Equity and its Operation

Abstract

In terms of the world’s legal systems, common law was originated in England and permeated into nations colonised by Britain, in contrast to its counterpart – civil law which was well developed in the Western European continent. One of the distinctive features of common law that differs from civil law is ‘equity’ or the ‘equitable principles’. Often, quite a few lawyers from civil law jurisdictions misunderstand that equity means justice, fairness, or impartiality. In fact, equity is another branch of common law, providing equitable remedies when the application of common law rules would result in unfairness. In order to comprehend how equity functions, this paper needs to call the readers’ attention to the history of equity, starting from being a supplement of common law rules until becoming a rival before it eventually bequeathed its spirits (equitable principles) towards common law jurisdictions. It will end with a classic case of Australia, namely Garcia v National Australia Bank (1998) 194 CLR 395, where the equity played more significant role in giving justice to an inferior party (Mrs. Garcia) than that the common law rules did. This case will explain why the equity has been a vitally important element of the common law system so far.