Maxim: Where the equities are equal, the law prevails

The related maxim is concerned with priorities of competing interests, that is to say which of various interests prevails in the events of a conflict, may be dealt with together. To understand this maxim, a distinction and understanding of the concept of “legal interest or estate” and “equitable interest” is necessary.
A legal interest or estate is an interest in the property required by a purchaser for valuable consideration either by cash or marriage consideration. It also includes mortgagee and lessee.


An equitable interest is any interest which recognised from the Chancery court. An example would be in the case of trust; although the trustee’s name would be registered as the holder of the property, the beneficiaries acquire an equitable interest over the trustee’s property. They have a right to sue the trustee for breach of trust.

Under general rule, the interest takes effect in order of their creation. For instance, whose rights are created first will receive priority in the court of equity. However, an equitable interest might be defeated by a legal interest, even though it has been created prior to the legal interest. For example, if the purchaser of a legal interest is bona fide and without notice of any equitable interest, then the equities are equal and legal interest prevails.

In the case of Langan v Lee Cheng Keat, the lands situated in Penang were held on trust as marriage settlement. However, the trust was never registered and the tittle deeds remained in the name of the owner. On the death of the owner, his administratix sold and conveyed the land to the Defendant and delivered to him the title deeds but without referring to the trust accidentally came across the marriage settlement. They filed a suit for possession of the property from the defendant.
The court held that defendant was in possession of the land and the title deeds as a bona fide purchaser without notice of trust. His equity should prevail over that of beneficiary.

In the case of Cave v Cave, the legal mortgage created without notice of the prior beneficial interest, applying the maxim above, the court held that the legal mortgage took priority over the equitable interest having been created bona fide for value without notice.


Others material

When two parties want the same thing and the court cannot in good conscience say that one has a better right to the item than the other, the court will leave it where it is. For example, a company that had been collecting sales tax and turning it over to the state government found that it had overtaxed and overpaid by 2 percent. It applied for a refund, but the state refused. The court upheld the state on the ground that the money really belonged to the customers of the company. Since the company had no better right to the money than the state, the court left the money with the state.

Where equities are equal , the first in time shall prevail – In the absence of a legal estate in the matter and the contest is among the equitable estate only, the rule is that the person whose equity attached to the property first will be entitled to priority over other or others e.g., if A enters into a contract for the sale of his house with B and then with C, the interest of B and C both being equitable, B will have priority over C because his attached to the property first.