LEGAL
REMEDIES AND EQUITABLE REMEDIES
LEGAL
REMEDIES
LEGAL
REMEDIES or judicial
relief
can be claimed as of right from a court of law, in the exercise
of civil law jurisdiction, enforcing of a right, imposing of a penalty,
or ordering to make another court
to impose its will.
THE
LEGAL RIGHTS give rise to LEGAL REMEDIES which can be claimed as of right in a court. They do
not depend upon the discretion of the Courts. ‘If I have a legal right to get
the house by inheritance, the Court is bound to grant it to me: it cannot
refuse the relief at its discretion. But if someone negligently sleep over
their rights for the length of time disproportionately long, i.e., beyond the
period of limitation, equity will not allow them to litigate in respect of
them.
AN
EQUITABLE RIGHT is one recognized by courts of equity. EQUITABLE REMEDIES are always awarded
at the discretion of the Court.
According to Hanbury all equitable interests have
this principle in common that they fasten on the conscience of certain persons
to whom to the legal estate belongs. Where a right vested in one person by the
law should in view of equity and as a matter of conscience be vested in
another, equity directed that person to use it for benefit of the person
entitled in conscience to it. This is known as equitable right.
The chief
characteristic of a legal right is its recognition and protection by the legal
system itself.
EQUITABLE
REMEDIES being based on the conscience of one who grants them
are always awarded at the discretion of the Court. The Court is not bound to
award them as a rule of law. EQUITABLE
RIGHTS have more precarious existence than legal rights. When there is a
competition between a LEGAL AND
EQUITABLE RIGHT, THE LEGAL RIGHT
prevails over THE EQUITABLE RIGHT
even though subsequent to it in origin, provided that the owner of THE LEGAL RIGHT acquired the property
for valuable consideration and without notice of THE PRIOR EQUITABLE RIGHT. As between holders of equal equities one
who gets in LEGAL ESTATE will gain
priority. This is expressed by the maxim: “When there are equal equities, the
law will prevail.”
In Commonwealth common
law jurisdictions and related jurisdictions (e.g. the United States),
the law of remedies distinguishes between a legal remedy (e.g. a specific
amount of monetary damages) and an equitable
remedy (e.g. injunctive relief or specific performance).
Another type of remedy is DECLARATORY
RELIEF, where a court determines the rights of the parties to
an action without awarding damages or ordering equitable relief.
In English and
American jurisprudence, there
is a legal maxim (albeit one sometimes honored in the breach)
that for every right, there is a remedy; where there is no remedy,
there is no right. That is, lawmakers claim to provide appropriate remedies
to protect rights. This legal maxim was first enunciated by William Blackstone:
"It is a settled and invariable principle in the laws of England,
that every right when with-held must have a remedy, and every injury its proper
redress.
________________
LEGAL ESTATE
It
is the exclusive right and interest of the owner in a property to posses,
enjoy, use and dispose off the property without infringing any existing law.
It
is different from Status in the point that an Estate is related to right and interest
of the owner of in a property alone; and Status is related to right and interest in
totality, of the person including in that of an estate.
Estate means designated property
real or personal in which a person has right or interest. An estate is
the net worth of a person at any point in time. In a living person
estate means the interest he has in land and other subjects of property. In a
deceased person it is a bundle of rights, powers, immunities and liabilities
which survive him.
It is the sum or bundle of rights of a person's assets
at a time – legal rights, interests and entitlements
to property of any kind – less all liabilities; and
is to be distinguished from the property itself, which is the subject
matter of interest.
An
estate is an interest in land. A legal estate is one valid against the world,
capable of subsisting or being created and conveyed at common law.
THE LAW OF PROPERTY ACT, 1925 deliberately cuts down the list of legal estates to
(1) Fee-simple absolute in
possession;
(2) The term of years
absolute; and
(3) Certain legal interests
or charges, giving over entirely to equity all particular estates and all
future estates of freehold.
An
estate in fee simple is one that is granted to a man and his heirs and is the
greatest estate a subject of the Crown can possess.
An
estate of freehold is one originally held by a freeman and subject to free
services, for life or for the life of another.
“It
is also a settled law that a property is a bundle of rights or interest of
which the owner can lawfully exercise to the exclusion of all others. He is
entitled to use and enjoy it as he pleases provided he does not infringe any
law of the state.
…..The
property is either corporeal or incorporeal.” CIT
Vs. National Insurance Co. Ltd. (1978) 113 ITR 37 (Cal)].
EQUITABLE ESTATE
An
equitable estate is one created and recognized only by a court of equity.
Under sections 19 to 21 of THE
LAW OF PROPERTY ACT, 1925, an
Infant can no longer hold a legal estate in land.
STRAHAN defining an equitable
right observes that it arises when a right vested in one person by law, should,
in the view of equity, be as a matter of conscience, vested in another. Where
this state of affairs exists equity does not attempt to transfer the legal
right to the person in conscience entitled to it, but directs the person
entitled to the legal right to use it for the benefit of the person entitled in
conscience to it.
EQUITABLE ESTATES in real property are
created in two ways, viz., under a trust and a mortgage. The trustee is the
legal owner of the estate, while the equitable estate resides in the cestui que trust, or the beneficiary. An equitable
estate under a legal mortgage arises when the date for making the payment
elapses without payment of the mortgage money. At law the mortgage loses his
right on his failure to redeem the property on the due date, but equity
relieves him by vesting in him an equity of redemption.
DIFFERENCE BETWEEN LEGAL AND EQUITABLE ESTATES
As
regards the difference between a legal estate and an equitable estate it may be
said at the outset that in the vast majority of cases any person who gets the
legal estate in a property takes priority over the person getting a subsequent
equitable estate, unless the person having the prior legal estate contributed
to the fraud which led to the creation of a subsequent equitable estate.
Where,
however, there is the prior equitable and subsequent estate, an equitable right
will be impotent against a purchaser of the legal estate, if the latter has
acquired property for valuable consideration, without notice of a prior
equitable right. The maxims that govern the legal and equitable estate are “where there is equal equity the
law shall prevail” and “where the equities are equal, the
first in time shall prevail.”
The second point of difference is that
equitable interests not the subject of tenure. Incidents such as dower and
escheat appertain to a legal estate and not to an equitable estate. The law of
escheat was not applied to an equitable fee simple, the legal owner being
allowed until THE INTESTATE
ESTATES ACT, 1884, to hold
the estate beneficially on the death of the beneficiary intestate and without
heirs.
EQUITABLE CONVERSION LAW & LEGAL DEFINITION
An equitable interest over land which is not conveyed correctly may
still be effective because of the rule in Walsh v Lonsdale. In this case it was held that ‘equity looks on as done
that which ought to be done’ and a contract, which does not meet the
requirements of a deed, may
be specifically enforced to convey the
equitable interest to the new purchaser. This rule has had a significant impact
because it allows interests which have not been conveyed by a deed to still be
binding on future purchasers, through the doctrine of constructive notice.
EQUITABLE CONVERSION, in the context of real
estate law, refers to when, after the parties have entered into a binding
contract for the sale of land, the buyer becomes the “equitable owner” before
the delivery of the deed. It is applied due to considerations of fairness,
because of the unique character of the property or the consequences of the
party not performing.
THE DOCTRINE OF EQUITABLE CONVERSION is used to make a buyer the equitable owner of title to the
property at the time that they sign a contract binding them to purchase the
land at a later date. The buyer is deemed the equitable owner after the
contract is signed, but prior to the closing. For example, if a house on the
property burns down after the contract has been signed, but before the deed is
conveyed, the buyer will nevertheless have to pay the agreed-upon purchase
price for the land. Equitable conversion may also be found when a deed is given
as security for the payment of money, though deeds are given to secure the
performance of other obligations as well. Parties may avoid application of the
doctrine of equitable conversion by providing for how to allocate the risk of
loss for damage to the property prior to the closing.
THE DOCTRINE OF CONVERSION, whereby notionally realty is converted into personality and
vice versa, lies within the domain of an equitable estate and not a legal
estate.
The
rights of married women to hold property were enlarged by equity because the
common law gave them only a limited right. One of the most obvious advantages
of the trust was that it enabled a wife to have property of her “own which the
husband could touch. THE LAW
REFORM (MARRIED WOMEN AND JOINT TORT FEASORS ACT, 1935, has however, brought about a great
change in the Legal position of married women, who can now acquire, hold
and dispose of any property and can sue and be sued in respect of any contract
or tort.
Again
the technical rule of common law that a fee simple estate could not be conveyed inter vivos without the use of the word “heir” or “in
fee simple” was not
applied strictly in equity. The words of limitation have never been necessary
to create an equitable fee simple in contract to convey, or in an agreement to
make a settlement.
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LEGAL
ESTATE IN THE HANDS OF A TRANSFEREE FOR VALUE
“All
equitable interests have this principle in common, that they fasten on the
conscience of certain persons to whom the legal estate belongs. But they meet
their waterloo when legal estate gets into the hands of one who has been given
value for the legal estate and has no notice of its existence.” (Hanbury)
A
LEGAL RIGHT is enforceable against any person who
takes the property, whether he has notice of it or not. If A sells to C land
over which B has a right of way, C takes the land subject to B’s right,
although he was ignorant of the right. But it is different as regards equitable
rights. Nothing can be clearer than that a purchaser for valuable
consideration, without notice of a prior equitable right, obtaining the legal
estate at the time of his purchase, is entitled to priority in equity as well
as at law. In such a case equity follows the law, the purchaser’s conscience
not being in any way affected by the equity. Where there is equal equity the
law shall prevail. Thus A, the owner of an estate, contracts with B to sell it
to him and B pays a part of the purchase money before the conveyance to him has
been actually executed; in law until the conveyance of the property, B has no
interest, whereas in contemplation of equity, which looks on that as done which
ought to be done, B from the moment of the contract is the owner of the estate.
If then, A, after this contract of sale with B, makes an absolute conveyance of
the legal estate to C, who purchases it for valuable considerat.ion without
notice of B’s right, C having the legal estate, and having acquired it bona
fide for value without notice, has an equity to retain the estate equal to B’s
right to enforce his equitable claim to it, and therefore the court will refuse
to give B any relief as against C. And, if the contract with B was entered into
after, 1925, C will take free from B’s equitable interest even if he had notice
of it, unless it is registered as a land charge. On the other hand,
registration is equivalent to actual notice.
Not only is it clear that a purchaser for
valuable consideration without notice of a prior equitable right, obtaining the
legal estate at the time of his purchase, will be protected, but it has also
been decided that such a purchaser, who has not obtained the legal estate at
the time, may protect himself by subsequently getting in the legal estate, so
long as he does not by that act become a party to a breach of trust ; because
as the equities of both parties are equal, there is no reason why the purchaser
should be deprived of the advantage he may obtain at law by superior activity
or diligence. After 1925, however, a third mortgagee cannot gain priority over
a second mortgagee by taking a transfer of the first mortgage.
In order, however, that
this defence of bonafide purchase for value without notice may afford a
protection against a prior equitable interest, certain conditions must be
fulfilled.
In
the
first place, it is necessary that
the defendant should have obtained the legal estate, or that it should be
vested in some person on his behalf, As an example of the legal estate being
held on trust for the defendant the case of Thorndike v. Hunt may be
given.
In
the second place the defendant must have given value for
the property.
In
the third place, the defendant must have had no notice of the equitable interest at the time when he gave his consideration
for the conveyance.
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WHETHER
EQUITABLE ESTATES ARE RIGHTS IN PERSONAM OR RIGHTS IN REM
“In their origin equitable interests were
merely rights in personam but they have long been recognized as rights in rem.”
Before dealing with the
question it is necessary to understand the meaning of the expressions “rights
in personam” and “rights in rem”. A right
in rem is a right available against the world at large, while a right
in personam is protected only against a determinate person or persons.
Maitland observes that
equitable estates and interests are rights in personam but they have
they a misleading resemblance to rights in rem.
Snell, however, observes
that in their original equitable interests were merely rights in personam, but
it has long been possible to treat them as rights in rem, or proprietary rights.
When it would have been un-conscientious for the legal owner of property to
keep the property for himself, the Court of Chancery acted on his conscience and
compelled him to hold the property for the benefit another person. If A is
trustee far B, B has not merely a right of action against
A to compel him to
perform the trust but a proprietary right available also against all persons in
whom the legal interest in the property may afterwards vest, unless for special
reasons they take free from his right.
It is no doubt true
that historically the right of Cestui que trust was regarded as a right
in personam and was available against the trustee personally. Later on,
equity enlarged the benefit of the beneficiary by disregarding the limitation
of the trustee personally, so much so that today the rights of a beneficiary
have become distinctly of a proprietary nature.
The general rule is
that a trust binds all the transferees save, a bona fide purchaser of the
legal estate without notice of the trust. A beneficiary has the right
to follow the trust property in the hands of third persons or into which it has
been converted, provided it has not gone into the hands of a transferee in good
faith for valuable consideration without notice either when the purchase-money
was paid, or when the conveyance was executed or in the hands of a transferee
for consideration when such transferee.
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