Legal rights are those which were recognised by Courts of Common Law, whereas equitable rights are those which were recognised solely in the Court of Chancery, which was presided over by the Chancellor.
The right vested in a trustee is thus legal right, but the Court of Chancery or the Court of Equity went a step further and recognised the right of the beneficiary as equitable right.
The Judicature Act of 1873 brought about the fusion of Common Law and Equity establishing a High Court of Justice with a Court of Appeal over it. Thus, all rights, whether legal or equitable, now obtain legal recognition in common court of law.
In their operation, however, the two systems still maintain their, distinct entry in the following respects:
1. The methods of their creation and disposition differ. A legal mortgage of land, for example, must be created by a deed, but an equitable mortgage may be created by mere deposit of title deeds.
2. As Salmond observes, equitable rights have more precarious existence than legal rights. Where there is a competition between a legal and equitable right, the legal right prevails over the equitable right even though subsequent to it in origin, provided the owner of the legal right acquired if for value and without notice of the prior equitable right. This is expressed by the maxim. “Where there are equal equities, the law will prevail.”