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HMRC internal manual

Trusts, Settlements and Estates Manual

Legal background to trusts & estates: the background to English law

Much of English law evolved naturally over the years, rather than being made. We call it common law. In turn, common law has been modified by equity. Equity was originally a body of rules and principles that the Lord Chancellor applied in his own courts. As equity evolved, it modified the impact of common law, to achieve natural justice. In recent times English law is increasingly contained in Acts of Parliament. This is known as statute law. Legislation can alter both common law and equity.

The Courts now administer all three forms of the law. Originally the Courts of Common Law and the Courts of Equity were quite distinct. This division is evident in the present Queen’s Bench and Chancery Divisions of the High Court.

In strictness, a ‘legal action’ is an action based on statute law or common law. It is not one governed by equity. (There are similar narrow meanings for ‘legal estate’ and ‘legal interest’). Often the words are used to describe any action on which a court of justice would adjudicate. Although this loose use of the words is understandable, it can cause confusion.