Equity_Priority_Maxims.docx the law of equity and trusts

equity and trusts

1. Where the Equities Are Equal: Law or Time?
Introduction
Two closely related equitable maxims frequently arise in disputes over competing interests in property
and commercial rights: “Where the equities are equal, the law shall prevail” and “Where the equities are
equal, the first in time shall prevail” (often expressed prior tempore, potior jure). Both attempt to resolve
priority problems where competing claimants assert equitable rights and neither party’s claim is clearly
stronger on equitable grounds. Their application affects land law, trusts, mortgages, proprietary estoppel,
assignment disputes and commercial finance.
Although they may appear to state the same outcome, they operate differently and the courts apply them
depending on context. This essay explains the meaning and scope of each maxim, examines the
authorities in the common law, Uganda and East Africa, and critically analyses how courts reconcile the
two rules and the limits of their application.
Meaning and Scope
“Where the equities are equal, the law shall prevail” means that where two claimants stand in equal
equitable circumstances and no distinguishing equitable factor (notice, diligence, bona fides) confers
priority, the relevant legal rule or the legal estate will determine the dispute. Equity will not disturb legal
certainty where it cannot award a preferential equitable right.
“Where the equities are equal, the first in time shall prevail” is a temporal priority rule: where competing
equitable interests are truly equal in strength, the earlier (in time) equitable claim takes precedence. This
is a rule of convenience and predictability — the earlier claimant is preferred because chronology
supplies an objective tie-breaker.
Both rules assume parity of equity — identical knowledge, conduct, consideration and equitable standing
— and are invoked to avoid indeterminate contest between claimants. But they point to different tie-
breakers: one defers to law, the other to temporal priority.
Common Law Authorities
Pilcher v Rawlins (1872) 7 Ch App 259 – A bona fide purchaser of a legal estate for value without notice
takes free of prior equitable interests. This illustrates the primacy of legal title where equities are
balanced.
Rice v Rice (1854) 61 ER 646 – Established that where two equitable charges compete, the first in time
will generally prevail unless displaced by other considerations.
Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 – The High Court of Australia
confirmed that where equitable claims are equal, legal ownership will prevail.
Tinsley v Milligan [1994] 1 AC 340 – Highlighted that courts rarely find equities truly equal; they often
examine conduct and notice before applying a maxim.
Ugandan and East African Authorities
Bank of Uganda v Banco Arabe Espanol [1999] 2 EA 22 (SCU) – Recognised equitable principles in
commercial law, but legal rules prevail where equities are balanced.
Kampala Bottlers Ltd v Damanico (U) Ltd [1990–94] EA 141 (SCU) – Equity cannot override clear legal
rights conferred by contract where both parties are equally placed.
Hajji Nurdin Matovu v Ben Kiwanuka [1963] EA 317 – Legal title cannot be displaced unless one party
demonstrates a superior equity.
Giella v Cassman Brown & Co Ltd [1973] EA 358 – Showed that courts weigh equities carefully before

2. granting equitable relief.
Mwangi v Mwangi [1986] KLR 328 (CA) – Applied first-in-time principle where two equitable claims to
land competed.
Karanja v Kihoto [1988] KLR 162 – Reinforced first-in-time principle unless displaced by notice or
statutory rules.
Attorney-General v Lohay Akonaay [1995] TLR 80 (TzCA) – Emphasised that equity aids the vigilant,
often preferring earlier or more diligent claimants.
How Courts Choose Between the Two Maxims
1. If one claimant holds legal title and the other an equitable interest, the courts usually apply 'the law
shall prevail'.
2. If both claimants hold equitable interests, the earlier in time usually prevails.
3. Notice and bona fides are decisive: an innocent purchaser for value without notice may be preferred.
4. Registration and statute may override equitable principles, giving priority to registered interests.
5. Courts often avoid blunt application of these rules by finding distinguishing facts (conduct, delay,
registration, fraud).
Critical Analysis and Limits
The two maxims serve different goals: 'law shall prevail' protects legal certainty, while 'first in time'
promotes fairness among equitable claimants. In practice, courts prefer not to declare equities exactly
equal and instead search for factual distinctions (notice, registration, diligence). Statutory land registration
schemes in Uganda and East Africa reduce the occasions for applying these rules, as priority is
determined by law. Yet these maxims remain important fallback principles when statutes or conduct do
not provide a clear resolution.
Critics argue that rigid application of 'law shall prevail' may perpetuate injustice by protecting formal
legal title even where it was obtained unconscionably. Conversely, 'first in time' may unfairly favour
earlier interests regardless of later equitable considerations. Courts therefore treat the maxims as
guidelines rather than absolute commands.
Conclusion
The maxims 'Where the equities are equal, the law shall prevail' and 'Where the equities are equal, the
first in time shall prevail' are complementary, not contradictory. Where legal rights are involved, law is
decisive; where both claimants hold equitable rights, temporal priority decides. Ugandan and East African
courts, drawing on English common law, apply these principles with flexibility, often relying on notice,
diligence and statutory registration to achieve fairness and certainty.
References (OSCOLA Style)
Pilcher v Rawlins (1872) 7 Ch App 259.
Rice v Rice (1854) 61 ER 646.
Latec Investments Ltd v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 (HCA).
Tinsley v Milligan [1994] 1 AC 340 (HL).
Bank of Uganda v Banco Arabe Espanol [1999] 2 EA 22 (SCU).
Kampala Bottlers Ltd v Damanico (U) Ltd [1990–94] EA 141 (SCU).
Hajji Nurdin Matovu v Ben Kiwanuka [1963] EA 317.
Giella v Cassman Brown & Co Ltd [1973] EA 358 (CAEA).
Mwangi v Mwangi [1986] KLR 328 (CA).
Karanja v Kihoto [1988] KLR 162.
Attorney-General v Lohay Akonaay [1995] TLR 80 (TzCA).
The Judicature Act, Cap 13 (Uganda).