Chancery Law and How It Protects Our Rights and Freedoms
When we think of the areas of law which protect our freedoms, chancery is not at the top of the list - if people have heard of it at all. In fact, most people’s response when they discover that my practice at the Bar is in commercial chancery is a blank stare, followed by a long pause, and then the question “But what is chancery law?”
Chancery law is basically a historical label for any work which is heard in the Chancery Division. In practical terms, this includes property, insolvency, inheritance, company law, trusts, patents and partnerships. Before the current court system was developed, chancery cases were those which would be heard in the Court of Chancery. That court developed a system of “equitable” rules. Most of those rules have since been brought into statute by Parliament, but the principles remain the same, and include, for example, principles that equity will look to intent rather than form. The rules developed by the Court of Chancery therefore sought to bring some flexibility to the common law, and to reflect the reality of agreements made by individuals and by businesses, beyond what might simply be written down.
This means that chancery law is in fact crucial for protecting our freedoms – it deals with how we live our lives both personally and professionally, and recognises that that is often not cut and dried.
One of the earliest land law cases I came across during my legal studies was Street v Mountford. That was about whether Mrs Mountford had a lease or a licence to live in her flat. The document which she had entered into with Mr Street, who was her landlord, stated that she had a licence. If Mrs Mountford had a lease, she would be protected by the provisions of the Rent Acts; if she had a licence, she would not. This chancery dispute, therefore, was not about stuffy lawyers poring over old textbooks and speaking in Latin – it was about Mrs Mountford’s home, and her ability to protect the roof over her head, which is one of the most fundamental freedoms a person can have.
In the case of RBS v Etridge, chancery law also played a role in protecting people’s rights in respect of their homes. The case concerned banks which were trying to take possession of people’s homes for non-payment of mortgages, in circumstances where a wife had signed the mortgage (or other charge) which secured her husband’s business debts against the family home. There was therefore a contract, signed by the husband, the wife, and the bank, which recognised that if monies were not paid to the bank, the bank would be allowed to take possession of the home. What that contract did not show, though, was that in certain cases a wife would only have signed the agreement because she was under ‘undue influence’ – that is, she had effectively not signed it of her own free will, meaning that the contract would have no effect. In response to this, the House of Lords set out the Etridge protocol, which sets out when issues of undue influence may arise, and the steps that a bank should take to ensure that someone in the position of the wives in that case fully understands the consequences of the agreement which they are signing.
When it comes to businesses, too, chancery law is important for protecting people’s rights and freedoms. A company in the strict legal sense can be anything from a huge multinational to a small shop, restaurant, or construction company, and in the early years of practice, chancery barristers tend to be dealing with the latter. In some cases, friends decide to enter into business together. They incorporate a company to formalise this arrangement, and they each have shares in the company, which give them a say in how the company operates. Those shares will be governed by a shareholders’ agreement. However, as time passes, one of the friends may start to be excluded from involvement in the company. If they have less than 50% of the shares, there is not very much they can do about this, since they don’t have enough voting power. What they may be able to do, though, is bring an unfair prejudice petition as a minority (i.e. less than 50%) shareholder. This is a type of claim where the individual in question can ask the court to look not just at the shareholders’ agreement, but also at the circumstances surrounding that agreement. Where someone has gone into business with friends, they can argue that the company should be treated like a partnership (a different form of business), so that they have a right to be involved in management, and cannot be frozen out of the company. Again, this is not about obscure legal arguments which have nothing to do with everyday life. It concerns people’s livelihoods, and how best to protect them, which again is a fundamentally important right.
The protection of freedoms is therefore not something which is limited to areas of the law which concern how those accused of a crime should be treated, or which focus on checks on the power of the government. It is also found in areas such as chancery which deal with people’s homes, livelihoods, and thus the fundamental elements of how we live our lives.
By Zara McGlone