THE BASIS OF EQUITY; THE ANALYSIS OF ONE OF THE MOST IMPORTANT EQUITY MAXIM
Equity in the ordinary means fairness. In the legal context, it is the body of rules that developed alongside the common law. It is the body of law developed by the early courts of Chancery (Curia Cancellariae) and administered by modern Courts of Justices. The importance of equity was mainly to remedy the rigidity of common law, strictly based on rules. The customary writs under common law (brevia de cursu, or writs, of course) were also limited in scope. However, with equity, new writs (breve magistralis, and writs in consimili casu) were granted to deal with new situations.
There were numerous concerns about the chancellors’ powers which was difficult to comprehend. It was exercised as per each chancellor’s conscience. This highlighted the flexibility of equity and its development. Equity thus maintained a separate, distinct jurisdiction to that of the common law until it emerged with common law.
The equity principles have no logical division and significantly overlap each other, i.e., the form of the particular maxim may be different, but the substance or code is the same. Justice McHugh posited that the maxim’s precise scope is not well defined. They have to be applied to such great diversity of circumstances which can be stated in the most general terms and with proper care of the exact circumstances of each case.
Many maxims have developed over time however; the most important would be he who comes to equity comes with clean hands. It has been noted as an essential maxim since it is a fundamental manifestation of the ethical attitude of equity as contrasted with the common law. Some scholars have posited that it is the expression of one of the elementary and fundamental conceptions of equity jurisprudence. Others have noted that doctrine is a vehicle for affirmatively enforcing the requirements of conscience and good faith to all parties. This paper shall focus on the development of the clean hands’ maxim from case law and journals.
The Clean Hands Doctrine arises from the concept of in parti delicto (of equal fault), which looks at the different levels of culpability of the parties to a dispute to determine responsibility and liability. In Dering V Winchelsea, it was described as a principle of justice designed to prevent those guilty of serious misconduct from securing a discretionary remedy such as an injection. It is directly linked to the remedy being sought after by the aggrieved person and must be depravity in both the legal and the moral sense.
The maxim depicts mainly two situations in respect of misconduct. First, cases where the plaintiff is engaged in a continuing course of fraudulent or illegal conduct, more or less closely connected with the subject matter of the suit. Second, cases where the plaintiff’s misconduct is at an end, and he seeks restoration of the status quo or other affirmative relief. This nature of the maxim emphasizes the importance of equity, which is to promote good faith by promoting fair play, protecting weaker parties, and preserving the justice system’s integrity.
A different approach was adopted later on, and the courts granted relief to a claimant who, even though she didn’t need to rely on the improper conduct to establish an equitable. Lord Browne-Wilknson held that the court is only entitled and bound to dismiss a claim on the basis that it is founded on illegality in those cases where the illegality is of a kind that would have provided a good defense if raised by the defendant. In a matter where the claimant is not seeking to enforce an unlawful contract but founds his case on collateral rights acquired under the agreement, the court is neither bound nor entitled to reject the claim unless the illegality of necessity forms part of the plaintiff’s case.
A plaintiff who has once been guilty of ‘unclean hands’ is not permanently barred from equitable relief. Plaintiffs may ‘wash their hands by showing the misconduct either, ceased well before the suit was brought to court, or occurred by accident and will not reoccur.Plaintiff lived in a cottage on the part of the deceased’s land for 15 years. During this time, he made improvements to the house and land, acting in the belief that the dead would devise the cottage for him. At the same time, the plaintiff was fraudulently receiving unemployment benefits. The landowner died without leaving the house to the plaintiff. The plaintiff sued for equitable compensation. The court held that the plaintiff was entitled to an amount of payment, but it was conditional on repaying all the money fraudulently he had received.
Nonetheless, Lord Goff in Tinsley V Milliganwas of the view that once it has come to the attention of the court of equity that the claimant has not approached the courts with clean hands, the court will refuse to assist the claimant even though the claimant can prima facie establish his claim without recourse to the underlying fraudulent or illegal purpose.
The clean hands’ maxim, therefore, looks at the conduct of the plaintiff. It arose in early times when the exercise of powers of a Chancery court was primarily discretion. Generally, it was applied only in favor of a person substantially injured by his or her complaints.A plaintiff who conducts himself improperly in a transaction and sought to seek relief in equity, then such a remedy will be refused at the court’s discretion. The dishonesty, misrepresentation, or disreputable conduct must relate to the particular transaction rather than the person’s general character or disposition.
A similar position was established where a minor fraudulently concealed his age and obtained from his trustees part of a sum of stock that he was entitled to when he came of age. When he came of age, he applied for and received a residue of the stock. Later on, he instituted a suit against the trustees for payment of the fraudulent portion paid earlier. However, he failed to pursue his lawsuit due to his mischievous conduct that rendered him the right to any remedy.
However, just because an aggrieved person’s general conduct is improper doesn’t mean that equity will deny them relief to the claimant. In Argyll V Argyll, the plaintiff was able to secure an injunction against her former husband, which barred him from publishing confidential information about her even though it was her adultery that led to the breakdown of her marriage. The learned judge believed that the affair was unrelated to the claimant’s attempt to prevent the publishing of confidential information. The court held that the cleanliness required to be judged concerning the relief sought.
In many cases, this maxim has operated as a defense to an equitable action. However, for it to succeed, the impropriety complained of an immediate and necessary relation to the issue’s fair principle. The burden of proof lies with the defendant, who has to prove that the plaintiff had some fraud or improper behavior. A mere breach of legal duty will is sufficient—a misrepresentation of whether innocent or fraud will be adequate. Thus, the plaintiff not only must be prepared to do what is right and fair but must also show that his record of transactions is clean, for he who has committed iniquity shall not have equity. It is not far removed from the maxim ‘those who seek equity must do equity which has a similar connotation.’
Justices Murphy J in Time-Life International BV V Interstate Parcel Express Co Pty Ltdjustified the clean hands’ maxim as far more than a banality. He held that it was a self-imposed ordinance that closes the doors of equity to anyone tainted with inequitableness or bad faith to the matter in which he seeks relief. He further emphasized that the maxim was deeply rooted in the historical concept as a vehicle for affirmatively enforcing conscience and good faith requirements.
The requirement of clean hands however does not mean that a person of bad conduct cannot be able to obtain the aid of equity. In Loughran v Loghran,Brandels J held that equity does not demand that suitors ,must have lived blameless lives. The defense of unclean hands would only be applicable where there is a nexus between the wrongful act and the tights that the person intends to enforce. The application of the, maxim is limited where the total conduct of the plaintiff is not to be considered.
One of the exception where the maxim will not be applicable is where the transaction that is entered into is against public policy. The maxim may become inapplicable where an action is against public policy and the plaintiff comes with unclean hands but for the interest of the public justice has to be upheld by giving effect to the policy in question. A more modern approach has been taken on matters of public policy with the flexible approach elaborated in the case of Saunders v Edwards where Bingham J explained that the courts have to steer a middle ground where there are issues of legality in question.On one hand it would be unacceptable for the courts to aid a dishonest party but on the other hand it would also be unacceptable for the courts to refuse to assist the plaintiff on the first indication of an unlawful action.
Secondly the maxim may not be used as a defense where a party repents for the wrongful conduct before the unjust actions are carried out. Under the specific relief Act 1877,the law outlines that the unfair conduct of the plaintiff will not disentitle the person to an equitable relief of specific c performance when it comes to contract. The maxim therefore is crucial as it enables the courts to concentrate on attaining justice and fairness to the parties concerned.
The maxim is considered to be more important because it protect the integrity of the judiciary by Safeguarding the sanctity of the legal system. The sanctity of the court is protected by restricting a party that is not honest who comes with unclean hands form seeking legal relief from the court. The objective of unclean hand is to prevent a parity from acquiring an unfair advantage by ensuring that moral values are upheld. The court of equity is a court of conscience and therefore protects the integrity of the courts by ensuring that there is no reprehensible conduct that would result in an unfair advantage.
Therefore, from this perspective, the clean hands maxim protects the integrity of the court. It does not disapprove only of illegal acts but will deny relief for bad conduct that ought to be discouraged as a matter of public policy. In two folds, it protects the court’s integrity and defends against misconduct that interferes with the court process in the present case. A court will ask whether the bad behavior was intentional.
In conclusion, the maxim he comes to equity must come with clean hands empowers any aggrieved person to seek remedies, especially where there was no foul play by the plaintiff. Although it serves as a caution to the plaintiff’s conduct when approaching the court, it also looks at the defendant’s conduct. Its applicability protects also judicial integrity “because allowing a plaintiff with unclean hands to recover in action creates doubts about the justice provided by the judicial system. Thus, the plaintiff must be prepared to do what is right and have done right during the said transaction. It forms equity since no aggrieved person would approach the court to seek a remedy without clean hands, especially where the equitable relief is directly reliant on their conduct. This aspect greatly highlights the exception nature of the doctrine. A party’ conduct where is of bad faith disqualifies them from seeking a remedy in under equity.
Bibliography
Legislation
The Specific Relief Act
Case laws
Argyll V Argyll, [1967] Ch 302
Cadman V. Horner (1810); Viscount Clermont V. Tasburgh (1819)
Dunbar V. Plant [1998] Ch 412, 422
Gee v. Pritchard, [1818] 36 ER 670
Holdsworte, A History of English law,( 401 et seq. 6th ed. 1938)
Loughran v. Loughran, 292 U.S. 216, 229 (1934),
Maldonado v. Ford Motor Co., 719 N.W.2d 809, 818 (Mich. 2006)
Overton V. Banister, (1844) 3 Hare 503
Rhodes v Badenach [2000] TASC 160
Saundersv. Edwards [1987]2 AllE.R.651,at pp,665,666(CA).
Tinsley V Milligan, [1994} 1AC 340
Books and Articles
Chafee, Zechariah, “Coming into Equity with Clean Hands. I.” Michigan Law Review, vol. 47, no. 7, 1949, pp. 877–906
Croft, C, ‘Lord Hardwick’s Use of Precedent in equity, (1988) Australian Bar Rev 29
Dal Pont, Gino & Cockburn, Tina, Equity and Trusts in Principle (2nd Edition 2008).
Ori J. Herstein, A Normative Theory of the Clean Hands Defense, 17 LEGAL THEORY 171, 195-96, 199-200 (2011)
Paul S. D., & Graham V., Equity & Trust text, Cases & Material, ( 3rd ed. Oxford University Press 2008)
Pettit, Philip Henry, Equity and the Law of Trusts (12th ed, Oxford University Press 2012)
Pomeroy, Equity Jurisprudence (4 th ed. 1918), 739, § 398
Time-Life International BV V Interstate Parcel Express Co Pty Ltd, [1978] FSR 215
T. Leigh Anenson, Announcing the “Clean Hands” Doctrine, Cambridge Univ. Press, 2018
Walsh, Equity c. 1 (1930), See Adams, Origin of English Equity, 16 Cor. L. REv. 87 (1916)
(1922). Harvard Law Review, 35(6), 754. https://doi.org/10.2307/1328898.
Websites
Maxims of equity, Oxford Reference, Retrieved 16 Mar 2021, from > https://www.oxfordreference.com/view/10.1093/oi/authority.20110803100141673. <
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