# Equity Doctrines — Expanded Equitable doctrines still in active use in Canadian practice. --- ## The Equitable Maxims Historical guiding principles. Not rules with binding force but frameworks for the exercise of equitable discretion. **"Equity looks to substance rather than form."** Equity examines the reality of a transaction, not just its formal description. A transaction called a sale but functioning as a loan may be treated as a loan. **"Equity will not suffer a wrong without a remedy."** Where the common law provides no adequate remedy, equity may fashion one. Basis for many equitable remedies. **"He who seeks equity must do equity."** A party seeking equitable relief must be prepared to act equitably themselves. Cannot claim relief while withholding what is due. **"He who comes to equity must come with clean hands."** A party whose own conduct is tainted in relation to the matter cannot obtain equitable relief. Narrow — the misconduct must relate to the transaction, not merely the party's general character. **"Delay defeats equity."** (Laches) Unreasonable delay in seeking equitable relief may bar the claim. **"Equity acts in personam."** Equitable remedies operate against the person, not the property. This distinction has procedural consequences. **"Equity looks upon that as done which ought to be done."** Where a person is obliged to perform an act, equity treats the act as if done. Basis for constructive trusts in some contexts. **"Where equities are equal, the law prevails."** When neither party's equitable claim is stronger, the outcome depends on legal rights. **"Where equities are equal, the first in time prevails."** Between equal equitable claims, priority is determined by time. --- ## Fiduciary Duties A fiduciary duty is a duty of loyalty and utmost good faith owed by one party (the fiduciary) to another (the beneficiary). ### Recognized Fiduciary Relationships Presumed fiduciary: - Trustee to beneficiary - Solicitor to client - Director to corporation - Guardian to ward - Agent to principal Ad hoc fiduciary (must be proved): - Doctor to patient (in specific circumstances) - Business partner to partner (sometimes) - Parent to child (specific contexts) - Anyone in a relationship where the beneficiary is peculiarly vulnerable and the fiduciary has undertaken to act in their interest ### The Ad Hoc Fiduciary Test (post-Alberta v Elder Advocates) 1. An undertaking by the fiduciary to act in the best interests of the beneficiary 2. A defined person or class of persons vulnerable to the fiduciary 3. A legal or substantial practical interest of the beneficiary that stands to be adversely affected ### Fiduciary Obligations - Loyalty (avoid conflicts of interest) - Good faith - Duty to act in the beneficiary's best interest - Duty not to profit from the position without informed consent - Duty to disclose material information ### Consequences of Breach - Constructive trust over profits - Account of profits - Rescission of transactions - Damages / equitable compensation --- ## Trusts ### Express Trust — Three Certainties For a valid express trust, the settlor must establish: 1. **Certainty of intention** — clear intention to create a trust 2. **Certainty of subject-matter** — the trust property is identifiable 3. **Certainty of objects** — the beneficiaries are identifiable Without any of these, the intended trust fails. ### Resulting Trust Arises where legal title has been transferred but the beneficial interest is presumed to remain with the transferor. Common triggers: - Gratuitous transfer (though presumption of advancement may apply between certain family relationships) - Purchase money resulting trust (A pays, B takes title) - Failure of an express trust for uncertainty of objects ### Constructive Trust An equitable remedy imposed to prevent unjust enrichment or the retention of property acquired through breach of fiduciary duty. Categories: - Institutional constructive trust (arising from a rule of substantive law) - Remedial constructive trust (imposed by the court as a remedy) The Canadian approach recognizes both. See *Soulos v Korkontzilas* 1997 SCC. ### Trustee's Duties - Follow the terms of the trust - Act in the best interests of beneficiaries - Loyalty (no conflicts, no profit) - Prudent management of trust property - Even-handedness among beneficiaries - Duty to account --- ## Equitable Remedies ### Specific Performance An order requiring a party to perform a contractual obligation. Discretionary. Available where: - Damages are inadequate - The subject matter is unique (land is presumptively unique) - The plaintiff is ready, willing, and able to perform their own obligations - No bar to equitable relief (delay, unclean hands, hardship) Rarely ordered for personal service contracts (constitutional / practical concerns). ### Injunction An order requiring conduct (mandatory injunction) or restraining conduct (prohibitory injunction). May be: - Perpetual (final) - Interlocutory (until trial or further order) - Interim (short-term, typically until inter partes hearing) Interlocutory injunctions governed by the *RJR-MacDonald* test: 1. Serious issue to be tried 2. Irreparable harm to the applicant if injunction not granted 3. Balance of convenience favours granting the injunction ### Rescission Setting aside a contract, restoring the parties to their pre-contract positions. Available for misrepresentation, mistake, duress, undue influence, and unconscionability. Bars to rescission: - Affirmation (electing to keep the contract with knowledge of the ground) - Delay - Restitutio in integrum impossible (parties cannot be restored) - Third-party rights affected ### Rectification Correcting a written document that does not reflect the parties' actual agreement. Requires clear and convincing evidence of a common intention inconsistent with the document. Restrictive test post-*Canada (Attorney General) v Fairmont Hotels* 2016 SCC — retreat from broader use of rectification as a tax planning tool. ### Account of Profits Ordering a defendant to account for and disgorge profits obtained through wrongdoing (typically breach of fiduciary duty or intellectual property infringement). ### Equitable Compensation Monetary compensation for equitable wrongs, calculated on equitable principles rather than tort damages principles. Available for breach of fiduciary duty and breach of trust. --- ## Tracing The equitable process of identifying and following value through changes in form or hands. Distinct from following (identifying the same property) and claiming (asserting a right in what is traced). Tracing may be: - Through mixed funds (e.g. into a bank account containing other money) - Through changes in form (money → asset → other asset) - Into the hands of third parties (subject to bona fide purchaser defence) Post-*Foskett v McKeown* [2001] UKHL, tracing is a process, not a remedy — the plaintiff must then claim a remedy (constructive trust, equitable lien, personal claim) against the traced property. --- ## Estoppel (Equitable Variants) ### Proprietary Estoppel Where A has, by words or conduct, encouraged B to believe B has or will have an interest in A's property, and B has acted in reliance to their detriment, equity may enforce the expectation. Elements: - Assurance (express or by conduct) - Reliance - Detriment - Unconscionability of denying the interest ### Promissory Estoppel Where A has, by promise, encouraged B to believe A will not enforce a strict legal right, and B has acted in reliance, A may be estopped from enforcing the right (at least temporarily). Requires: - Clear promise - Reliance - Inequity in resiling Traditional English rule: promissory estoppel is a "shield, not a sword" — cannot found a cause of action, only defeat one. Canadian position allows it more flexibly in some contexts. --- ## Laches Unreasonable delay in seeking equitable relief, combined with prejudice to the defendant, may bar the claim. Requires more than delay alone — the delay must be prejudicial. Statutory limitation periods now largely displace laches but the doctrine survives where limitation statutes don't apply. --- ## Notice The doctrine determining when a person is affected by an equitable interest they don't have actual knowledge of. - Actual notice — real knowledge - Constructive notice — knowledge a person would have if they made reasonable inquiries - Imputed notice — notice held by an agent, attributed to the principal Modern registration systems (e.g. BC Land Title System for real property) largely displace common-law notice rules for registered interests.