Law and Physics

 

E = mc²

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Have you ever wondered what that actually means?

Energy = mass multiplied by the speed of light, squared.  The speed of light is 299,792.458 kilometres per second (or about a billion kilometres per hour).   When you square a number you multiply it by itself.

So the speed of light squared is a billion multiplied by a billion.


I can’t find anything that actually tells me what that result is (due to differing values for a billion in the first place – I have used a thousand million) but it is a huge number.   But if we use mass denominated in kilograms, than the energy stored in 1 kilogram of matter (let’s say a kilo of cheese in your refrigerator) is E = 1 x 1 billion x 1 billion.  Which, frankly, is mind numbing.  But shows why a nuclear bomb, which releases part only of such energy, is so destructive.  And perhaps why it takes so much energy to lose weight…

Ross Dillon looks this week at how courts attitudes to equity is and the concept of equitable estoppel. He has specialized in dispute resolution and has a reputation for forging successful resolutions in even the most bitter estate disputes. To read more articles by Ross click here. To read more about Ross click here. To download the full article as a PDF click here. To complete your own legal research check out The Queen City Law Library is designed to assist clients with a wide range of legal issues and is constantly updated as the law itself is constantly evolving.

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I recall once being asked to explain what I do as a lawyer, by using a motor car as an analogy.  In other words, use the example of a motor car to describe what it is you do.I was in a group of business owners who were all asked the same question.   One of the business owners was an auto mechanic, so his answer was easy – “I fix it”.   No analogy required. My own practice as a civil litigator has the same answer, if a car stands in the place of a commercial problem.  But it made me think of what “the law” is.   Using the analogy, the law is the laws of physics which allow a motor car to work.  You can’t see it, but you see the results of it. My profession involves using knowledge of how those laws work, to fix a problem.

Like the laws of physics, the law is complicated (sometimes also almost  mind numbing).  It is the enforceable underlying structure of our society, made apparent in legislation, regulation and case law.

My definition above uses the word “enforceable” advisedly.   Morals and ethics (which represent the underlying structure of a society) do not always result in a legal outcome.   Something can be immoral and unethical without being illegal. However, one branch of law in particular does attempt to narrow the gap between what may be immoral and/or unethical, and what is illegal.  That is the branch of law known as Equity. While Equity is most commonly found in the law of Trusts, it is not confined to that.  It can also be involved at the margins of contract law, and a recent Court of Appeal case[1] very nicely sets out how morality/ethics and law inter-relate.

An equitable estoppel is a strange beast.

Prosaically, the case involved a dispute between a car park operator and a landowner, over a right of first refusal in a lease.  In effect, if the landlord wished to sell, he had to offer it to the car park operator first.  The issue of interest to us was whether an “equitable estoppel” arose, and if so, what remedy was available. An equitable estoppel is a strange beast.  It is not a contract, where both parties agree on something.  It arises where one party (A) says it will do something, and the other party (B) relies on that statement, to do something to that party’s (B’s) detriment (usually to the knowledge of A). The Courts have developed this whole area of law, and some rules have evolved as to when such an equitable estoppel arises.   The recent case has stated that the 3 main ingredients of an enforceable claim involve a consideration of (a) the quality and nature of the statements made by A, (b) the extent and nature of the steps taken by B in reliance upon the statements, and (c) “the need for the claimant to show that it would be unconscionable for the promisor to depart from the assurance given” [2].

Unconscionability is where Equity becomes Ethics.SCCZEN_A_060814SPLNUMBER2_620x310

The case explains what this principle means, as follows: “…unconscionability is the element which both attracts the jurisdiction of a court of equity and moulds the remedy” [3] and more helpfully when considering the remedy, involves “…a broad consideration of the relief necessary to achieve a just and proportionate outcome.” [4] We could simplify these statements and suggest that, broadly speaking, Equity is Justice in its broadest sense, determined by what appears ethically proper in the fact situation presented.

The Court of Appeal had to decide whether to compensate the claimant merely for the costs it had incurred in relying on the statement made ( called “reliance losses”), or for the lost profits it would have made if the statement had been offered (called “expectation losses”).   For example, the reliance losses could have been overcapitalizing on the equipment installed on the site, whereas the expectation losses could have been capital gains over a reasonable period if the claimant company had actually ended up owning the premises.  These are obviously very different figures, both at a conceptual level (how they arise) and in a real sense (how much they are). In deciding what measure to use, the Court held:  “A broad assessment of all the relevant circumstances is to be made including losses or other detriment which cannot be quantified or measured in money terms”.[5]   It concluded:  “In the end, the courts must be free to fashion a just outcome guided by the general principles discussed, flexibility applied to the particular circumstances of the case”. [6]

So much for the principle of certainty.   Yet, the statements quoted above do make it clear that the conduct of party A is what is at issue – conduct that is not in breach of any contract, but which is still unconscionable – against the good conscience of a right thinking member of society. That last definition may look like a moveable feast.  It is.   What may be against good conscience is likely to alter considerably over time.  The Courts will merely reflect those changes, over time.   Those changes are social changes, not legal changes.  They are changes in morality and ethics, which may be harsher or more lax as time moves on. The law will merely reflect those changes.  Which may keep us all guessing, to some degree, which is bad for certainty and the predictability of the outcome from any given course of action.  But like good art, the theory is that you do tend to know what good ethics and morality require, when you meet it.

Lawyers are trained to deal with these shifting targets.   Accordingly, if you have a commercial dispute, you need expert advice.   Answering a problem by reference to the words used in a contract may not help, as you may not even be addressing the proper issue, if an equitable principle is involved.


 

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[1] Wilson Parking New Zealand Limited v Fanshawe 136 Limited and Ors [2014] NZSA 407

[2] Ibid, para 114

[3] Ibid, para 116

[4] Ibid, para 117

[5] Ibid, para 118

[6] Ibid, para 124