Chapter 12 - Equity and the common law: section 99

Application of the provision

Reference has been made to, or reliance placed on, section 99 or one of its two predecessors in 21 New Zealand cases since 1883. There have been seven cases since the mid-1960s. The English equivalent features in over 100 cases.

It is arguable that the provision was essential to the outcome of only a few of the cases, and that in some instances it has been misapplied. In some cases there was no true conflict or variance.

The fact that there have been few cases involving a true conflict is perhaps not surprising.283 Writing in 1948, Lord Justice Evershed said:284

Appeals to section 25 of the Judicature Act like appeals in a construction case to the general sense and structure of the document are apt to be regarded as the last argument of forlorn hope.

… the assumption on which [s 25(11)] of the Judicature Act has rested, was, broadly speaking, not well founded : for except in procedural matters there was little or no conflict or variance between Equity and the Common Law. Equity then, as it has done since, operated as a supplement to law.

New Zealand case law

Section 99 and its New Zealand predecessor have been considered in relation to eight areas of true or apparent conflict:

(a)to enable a court to recognise a lease that was unenforceable at law but specifically enforceable in equity;285

(b)to enable a lessee to obtain a decree of indemnity from an assignee who was in breach of a covenant in the lease, for which breach the lessee was liable and in the position of a surety;286

(c)to enable a court to recognise a gift that was incomplete at law as an enforceable contract in equity, from the date of the original promise;287

(d)to confirm that a party could repudiate a contract for lack of title;288

(e)to confirm that a plaintiff could claim interest on a deposit after the rescission of contract, where the position at common law was unclear;289

(f)section 99 was mentioned in argument in relation to whether an assignment of a contract had been effective in equity, although it had not been effected in writing as to satisfy section 130 of the Property Law Act 1952;290

(g)to enable a court to state that the equitable rule relating to estoppel by deed should be adopted in New Zealand;291

(h)the distinction between the invalidating effects of (equitable) innocent and (common law) fraudulent misrepresentation.292

Section 99 has also been used to reinforce:

  • The express provision as to the primacy of the equitable rule on merger, previously found in section 30 of the Property Law Act 1952.293
  • The express provision of the equitable rule in section 90 of the Judicature Act 1908 that time is not deemed to be of the essence of a contract unless made so by express stipulation or necessary implication.294

Finally, reference was made to section 99 in X v Attorney-General, where the basis of compensation or damages for breach of confidence claims was considered.295 Williams J discussed the fusion of law and equity and the decision in Aquaculture Corp v New Zealand Green Mussel Co Ltd296 and stated:297

What must be further examined is the nature of the relief to which X is entitled and the principles on which it is to be calculated. Aquaculture, the cases which have followed it and the academic writing give little guidance as to the principles to be applied in resolving those questions. For instance, might the Judicature Act 1908, section 99 have a part to play in deciding whether common law damages replace equitable compensation?

Williams J went on to award “general or equitable damages or compensation” in reliance on Aquaculture, at an amount which “will reflect the effect on both parties in a just and equitable way and which will endeavour to compensate him for the value to him of the information disclosed.”298

English case law

In England, courts have placed reliance on section 25(11) and its successors in resolving, or considering, possible conflicts on the following matters:

  • fraudulent and innocent misrepresentation;299
  • estoppel by deed;300
  • reinforcing the primacy of the equitable rule making time of the essence;301
  • rescission for common law duress and undue influence at equity;302
  • actions for a contribution by a surety against a co-surety,303 and for contribution between partners;304
  • an equitable assignor’s right to sue;305
  • equitable relief from penalty clauses in contracts;306
  • the equitable rules that fraudulent concealment alone is a good answer to the Statute of Limitations (the common law required fraud as well as fraudulent concealment);307
  • the rule that equity allows a deed to be varied by a simple agreement;308
  • in equity, accord and satisfaction are an answer to an action for a speciality debt;309
  • where there is a licence and an agreement to give a person a right which is given for value, the right is enforceable in equity;310
  • the prevalence of equitable rules of discovery;311
  • the equitable rule that allowed the court to strike out interrogatories if they may tend to incriminate;312
  • the liability of an executor who loses estate property (wilful default required in equity);313
  • payment of creditors by the executor or administrator of an insolvent estate;314
  • whether a lawyer in an action who has been replaced can obtain an order for his costs from the party;315
  • equity (as opposed to common law) is open on a Sunday.316

Conflict or variance required

The authors of Meagher Gummow and Lehane’s Equity: Doctrines and Remedies note that section 25(11) does not “speak of inconsistent remedies reached upon consideration of the same facts”, but of conflict or variance between rules relating to the same matter.317 They argue that a number of section 25(11) cases have not involved a true conflict.

Two English cases are usually cited as good examples of where a conflict existed. In Job v Job, the assets of a testator came into the hands of his executor, but were afterwards lost to the estate through no wilful default on the part of the executor.318 Under common law the executor was strictly liable, whereas in equity he was only liable on proof of wilful default. Jessel MR treated the case as one of conflict and applied the equitable rule.

In Lowe & Sons v Dixon & Sons, three firms purchased a shipment of wheat as joint partners.319  One of the firms went into liquidation and the question was whether and to what extent the other two firms had to contribute to make good the default of the third. Lopes J found that:320

At law, if several persons have to contribute a certain sum, the share which each has to pay is, the total amount divided by the number of contributors; and no allowance is made in respect of the inability of some of them to pay their shares. But, in equity, those who can pay must not only contribute their own shares, but they must also make good the shares of those who are unable to furnish their own contribution. Inasmuch, therefore, as the rules of equity prevail, the defendants must make good each one-half of that which Lund, Beveridge, & Co. are unable to pay.

In contrast, Walsh v Lonsdale is generally accepted to be a case where there was no true conflict.321 The case involved an agreement by Lonsdale to let a cotton mill to Walsh, with rent to be payable in advance. The agreement was not made by deed so there was no lease at law. Walsh occupied the mill and paid some rent, but not in advance. Lonsdale demanded a year’s rent in advance and when Walsh refused, Lonsdale distrained. Walsh brought an action claiming damages for unlawful distress. At common law the lease was not recognised on its terms and it was illegal to distrain for rent in advance. But equity would have granted specific performance of the agreement for the lease. Before the SCJA, a number of actions could have been taken in different courts: Walsh or Lonsdale could have sought specific performance in the Court of Chancery; Walsh could have sought damages for illegal distress in the common law courts; and Lonsdale could have sought an injunction from Chancery to restrain an action for damages. The court held that it could recognise the equitable lease and resolve the whole dispute before it.

Walsh v Lonsdale is sometimes cited as a case within section 25(11). However, Maitland and the authors of Meagher Gummow and Lehane have disputed that Walsh v Lonsdale involved a conflict of rules within the provision,322 although the latter acknowledge that the competing rules could produce an impasse from inconsistent remedies. Before the SCJA, the same outcome would have been reached, it just would have taken a lot more litigation to get there. What Walsh v Lonsdale illustrates is the procedural change introduced by the SCJA – it enabled the dispute to be decided at one hearing.323 The New Zealand cases of Morris v Montague324 and In re Alexander, ex p Grainger,325 which applied section 11 of the Law Amendment Act 1882 in reliance on Walsh v Lonsdale arguably fall into the same category.

McKerrow v Tattle is another local example of a case where it is arguable that no conflict existed.326 It involved a breach of a covenant by the assignee of a lease. It was accepted that the lessee was liable for the assignee’s breach and that the lessee was in the position of a surety. At common law, the lessee was entitled to recover the damages paid from the assignee, but at equity he could obtain a decree of indemnity (and possibly payment) from the assignee before making any payment of damages. Cooper J accepted that equity prevailed due to section 11 and that the lessee was entitled to a decree.327 In fact then, the case merely involved different remedies. The court could have used the equitable one without reliance on section 11.

Courts have declined to apply the provision in some cases where no true conflict existed. Riddiford v Warren involved an action in equity for rescission of a contract for the sale of goods for innocent misrepresentation.328 The court considered the impact of section 11 of the Law Amendment Act 1882, but held that contracts for the sale of goods (unlike land or insurance contracts) had never been liable to rescission for innocent misrepresentation at equity.329 It followed that there could be no conflict with the common law position.


Section 99 applies to substantive law, not practice or procedure

The point made above is reinforced by the line of authority that section 99 applies to matters of substantive law and not to practice or procedure.330 This follows from the context of section 25 of the SCJA which, as noted, dealt with substantive conflicts, in contrast to the procedurally focussed section 24 of the SCJA.

An example is Mayor, Councillors and Citizens of City of Dunedin v Searl.331 A tenant sought relief against forfeiture of the lease for non-payment of rent. Before the SCJA, relief could be obtained at both common law and equity, and there was no difference in the principle on which relief was administered in the two courts. However, the common law and Chancery procedures differed. Sim J queried whether he was obliged under section 99 to follow the Chancery procedure, but observed that section 99 relates to matters of “substantive law, not mere practice”. It followed that the common law procedure could still be followed.

Application in courts with no, or limited, equitable jurisdiction

Section 99 applies to all courts, so every judge is required to give effect to the principle that equity prevails. This means, for example, that all courts are required to recognise equitable rights and estates. But, a court cannot hand down an equitable remedy if it does not have jurisdiction in equity: section 99 does not extend the jurisdiction of inferior courts.

In both Morris v Montague332 and Rewiri v Eivers,333 despite having no equitable jurisdiction, Magistrates’ Courts treated an agreement for a lease for a term of years on the same footing as if a deed of lease had been actually executed. In Rewiri, Cooper J said:334

In my opinion it was plainly the intention of the Legislature, when it enacted the Law Amendment Act, 1882, that the rules of equity should prevail in all Courts, and the fact that the two sections I have quoted have been reproduced in the Judicature Act does not, in my opinion confine their operation to actions or proceedings in the Supreme Court.

In contrast, in Taranaki Hospital Board v Brown the Supreme Court held that the Magistrates’ Court had no jurisdiction to hear an action that necessarily involved rectification of an agreement:335

The learned Magistrate relies upon section 99 of the Judicature Act, 1908 … and he rightly says that this provision has been held to be not limited to matters litigated in the Supreme Court but to extend to actions in the Magistrates’ Court. But that does not mean that the section confers upon the Magistrates’ Court a general jurisdiction in equity. …if … in any other matter which it is within the jurisdiction of the Magistrate to decide, there is conflict or variance between the rules of equity and the rules of common law, then the rules of equity shall prevail and the Magistrate must apply them accordingly. That, however, is a different thing from exercising an equitable jurisdiction in the sense of granting a relief that can only be granted by a Court which has equitable jurisdiction.

Referring to section 25(11) SCJA, the editor of Snell’s Equity states that “[a]s might be expected, it has not often been necessary to resort to this provision": J McGhee (ed) Snell’s Equity (30th ed, Sweet & Maxwell, London, 2000) at [1-24].

Lord Justice Evershed “Equity after fusion: federal or confederate” [1948] JSPTL 171 at 176, 181.

Morris v Montague (1883) 2 NZLR (SC) 418 and In re Alexander, ex p Grainger (1892) 11 NZLR 682 (SC), both relying on Walsh v Lonsdale (1882) 21 Ch D 9 (CA).

McKerrow v Tattle (1905) 25 NZLR 881 (SC). However, the court found that section 11 was of no effect where the court in which the action was brought (here the Magistrates' Court) had no equitable jurisdiction. The Magistrates’ Courts’ jurisdiction was defined under the Magistrates’ Courts Act 1893.

In re Hume, ex p OA (1909) 28 NZLR 793 (SC).

MacDonald v Marson (1913) 33 NZLR 248 (SC).

Moss v Perpetual Trustees Estate and Agency Co of NZ Ltd [1923] NZLR 264 (SC).

CB Peacock Land Co Ltd v Hamilton Milk Producers Co Ltd [1963] NZLR 576 (CA).

Walters v Icon Central Ltd HC Auckland CIV-2010-404-4877, 7 March 2011. See also Greer v Kettle; Re Parent Trust & Finance Co Ltd [1937] 4 ALL ER 396 (HL).

Hall v Guardian Trust and Executors Co NZ Ltd [1938] NZLR 922 (CA); Riddiford v Warren (1901) 20 NZLR 572 (CA).

Robert Bryce & Co Ltd v Stowehill Investments Ltd [2000] 3 NZLR 535 (CA) at [32].

Cobbett v Sexton [1920] NZLR 223 (SC). See also Morris v Robert James Investments Ltd [1994] 2 NZLR 275 where the court relies on dicta of Browne-Wilkinson VC in British and Commonwealth Holdings Plc v Quadrex Holdings Inc [1989] QB 842 at 856: since equity now prevailed by virtue of the Judicature Act, this was the prevailing rule. There was no specific reference to section 99.

X v Attorney-General [1997] 2 NZLR 623 (HC).

Aquaculture Corp v New Zealand Green Mussel Co Ltd [1990] 3 NZLR 299 (CA). In this case, the Court of Appeal held (at 301) that (per Lord Cooke): “For all purposes now material, equity and common law are mingled or merged. The practicality of the matter is that in the circumstances of the dealings between the parties the law imposes a duty of confidence. For its breach a full range of remedies should be available as appropriate, no matter whether they originated in common law, equity or statute.”

At 633.

At 637.

Redgrave v Hurd (1881) 20 Ch D 1 (CA); London General Omnibus Co Ltd v Holloway [1911-1913] All ER Rep 518 (CA).

Greer v Kettle; Re Parent Trust & Finance Co Ltd [1937] 4 All ER 396 (HL).

United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 AII ER 62; Cheapside Land Development Co Ltd and another v Messels Service Co [1978] AC 904 (HL); Re Olympia and York Canary Wharf Ltd; Bear Stearns International Ltd v Adamson [1993] BCC 159 (Ch D), Behzadi v Shaftesbury Hotels Ltd [1992] Ch 1, [1991] 2 All ER 477 (CA); Lock v Bell [1931] 1 Ch 35.

Halpern v Halpern (Nos 1 and 2) [2007] EWCA Civ 291, [2008] QB 195 (CA).

Hampton v Minns [2002] 1 All ER (Comm) 481, [2002] 1 WLR 1 (Ch D); Wolmershausen v Gullick 2 Ch 514 (Ch D).

Lowe & Sons v Dixon & Sons (1885) 16 QBD 455 (QBD).

Three Rivers District Council v Governor and Company of the Bank of England [1996] QB 292 (CA).

Jobson v Johnson [1989] 1 All ER 621 (CA).

Lynn v Bamber [1930] 2 KB 72 (KBD).

Berry v Berry [1929] 2 KB 316 (Div Ct).

Steeds v Steeds (1889) 22 QBD 537.

Hurst v Picture Theatres Ltd [1915] 1 KB 1 (CA).

Bustros v White 1 QBD 423 (CA); Anderson v Bank of British Columbia 2 Ch D 644 (CA); Bolckow, Vaughn & Co v Fisher 10 QBD 161 (CA); Kearlsey v Philips 10 QBD 36 (Div Ct).

Atherley v Harvey 2 QBD 524 (Div Ct).

Job v Job 6 Ch D 562 (Ch D).

In re Radcliffe 7 Ch D 733 (Ch D), Vibart v Coles 24 QBD 364 (CA) and In re Wells 45 Ch D 569 (Ch D).

Grant v Holland 3 CPD 180 (Div Ct).

In re “N” (Infants) [1967] Ch D 512 (Ch D).

R Meagher et al Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, Butterworths LexisNexis, Sydney, 2002) at [2-115].

Job v Job (1877) 6 Ch D 562 (Ch D).

Lowe & Sons v Dixon & Sons (1885) 16 QBD 455 (QBD).

At 458.

Walsh v Lonsdale (1882) 21 Ch D 9 (CA).

See FW Maitland Equity (Cambridge University Press, Cambridge, 1936) at 157 and R Meagher et al Meagher Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, Butterworths LexisNexis, Sydney, 2002) at [2-180].

See Jill E Martin (ed) Hanbury and Maudsley’s Modern Equity (13th ed, Stevens & Co, London, 1989) at 16. See also FW Maitland Equity (Cambridge University Press, Cambridge, 1936) at 157.

Morris v Montague (1883) 2 NZLR 418 (SC).

In re Alexander, ex p Grainger (1892) 11 NZLR 682 (SC).

McKerrow v Tattle (1905) 25 NZLR 881 (SC).

However, the court found that section 11 was of no effect where the court in which the action was brought (here the Magistrates’ Court) had no equitable jurisdiction. The Magistrates’ Courts’ jurisdiction was defined under the Magistrates’ Courts Act 1893.

Riddiford v Warren (1901) 20 NZLR 572 (CA). See also Kendall v Hamilton 4 App Cas 504 (HL) and Powell v Brodhurst [1901] 2 Ch 160 (Ch D) where, although pleaded, the provision did not come into play because equity never dealt with the particular issue of partnership at hand (Kendall) and you could not recover a mere money demand in Chancery (Powell).

Unless the misrepresentation was such that there was a complete difference in substance between the thing bargained for and the thing obtained, so as to constitute a failure of consideration. But, see Root v Badley [1960] NZLR 756.

See Mayor, Councillors and Citizens of City of Dunedin v Searl (1915) 34 NZLR 861; Cobbett v Sexton [1920] NZLR 223; Rewiri v Eivers [1917] NZLR 479; and see La Grange v McAndrew 4 QBD 210 (Div Ct); Harrison v Duke of Rutland [1891-1894] All ER Rep 514 (CA).

Mayor, Councillors and Citizens of City of Dunedin v Searl (1915) 34 NZLR 861.

Morris v Montague (1883) 2 NZLR (SC) 418.

Rewiri v Eivers [1917] NZLR 479.

At 482.

Taranaki Hospital Board v Brown [1941] NZLR 586 at 587.