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For Michael,
(Jeremiah, 2:2)
Table of Cases
UNITED KINGDOM
Abacus Trust Co (Isle of Man) v Barr [2003] Ch 409
Aberdeen Town Council v Aberdeen University (1877) 2 App Cas 544 .....................
Abou-Rahmah v Abacha [2007] 1 All ER (Comm) 827 ..................................
Agnew v Commissioner of Inland Revenue [2001] UKPC 28 .............................
AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58 ..................... 3, 8
Akers and ors v Samba Financial Group [2017] UKSC 6 (UKSC) .......................... ix
Amalgamated Investment and Property Co Ltd v Texas Commercial Bank Ltd [1982] 1 QB 84 ....
Appleby v Cowley (Ch) The Times, 14 April 1982
Armitage v Nurse [1998] Ch 241 (CA)
Attorney General of Hong Kong v Humphreys Estate (Queen’s Gardens) Ltd [1987] AC 114 (PC)
McMullen v Hoffman 174 US 639 (1899) (USSC) ....................................
Meinhard v Salmon 164 N.E. 545 (N.Y. 1928) (N.Y.S.C.) ..............................
Morrison v Olson 108 S. Ct. 2597 (1988) ............................................
People v National Research Co of California 201 Cal. App. 2d 765 (1962) ...................
SEC v Chenery Corp 318 US 80 (1942) ............................................
United States v Badt 53 F. Supp. 906 (D.N.Y. 1943)
US Airways, Inc v McCutchen 133 S Ct 1537 (2013)
Winter v Natural Resources Defense Council, Inc 555 US 7 (2008)
World Trade Organisation
EC–Seals (Appellate Body Report) WT/DS400/AB/R
Table of Legislation
INTERNATIONAL INSTRUMENTS
Introduction
In this book, I set out to defend the claim that Equity ought to remain a separate body of law; the temptation to iron-out the differences between neighbouring doctrines on the two sides of the Equity/Common Law divide should, in most cases, be resisted. Some readers, especially from the US, may well think that in making this claim I skipped over a crucial step. For prior to asking how it should be interpreted and developed, one must first show that the law of Equity is indeed a field of law, more than, say, ‘the law of shoes’ or ‘laws whose origin can be traced to the 1850s’. In most other Common Law systems (for reasons that I briefly explain in Chapter 1), lawyers tend to take it for granted that Equity is indeed, at least for now, a domain of private law. But the question whether its different pieces, scattered as they are across much of the terrain of private law, have a unifying principle, or merely share a historical origin in the Chancery Court, has engaged Equity Lawyers for a long time.1 The quest after an organising theme or narrative behind the various doctrines of Equity has, as of late, taken on a new life.2 But for the purposes of this book, I do not need to show that a single principle, which runs like a bolt through all the doctrines of Equity, justifies (or at least explains) their presence in our law books. For I am asking a different, if related, quesiton: I wish to explore whether those Equitable doctrines that feature (some, or all of) the classic characteristics of Equity, namely, appeal to conscience, flexibility, retroactivity, and the use of morally freighted jargon, should be preserved in this Equitable form; or should we do our best to strip them of these problematic characteristics, so as to blend them seamlessly into the nearest Common Law field, be it contract, property, tort, or what have you. The first part of the book is devoted to arguing that each of these features is essential for the implementation of a legal ideal that has been neglected by the Common Law: ‘Accountability Correspondence’. According to this fundamental legal ideal, liability imposed by legal rules should correspond to the pattern of moral duty in the circumstances to which the rules apply. The faults identified by critics of Equity, especially from the perspective of the Rule of Law, are highly exaggerated, and reflect the Myopia that caused the Common Law to obsess over the Rule of Law and oversee the importance of achieving Accountability Correspondence.
Leaving the doctrines that feature Equity’s unique mode d’emploi to run along a separate course in which their Equitable features are celebrated and developed is
1 Perhaps most famously in a passage in Maitland’s Lectures on Equity, where he pronounces Equity to be no more than a ‘collection of appendixes between which there is no very close connection’, Frederic William Maitland, Equity : A Course of Lectures (2nd edn, CUP 1936) 19.
2 See e.g. the chapters by E. Fox-Decent, A. Gold, L. Katz, D. Klimchuk, E. Sherwin, H. Smith, L. Smith, and C. Webb in Dennis Klimchuk, Irit Samet, and Henry Smith (eds), Philosophical Foundation of the Law of Equity (OUP 2019). I refer to the specific ideas in many of these papers in various chapters of this book.
therefore essential for the health of our legal system. The chapters that follow look, in turn, at the doctrines of proprietary estoppel, fiduciaries, and clean hands, in order to show how their Equitable characteristics are indispensable for achieving their purpose and promoting Accountability Correspondence. In the conclusion, I argue that the doctrines I discuss throughout the book indeed bear a family resemblance to each other. I do not wish to argue, however, that every doctrine with the label ‘origin: Chancery Court’ around its neck displays equitable features in a prominent way; nor do I mean to argue that the call to fuse a doctrine which carries the label with a counterpart Common Law doctrine should be automatically resisted. Whenever Equity provides a different solution from Common Law to problems that look similar at first blush, the question should be asked whether the difference can be justified, or is it a case in which horizontal justice (i.e. treat like cases alike) and Rule of Law considerations militate in favour of fusion. The purpose of promoting Accountability Correspondence, I argue, provides a good reason for preserving the unique Equitable nature of, at least, a substantial segment of the collection of doctrines that first saw light in the Chancery Courts. In what follows, I therefore use Equity with a capital E to mark those doctrines that either originate from the Courts of Chancery or were developed by the unified (post 1870) court as Equitable doctrines, which feature flexible, ad hominem ex-post principles, resort to the language of morality, and tie liability to unconscionability. This category comprises much, if not all, the doctrines which were developed by the Courts of Equity; or so I argue here and in other parts of my work. A successful analysis of this category would therefore go a long way towards revealing the underlying principle of Equity; or, at least, one such principle. I use equity, with a small ‘e’, to refer to philosophical accounts of ad-hoc interventions in the parties’ legal rights, which are designed to tackle the occasional injustice that the general nature of laws inevitably leads to (most famously, Aristotle’s).
Yet, my choice of exemplifying doctrines—fiduciaries, proprietary estoppel, and clean hands—may raise some doubt about my project. For, as Plato taught us, if we want ‘to bring a disperse plurality under a single form, seeing it all together; the purpose being to define so-and-so . . we are not to attempt hacking off parts like a clumsy butcher’.3 A quest after the, or even ‘an’, underlying theme of Equity that leaves out the law of trust, one might think, must be the product of exactly the kind of a maladroit carving of the legal corpus that Plato warns us of.4 But my choice to avoid the law of trusts, even as it is seen by many as the hallmark of Equity, can, I believe, be justified on three grounds: the first is that, even according to ardent pro-fusion agendas, the law of trust should be allowed to retain its distinctive equitable feature, namely the split between legal and equitable ownership.5
3 Plato, Plato’s Phaedrus (CUP 1952) 256 d–e.
4 According to Lionel Smith, for example, ‘a discussion of Equity that does not take account of the trust would be like a discussion of Hamlet that did not refer to the Prince of Denmark’ (Lionel Smith, ‘Equity is Not a “Thing” ’ in Dennis Klimchuk, Irit Samet, and Henry Smith (eds), Philosophical Foundation of the Law of Equity (OUP 2019) section I).
5 For instance, Andrew Burrows, ‘We Do This at Common Law But That In Equity’ (2002) 22 OJLS 1, 3.
Since I set out to defend the independence of equitable doctrines in the face of the call to fuse them with corresponding Common Law doctrines and/or erase their equitable features, I chose to focus on doctrines that are candidates for either one of these reductive moves. The second reason why the law of trusts keeps a low profile in this book is that in its present form it is a body of law that mostly consists of ‘non-discretionary, clear and hard-edged’ rules.6 While it started off as a device for stopping the hard-nosed from evading the decrees of conscience by taking shelter behind legal formalities—and hence as a paradigm of Equity’s vocation as portrayed in this book, trust law has long since developed into a system of rules whose technical complexity rivals that of tax law.7 As such, it fails to display those features of Equity that attract the criticism I wish to deflect here. But while flexible principles can now hardly be found in the jurisprudence of trust law, conscience continues to be viewed as the fulcrum on which the complex edifice of trusts rests. Thus, when in 2017 a case that stood at a fiendishly difficult crossroad between private international law, insolvency, and trust law landed at the door step of the UK Supreme Court, the core of trust as an obligation of conscience was used as a conceptual axe for cutting a way out of the thicket.8 Moreover, when it comes to the responsibility of third parties who meddle with the trust, everything hangs on the question whether the defendant’s conscience was affected.9 Nevertheless, and that leads me to the third reason, the responsibility of trustees to account for their actions is of the strict kind; i.e. the claim against them need not involve any wrongdoing. This places the conscience on the back-burner in the arguments made by Counsel in court. Thus, the question of accountability that lies at the heart of trust, viz. that of the trustee vis-à-vis the beneficiary, hardly ever gives rise to questions of substantial unconscionability, i.e. wrongdoing. As I will argue in the chapter on fiduciaries, there are very good reasons not to expect the beneficiary to be in a position to prove unconscionability on the part of the trustee (and for disallowing trustees to prove they acted on clean conscience). But that makes claims for breach of trust an exception to the central case of claims in
6 Smith, ‘Equity is Not a “Thing” ’ (n. 4) ibid.
7 On the increasing challenge of applying the highly complicated law of trust to cases at hand, and the risk it may pose to its legitimacy and future development, see J. E. Penner, ‘An Untheory of the Law of Trusts, or Some Notes Towards Understanding the Structure of Trusts Law Doctrine’ (2010) 63 Current Legal Problems 653, in particular 674–5.
8 Akers and ors v Samba Financial Group [2017] UKSC 6 (UKSC). See, for instance, the way in which Lord Sumption rests his application of the term ‘disposition’ in section 127 of the Insolvency Act to the facts of the case on the principle that ‘equitable interests arise from equity’s recognition that in some circumstances the conscience of the holder of the legal interest may be affected’; and since the transferee in this case had no knowledge of the trust, ‘the equitable interest of [the beneficiary] was defeated not by the act of the transferor . . but by absence of anything affecting the conscience of the transferee’, (ibid para. 89). Similarly, to support his claim that the English courts are willing to enforce in personam trusts in respect of property abroad, Lord Mance cites Earl of Selborne LC’s forceful statement that ‘[t]he Courts of Equity in England are, and have always been, courts of conscience . . .’ (Ewing v Orr Ewing (1883) LR 9 App Cas 34, 40), (ibid para. 24).
9 This point is argued in detail in Aruna Nair and Irit Samet, ‘Equity’s Darling’ in Dennis Klimchuk, Irit Samet, and Henry Smith (eds), The Philosophical Foundations of the Law of Equity (OUP 2019).
Equity, which are based on a particular type of wrongdoing that is referred to as ‘unconscionability’; or so I argue in Chapter 1.10 Thus, in spite of the sheer volume of litigation around trusts, and its importance in the financial and housing sectors, the accountability of trustees has an inferior explanatory potential for the study of Equity from the perspective of this book (i.e. as an anti-fusion project).
I have been thinking and writing about Equity and the questions addressed in this book for a long time. Throughout this period, I benefited enormously from conversations and correspondence with many friends and colleagues who share my passion for this wonderful subject; in particular, I wish to thank Samuel Bray, Simone Degeling, Josh Getzler, Andrew Gold, Ori Herstein, Larissa Katz, Dennis Klimchuk, Jamie Lee, Nick McBride, Ben McFarlane, Paul Miller, Aruna Nair, James Penner, Henry Smith, Lionel Smith, Charlie Webb, and Sarah Worthington. I presented parts of this work at various seminars, workshops, and conferences in Cambridge, Chicago, Edinburgh, Glasgow, London, London (Ontario), Montreal, Oxford, Palermo, Sheffield, Singapore, Sydney, Tel-Aviv, Torino, Toronto, and Washington DC. The comments, support, and criticism I received from those around the table enriched my work and helped me to weed out all manner of faulty reasoning and mistakes; those still left are all my responsibility. King’s College London has been a warm, generous, and nurturing academic home. My greatest intellectual debt is owed to Joseph Raz, whose original and deep thinking inform many pages of this book; as is the case with so many of his students, the care and encouragement he offered me were invaluable for finding my place in the world of ideas. Finally, I wish to thank my father Jacob and my late mother Hannah for their unconditional love and support, and my children Naomi, David, and Hannah for laughs, hugs, and armfuls of love. I am dedicating this book to Michael, my pillar.
London August 2018
Irit Samet
10 This is by no means a consensual view, see, for instance, Larissa Katz, ‘Pathways to Legal Rights: The Function of Equity’ in Dennis Klimchuk, Irit Samet, and Henry Smith (eds), Philosophical Foundation of the Law of Equity (OUP 2019), who sees her project as justifying equitable intervention in spite of the fact that the owner of the legal right has done no wrong in insisting on it.
Equity’s Own Room
1. The Critics
You would not expect that a 700-year-old pivotal body of law would still be fighting for its right to exist,1 but this is exactly the awkward position of Equity in English
1 Much has been written about the history of Equity. The discussion in this text is conceptual and I will only refer to the history of this body of law when the analysis calls for it. For a historical survey of Equity see John H. Baker, An Introduction to English Legal History (3rd edn, Butterworths 1990) Ch. 6. For a comprehensive analysis of the early medieval court, see Timothy S. Hasket, ‘The Medieval
law. On the one hand, equitable claims and remedies have been, for many centuries, playing a key role in large parts of private law. On the other hand, persistent objectors claim that the preservation of Equity as a separate body of law is an ‘unacceptable willingness to be slaves to history’, and has very little to offer to modern legal systems.2 In the present chapter I want to show that this view is misguided, and that it is worthwhile to hold on to the separate labels of ‘Law’ and ‘Equity’ and the sensitivities that inform their separate existence. Subsequent chapters will show how various doctrines of Equity exemplify this conceptual argument. The chapter opens with a presentation of two strands of the opposition to the dualist system of Equity and Common Law: (1) the fusion project—which calls to iron-out the differences between them wherever possible; and (2) the ‘conscionability scepticism’ of those who wish to do away with the most familiar mark of Equity, namely the standard of conscience. I then put these critiques in terms of a Fuller-Raz formalist account of the Rule of Law (ROL) ideal. Cashing out the ROL ideal and the possible ways in which Equity may defy it, will help us to better understand the price we pay for maintaining a dualist Equity-Common Law system. In what follows I will attempt to show that this price for keeping the Law of Equity distinct is not as high as Equity’s opponents claim, and that it is worth paying as it serves a no less important legal ideal.
Equity, I will argue in section 2, plays the essential role of promoting a legal virtue that is neglected by Common Law’s fixation on the ideal of the ROL. This legal virtue, which I call ‘Accountability Correspondence’, requires that legal liability tallies with the pattern of moral duty in the circumstances to which it applies. I offer an explanation of why this legal virtue is vital for a successful legal system, and how Equity, by attending to the ethical underpinnings of the parties’ rights and duties, reintroduces equilibrium between ‘Accountability Correspondence’ and the ROL. In order to do its job well, Equity must stick to its characteristic use of ex post, particularistic, and principle-led methods of adjudication. Moreover, in the areas where Equity is most active, these methods will also serve the underlying goal of the ROL ideal, namely, protecting citizens from the arbitrary wielding of power. In section 3, I set out to show that the standard of conscience which stands at the foundation of Equity is not as hostile to the ROL ideal as many ‘conscionability sceptics’ want us to believe. A philosophical analysis of the different meanings of ‘conscience’ would reveal that whereas Equity employs the objectivist meaning of the concept, many of the critics’ arguments are only good against its subjective meaning. In section 4, I further explore the question of the extent to which Equity detracts from the proximity of our legal system to the ROL ideal. Checking Equity’s performance in terms of the clarity and certainty of its norms, as well as the goals its doctrines help
English Court of Chancery’ (1996) 14 Law and History Review 245; Dennis R. Klinck, Conscience, Equity and the Court of Chancery in Early Modern England (Ashgate 2010) covers the next period of development; and a discussion of the state of Equity in the 17th to 19th centuries, through a literary lens, can be found in Gary Watt, Equity Stirring: The Story of Justice Beyond Law (Hart 2009).
2 Andrew Burrows, Fusing Common Law and Equity: Remedies, Restitution and Reform (Sweet & Maxwell Asia 2002) 3.
to promote, will lead to the conclusion that the animosity between Equity and the ROL is highly exaggerated by its opponents. Given the significance of the legal ideal of ‘Accountability Correspondence’ which Equity serves so well in the field of private law, my conclusion will be that the preservation of Equity as a separate, conscience-based body of law does not imply that English law ‘is clinging atavistically to differences which are explicable only in terms of the historical origin of the relevant rules’.3 On the contrary, it implies that we recognise the distinctive contribution made by Equity to the delicate tapestry of private law, and value it as essential for maintaining justice.
A word on terminology: The term Common Law has acquired more than one meaning in its long history. In the wide sense it is a global term for the legal tradition that was developed in England, and spread to its legal offshoots, such as the US, Canada, Australia, and New Zealand. The Common Law, in this sense, is most often contrasted with the civilian tradition. In a narrower sense, when statutes enacted by Parliament became prominent sources of English law, they were also distinguished from the Common Law developed by the courts. I here use the term ‘Common Law’ in yet a different narrower sense as ‘the law dispensed by the common law courts as distinguished from the specific “equitable” interventions by the Lord Chancellor and the Court of Chancery’.4
1.1 Fusion
Taking sides in the dispute about the feasibility of ‘fusion’ can be intimidating. This is not only because of the vast areas of private law that are involved—most of the law of obligations and property for starters—but also because of the extraordinarily heated passion that is associated with the debate. While protectors of Equity’s independence were accused of ‘angry fundamentalism’, the idea that Equity and Common Law should be amalgamated was described as ‘evil’.5 All this rhetoric is, of course, hyperbolic and unnecessary. However, the unusual storm of emotions does indicate that the question of whether the administrative fusion of Equity and Common Law in the 1870s has ushered in a brave new world of substantive fusion is (still) at the heart of our perception of private law. Different common law jurisdictions which grappled with this problem reached different conclusions. And yet again, the rhetoric that accompanies the decision either way seems overboard when it is portrayed as a reflection of core national values: thus, the Australian insistence on preserving Equity as a dominant independent jurisdiction is seen as an expression of the mutual responsibility and community values of the settlers; while the enthusiastic embrace
3 AIB Group (UK) plc v Mark Redler & Co. Solicitors [2014] UKSC 58, para. 138.
4 Martin Krygier, ‘Common Law’ in Edward Craig (ed.), Routledge Encyclopedia of Philosophy, Vol. 1 (Routledge 1998) 440.
5 Peter Birks, ‘Meagher, Gummow and Lehane’s Equity Doctrines and Remedies’ (2004) 120 LQR 344, 347; R. P. Meagher, W. M. C. Gummow, and J. R. F. Lehane, Equity, Doctrines, and Remedies (2nd edn, Butterworths 2002) para. 221; and see Anthony Mason’s call to all factions to adopt a more civilised tone (Anthony Mason, ‘Fusion’ in Simone Degeling and James Edelman (eds), Equity in Commercial Law (Lawbook Co. 2005) 11).
of fusion in the US is perceived as a manifestation of the individualism and free spirit that marks the American frame of mind (to which Equity is, presumably, unfriendly, if not inimical); the refusal of the English courts to interpret the Judicature Acts as calling for a substantial fusion was seen by one irritated Law Lord as yet another harmful expression of the ‘innate conservatism of English lawyers’.6
The interesting question of the extent to which the decision to preserve or abolish the Equity-Common Law duality is dictated by the national ethos is beyond the boundaries of this book. However, some conclusions that one might be tempted to make on the basis of such armchair legal anthropology must be resisted: first, the rejection of fusion is not necessarily a sign of conservatism, nor is embracing it a mark of modern outlook. The legal systems I discuss here demonstrate varying degrees of dynamic attitude to the autonomous status of equitable doctrines, and the interesting arguments for and against fusion do not draw on an impetus to conserve the status quo for its own sake. Second, one’s position on the role that Equity ought to play in private law is not necessarily indicative of a particular view on the value of free market and economic efficiency; some strong arguments have been made in support of equitable principles as promoting the most efficient form of key relationships in private law.7 A third conclusion one must avoid is that some legal systems sport a purist position either for or against the merger of Equity and Common Law; the crude map of fusion as ‘mission achieved’ in the US, ‘rejected’ in Australia, and ‘half way house’ in England requires serious nuancing.
The most avid supporters of the idea that the differences between Equity and Common Law ought to be ironed out so as to create one seamless cloth of private law are, indeed, the Americans. The way forward was marked in the middle of the last century when Zechariah Chafee declared that ‘it would be absurd for us to go on until the year 2000 obliging judges and lawyers to climb over a barrier which was put up by an historical accident in 14th century England and built higher by the eagerness of three extinct courts to keep as much business as possible in their own hands’.8 Over the years, Equity as an independent feature of civil jurisdiction (often with separate courts) largely ceased to exist.9 Add the long-standing neglect by law schools to
6 Respectively, Patrick Parkinson and Michael Bryan, The Principles of Equity (2nd edn, Lawbook Co. 2003) Preface; ‘Taken for all they are worth, Cardozo’s words in Meinhard undermine the individualistic premises on which mainstream U.S. notions of “justice” and “good conscience” are based’ (Jefferson Powell, ‘ “Cardozo’s Foot”: The Chancellor’s Conscience and Constructive Trusts’ (1993) 56 Law and Contemporary Problems 7, 20); United Scientific v Burnley Council [1978] AC 904, 925 per Lord Diplock.
7 As can be seen in, e.g., Henry Smith, ‘Fusion of Law and Confusion of Equity’ in Dennis Klimchuk, Irit Samet, and Henry Smith (eds), Philosophical Foundation of the Law of Equity (OUP 2019) (forthcoming); and A. J. Duggan, ‘Is Equity Efficient?’ (1997) 113 LQR 601. And see the discussion of the efficiency-promoting potential of proprietary estoppel in Chapter 2.
8 Zechariah Chafee, Jr, Selected Essays on Equity (Edward D. Re ed., Oceana 1955) Foreword, iii, iv.
9 With the glaring exception of the Court of Chancery in Delaware, which fiercely retained its (constitutionally protected) independence, and is highly regarded for its professionalism (on its unique nature see e.g. William T. Quillen, ‘Constitutional Equity and the Innovative Tradition’ (1993) 56 Law and Contemporary Problems 29; William T. Allen, ‘Speculations on the Bicentennial: What is Distinctive about Our Court of Chancery?’, a publication of the Bicentennial Commemoration Committee of the Historical Society for the Court of Chancery of the State of Delaware (1992)).
teach Equity as part of the curriculum, and by the 1980s the wet dream of every fusionist was realised in the US: the majority of lawyers in a common law jurisdiction could not tell you when ‘We Do This at Common Law but That in Equity’.10 In the early 1990s, Douglas Laycock summarised the situation as follows: ‘Except where references to equity have been codified, as in the constitutional guarantees of jury trial, we should consider it wholly irrelevant whether a remedy, procedure, or doctrine originated at law or in equity’.11 But then ‘something remarkable’ happened in the area of civil remedies: an ‘American Revolution’ which reinstated Equity.12 The US Supreme Court, in a steady stream of cases, reintroduced the distinction between Equity and Common Law, so that whether the remedy you ask for originated in Equity or Common Law made a difference to the way you claim it, your chances of getting it, and the defences your adversary can resort to.13
The resurrection of the distinction between Equity and Common Law had a bumpy ride to begin with, and ‘early cases were marked by false starts, bitter divisions, and technical errors’; but as they gathered pace, ‘the Court has developed a remarkable consensus about the boundaries and principles of equitable remedies and about the methodology it uses in these cases’.14 The courts worked to ‘de-fuse’ the jurisprudence of remedies in order to answer two questions: First, is the remedy sought indeed rooted in Equity? When the answer to the first question is positive, a second question then arises: ‘What are the ramifications of finding that remedy x is equitable?’ One important consequence is the requirement that a plaintiff who seeks to obtain an equitable remedy must first show that she has no adequate remedy at law. This so-called ‘irreparable injury rule’ for equitable remedies was squarely rejected by large majority of academics as a useless leftover from the pre-fusion era. Section 4(2) of the Restatement (Third) of Restitution and Unjust Enrichment of 2011 (also referred to as ‘R3RUE’) indeed sports a perfectly fused approach to the matter: ‘A claimant otherwise entitled to a remedy for unjust enrichment, including a remedy originating in equity, need not demonstrate the inadequacy of available remedies at law’.15 However, the US Supreme Court did not change its course: in a series of decisions it further strengthened the Equity/Common Law divide when it reintroduced the ‘balance of hardship’ requirement for permanent injunctions.16 This traditional principle states that where the defendant acted in good faith, the
10 As in the name of Andrew Burrows’ famous pro-fusion manifesto; see later extensive discussion.
11 Douglas Laycock, ‘The Triumph of Equity’ (1993) 56 Law and Contemporary Problems 53, 54.
12 Samuel Bray, ‘The Supreme Court and the New Equity’ (2015) 68 Vanderbilt Law Review 997, 999; M. P. Gergen, J. M. Golden, and H. E. Smith, ‘The Supreme Court’s Accidental Revolution? The Test for Permanent Injunctions’ (2012) 112 Columbia Law Review 204, 204.
13 Starting with Grupo Mexicano de Desarrollo, SA v Alliance Bond Fund, Inc. 527 US 308, 312 (1999), and the latest being US Airways, Inc. v McCutchen 133 S Ct 1537 (2013).
14 Bray, ‘The Supreme Court and the New Equity’ (n. 12) 1002.
15 The current reporter, Andrew Kull, is of the view that the First (1937) Restatement’s ‘most significant innovation is its unified treatment of law and equity’ (Andrew Kull, ‘James Barr Ames and the Early Modern History of Unjust Enrichment’ (2005) 25 OJLS 297, 297).
16 eBay Inc. v MercExchange 547 US 388 (2006). e-Bay’s test was later applied to preliminary injunctions in Winter v Natural Resources Defense Council, Inc. 555 US 7 (2008). For an explanation of why this requirement is justified in equitable remedies, see Samuel L. Bray, ‘The System of Equitable Remedies’ (2016) 63 UCLA Law Review 530, 551–86.
court will not grant an equitable remedy if the costs to the defendant vastly exceed the benefits to the plaintiff. The Supreme Court’s de-fusion approach has been heavily criticised by academics. Some have argued that the Court misunderstood the tradition to which it refers, and misapplied the equitable principles it purports to revive.17 But for most academics who write in the field, this move to sway the pendulum back towards distinctive Equity-based remedies is, either way, totally misguided. Those who celebrated the ousting of ‘Equity’s Ghosts’ and saw the unification of Equity and Common Law as a done deal, would not have been more approving had the court been more faithful to the ‘equitable tradition’ which it purported to follow.18
The pro-fusion campaigners on the other side of the Atlantic can only envy the troubles of their American brethren. For while a clear division between Equity and Common Law in the US is mostly restricted to the area of remedies, in England and Wales it affects (or afflicts, depending on your viewpoint) large areas of substantive private law. The way to a US-style merger of Law and Equity is still very long. But hard work would not deter a true revolutionist. In a body of work influenced by the scholarship of Peter Birks, Andrew Burrows sets out a blueprint for a fusion project in English law. While Burrows’ vision lacks no intellectual ambition it is less radical than Chafee’s vision in that it recognises that, at least in some areas, the dualist Common Law/Equity system should be allowed to stand. Thus, Burrows divides English private law into three categories: the first, in which ‘common law and equity co-exist coherently, and where the historical labels of common law and equity remain useful terminology’; a second, in which ‘common law and equity co-exist coherently but there is nothing to be gained by adherence to those labels which could, and should, be excised at a stroke’; and a third, wherein ‘common law and equity do not co-exist coherently and a change . . . is needed to produce [a fused law]’.19
In the first category, that in which Burrows would allow Equity doctrine and terminology to stay put, we find trust law.20 For when it comes to trusts, Burrows admits that it is, at least, ‘very hard’ to account for this immensely important apparatus without reference to ‘equitable title’.21 But in other areas where the tag ‘equitable’
17 See e.g. John H. Langbein, ‘What Erisa Means by “Equitable”: The Supreme Court’s Trail of Error in Russell, Mertens, and Great-West’ (2003) 103 Columbia Law Review 1317; and Gergen, Golden, and Smith, ‘The Supreme Court’s Accidental Revolution? The Test for Permanent Injunctions’ (n. 12) sections IIA and IIB. But for a defence of the reconstructed history of the tradition, see later discussion of Bray, ‘The Supreme Court and the New Equity’ (n. 12).
18 Caprice Roberts, ‘The Restitution Revival and the Ghosts of Equity’ (2011) 68 Washington and Lee Law Review 1027. For a review of critical literature, see Bray, ‘The Supreme Court and the New Equity’ (n. 12) section IV.
19 Andrew Burrows, ‘We Do This at Common Law but That in Equity’ (2002) 22 OJLS 1, section 2.
20 On the rejection of Jessel MR’s attempt to equate trusts with legal estates in the post-Judicature Act period, see J. S. Getzler, ‘Patterns of Fusion’ in Peter Birks (ed.), The Classification of Obligations (Clarendon 1997) 158.
21 The assimilation of trusts operated by law into common law doctrines can be just as, if not more, problematic, see e.g. Lionel Smith, ‘Legal Epistemology in the Restatement (3d) of Restitution and Unjust Enrichment’ (2012) 92 Boston University Law Review 899, 907–16. From the other direction, Sarah Worthington thinks that giving up on converting trusts into a common law category is an unnecessary ‘sop to the anti-fusionists’ (Sarah Worthington, ‘Review of Hochelaga Lectures. Fusing Common Law and Equity: Remedies, Restitution and Reform’ (2003) 119 LQR 519).
seems to make a difference—like proprietary remedies for wrongs, limitation rules, or punitive damages—we need only ‘strip away the clothing of historical labels’ and it would become immediately clear that ‘in common law and in equity one is dealing with the same essential facts, ideas and concepts and yet treat[s] them differently’.22 No great revolutions will be necessary to amend this sorry situation, says Burrows. Some fairly modest changes to the law will suffice to bring out the unifying themes and reinstate coherence and rationality into private law. Jurists should therefore focus their analytical energies on the (straightforward) job of erasing the label ‘equitable’ where it adds nothing, and the (laborious) task of sorting out the best solution to those problems which seem to be treated differently by Equity and Common Law. Alas, as he immediately admits, this last category comprises most of English civil law. Nonetheless, for supporters of the fusion project, we do not have a good enough reason to take our time in deliberating the issue. It is ‘pressingly needed [at the] doctrinal level . . . to take all the learning from both Equity and the Common Law and attempt to map it into a coherent analytical structure’.23 The current state of affairs is intolerable because the Equity/Common Law split lacks internal coherence, or, in Austin’s more upfront words, ‘the distinction [between Common Law and Equity] is utterly senseless, when tried by general principles; and is one prolific source of the needless and vicious complexness which disgraces the systems of jurisprudence wherein the distinction obtains’.24 According to Burrows (and other pro-fusionists) the current dualism is not only inelegant; its incoherence leads to a severe horizontal injustice as like cases are not to be treated alike.25 I elaborate on these problems later, in section 3.
In other parts of his work, Burrows seems to retreat somewhat from the reformist spirit of the fusion movement—as when he limits his project to the legal equivalent of what a physicist would dub ‘hemi fusion’.26 Fusion by analogy, as James Edelman explains, is not as world-shattering as the US-style fusion since it only implies ‘judicial development of equity rules by reference to common law principles and vice versa’.27 It seems, however, that this temperate rephrasing of Barrows’ fusion project is mainly directed at those staunch (Australian and English) lawyers who believe that the courts have no authority to engage even in such cross-reference and mutual fertilisation between common law and Equity.28 As against this ‘fusion
22 Burrows, ‘We Do This at Common Law but That in Equity’ (n. 19) 8.
23 Sarah Worthington, Equity (2nd edn, OUP 2006) 321.
24 J. Austin, Lectures on Jurisprudence (1st edn, J. Murray, 1863; 5th edn, R. Campbell (ed.) 1885) i, 38–9.
25 Worthington, Equity (n. 23) 321.
26 See e.g. L. V. Chernomordik and M. M. Kozlov, ‘Membrane Hemifusion: Crossing a Chasm in Two Leaps’ (2005) 123 Cell 375.
27 James Edelman, ‘A “Fusion Fallacy” Fallacy?’ (2003) LQR 375, 377. A good example of successful cross-borrowings is the way in which equitable trusts and fiduciaries learnt from, and informed, common law agency and mandate relationships (Joshua Getzler, ‘Fiduciary Investment in the Shadow of Financial Crisis: Was Lord Eldon Right?’ (2009) 3 Journal of Equity 219, 228–9). But see Worthington’s dismay at the (relatively) limited scope of his project (Worthington, ‘Review of Hochelaga Lectures. Fusing Common Law and Equity: Remedies, Restitution and Reform’ (n. 21) 519).
28 Since the Judicature Acts sanction only a procedural merger of common law and Equity. Indeed, as Jill Martin reminds us, the wording of the 1873 Act clearly envisaged that equity and the common law
