May 5, 2023
You may have heard the expression “coming to court with clean hands”. Perhaps you have a vague idea what you think it may mean or you may have no idea.
We are here to help your understanding because, like so much in law, a few simple words can have a lot of complexity.
The clean hands doctrine is a maxim of equity.
Equity is the branch of our legal system which deals with situations where the strict rules of law would result in an unfair result. Equity had its historic origins in England where there were local courts of law presided over by local nobility or their deputies. In time, dissatisfied parties who lost cases in the courts of law would send petitions to the king asking him to exercise his discretion, or “royal prerogative” to excuse them from the unfair result. The king eventually delegated that power to the Lord Chancellor, which led to the development of courts of equity, called the Courts of Chancery.
For centuries, Courts of Chancery operated separate and apart from courts of law. There was rivalry, duplication, delay, and extra expense. The courts of equity and the courts of law were merged in England and in Canada in the late 1800s. However, the principles of equity are still administered by our superior courts today.
These principles are expressed in the maxims of equity. There is no specific universal list of the maxims, and depending upon the source, the number of maxims varies from about half a dozen to the mid teens. But every list contains the maxim “a person who comes into equity must come with clean hands.”
Because this maxim seems so absolute, people often mistake it for a rule, leading to the mistaken belief that any misconduct by the party seeking equity disqualifies them. That ignores the fact that the equitable maxims are principles, not rules. As such, the principles are flexible and adaptable to fit the particular situation.
For this maxim to disqualify a person from seeking equity:
- The misconduct must relate to the particular transaction in dispute;
- The unclean hands must be those of the person seeking the remedy;
- The harm done by the unclean hands must have affected the person against whom the remedy is sought;
- It must make it inappropriate for equity to grant relief – equitable remedies and equitable principles are always about the discretion of judges. They are flexible to fit particular circumstances; and
- Therefore, the wrongdoing must have a relationship to the equity sued for. But that will not always be enough for the doctrine to be invoked.
What does this mean?
A leading text on equitable remedies[1] gives the example that where a claimant sought an interlocutory injunction to enforce restrictive covenant in a former employee’s employment contract, the employee could not escape the injunction by making allegations of misconduct like requesting falsification of research records or failing to make full disclosure. These errors, if true, were not related to the dispute over the covenant.
An absence of clean hands does not prevent a party from seeking the usual legal remedies such as damages. However, the loss of the right to equitable remedies can be a very significant loss. Unjust enrichment, a very popular claim in lawsuits these days, is an equitable concept and the doctrine of clean hands will be a juristic reason why a person will not be awarded compensation for unjust enrichment, even if they have been deprived of a benefit which then flowed to the other party being sued.
Clean hands are all about the concept of the moral high ground that we have discussed previously. If good conduct helps climb the hill towards the moral high ground, then unclean hands may send you on a toboggan ride to the bottom.
Because these consequences can be so serious, something more than mere negligence or carelessness must be showing to invoke the doctrine of clean hands. Moral turpitude is the test.
Like everything else in equity, the clean hands doctrine is discretionary, and not absolute – as we said, a principle, not a rule. This is especially important where both parties have committed misconduct. The instigator of misconduct may be denied the ability to rely upon the clean hands doctrine to prevent the other party obtaining a remedy.
WHAT WEILERS LLP CAN DO TO HELP YOU
When you structure and perform a transaction, the lawyers at Weilers LLP can give you sound advice as to how to keep your hands clean.
If, in spite of this, you find yourself accused of having hands that are not clean, our litigation team will respond with the appropriate arguments. We have the virtue of our counsel, Brian Babcock, having taught about equity in various courses at the Bora Laskin Faculty of Law. His knowledge in this area is available to all of our lawyers and provides the sort of guidance that our clients rely upon.
If you have a concern about keeping your hands clean, or about capturing the moral high ground, why not give us a call and see if Weilers LLP can help.
[1] Berryman, Jeffery The Law of Equitable Remedies (Irwin Law) at p.18.