Chapter 12 - Equity and the common law: section 99

Legislative history

Supreme Court of Judicature Act 1873 (UK)

Section 99 is based on section 25(11) of the Supreme Court of Judicature Act 1873 (UK) (“SCJA”). The SCJA implemented the reform of the English court system which saw the amalgamation of the equity and common law courts. The Courts of Chancery, Queen’s Bench, Common Pleas, Exchequer, Admiralty, Probate and Divorce and Bankruptcy were combined in the Supreme Court of Judicature, which comprised the High Court and Court of Appeal. The High Court was organised into five, and later three, divisions (Queen’s Bench, Chancery and Family).

Before the 1873 reforms, the two jurisdictions possessed different procedural powers, offered different remedies and, in some cases, dealt with different substantive areas of law. When a matter involved questions of both common law and equity, actions had to be commenced in both courts. This added considerable complexity and delay. The SCJA comprehensively fused the administration of the two streams of law so that:269

every judge of every division must recognize and give effect to all equitable rights, obligations and defences and, subject to the supremacy of equity, to all legal rights and obligations, and must grant all such remedies as the parties may be entitled to in respect of any legal or equitable claim so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and multiplicity of legal proceedings avoided.

After 1873 the benefits of both systems were available to every litigant wherever their action was tried. However, the amalgamation of the courts meant that the relationship between their procedures and between any conflicting rules adopted by the two streams of law had to be worked out.

To this end, first, section 24 of the SCJA set out broad procedural rules for the new court. Among other things, its seven subsections made it clear that judges in all divisions of the High Court were to give equitable relief and allow equitable defences in the same manner as would have been the case before the Court of Chancery; that judges were required to recognise all equitable estates, titles, rights, duties and liabilities; and that, subject to the aforesaid provisions about equity, judges were required to give effect to all legal claims, demands, estates, titles, rights, and so on of common law or created by statute.

Second, section 25 of the SCJA was directed at resolving any substantive conflicts between the rules of equity and the common law. The first 10 subsections of section 25 dealt with 10 matters where the common law and equity rules were known to conflict. These included:

  • the order of priority of payment of debts of a person dying insolvent;
  • the rule that merger of estates depends on intent and is not automatic;
  • the right of a mortgagor to bring an action for possession against a third person without joining the mortgagee;
  • equity’s approach to time being of the essence of contracts;
  • the rules relating to the custody and education of infants.

Because of the possibility that some other conflicts had been overlooked, section 25(11) (which is mirrored by our section 99) was added as a catch-all provision.270 The section, then, was one of a number of instructions given to judges as to how the new combined courts were to operate.271

The primacy of equity was first established in 1615, in the wake of the Earl of Oxford’s case, when James I intervened in an ongoing dispute between the Court of Chancery and the common law courts about the former’s use of injunctions to prevent the enforcement of common law judgments, or prohibit individuals from pursuing actions in the common law courts. James I’s conclusion was that equity was to prevail.

That equity should prevail followed from the original purpose of the jurisdiction – which was to mitigate the rigours and strictness of the common law and to fill in gaps where the common law provided no answer. It has also been suggested that section 25(11) of the SCJA was required because section 24(5) abolished the practice of restraining proceedings by injunction – the mechanism by which the supremacy of equitable rules had previously been assured in cases of conflict.272 Section 24 itself, and today’s section 49(2) of the Senior Courts Act 1981 (UK), legislate for the primacy of equity, given that the paragraphs relating to common law claims and rights are expressed to be “subject to” the provisions giving effect to equitable claims and rights.

The provisions of the English Judicature Acts were subsequently adopted by other common law jurisdictions. Equivalents to section 25(11) of the SCJA remain in force in, among others, the Republic of Ireland,273 Northern Ireland,274 in the legislation of all the Australian states and territories,275 and all the Canadian jurisdictions (except Quebec) and at the federal level.276

New Zealand

The superior courts of New Zealand have always exercised full jurisdiction in both common law and equity.277 Despite this, there were no legislative equivalents of sections 24 or 25 of the SCJA in New Zealand until 1882.

In the 1840s/1850s a set of Supreme Court rules had been devised by Chief Justice Martin and (then) Justice Henry Chapman “designed for simplicity and accessibility of procedure (without the fictions and technical forms of the English courts and with the aim of fusing law and equity procedures)”.278 The rules remained in force until 1882. Those rules did not tackle the question of conflict directly, meaning that the courts were left to decide upon clashes between the common law and equity at their discretion.

In 1881, a subcommittee of the Law Procedure Commission drafted a new set of procedural rules. The subcommittee noted that one of the aims of the new code of procedure was to ensure that “the laws of the colony shall be administered as one organic whole, irrespective of any division into law and equity”.279 The report further stated:280

The desirability of bringing about a fusion of the systems of law and equity is now admitted to be the chief object that ought to be kept in view in any attempt to reform civil procedure.

The framers of the existing rules of procedure and practice in the Supreme Court [the Martin / Chapman rules] seem to have recognized the great importance of this, and have indeed done so much towards bringing about the desired result that your Sub-Committee can only be considered as following in their footsteps. In England, as the Commission are aware, the recent important changes in the law of procedure have also been made principally with the same object.

Your Sub-Committee consider that, as the chief obstacle, arising from part of the law being administered by one class of Courts and part by another class of Courts, as formerly in England does not exist in this colony, there should be no insuperable difficulty in accomplishing this object.

It will accordingly be found that in the code no reference is made to the division, and that it is drafted throughout on the assumption that they will be so administered.

All that seems necessary to complete the work is an Act providing for the cases in which there is any conflict between the rules of the two systems, and section 5 of the Law Amendment Act, 1878, [which mirrored section 25(11) SCJA] appears to your Sub-Committee sufficient for this purpose.

Subsequently, sections 25(1)–(11) of the SCJA were enacted as sections 2 to 11 of the Law Amendment Act 1882.281 Section 24 of the SCJA, however, was omitted with the result that there was no legislative statement that all courts of full jurisdiction were to grant both equitable and common law remedies and to allow equitable and common law defences. Presumably, given the history of New Zealand’s court system, this was considered superfluous.

Today, in section 99, the Judicature Act 1908 retains only the catch-all provision. With the exception of section 90 of the Judicature Act 1908 (time of the essence), the specific rules that made up section 25(1)–(10) of the SCJA either have been repealed or replaced by new legislation.282

As provided in the Senior Courts Act 1981 (UK), s 49(2) (formerly the Supreme Court Act 1981). This is the modern version of section 24(7) of the 1873 Act. Steps had been taken to amalgamate the two jurisdictions and reduce delay throughout the 19th Century.

It provided: “Generally in all matters not herein-before particularly mentioned, in which there is any conflict or variance between the Rules of Equity and the Rules of the Common Law with reference to the same matter, the Rules of Equity shall prevail.” In his speech to the House of Lords on the first reading of the Supreme Court of Judicature Bill, the Lord Chancellor, Lord Selbourne said: “There are some points, however, in which, from this division of jurisdiction, unnecessary discrepancies have been introduced by reason of arbitrary rules established in different Courts. They are not very numerous. It is possible that some may have been overlooked: and on the suggestion of a high authority, I have added in the Bill general words to provide that where there is any variance between the rules of law and those of equity, and the matter is not expressly dealt with, the rules of equity shall prevail.” See Hansard, 13 February 1873, 339.

It remains in force in the UK as Senior Courts Act 1981 (UK), s 49 (formerly the Supreme Court Act 1981). Many of the specific rules set out in ss 25(1)–(10) have been moved to other legislation.

R Meagher et al Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (4th ed, Butterworths LexisNexis, Sydney, 2002) at [2-065].

Supreme Court of Judicature Act (Ireland) 1877. See also Law Reform Commission of Ireland Report on Consolidation and Reform of the Courts Acts (LRC 97-2010) at 460 and cl 97 of the Draft Courts (Consolidation and Reform) Bill (Ireland).

Judicature (Northern Ireland) Act 1978, s 86.

See, for example, Law Reform (Law and Equity) Act 1972 (NSW), s 5; Supreme Court Act 1935 (SA), s 10(2); Supreme Court Act 1986 (Vic), s 29(1); Supreme Court Act 1935 (WA), s 25(11).

See, for example, Law and Equity Act RSBC 1996, c 253, s 44; Judicature Act RSA 2000, c J-2, s 15.

Supreme Court Ordinance 1841. See also, the Supreme Court Ordinance 1844, ss 2 and 3, the Supreme Court Act 1860, ss 4 and 5, Supreme Court Act 1882, s 16 and (now) the Judicature Act 1908, s 16.

P Spiller, J Finn and R Boast A New Zealand Legal History (2nd ed, Brookers, Wellington, 2001) at 205.

Report of the Sub-Committee Appointed to Prepare a Code of Procedure [1881] I AJHR A6 at 9.

At 9.

Almost exact replicas of ss 24 and 25 SCJA were enacted in the Law Amendment Act 1878, but it is not clear that those provisions were ever brought into force. References to the provisions by the 1881 Law Procedure Commission indicate that they were not in force at that time and Spiller, Finn and Boast state that the Commission’s recommendation that equity should prevail found its expression in the later Law Amendment Act 1882 (s 11) (they do not mention the earlier Act): see P Spiller, J Finn and R Boast A New Zealand Legal History (2nd ed, Brookers, Wellington, 2001) at 207.

For example, the provision relating to the custody and education of infants was repealed by the Guardianship Act 1968, and the rules on equitable waste, merger and suits for possession of land by a mortgagor were moved to the Property Law Act in 1908.