The Common Law and Equity: Are England and Australia a World Apart?

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THE COMMON LAW AND EQUITY: ARE ENGLAND AND
AUSTRALIA A WORLD APART?
TONY MEACHAM
ABSTRACT
When decisions are made in the High Court of Australia in the areas of common law and equity,
lawyers in England often cast their eyes over the decisions in Australia to consider in which
direction those in the former colonies are taking the laws bequeathed to them, or received by
them, depending on one's perspective. There was little divergence until relatively lately as the
Australian High Court felt obligated to be bound by the decisions of the House of Lords until
1963 and the Privy Council until 1978.
Yet, there remains in England an expectation that Australia should continue to follow the
example of the mother country, perhaps to keep the common law as much as possible, common.
It is argued that it is unrealistic to keep looking at what Australia does as somehow not
following the example of England as lead in areas of law that it developed over nearly a
millennium. Will it hurt the common law and equity to have strong separate traditions
reflecting matters that are uniquely Australian? Can Australia be left to have the ability to be
diametrically opposite if it wishes to be, inasmuch as it is antipodean geographically, without
some feeling it has let the 'team' down?
I INTRODUCTION
In March 2019, Orestis Sherman from University College in London, in an article in Trusts and
Trustees titled 'Antipodean Assistance'
1
criticised the High Court of Australia (HCA) on a
matter relating to equity to have "diverged from the recent English position" and to have
"perhaps ... overstepped the mark". The paper argued that the HCA decision in Ancient Order
 LLB (Macq) LLM (UNE), PhD (USQ); Lecturer in Law, Coventry University. I have taught Equity in England
and Australia, and English Equity in China. Through this I have developed an interest and curiosity in comparing
equity in various legal jurisdictions.
1
Orestis Sherman, ‘Antipodean assistance: Ancient Order of Foresters in Victoria Friendly Ltd v Lifeplan
Australia Friendly Society Ltd [2018] HCA 4’ (2019) 25(2) Trusts & Trustees 266.

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of Foresters in Victoria Friendly Ltd v Lifeplan Australia Friendly Society Ltd
2
diverged from
the recent English position as held in Novoship (UK) Ltd v Mikhaylyuk
3
on a matter relating to
accounts of profits taken from a dishonest assistant.
The court in Australia is of course quite free to do so. However, the article reads like the author
is rather peeved that it has ‘diverged’, concluding that “[a]s a matter of legal principle, the
English approach must be preferred.”
4
This is not just a philosophical difference. This view
is expressed under a subheading of ‘Divergence from English Law’; a divergence, not a
difference. The author’s insistence or apparent pique that the HCA has done so led me to
consider why Australia ought to do so, or even whether Australia may well argue the reverse
position. Granted, equity law as then understood in England some two centuries ago was
adopted by Australia, and by all accounts continues to serve it well. It begs the questions
though, why should the common law world be lead by England at all, and be affronted by those
who would do otherwise, and as the title of this article suggests and I was intrigued to find out,
how divergent has Australia gone in two centuries from the English position?
The endurance of the doctrine of Equity across the world over thus far something like eight
centuries has been its ability to change with society. As has been observed by Pearce and
Stevens, “[f]rom a historical perspective one of the outstanding characteristics of equity has
been its capacity to develop new rights and remedies for the benefit of plaintiffs. The need for
such creativity within English law was the very reason for equity’s genesis.”
5
Indeed, Lord
Denning expressed this as metaphor when he said that equity is not “past the age of
childbearing”.
6
This was endorsed by Australian High Court Judge Michael Kirby, who
denied “that equitable remedies (any more than those of the common law) are chained forever
to the rules and approaches of the past.”
7
As we are all well aware, Equity is a subject of great width and depth. A number of areas of
the doctrine in the context of this paper are worthy of mention. I will address some of the more
2
[2018] HCA 43.
3
[2015] QB 499.
4
At 269.
5
R Pearce and J Stevens, The Law of Trusts and Equitable Obligations (Oxford University Press, 4th ed, 2006),
24.
6
Eves v Eves [1975] 1 WLR 1338.
7
Pilmer v Duke Group Limited (In Liquidation) (2001) 207 CLR 165, 230 [170], cited in Michael Kirby, ‘Equity's
Australian Isolationism’, (2008) 8(2) Queensland University of Technology Law and Justice Journal 444, 452.

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interesting after a brief general discussion on what distinguishes Australian law. This paper
will examine some common doctrines briefly, particularly those that have been controversial
of late. An assessment in more depth is of course outside the scope of this paper.
Australian law – where it began
The introduction of English law into Australia has a complex and complicated history, having
flavours of the initial criminal law of a penal colony, the development of a conventional
colonies with settlers, and the imposition upon the former colonies of a national ideal and
mutual amity. The first question has usually been about upon what sort of ground was the new
legal system planted? As Alex Castles has questioned, under the then rules of reception of
international English law, was Australia ceded, conquered or settled?
8
The manner in which
laws are introduced to a new country are varied, and Australia was considered settled, without
inhabitants, or with inhabitants who had “laws and customs, [which] were considered in-
applicable to a civilised race”.
9
The English common law and equity arrived in Australia, with
as Blackstone noted, the colonists carrying “with them only so much of English laws as is
applicable to their new situation and the condition of the infant colony”.
10
Accordingly British
settlers took their own laws with them a body of the laws of England, including those of Equity,
to be transplanted in the new colonies where the country was considered to have such
inhabitants.
11
The view of the law in the Australian colonies at the time of British occupation was
expressed in Cooper v Stuart,
12
where Lord Watson observed:
There is a great difference between the case of a Colony acquired by conquest or cession, in which
there is an established system of law, and that of a Colony which consisted of a tract of territory
8
Alex Castles, ‘The Reception and Status of English Law in Australia’, (1963) 2(1) Adelaide Law Review 1, 2.
9
William Blackstone, ‘Commentaries on the Laws of England’, in George Williams, Sean Brennan, Andrew
Lynch, Blackshield & Williams: Australian Constitutional Law & Theory, Commentary and Materials, 6th Edition
(The Federation Press, 2013) 91.
10
Blackstone, Commentaries on the Laws of England (1765), 1 Comm. 107.
11
Williams, George; Brennan, Sean; Lynch, Andrew Blackshield and Williams Australian Constitutional Law
and Theory ((2014) 6th ed. Leichhardt, NSW: Federation Press), 136–146. For a wider and very interesting
discussion of this see generally Alex Castles, ‘The Reception and Status of English Law in Australia’, (1963) 2(1)
Adelaide Law Review 1.
12
(1889) 14 App Cas 286, 291.

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practically unoccupied, without settled inhabitants or settled law, at the time when it was peacefully
annexed to the British dominions. The Colony of New South Wales belongs to the latter class.
13
By that mechanism laws were introduced to the colonies, which became states upon Federation
in 1901. At the outset the Supreme Courts of the various colonies had “their powers and
procedures … often modelled closely on those of England”
14
because “in each of the Australian
States, Papua and New Zealand English law became the legal foundation of these colonies
because they were initially treated as ‘settled colonies’
15
or came to be recognised as such.”
16
For those unfamiliar with Australia, laws are divided between those of the Federal (sometimes
called Commonwealth) government, and those of the six states and two territories. Generally
speaking, matters of the common law and Equity fall into the realms of the states, with appellate
courts beyond the states in the form of Federal courts and the High Court. The common law
in Australia is unfamiliar to some because, as was explained by McHugh J in Kable's Case
17
that “[u]nlike the United States of America where there is a common law of each State,
Australia has a unified common law which applies in each State but is not itself the creature of
any State.”
18
Bruce Kercher observed however that the introduction of law to Australia was not, in modern
parlance, a ‘cut and paste’ transfer. Although Burton J in Macdonald v Levy believed that the
common law and equity of England should be transplanted unchanged in the colonies, Forbes
CJ argued that reception should consider the circumstances in the colony, that they were
suitable to its conditions and importantly, and that they were necessary. He observed in R v
Maloney that
13
This view was disavowed in Mabo and Others v Queensland (No. 2) [1992] HCA 23 where the HCA concluded
that Australia had not been settled terra nulllius and consequently the transplantation of law to Australia should
have been under the rules that the land was already settled, rather than those where the land was unoccupied.
Accordingly, existing customary laws that applied at the time of settlement should have survived the reception of
English law.
14
Alex Castles, An Australian Legal History (Law Book Company Limited, 1982), 17.
15
a "settled" colony was a territory, which at the time of its occupation by the British, was uninhabited or
inhabited by a primitive people whose laws and customs were considered inapplicable to a civilised race. (op cit
Blackstone). See also, ALRC, ‘Recognition of Aboriginal Customary Laws at Common Law: The Settled
Colony Debate’, Recognition of Aboriginal Customary Laws (ALRC Report 31) 1986.
(https://www.alrc.gov.au/publications/report-31# )
16
Alex Castles, ‘The Reception and Status of English Law in Australia’, (1963) 2(1) Adelaide Law Review 1, 2.
17
Kable v The Director of Public Prosecutions for New South Wales [1996] HCA 24; (1996) 189 CLR 51.
18
Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 at 112.

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to hold that Parliament intended to force the whole mass of English laws - the laws of an old and settled
society, which have grown out of occasions, during a long course of years, and which are become more
refined and complicated than the laws of any other country in the world -- to apply all these laws at once
to an infant community, without limitation or restraint, ``is a proposition much too inconvenient in its
consequences, to be perfectly just in its principle."
II AUSTRALIAN EQUITY
It has been suggested that Australia had Equity laws introduced to New South Wales,
19
its first
colony, in 1787 in order to establish a superior court with equitable jurisdiction. The debate
relates to documents including a Charter of Justice, claiming to be letters patent creating courts
of civil and criminal jurisdiction in New South Wales. A second set of letters patent in 1814
asserted that new courts, a ‘Supreme Court’ and ‘Governor’s Court’, also referred to as a
Charter of Justice were created, but their validity was doubted as they lacked authorising
legislation. However, 4 Geo IV (1823)
20
was enacted authorising the establishment of a
Supreme Court of New South Wales, and impliedly assuming equitable jurisdiction.
21
There
have always been a distinction between the common law and equity in the Supreme Courts of
the colonies. In these courts the equity jurisdiction of the various colonies (later states)
followed that of the English Court of Chancery, with the exception of the Supreme Court of
New South Wales, which continued to separate the common law and equity divisions of that
court until 1970. Many of the pre-Judicature Act statutes were incorporated in the colony laws
largely unchanged up until the passing of the Judicature Acts of 1873 and 1875 in England.
In the context of these Acts, there was a point in both jurisdictions where the idea of the fusion
of the doctrines as well as their administration post-1865 was entertained.
19
In the first instance New South Wales was all of the continent East of the 129th meridian East longitude,
corresponding to what is now the border with Western Australia, then roughly two-thirds of the continent.
20
Also referred to as a Charter of Justice.
21
R.P. Meagher, WMC Gummow and JRF Lehane, Equity: Doctrines and Remedies (Butterworths 1992), 10-11.

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Since then, during the last century, Australia has sought to remove itself from the legislative
influence of the UK.
22
Although New Zealand retains the capacity to appeal to the Privy
Council, Australia has not done so since 1986 since the passing of the Australia Act in that year
by the UK and Australian parliaments.
Some have said that Australia clearly started forming its own path in Equity in Parker v
Queen
23
in 1963. It is said that Parker “will probably be remembered by English lawyers rather
than … the subsequent advice tendered by the Judicial Committee of the Privy Council”
24
and
that it “liberated Australian jurisprudence from the self-imposed shackles of blind adherence
to English precedent” and allowed it to think independently.
In the Australian context however, Tilbury suggested that perhaps “It is probably true to say
that the Australian law of remedies has reached the limit of judicial invention, in the sense
that new remedies … are likely to be the progeny of statute.”
25
Why is this the case? Former
Australian High Court Justice Michael Kirby
26
observed that the Australian High court was
reluctant to expand the scope of the 1939 case of Yerkey v Jones which, as recently as 1998
continued to be endorsed in Garcia v National Australia Bank Ltd
27
where the court held that
Also, the Australian High Court has been reluctant to expand fiduciary obligations such as in
cases such as Breen v Williams,
28
in the context of doctor/patient relationships. In this
Australia is more aligned with England, although such expansion has gained traction in
Canada.
22
As a former Australian High Court Chief Justice noted, “Our development to a fully independent nation in the
community of nations has occurred step-wise since the coming into effect of the Commonwealth Constitution in
1901. Executive independence from the British Crown was achieved through resolutions passed at Imperial
Conferences held in 1926 and 1930. Substantial legislative independence followed upon the adoption by the
Commonwealth Parliament in 1942 of the Statute of Westminster 1931 (UK) retrospective to 1939. What many
regard as the final severance of legislative dependence on the United Kingdom occurred in 1986 with the passage
of the Australia Act 1986 (UK) and corresponding Australia Acts of the Commonwealth and the States.” (Chief
Justice R S French ‘State of the Australian Judicature’ (2010) 84 Australian Law Journal 310.)
23
(1963) 11 CLR 610.
24
L.H. Leigh, ‘Parker v The Queen’ (1965)28(1) Modern Law Review 104, 104.
25
M Tilbury, Civil Remedies, vol 1 (Butterworths, 1990) 16 [1026].
26
Michael Kirby, ‘Equity's Australian Isolationism’, (2008) 8(2) Queensland University of Technology Law and
Justice Journal 444, 454.
27
(1998) 194 CLR 395.
28
(1996) 186 CLR 71.

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Remedial Fusion
In first looking at comparing Australian and English equity an apt beginning would be to
examine the relationship between law and equity, to observe where some consider Equity may
merge with the common law.
Remedial fusion is a concept that, while acknowledging that traditionally the common law and
equity provide their own suite of remedies, both “should be able to provide whatever relief or
combination of remedies best suits the justice of the case”.
29
The remedy would then be at the
discretion of the court rather than the application of a convention or rule.
30
On the issue of fusion Lord Diplock in United Scientific Holdings Ltd v Burnley Borough
Council
31
famously remarked: “[T]o perpetuate the dichotomy between rules of equity and
rules of common law, which it was a major purpose … of the Judicature Act 1873 to do away
with, is, in my view, conducive of erroneous conclusions to the ways in which the law of
England has developed in the last hundred years… The waters of the confluent streams of law
and Equity have surely mingled now.”
In general, while both Australia and the UK have flirted with the idea of remedial fusion
Australia has embraced the idea with less enthusiasm. The origins of this position rely
primarily on the strong stance against the principle held by the influential text of Meagher,
Gummow and Lehane.
32
One of the authors of this book, Meagher JA in GR Mailman &
Associates Pty Ltd v Wormald (Aust) Pty Ltd,
33
described the view of Lord Diplock as “so
obviously erroneous as to be risible”.
Not all in Australia are inclined to follow the authority of Meagher at al however. Referencing
Ashburner's famous metaphor,
34
in a dissenting opinion Mason P remarked that the
29
Rt Hon Justice Tipping, ‘Causation at Law and in Equity-Do we have fusion? (2000) 7 Canterbury Law Review
443, 449.
30
Cane,
31
[1978] AC 904, 924; [1977] 2 All ER 62, 68.
32
J. D. Heydon, M. J. Leeming, P. G. Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies
(LexisNexis Australia).
33
(1991) 24 NSWLR 80, 99.
34
“... the two streams of jurisdiction, though they run in the same channel, run side by side and do not mingle
their waters” (W Ashburner, Principles of Equity (2nd ed, Butterworths, London 1933), 18).

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"fusion fallacy" bogey is quite different in nature. In terms, it condemns law and equity to the eternal
separation of two parallel lines, ignoring the history of the two "systems" both before and after the passing
of the Judicature Act 1873 (UK). And it treats the permission of the statute to fuse administration as if it
were an enacted prohibition against a judge exercising the fused administration from applying doctrines
and remedies found historically in one "system" in a case whose roots may be found in the other "system".
Although there is some consideration of the concept in Australia, such as Michael Kirby who
argues that in equity, we must acknowledge “[t]he apparent antagonism to the suggested
updating of old principles which reveals a hostility to evolution that we need to overcome”
35
others warn that “assuming too readily that cases are alike” may be dangerous.
36
In the UK, remedial fusion has been considered and was utilised in Seager v Copydex
37
in 1967,
where common law damages were awarded for an equitable breach of confidence by a court
led by Lord Denning MR. This decision itself has been criticised.
Accordingly, both jurisdictions find the idea of fusion uncomfortable. Consideration then
should be made of where Equity is considered separate, but its application perhaps distinct
between the two.
Trusts
Illegality
Acquisition of property as a fiduciary through illegal means and constructive trusts
These are unlawful acts such as bribery, theft and killing or are unlawful in the sense that they
are illegal under the criminal law or are contrary to a mandatory legal principle.
38
Equity takes
the position that such a person who acquires property through such actions should not benefit
35
Michael Kirby, ‘Equity's Australian Isolationism’, (2008) 8(2) Queensland University of Technology Law and
Justice Journal 444, 468.
36
Tilbury, ‘Fallacy or Furphy: Fusion in a Judicature World’ (2003) University of New South Wales Law Journal
357, 375-376.
37
[1967] 1 WLR 923.
38
Alastair Hudson, Equity and Trusts (9th ed., Routledge 2017), 499.

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from their actions, and that such property will usually be held on constructive trust. Hudson
argues that this principle in modern terms should be considered to arise on the principles
established in Westdeutsche Landesbank v Islington LBC
39
whereby “equity acts on the basis
of conscience so as to prevent advantage being taken from unconscionable activity”.
40
Many
of the recent cases have looked at actions arising from bribery and secret commissions.
On profits from bribery the principles here have been, as determined by Lord Templeman in
Attorney-General for Hong Kong v Reid,
41
that receipt of a bribe by a person in a position of
trust is unconscionable, and accordingly that bribe or any property acquired with those funds
should be kept on constructive trust for those for whom the recipient is a fiduciary. This case
derived from an appeal from New Zealand to the Privy Council where Reid took bribes to
obstruct the prosecution of criminals. Lord Templeman held that
The false fiduciary who received the bribe in breach of duty must pay and account for the bribe to the
person to whom that duty was owed. In the present case, as soon as the first respondent received a bribe
in breach of the duties he owed to the Government of Hong Kong, he became a debtor in equity to the
Crown for the amount of that bribe.
This principle was accepted into English law by the UK Supreme Court in FHR European
Ventures LLP v Cedar Capital Partners LLC.
42
However, there has been debate as to whether
the correct response is a constructive, trust or rather, as held in Lister v Stubbs
43
back in 1890,
that the offending fiduciary should simply owe a debt equal to the value of the bribe to the
beneficiaries of the fiduciary office, keeping profits from the bribe. The problem with this
approach was that in giving back the capital amount, the interest or other profits from
investment of that sum rewarded the offender. On this point Lord Neuberger MR considered
the decision in Reid to be unsound.
44
The counter argument is that the funds were not derived from a trust property. However, the
use of the constructive trust in Attorney-General for Hong Kong v Reid did solve the problem
39
[1996] UKHL 12.
40
Alastair Hudson, Equity and Trusts (9th ed., Routledge 2017), 499.
41
[1993] UKPC 2; [1993] UKPC 1993 36.
42
[2014] UKSC 45.
43
(1890) 45 Ch. D 1.
44
Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd [2012] Ch 453, [77].

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of the offender receiving benefit from the wrong-doing, but was not domestic law. The
decision in FHR European Ventures LLP v Cedar Capital Partners LLC addressed this by
confirming the Reid decision that receipts of bribes or secret commissions result in constructive
trusts.
45
The underlying justification for the Reid and FHR decisions appears to be the principle
that a fiduciary should come to equity with clean hands, and that one who commits an unlawful
act must be acting prima facie unconscionably. However, in the case of insolvency, this
approach removes the funds in question away from possible creditors. Debate on this matter
remains between the new approaches and English equity traditionalists.
46
The Australian position at this time is quite different. As Dal Pont argues, constructive trust
relief is not an automatic process. A need for discretion “dictates that a constructive trust is
not an ‘automatic’ remedy when a fiduciary breach or unconscionable conduct is shown. Other
remedies may suffice.”
47
the demands of justice and good conscience could have been satisfied without the creation of a
constructive trust. … One consequence would be that the money, and any property acquired with it,
would, on the firm’s bankruptcy, be withdrawn from the general body of creditors; another would be that
the appellant could require the firm to account for any profits made with the use of the money.
Gibbs CJ of the HCA observed that such considerations regarding disadvantaging creditors
meant that changing relationships such as agent and primary to trustee and beneficiary confuses
ownership with obligation. The outcome in Lister, where the agent holds the profit as debtor
rather than trustee is unlikely to prevail in Australian law given the outcome in Grimaldi v
Chameleon Mining NL (No 2).
48
The Reid approach was endorsed in Grimaldi by the Full Federal Court of Australia. However,
the court in Grimaldi noted that “to accept that money bribes can be captured by a constructive
trust does not mean that they necessarily will be in all circumstances”
49
on the basis that “a
45
The approach here is not entirely consistent as the Court of Appeal followed the precedent in Lister v Stubbs in
Sinclair v Versailles Trading [2011] EWCA Civ 347 prior to the FHR decision.
46
For an excellent examination of these issues see Alastair Hudson, Equity and Trusts (9th ed., Routledge 2017),
Chap. 12.3.
47
Gino Dal Pont, ‘The High Court's Constructive Trust Tricenarian: Its Legacy from 1985-2015’ (2015) 36(2)
Adelaide Law Review 459, 474.
48
(2012) 200 FCR 296, [576].
49
(2012) 200 FCR 296, 422–3 [583].

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constructive trust ought not to be imposed if there are other orders capable of doing full
justice”.
50
Curial discretion is therefore required when considering justice between
complainants short of trusteeship of a constructive trust.
51
The court in Bofinger v Kingsway
Group Ltd noted the ‘importance attached by equity to the fashioning of the particular remedy
to meet the nature of the case’, by reference to, ‘the remedial constructive trust’.
52
In John Alexander’s Clubs in 2010 the HCA addressed the above points of issue where they
advised that
A constructive trust ought not to be imposed if there are other orders capable of doing full justice. …
One point … is that care must be taken to avoid granting equitable relief which goes beyond the
necessities of the case. Another point … is that third party interests must be borne in mind in deciding
whether a constructive trust should be granted. [The law] does not permit a constructive trust to be
declared in a manner injurious to third parties merely because the plaintiff has no other useful remedy
against a defendant.
53
Presumed advancements and resulting trusts
The general position in equity is that if an express trust fails due to illegality, a resulting trust
arises in favour of the settlor. The defence of illegality in private law has been recently
reviewed in several cases in the period between 2014 and 2016 in the UK.
54
The illegality
defence has been the subject of a “longstanding schism between those judges and writers who
consider the law of illegality as calling for the application of clear rules, and those who would
wish to address the equities of each case as it arises.”
55
50
Ibid.
51
Gino Dal Pont, ‘The High Court's Constructive Trust Tricenarian: Its Legacy from 1985-2015’ (2015) 36(2)
Adelaide Law Review 459, 475.
52
(2009) 239 CLR 269, 290 [47]; Dal Pont, 476.
53
(2010) 241 CLR 1, 45–6 [128]–[129].
54
This follows development in Hounga v Allen [2014] 1 WLR 2889, Les Laboratoires Servier & Anor v Apotex
Inc & Ors (Rev 1) [2014] UKSC 55; [2015] 1 AC 430. and Jetivia SA & Anor v Bilta (UK) Ltd & Ors [2015]
UKSC 23.
55
[2017] AC 467 [226] (Lord Sumption).

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This principle considers that, where property has been transferred to a volunteer for an unlawful
purpose, to avoid the presumption of advancement or a gift, there is reliance on an illegal act
to rebut that presumption. This principle derives from Gascoigne v Gascoigne
56
where a
husband transferred property to his wife to avoid creditors, and when they separated sought to
have the property returned to him. The court held the transfer to be a gift, not allowing equity
to presume an equitable interest under a resulting trust.
More recently the House of Lords considered the case of Tinsley v Milligan.
57
In this case a
couple purchased a house in one name using contributions from both. One of the couple
claimed government housing benefits by asserting the other was the sole owner. Following a
relationship breakdown Tinsley claimed absolute title to the property, arguing that Milligan
could not claim an equitable interest based on an illegal act. The court held that the
presumption of a resulting trust acquired by Milligan had not depended upon the illegal
purpose. As this decision considered source of the property rights, and not just the transferor’s
intention, subsequent cases also did so, such as Tribe v Tribe.
58
Tribe was concerned that his
business assets might be lost to creditors. Accordingly he asserted that he had sold his shares
in the business to his son, but in fact transferred them to him for no consideration. After being
satisfied that his creditors would not seek his assets Tribe sought to recover the transferred
property in which he claimed a resulting trust. The son refused, so Tribe pleaded his illegal act
to rebut the presumption of transfer. The court here held that, as the illegal act actually had not
been carried out, the presumption of advancement remained valid and the father could therefore
claim a property right in the form or a resulting trust.
The recent case of Patel v Mirza
59
again looked at the principle that equity will not assist a
person who transfers property with an illegal purpose with the intention that a property interest
is retained in the property disposed of. The principles of Tinsley v Milligan and Tribe v Tribe
were considered here. Patel v Mirza involved the illegality principle relating to insider trading
under section 52 of the Criminal Justice Act 1993. Mirza had set up a scheme with Patel to
benefit from share movements in the Bank of Scotland. Mirza received a large sum of money
from Patel to invest in anticipation of inside knowledge that would affect the share price to
56
[1918] 1 KB 223; More recently applied in Collier v Collier [2002] EWCA Civ 1095.
57
[1994] 1 AC 340.
58
[1995] EWCA Civ 20.
59
[2016] UKSC 42.

13
their benefit. The bets were never placed because the anticipated advice upon which the plan
depended never occurred. Patel sought to have his advancement returned, but Mirza argued
that he could depend on courts of equity to respect the defence of illegality and hence retain
the advancement and retain it as his own, using ex turpi causa non oritur actio.
60
The UK
Supreme Court held that Patel could recover the money, but Lord Toulson did not approve of
the reliance test, where advancements could be recovered if one’s own illegality had not been
relied on, as in Tinsley, or if the illegality had not been carried out, as in Tribe. He argued (at
[99]) that
Looking behind the maxims, there are two broad discernible policy reasons for the common law doctrine
of illegality as a defence to a civil claim. One is that a person should not be allowed to profit from his
own wrongdoing. The other, linked, consideration is that the law should be coherent and not self-
defeating, condoning illegality by giving with the left-hand what it takes with the right hand.
The court held here that the equitable principle that someone who meets the conditions for a
claim for unjust enrichment should be able to recover their funds, despite the failure of
consideration in an illegal contract. The reliance test in Tinsley had been subject to arbitrary
results. Accordingly the Supreme Court articulated a three stage ‘range of factors’ test, arguing
that
The essential rationale of the illegality doctrine is that it would be contrary to the public interest to enforce
a claim if to do so would be harmful to the integrity of the legal system (or, possibly, certain aspects of
public morality, the boundaries of which have never been made entirely clear and which do not arise for
consideration in this case). In assessing whether the public interest would be harmed in that way, it is
necessary a) to consider the underlying purpose of the prohibition which has been transgressed and
whether that purpose will be enhanced by denial of the claim, b) to consider any other relevant public
policy on which the denial of the claim may have an impact and c) to consider whether denial of the
claim would be a proportionate response to the illegality, bearing in mind that punishment is a matter for
the criminal courts.
Tinsley was therefore overruled. The decision in Patel remains controversial and its
implications yet to be worked out in future case law.
61
60
‘from a dishonourable cause an action does not arise’.
61
Jamie Glister and James Lee, Hanbury & Martin: Modern Equity (21st ed. Sweet & Maxwell, 2018), 14-015.

14
Secret Trusts
Secret trusts in Australia, as in England, are controversial. Their fundamental status as to
whether they are constructive trusts or express trusts, and whether they exist to prevent a fraud
is always a common discussion. Secret trusts are usually not seen to be a construct of the courts
but are recognised as existing prior by assessing the evidence available.
62
Their notoriety in
law in England and Wales relates to them breaching terms of the Wills Act 1837, in particular
s9. In Australia there is not considered a comparable clash as they are generally viewed as
arising in a will, rather than because of it. This does not mean of course
On the matter of whether secret trusts are express trusts or constructive, the New Zealand case
of Brown v Pourau
63
examined this issue, where Hammond J considered that the nature of a
secret trust is that of an express trust, but that the obligation of a trustee has the support of a
remedial constructive trust.
Indeed Trustees and fiduciaries.
Charitable Trusts
Regarding Charitable Trusts Australia has, relative to England and Wales, a mixed outcome.
In 2014 legislation was passed that is comparable to the 2006 changes in England, but applies
only in the Commonwealth context. It does not extend to the various states.
Remedial vs Institutional Constructive Trusts
Lord Denning explained in Hussey v Palmer
64
as
62
GE Dal Pont, Equity and Trusts in Australia (7th ed., Lawbook Co. 2019), 551.
63
[1995] 1 NZLR 352, 368.
64
(1972) 3 All E.R. 70 (CA).

15
by whatever name it is described, it is a trust imposed by law whenever justice and good conscience
require it. It is a liberal process, founded upon large principles of equity, to be applied in cases where the
defendant cannot conscientiously keep the property for himself alone, but ought to allow another to have
the property or a share in it. It is an equitable remedy where the court can enable an aggrieved party to
obtain restitution.
The principle of a constructive trust as a remedy for unjust enrichment goes back to Lord
Mansfield who, in Moses v Macferlan,
65
argued that “the gist of this kind of action is the
defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity
to refund the money.”
Restitution and unjust enrichment
The High Court of Australia has also been disinclined to accommodate recent developments
elsewhere regarding unjust enrichment with restitutionary remedies. The genera perception in
Australia is that such thinking threatens the existence of Equity. Sir Anthony Mason of the
High Court observed that ‘a law of restitution may be seen as a threat to equity because it may
entail the submergence of the separate identity of equity in a new body of restitutionary
principle and a distortion of equitable principles.’
66
The decision in Farah has been described
as a critique of those favour restation as a remedy.
67
This view was made clear in 2007 when
the High Court examined the rule in Barnes v Addy
68
in Farah Constructions Pty Ltd v Say-
Dee Pty Ltd [2007] HCA 22.
Barnes v Addy is of course the basis for the modern English law of dishonest assistance,
establishing the principle that a stranger to a trust can be liable in equity for assisting in a trust
breach, but does not receive trust property.
In Farah Constructions the Australian High Court
James Lee
69
has observed that the High Court in Australia actively restricts the scope of the
lower courts to develop the law in this area, arguing in Farah Constructions that they are
65
(1760) 97 E.R. 676.
66
A Mason, ‘Equity’s Role in the Twentieth Century’ (1997-8) 8 The Kings College Law Journal 1, 6.
67
Michael Kirby, ‘Equity's Australian Isolationism’, (2008) 8(2) Queensland University of Technology Law and
Justice Journal 444, 459.
68
(1874) LR 9 Ch App 244.
69
currently Reader in Law at the Dickson Poon School of Law, Kings College London.

16
bound by ‘seriously considered dicta’
70
and discouraging new arguments.
71
In quite strong
terms the lower courts were told:
72
Intermediate appellate courts and trial judges in Australia should not depart from decisions in
intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation
or uniform national legislation unless they are convinced that the interpretation is plainly wrong. Since
there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies
in relation to non-statutory law
Justice Heydon, although in dissent in Pape v Commissioner of Taxation,
73
that the defendants
in this case had gone further, relying on “statements… [which were] not part of the ratio
decidendi of any of the decisions in which they were made. They were seriously considered
dicta, but they could not be described as conforming with long-established authority”.
74
The
debate in Farah was considered in the context of absence relevant authority undermined
reliance on the relevant dicta in PGA v The Queen.
75
Chambers has gone so far as to express the view that “by requiring lower courts to adhere to
obiter dicta expressed in 1975,” and that the High Court has “swept aside several decades of
legal development”. Accordingly, Australian law in developing Equity is seen as being less
flexible than English approaches,
76
in that it is
now out of step with the law as it currently stands in most other common law jurisdictions. In an era of
global investment, it does not pay to stand out as a jurisdiction perceived as having less protection for
trust assets and weaker responses to money laundering and similar activities.
77
70
At [134] and [158].
71
James Lee, ‘Precedent on High: The High Court of Australia and “Seriously Considered Dicta”’ on Opinions
on High (21 August 2013) <http://blogs.unimelb.edu.au/opinionsonhigh/2013/08/21/lee-precedent-on-high>.
72
(2007) 230 CLR 89 at 151-152 [135].
73
[2009] HCA 23.
74
At [473].
75
[2011] HCATrans 267.
76
Michael Kirby, ‘Equity's Australian Isolationism’, (2008) 8(2) Queensland University of Technology Law and
Justice Journal 444, 464.
77
Robert Chambers, ‘Knowing Receipt: Frozen in Australia’ (2007) 2 Journal of Equity 40, 41

17
a view endorsed by Chief Justice Gleeson, observing that “current Australian doctrine
[regarding equity] reflects a certain caution in accepting some general theories that have been
more popular elsewhere.”
78
In the UK, however, while not quite as conservative in approach as the Australian courts, Mr
Justice Bagnall did observe that, while Lord denning had noted that equity was not past the age
of childbearing, he also warned that “its progeny must be legitimate - by precedent out of
principle. It is well that this should be so; otherwise, no lawyer could safely advise on his
client's title and every quarrel would lead to a law suit.”
79
Even in Australia, this view is echoed
by Justice Harold Glass of the New South Wales Court of Appeal who warned that:
It is essential that new rules should be related to fundamental doctrine. If the foundations of accepted
doctrine be submerged under new principles, without regard to the interaction between the two, there
will be high uncertainty as to the state of the law, both old and new.
80
Unjust enrichment approach to recipient liability
Appeals to equity in matters tainted by illegality
So, where are the two jurisdictions going from here?
As has been noted before, to remain vital and relevant, equity needs to adapt to changes in
society. Sir George Jessel MR emphasised as far back as 1879 that equity must continue to
develop, noting in Re Hallet’s Estate that
It must not be forgotten that the rules of Courts of Equity are not, like the rules of the Common Law,
supposed to have been established from time immemorial. It is perfectly well known that they have been
established from time to time – altered, improved, and refined from time to time. In many cases we know
the names of the Chancellors who invented them.
81
78
A M Gleeson, ‘Australia’s Contribution to the Common Law’ (2008) 82 Australian Law Journal 247, 250
79
Cowcher v Cowcher [1972] 1 WLR 425, 430; [1972] 1 All ER 943, 948.
80
Allen v Snyder [1977] 2 NSWLR 685, 689.
81
(1879) 13 Ch D 696, 710.

18
This view has been expressed as recently as 2001 where the Australian High Court Justice
Michael Kirby observed in Pilmer v Duke Group Limited (In Liquidation) that
Fiduciary obligations are not confined to established relationships or to exactly identical facts as those
that have given rise to them in the past. Even those jurists most resistant to analogical extensions in this
field accept that the list of persons owing fiduciary duties is not closed. It could scarcely be so, given
that equity is itself the embodiment of judicial invention.
82
However, as this paper has discussed, the societies of Australia have drawn upon the traditions
of equity in quite different ways. It is possible that the influences upon each are similar, so that
the law goes in similar directions, or may be solving issues the same way so that the laws in
each converge.
Conclusion
82
Pilmer v Duke Group Limited (In Liquidation) (2001) 207 CLR 165, 217 [136].