The principles of marshalling will not apply where in doing so a third encumbrancer will be adversely
affected. This arises where for example A has funds X, Y, as security and B and has only X as a
security and C has Y as a security. Since in the situation if a is complied to take out of funds X, B,
will then get an unfair advantage for fund X will be let free for him when probably C will get nothing.
This will be unjust, for even if C had any notice, the notice he acquired will be in relation to A's
interest in Y and he should not be made to lose in favour of B who had but merely a potential equity
The Court will as a solution throw the debt of A upon both securities ratably according to their value,
the residue of each will be used to satisfy the debt of the encumbrancer to whom it is due: Barless v.
Racster (1842) Y & C.C.C. 401. But Re Mower's Trust (1869) L.R. 8 Eq. 110 decided that
marshalling will operate to the prejudice of a third encumbrancer who has contract to take the surplus
which remains after satisfying the earlier encumbrancers.
MAXIMS OF EQUITY (part1)
HE WHO SEEKS EQUITY MUST DO EQUITY
Every claim in equity is or may be subject to the operation or this maxim. Equitable
reliefs were not available to suitors as a matter of right. Much depended on the
discretion of the Chancellor. A suitor, therefore, found himself at the mercy of the
chancery alleging that the other party had not been fair to him and praying that
justice should be done. Equity would accede to the prayer if the petitioner was
himself prepared and willing to be fair to his opponent. He must be willing to do
equity in the popular sense of fairness, justice or good conscience. Equity would
grant him relief on terms dictated by conscience and justice, and his wrong would be
redressed only if he was prepared to abide those terms, by admitting and securing to
the other party all the equitable claims arising out of the subject matter which were
due to his adversary.
He would be relieved only if he was prepared to act in an equi