Equity in Canada and the United Kingdom

The Shared Root: Chancery and Conscience

Equity in England, Canada and the United States grows from one root: the English Court of Chancery. Petitions to the King for relief the common-law courts could not give were heard by the Lord Chancellor, who sat in the Chancery as the King's agent in the King's prerogative court. The early Chancellors were churchmen, and the question they asked was one of conscience — not the conscience of the King or of the Chancellor, but of the party before the court. That is why equity is said to act in personam: it works on the person whose conscience is bound.

The rivalry between the two systems came to a head in the Earl of Oxford's Case, reported as (1615) 1 Ch Rep 1, 21 ER 485. Chief Justice Coke's common-law court had held the Earl's title void under a statute; Lord Chancellor Ellesmere then issued an injunction in Chancery that stayed the common-law proceedings. The deadlock was referred to King James I, who, on the advice of his law officers including Francis Bacon, sided with Ellesmere. By royal decree of 1616 it was settled that where common law and equity conflict, equity prevails.

Four centuries later the English courts still describe equity in the same terms. In Westdeutsche Landesbank v Islington LBC (1996), Lord Browne-Wilkinson put it in one sentence: “Equity operates on the conscience of the owner of the legal interest.” The treatises the ministry reads — Story and Pomeroy in America, Snell in England — all describe this same jurisdiction.

The Judicature Acts: Fusing the Administration

For centuries England kept two separate court systems: the common-law courts and the Court of Chancery. A litigant who needed both a legal and an equitable answer could be sent from one to the other. The Supreme Court of Judicature Acts 1873 and 1875 ended that by creating a single Supreme Court whose High Court could administer both law and equity in the same action.

Section 25(11) of the 1873 Act, as amended in 1875, carried forward the old rule of priority: “Generally in all matters not hereinbefore 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.” Today the rule sits in section 49 of the Senior Courts Act 1981, headed “Concurrent administration of law and equity.” Section 49(1) requires every court in England and Wales exercising civil jurisdiction to continue administering law and equity together, and where they conflict on the same matter, “the rules of equity shall prevail.” Section 49(2) directs the courts to give effect to both legal and equitable rights so that matters in dispute are, as far as possible, “completely and finally determined.”

Did the Acts fuse only the administration of law and equity, or the substance too? The traditional answer was given by Ashburner in his Principles of Equity (2nd ed., 1933, p. 18): the two “streams of jurisdiction, though they run in the same channel, run side by side and do not mingle their waters.” Lord Diplock challenged that view in United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, at 924, warning that keeping up the dichotomy “is conducive to erroneous conclusions.” Historians note that the 1873 reform was largely procedural. The general consensus remains that the rules of law and equity are distinct bodies of doctrine that now work closely together in one court.

England and Wales Today

The Court of Chancery's successor is the Chancery Division, one of the three divisions of the High Court of Justice, headed by the Chancellor of the High Court. Since the Business and Property Courts were launched on 4 July 2017 (going live on 2 October 2017), the courts of the Chancery Division sit within that umbrella alongside the Commercial Court and the Technology and Construction Court. Chancery lists include the Property, Trusts and Probate List, the Insolvency and Companies Court and the Intellectual Property List.

Equity is not confined to that Division. Section 49 binds every civil court in England and Wales, so equitable doctrines are applied daily wherever they arise: express, resulting and constructive trusts; fiduciary duties of trustees, agents and company directors; injunctions; specific performance; proprietary estoppel; equitable leases and charges; rescission and rectification. The leading modern cases below show these doctrines being developed, not merely preserved.

Landmark English Cases

Each of these decisions is a short lesson in a maxim the ministry teaches. Walsh v Lonsdale shows “equity regards as done that which ought to be done” working inside the fused court. Westdeutsche shows that a trust depends on the conscience of the legal owner. FHR shows equity's strict view of a fiduciary's loyalty, and Guest shows how a court shapes a discretionary remedy to undo unconscionable conduct.

Scotland and Northern Ireland

The United Kingdom is not one legal system. Scots law is a mixed system that drew on Roman (civil) law as well as its own common law and later English influence. No separate equity court ever appeared in Scotland, and equity was never a distinct branch of Scots law; equitable ideas run through the general law instead. The Court of Session and the High Court of Justiciary do hold an extraordinary equitable power called the nobile officium, used to give a remedy where no legal rule covers the situation or where a rule would be unduly harsh. It is exceptional, used with caution, and not used to defeat the intention of a statute.

Northern Ireland follows the English pattern. Section 86 of the Judicature (Northern Ireland) Act 1978, headed “Concurrent administration of law and equity to continue,” requires its civil courts to administer law and equity together and provides that where they conflict on the same matter the rules of equity prevail. Under section 5 of that Act the High Court in Northern Ireland has its own Chancery Division.

Canada: Reception and the Provincial Statutes

English law, equity included, reached Canada by reception. Nova Scotia and Prince Edward Island received it as settled colonies (with a reception date of 1758); Upper Canada adopted English law by the very first Act of its legislature in 1792; and the Prairie provinces and the northern territories take 15 July 1870, the date of the transfer from the Hudson's Bay Company, as their reception date. With the common law came the body of equity administered in Chancery.

Each common-law province then passed its own Judicature-style statute. In Ontario, section 96 of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides: “Courts shall administer concurrently all rules of equity and the common law” and “Where a rule of equity conflicts with a rule of the common law, the rule of equity prevails.” British Columbia's Law and Equity Act, R.S.B.C. 1996, c. 253, s. 44, repeats the 1873 English wording almost word for word: where 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 prevail.” Alberta's Judicature Act, R.S.A. 2000, c. J-2, s. 16, is a further example of the same concurrent-administration rule.

Quebec is different. Under section 92(13) of the Constitution Act, 1867, property and civil rights belong to the provinces, and Quebec's private law comes from the French civil-law tradition. The Quebec Act of 1774 restored French civil law for private matters; the Civil Code of Lower Canada took effect in 1866; and the present Civil Code of Québec came into force on 1 January 1994. Quebec private law is therefore not built on the English division between law and equity, and Chancery precedent does not operate there in the same way.

Landmark Supreme Court of Canada Cases

The Supreme Court of Canada has developed equity with energy, sometimes in directions English courts have not taken. It built a full law of unjust enrichment with the constructive trust as a remedy, allowed a constructive trust to rest on good conscience alone, extended fiduciary duties beyond the traditional categories, and in Guerin recognised a fiduciary obligation owed by the Crown itself. Its 2017 decision on proprietary estoppel stands beside the UK Supreme Court's 2022 decision in Guest as a useful comparison.

What This Means for a Member in Canada or the UK

The maxims and doctrines the ministry studies are live law in the ordinary superior courts of England and Wales, Northern Ireland and the common-law provinces of Canada. There is no separate court of equity to seek out: the same judge who hears a claim at law hears the equitable claim, and by statute equity prevails where the two rules truly conflict.

Equitable remedies remain discretionary. Guest v Guest shows a court choosing between transferring a farm into trust and paying a discounted sum; Kerr v Baranow shows the Supreme Court of Canada preferring money unless a proprietary remedy is truly needed. A court weighs the conduct of both parties, delay, hardship and the rights of third parties before it grants relief, and no member should expect that a court will act in a particular way.

Statutes and rules govern the path. Limitation statutes, the rules of civil procedure and the practice directions of each court apply to equitable claims as much as to legal ones, and they differ between Ontario, British Columbia, England and Northern Ireland. Quebec and Scotland have their own systems entirely. Use the local procedure, read the local statute in its current official version, and consider consulting local counsel before anything is filed.

Side by side