CHAPTER XXX.

claims in one

THE IMPOSITION OF EQUITABLE TERMS.

THE rule that he that comes into equity must do equity has been applied in modern times (a) in three classes of cases.

Adjudication 1. At common law, the only defences open to the claim of conflicting of a plaintiff were either that his claim had never existed proceeding. or that it had ceased to exist. It did not avail a defendant at law to allege that, though the plaintiff had a valid claim in respect of the matter for which he was bringing an action, and though the defendant had no answer to that claim, yet he the defendant had a claim against the plaintiff and that the amount which he would recover under that claim, if prosecuted to judgment, would reduce or extinguish or overtop the amount of the plaintiff's claim (b). In equity, however, the practice of the court was different. A defendant in equity could often resist a claim against him on the ground that he had a countervailing claim against the plaintiff, and that it was conducive to the ends of justice that both claims should be adjudicated upon in the same proceeding. Where a defendant in equity has a claim against the plaintiff which he can enforce by independent proceedings, the question whether he shall be left to take such proceedings or whether his claim shall be determined in the pending action is a question of procedure only. It does not affect the substantive rights of the parties. The object of dealing with both claims in one action is to prevent multiplicity of suits (c). The question, to what extent

(a) In the sixteenth century the court often imposed the performance of moral duties on the plaintiff as a condition of relief. Examples are given in 1 Spence, p. 423 n. (a).

(b) Chitty's Pleading, 7th ed. 596. The common law doctrine was modified in certain respects by the statutes of set-off (2 Geo. 2, c. 22, s. 13 ; 8 Geo. 2, c. 24, s. 4).

(c) Shish v. Foster (1748), 1 Ves, sen. 88.

66

reciprocal claims should be dealt with in the same proceeding has been the subject of many judicial observations. That rule," namely, that those who will have equity must do equity, "does not hold throughout," says Lord HARDWICKE (d)," so as to tack things together which are independent in their own nature; but wherever the court can do it, they will lay hold of any circumstance for it." "I conceive the true meaning of that maxim only to be this," says Lord DEVON (e), that a man who comes to seek the aid of a court of equity to inforce a claim must be prepared to submit in that suit to any directions which the known principles of a court of equity may make it proper to give." "It is only, I may observe as a general rule," says WIGRAM, V.-C. (ƒ), "to the one matter which is the subject of a given suit that the rule applies and not to distinct matters pending between the same parties." "The true meaning of it," says TURNER, L.J. (g), "as I apprehend, is this, that those who ask for the assistance of the court must do justice as to the matters in respect of which that assistance is asked." This subject is now dealt with by O. XIX., r. 3, and by the practice under that Order.

of equitable terms.

2. "In a court of law," said ASHURST, J. (h), "we cannot Imposition impose any terms on the party suing; if he be entitled to a verdict, the law must take its course." In equity, where a plaintiff sues to recover property from a defendant who is in possession of it under a legal title, the court under certain circumstances will not allow the plaintiff to recover the property except on the terms of allowing to the defendant sums of money which he could nevertheless not recover in an independent action against the plaintiff. The equity which the court gives him may be termed a passive equity. It is not an equity which he can actively enforce. For instance, expenditure on property by a stranger does not (in the absence of contract with the owner of the property)

(d) Shish v. Foster, supra.

(e) Colrin v. Hartwell (1837), 5 Cl. & F. 484, p. 522.

(ƒ) Hanson v. Keating (1844), 4 Ha. 1, p. 5.

(g) Gibson v. Goldsmid (1854), 5 De G. M. & G. 757, p. 765.

(h) Deeks v. Strutt (1794), 5 T. R. 690, p. 693. Compare Portsea Island Building Society v. Barclay, [1895] 2 Ch. 298, p. 308.

give him any rights which he can actively enforce against the property or its owner. He becomes by such expenditure neither a creditor of the owner nor does he acquire an active lien on the property. On the same principle, expenditure by a part-owner or person having a partial interest in property does not confer on him any active rights against his co-owners or against the property (i). But such expenditure may in both cases confer a passive right. Thus, where a mortgagor comes into equity to redeem, he is only allowed to do so on the terms of paying to the mortgagee not only his principal money and interest, but also all proper costs, charges and expenses incurred by him in relation to the mortgage debt or the mortgage security, and the costs of litigation properly undertaken by him in reference to the mortgage debt or mortgage security (k). Such costs, charges and expenses of the mortgagee, however, do not constitute a debt of the mortgagor in respect of which an action can be brought (1), nor can the mortgagee enforce any lien in respect of them inconsistently with the terms of his security (m). Where a mortgagor comes into equity to redeem a purchaser from the mortgagee on the ground that the power of sale has not been validly exercised, the purchaser is allowed all such expenditure as would be allowed to a mortgagee in possession, e.g., lasting improvements made by him (n). Where a purchaser for value without notice is declared by the court to be a trustee for the holder of a prior title, he is allowed the expense of improvements made by him in so far as they have increased the permanent value of the estate (o). Where a conveyance or transfer of property has been obtained by

(i) In ve Leslie (1883), 23 Ch. D. 552; Falcke v. Scottish Imperial Insurance Co (1886), 34 Ch. D. 234.

(k) The mortgagor is subject to the same terms in a foreclosure action; the reason being that such an action does not seek active relief of the

court.

See p. 309.

(1) Phene v. Gillan (1845), 5 Ha. 1, p. 9; Ex parte Fewings (1883), 25 Ch. D. 338, p. 352; Powell v. Brodhurst, [1901] 2 Ch. 160, p. 167. (m) Ramsbottom v. Wallis (1835), 5 L. J. (N.S.) Ch. 92; Burrowes v. Molloy (1845), 2 Jo. & Lat. 521, p. 528; Haywood v. Gregg (1875), 24 W. R. 157.

(n) Davey v. Durrant (1857), 1 De G. & J. 535. (0) Mill v. Hill (1852), 3 H. L. Cas. 828, p. 869.

fraud, abuse of a fiduciary position or undue influence, and it is set aside, the purchaser will be allowed the amount of the consideration paid and of permanent improvements made by him (p). Where one tenant in common seeks for a partition of the property held in common, the court will not allow him to take the benefit of improvements and repairs done by another without making an allowance to the extent to which the value of his share has been thereby increased (q), although such improvements and repairs give the tenant who has made them no right of action for contribution against his co-tenant (r).

common law.

The principle that, where the owner of property cannot Effect of recover it without the assistance of the court, he may be doctrine on compelled to make an allowance for expenditure which could not form the subject of an active claim against him, has had some influence even at common law. At law, when a part of the realty, e.g., coals, is severed from the realty and converted into a chattel, it instantly becomes the property of the owner of the fee, and he is entitled to recover its value at the time of conversion. He is not obliged, therefore, in strict law to make any allowance for the expenses attending the conversion, i.e., the cost of severance (s). In 1841, however, PARKE, B., in Wood v. Morewood (t), at nisi prius, directed the jury that if there was fraud or negligence on the defendant's part they might give as damages, under a count in trover, the value of the coals at the time they first became chattels. If the jury thought that the defendant was not guilty of fraud or negligence, but acted fairly and honestly in the full belief that he had a right to do what he did, they may give the

(p) York Buildings Co. v. Mackenzie (1797), 3 Paton Sc. App. 579, where the purchaser was allowed expenses incurred in building a mansionhouse and in making plantations; Ex parte Hughes (1802), 6 Ves. 617; Ex parte Bennett (1805), 10 Ves. 381, p. 400.

(4) In re Jones, [1893] 2 Ch. 475.

(r) Leigh v. Dickeson (1884), 15 Q. B. D. 60.

() Martin v. Porter (1839), 5 M. & W. 351; Wild v. Holt (1842), 9 M. & W. 672. It was held that, in trespass, the owner was not entitled to the increased value given to the coal by bringing it to the pit's mouth, however the case might be in trover or detinue (Morgan v. Powell (1842), 3 Q. B. 278).

(t) 3 Q. B. 440.

Waiver of penalty or forfeiture.

fair value of the coals as if the coal field had been purchased from the plaintiff. In Wood v. Morewood the rights of the parties depended on whether a conveyance in the time of Elizabeth was voluntary or for value, and PARKE, B., is no doubt referring to this case where, in his judgment in Wild v. Holt (u), he says that there is an exception to the general rule where there is a real disputed title. The relaxation adopted in Wood v. Morewood was followed in equity in actions for damages under Lord Cairns' Act. Therefore, where the defendant trespassed under a boná fide belief of title he was allowed the costs of severance (x), and this view was adopted under similar circumstances by the House of Lords in a Scotch case (y). On the other hand, where he trespassed knowing that he was trespassing, the strict rule of the common law was applied (z). In Peruvian Guano Co. v. Dreyfus Brothers & Co. (a), Lords WATSON and MACNAGHTEN expressed the opinion that defendants who under an honest mistake as to their rights had detained cargoes of the plaintiff were entitled to repayment of the expenses properly incurred by them on account of freight and landing charges. Lord MACNAGHTEN did not think that it made any difference in such a case whether the action was for damages or for recovery of the specific chattel.

3. At law there is nothing to prevent a plaintiff from bringing an action for penalties in respect of the same subject-matter which he was seeking to recover. In equity where a person seeking relief is incidentally entitled to the benefit of a penalty or forfeiture, the court requires him, as a condition of its assistance, to waive the penalty or forfeiture (b). Thus, at law, where waste has been committed by cutting timber, the remainderman might sue in trover for the timber and at the same time sue for penalties. But

(u) Supra.

(x) Jegon v. Vivian (1871), 6 Ch. 742; Ashton v. Stock (1877), 6 Ch. D. 719; Trotter v. Maclean (1879), 13 Ch. D. 574.

(y) Livingstone v. Rawyards Coal Co. (1880), 5 App. Cas. 25.

Phillips v. Homfray (1871), 6 Ch. 770.

(a) (1887), [1892] A. C. 170 n.

(b) Colburn v. Simms (1843), 2 Ha. 543, p. 554; Jervis v. Berridge (1873), 8 Ch 351, p. 358.