Download Pennington v Waine

Equity and Trusts –
Introduction & Historical
Origins (3)
Medieval society
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Key perceptions:
link between divine justice and man made laws made
religion dominant
sense of communal order derived in part from the
understanding gained through religion of societal roles and
duties
customary practises
Dutiful aspect of relationships reflected in contractual and
other legal relationships influenced by teaching of
medieval scholastic philosophers like Thomas Aquinas
(1226-1274). and his Summa Theologica (1265-1274)
The just price
From Aquinas came the concept of the
just price: a bargain had to be
equitable – both sides had to gain
equally from a bargain.
Influence lasted until the last vestiges of
the common law offences against unfair
bargaining and market fixing were
played out in the early 1800s
The fair wage
The concept of the just price led
naturally to the concept of the fair wage
– a feature of English law up until the
middle of the 18th C.
Medieval community
Nature of trade was essentially within a
closed market thus more reliant on the just
price
Consumers bought directly from one another
Services for social as much as for customary
reasons were performed within small
communities for a fair allowance not for profit.
A gradual transition from
the old world to the new
Saw freeing up the rules on interest
charges that
Move away from the agrarian and
customary society
Economic change but also growing
secularism - an abandonment or casting
off of the social and ethical framework
provided by the church
Thomas Hobbes (1588 –1679)
“Justice of actions is by writers divided into commutative and distributive: and
the former they say consisteth in proportion arithmetical; the latter in proportion
geometrical. Commutative, therefore, they place in the equality of value of the
things contracted for; and distributive, in the distribution of equal benefit to men
of equal merit. As if it were injustice to sell dearer than we buy, or to give more
to a man than he merits. The value of all things contracted for is measured by
the appetite of the contractors, and therefore the just value is that which they
be contented to give. And merit (besides that which is by covenant, where the
performance on one part meriteth the performance of the other part, and falls
under justice commutative, not distributive) is not due by justice, but is
rewarded of grace only. And therefore this distinction, in the sense wherein it
useth to be expounded, is not right. To speak properly, commutative justice is
the justice of a contractor; that is, a performance of covenant in buying and
selling, hiring and letting to hire, lending and borrowing, exchanging, bartering,
and other acts of contract.” Leviathan published in 1651 (Part 1 Chapter
15)
Statement of central
importance
“the value of all things contracted for is
measured by the Appetite of the
contractors; and therefore the just
value, is that which they be contented
to give”.
Liberalism
Stable market relations necessitate the
enforcement of contract
Liberalism was a powerful political message
of individual freedom
Move away from medieval Christian ethics
and religious observance were key to triumph
of the free market and the changes this
entailed for the exercise of equity
Custom
Customs and traditions of rural
existence were one of its defining
features from before the middle ages.
Many would not survive the coming of
market capitalism and changes that
necessarily accompanied it in legal
thought – especially those connected
with the nature of property
E P Thompson
“What was happening, from the time of Coke to that
of Blackstone, was a hardening and concentration of
the notion of property in land, and a reification of
usages into properties which could be rented or sold,
or willed. For good reason Blackstone entitled volume
two of his commentaries, Of the Rights of Things, not because there rights were a novelty (they were
an ancient chapter of the law) but because the
market in these rights was never more active, or
more prolific in tests at law than at this time.”
Customs in Common Page 135
E P Thompson
“It was always a problem to examine the commons within
capitalist categories. There was something uncomfortable
about them. Their very existence prompted questions
about the origins of property and the about historical title to
land.
“In the sixteenth and seventeenth centuries landowners
had asserted their titles in land against the prerogative of
the King, and copyholders had asserted their rights titles
and customs against their lords. They therefore had
discarded theories of the origin of divine right ... When
Locke sat down all this was stewing around in his mind.”
E P Thompson
“Agrarian custom was never fact. It was
ambience. It may best be understood with
the aid of Bourdieu’s concept of “habitus” – a
lived environment comprised of practices,
inherited expectations, rules which both
determined limits to usages and disclosed
possibilities, norms and sanctions both of law
and neighbourhood pressures.”
Customary rights
Such activities included for example
collecting wood, grazing animals,
gleaning and others of a purely local
variety.
Customary rights
The point concerns not just patterns of
economic development which required
a new legal regime but also the way in
which the loss of rights had to be
rationalised by the development of new
theories of rights to property
Custom and change
Custom was a way of conceiving of human
relationships – an expression of communal
justice in its own right
The changing pattern of economic development
required a new legal regime in respect of land
and in the conception of customary rights – this
was also the case in equity where economics and
the stresses of social transformation resulted in
new market relationships and the need for new
ways of dealing with these through the law
Liberalism
Liberalism was predicated in part on a
new way of seeing social relationships –
individualism – and a rejection of the
Aristotelian belief implicit in Christianity
of communal relations
Liberalism
The bond between fact and value - the idea
of morality as interwoven with the world – a
notion which had survived in the form of
natural law thinking from Aristotle through
medieval Christianity onwards was severed
and individual autonomy became the
fundamental human condition
Individual choice
Political individualism accompanied by
religious individualism – the idea of
conscience as God’s direction – through
increasing secularism became
individual conscience – the individual
human conscience no longer thought of
an expression of God’s direction but as
autonomous individualism
Facts and values
Separation answered needs of law in face of
social change:
the rise of market freedoms
the dissolution of custom
the growth of industrialism
the development of communications
the advent of larger and larger towns and
cities
new and more complex market relationships
Capitalism
“Basically, then, the pure law of contract is an are of what we can call
abstract relationships. “Pure” contract doctrine is blind to details of
subject matter and person. It does not ask who buys and who sells
and what is bought and sold … Contract law is abstraction – what is
left in the law relating to agreements when all particularities of person
and subject matter are removed. The abstraction of classical contract
law is not unrealistic; it is a deliberate renunciation of the particular, a
deliberate relinquishment of the temptation to restrict untrammeled
individual autonomy or the completely free market in the name of
social policy. The law of contract is, therefore, roughly co-extensive
with the free market. Liberal nineteenth century economics fits in
neatly with the law of contract so viewed.”
Lawrence Friedman - Contract Law in America 1967.
Capitalism
That liberal nineteenth century
economics fit neatly with a purist view of
the law of contract of the later 20th c is
testament to the fundamental changes
that had occurred by the middle of the
19th c in response to market forces and
the success of the political conception
of human relations implicit in liberal
individualism
Capitalism
The earlier conception of contract was
that it was akin to a remedy –
something interposed by the court
between the parties to create a just
outcome
Changes in law
The courts of the 19th C focussed only on the
facts – was there a contract or not? what
were its terms? Had these been breached?
The 18th C court focus on values led to
questions such as was the outcome of the
transaction fair? If not should the agreement
be remade in order to make it so?
Recreating contract
“an agreement by which two parties
reciprocally promise and engage, or one
of them singly, promises and engages
to the other to give some particular
thing, or to do or to abstain from doing
some particular act”
M Pothier “A Treatise on the law of
Obligations or Contracts” (1806)
Addison 1849
“The law of contracts may justly indeed to be said to be a
universal law adapted at all times and races, and all
places and circumstances, being founded upon those
great and fundamental principles of rights and wrong
which are immutable and eternal, and present a striking
uniformity among all nations, whatever seas or mountains
may separate them, or how many ages soever have
elapsed between the periods of their existence; being
widely different from those laws, which proceeding merely
from positive institution are consequently as various as the
wills and fancies of those who enact them.”
The US
Process of creating abstract rules and
generaliseable principles was not
confined to England but was replicated
in the United States.
The US
Growing secularism in Britain speeded
social change – the US is much more
difficult to read in this respect.
The US
American law moved away from system of
status or function categories in tort (like
agents, doctors, attorneys, bankers,
passenger carriers etc) and in contract law
functional categories (like sales, insurance,
railroads, telegraphs, negotiable instruments
etc) toward conceptual headings such as
negligence in tort and the will theory in
contract
A new law
1870 to 1900 was the high tide of US
trend to the generalisation and
systematization of legal concepts and
the creation of a new private law
Formalism in the US sprung from (inter
alia) English liberal political thinking
between the 17th and 19th Cs
The US
By beginning of the 19th Century Equity
had been almost completely
subordinated to the common law
Just as with the Judicature Acts in
England – the New York Field Code of
1848 marked the end of a separate
system of equitable substantive justice
in the US
Legal Texts
Changes reflected in legal texts of the
time - not only in the US but in England
– also in legal teaching so that subjects
could be broken down in a similar to
follow a pattern of rather abstract
concepts
Pennington v Waine
Unpredictability is undesirable since it is said to
lead to commercial uncertainty. Criticism of such
equitable intervention is not confined to the issue
of imperfect gifts: see also proprietary estoppel:
Yaxley v Gotts [2000] 1 All ER 711 (All ER Rev
2000, pp 242–244); Gillett v Holt [2000] 2 All ER
289 (All ER Rev 2000, pp 246–247) and the
development or the constructive trust: Banner
Homes Group plc v Luff Developments Ltd [2000]
2 All ER 117 (All ER Rev 2000, pp 245–246).
Pennington v Waine – an
th
18 C echo
“Thus explained, the principle that equity will not
assist a volunteer at first sight looks like a hardedged rule of law not permitting much argument or
exception. Historically the emergence of the principle
may have been due to the need for equity to follow
the law rather than an intuitive development of equity.
The principle against imperfectly constituted gifts led
to harsh and seemingly paradoxical results. Before
long, equity had tempered the wind to the shorn lamb
(i.e. the donee). It did so on more than one occasion
and in more than one way.”
Equity today
“the rules of equity are not like the rules of the
common law supposed to be established from time
immemorial. It is perfectly well known that they have
been established from time to time … No doubt they
were invented for the purpose of securing the better
administration of justice but still they were invented.”
Jessell MR said in Re Hallet’s Estate [1880] 13 Ch D
696 t