Specific performance - Essay PDF

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Q.4. “As an equitable discretionary remedy, the order for specific

performance is a vital tool in compelling the unwilling defendant to perform his contractual obligations. Modern courts have proved only too willing to side-step possible problems of enforcement and grant the remedy where the justice of the case demands’. Specific performance is a purely equitable remedy and an order of the courts that compels the defendant to carry out a contractually binding promise he has made to the claimant (Pakenham v Crosby, 1924 ). Specific performance is tailored exclusively to the performance of the contract and only sought in specific conditions, as it’s a discretionary remedy, completely at the court’s disposal. However, the principles governing this remedy can be seen as archaic and consequently, the courts are reluctant to use it unless called for. When granted, this will either be an alternative to damages or in addition to damages to a breach of contract. In this essay, I aim to explore the circumstances in which courts use specific performance, and if the courts act with caution when refusing to use this remedy. Traditionally, specific performance was used as an exceptional remedy, ordered by the court where damages at common law would be an inadequate remedy (Miller and Jentz, 2008). For example, a variety of factors can influence how discretion awarded is exercised such as the conduct of the claimants, a delay in seeking equitable assistance or hardship resulting from an order of specific performance (Tamplin v James 1880). In instances such as contracts for the sale of land, an order of specific performance will usually be available because all land is considered to be unique and damages will usually not be sufficient to compensate the purchaser. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, states, SP will not apply in cases, where the contract is invalid or conditional (Hanham, 2015). As Sir William Grant said of the Court of Equity, that “as much a course in this court to decree specific performance, as it is to give damages in law” (Hall v Warren, 1804). Traditionally, specific performance was always granted to the purchaser of the land, due to the argument, it was unique. However, in light of Lord Hoffman's reasoning in the Jumbo King Limited case, Hanham questions the uniqueness of land when it is sold and invested in, with the intention of being treated as a ‘money making commodity’. This approach was adopted following the Canadian outlook on granting specific performance mainly for residential purchasers as opposed to vendors. This is because if vendors successfully sought specific performance they would be remedied with the entire price of the property. Professor Steven Shavell argued that ‘specific performance should only be reserved to contracts to convey property and that in all other cases, money damages would be superior’. On the other hand, looking at non-land contracts, specific performance can be granted concerning tangible items. For example, in (Cohen v Roche, 1927), the courts agreed that a set of Hepplewhite chairs were not to be classed as ‘unique’ as they could be acquired anywhere, therefore specific performance was not granted, as damages were seen to be adequate. McCardie LJ stated that if the item was no more than an ‘ordinary article of commerce with no special value’ than SP will not

suffice. However, in Benhke v Bede Shipping Company 1927, a boat was deemed to be unique as it couldn’t be acquired anywhere else and also had a unique engine model. It was also of rare value. Therefore, in this case, specific performance was granted as damages were inadequate. When looking at whether a contractual bargain was sufficient enough for specific performance, Falcke v Gray is considered, and the courts refused to grant specific performance due to the parties not being on equal footing, and one party being aware of this, which gave him an unfair advantage. Therefore, the judge did not feel he deserved an equitable remedy. Damages were awarded and the defendant was able to escape the contract, due to specific performance not being enforced. In terms of statutes, the Sale of Goods Act 1979 can be referred to, whereby s52 says ‘specific or ascertainable goods’ allows courts to grant the remedy of specific performance. This is further enabled by the Consumer Rights Act 2015, which doesn’t hinder consumers from seeking specific performance. In addition to inadequacy of damages as a remedy, the court will be reluctant to award specific performance if it requires constant court supervision, whereby parties will continue to make application to the courts. Historically, this has been refused, as seen in Ryan v Mutual Tontine Westminster Chambers Association,1893, a case in which Lord Esher refused an order for specific performance on the grounds that the nature of the obligation – the constant attendance of a resident porter – would require ongoing supervision by the court. The recent case of Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd 1996, confirmed that due to constant court supervision being required, specific performance could not be granted. The plaintiffs granted a lease to the defendant for the use of a unit in a shopping centre for their supermarket. A clause in the lease required a covenant to keep the premises open for trade during regular business hours in the local area. the defendants closed the supermarket despite a decrease in rent. The plaintiff brought an action seeking specific performance and/or damages. However, a breach of contract was found due to there being a covenant that required them to keep the supermarket open. The Court of Appeal granted specific performance as they believed the damages to be inadequate and concluded that this was a ‘gross commercial cynicism’ because the locals relied on this supermarket for their shopping. Despite the defendants appealing, the House of Lords still denied this remedy. Lord Hoffman explained that the courts require there to be certainty in business and for this reason damages, offers more financial certainty than specific performance does. Another reason he acknowledges is in this instance, a continuing order to perform obligations indefinitely gives rise to situations that would require the court to interpret repeatedly. This is more likely to arise because trading practices are ever-changing. As a response to Lord Hoffman’s test, Tettenborn argues ‘it is an unfortunate failure to liberalize the rules of specific performance and grant an effective remedy to a plaintiff who is clearly deserving’ (Tettenborn, 1998). If the claimant will suffer from hardship as a result of the judgement, specific performance can be sought. This was illustrated in Patel v Ali 1984, where a couple who were faced with the prospect of having to move residences. This created unnecessary hardship, especially for the wife, who had several severe health issues, spoke little English and her husband was incarcerated. The courts, in this case, acted in good faith by allowing her to use hardship as a defence, as the damages were seen to be inadequate. This is a very extreme case and is not likely to occur regularly, hence specific performance was given. In Wroth v Tyler 1974, specific

performance was not granted as it went against public policy for the husband to undertake separate costly litigation against his wife to grant the right of occupation. If there is a delay, the courts are usually hesitant to award specific performance. This is because a delay defeats equity, and is an equitable maxim. If the claim for SP isn’t progressed, with sufficient speed in a reasonable time, this remedy can be withheld, due to “relevant equitable rules should accord with comparable legal rules” (Spry,1997). Finally, a contract cannot be avoided in equity if there is a mistake or misrepresentation, and specific performance could be sought. However, if the error made is acknowledged and could lead to an exploitation of the situation, specific performance isn’t granted (Webster v Cecil 1861) In conclusion, although an infrequent remedy that has been around for a long period, modern courts have to use the reasoning given in old cases, as there haven’t been enough recent cases to rectify and amend the current remedy of specific performance. As a general principle, specific performance will not be readily available in circumstances where it would be futile or impossible as ‘equity does nothing in vain’. The ongoing debate in legal literature focuses on whether specific performance is useful. I do believe the courts act with caution when awarding this remedy, to ensure damages would be inadequate to provide compensation for the claimants before awarding specific performance. Some philosophical lawyers are in favour of the courts employing specific performance as it is closest to what was promised in the contract (Shiffrin, 2007) https://lawexplores.com/equitable-remedies-of-injunctions-and-specific-performance/

Blue Manchester Ltd v North West Ground Rents Ltd-

this case surrounded the landlord covenanted to keep the common parts “in good and substantial repair and when necessary as part of repair to reinstate replace and renew where appropriate…”. The external parts were within the common parts. One of the parties went into liquidation. The tenant bought a case against the landlord for specific performance, seeking to compel the landlord to carry out the works under the repairing covenant in the lease. The landlord disagreed with the claim as the had done what they needed to do to ensure sufficient steps were taken to comply with its repairing obligation. The landlord was therefore in breach of its repairing covenant and the landlord was required to repair the SBUs by arranging for their like-for-like replacement. This case is interesting because it is not common for specific performance to be granted requiring compliance with a repairing covenant in a lease. Despite the steps being taken to fix, this was only a temporary measure and the landlord should’ve ensured there was a more permanent solution....