Turner on Fusion and the Penalty Doctrine

P. G. Turner, University of Cambridge, St. Catharine's College, has posted Lex Sequitur Equitatem: Fusion and the Penalty Doctrine:

Since an early article of Professor Brian Simpson’s, the opinion of historians and lawyers has been that the penalty doctrine which disallows the enforcement of penal stipulations in voluntary transactions derives from a fusion of law and equity. Specifically, the doctrine derives from ‘fusion by convergence’: the independent development by separate courts of law and courts of equity of similar rules concerning relief from penalties.

Under Simpson's account, the penalty doctrine has become a model of the fusion of law and equity dating to the life of equity's ‘father’, Lord Nottingham. On that account, after transacting parties began using them in the fourteenth century, English law condoned the use of penalties in voluntary transactions for upwards of one century. Slowly the Court of Chancery found situations in which it would be inequitable to condone the penalty: at first because of special circumstances, later simply because the penalty was a penalty. The common law soon followed, inverting the maxim aequitas sequitur legem. By the last quarter of the seventeenth century, the common law courts routinely relieved against penalties, and by the turn of the nineteenth century had taken over the bulk of such litigation. The penalty doctrine became a common law doctrine solely or nearly so.

Half a century after its publication, Simpson’s thesis requires examination. This paper suggests that Simpson’s account and the current understanding that flows therefrom are false. On the basis of a fuller examination of printed and unprinted reports and manuscript sources of the Court of King’s Bench and Court of Chancery than previously made, this paper redraws the account of the development of the penalty doctrine. The evidence shows that: penalties were routinely enforced in common law courts until the end of the eighteenth century; all “common law” relief in the royal courts depended on statutes under which the judges applied equitable principles borrowed from the Court of Chancery; reliance on statutory power to grant relief at common law continued after 1875 in “Judicature Act courts”; but the repeal of those statutes means that the only source of principle for relief from penalties in England today are principles of equity.

Simpson’s suggestion that the penalty doctrine is a product of “fusion” is mistaken: in the modern period, there has been no judge-made common law of relief from penalties with which the equitable doctrine could fuse. As Parliament has directed that those equitable principles shall continue to apply, fusion is a distraction from the application and development of the (equitable) penalty doctrine.