [11] See Moses v Macferlan (1760) 2 Burr 1005, 1012; 97 ER 676, 681 (Lord Mansfield); Straton v Rastall(1788) 2 Term Rep 366, 370 (Buller J). See Virgo, ‘Restitution Through the Looking Glass’, 87-94.
