Specific performance is an order of the court requiring the Defendant to carry out his obligations under an instrument (contract) according to its terms. Specific performance is a discretionary remedy.
The general rule is that specific performance will be granted where the common law remedy of damages is inadequate. Equity will not interfere if damages will grant a Plaintiff full compensation. If damages will put the Plaintiff in the position he would have been in had the instrument been performed, equity will not interfere.
There are cases where the court will not grant specific performance even if the remedy of damages is inadequate. The court will take into account special circumstance surrounding a case where the Plaintiff has been denied specific performance even though the damages are inadequate. The court will look into the conduct of the Plaintiff and this is done in the courts discretion. The decision whether or not to grant specific performance will be made by the court. This is the discretionary nature of equity.
That discretion however is to be exercised on well settled principles. There are certain rules in equity that govern the exercise of discretion.
Penn and Richard West are cases on specific performance where the courts acted in personam, the courts granted orders remedies in favour of the Plaintiff. Only the parties to a contract can sue or be sued for specific performance. If it is a land matter it is only the seller and the buyer who can be sued.
When does a third party become joined?
The general rule is that only parties to a contract can be sued or sue for specific performance. A third party can be enjoined in a suit for specific performance where it is shown that he was not a bona fide purchaser for value without notice i.e. when he has contributed to the breach by one party.
Ensuring Observance of the Court’s Order for Specific Performance
Tito v. Waddell (No. 2) 1977
If the court cannot ensure that the order will be observed by the Defendant, then the court will not grant specific performance. (Equity does not act in vain) if the order cannot be enforced, specific performance will not issue.
Specific Performance is granted for the enforcement of positive contractual obligations. This means that for example in a lease, you find obligations on the part of the tenant and then there are the obligations to be observed by the Landlord so you find that the obligations of the landlord become the tenant’s rights. Specific performance will only apply to positive obligations. For example if the tenant is supposed to keep the premises in a state of repairs and is not supposed to sublet the premises, specific performance will issue to enforce the keeping of the premises in a state of repairs but will not issue to allow the tenant to sublet the premises.
The defendant is ordered to take positive steps to remedy a wrong or to do something that he has failed to do in law. Matters for specific performance are heard and determined before the specific performance is issued unlike an injunction which can be issued on an interlocutory basis. Section 16 of the Government’s Proceedings Act Cap 40 Specific Performance cannot issue against the Government. One can only sue the government for a declaration but one cannot get an injunction or specific performance. The rule that an injunction cannot issue against the government is currently being challenged in court at the moment.
TYPES OF CONTRACT
1. CONTRACTS THAT ARE SPECIFICALLY ENFORCEABLE:
There are certain kinds of contracts where it is recognised as a general rule that specific performance will be granted. These are the specifically enforceable contract.
(i) Contract related to land: This is the most common type of contract where parties apply for specific performance. It could be any type of contract as long as it relates to land. Land has a fixed location and no two pieces of land are alike, each piece of land is unique and special and it is thus accepted as a general rule in equity that damages will not be adequate compensation to a purchaser, a mortgagee or chargee etc. It is for this reason that we say that contracts related to land are specifically enforceable.
(ii) Contract related to Personalty/Chattels – the rule is that the court will not grant specific performance unless it is shown that the chattel that is the subject matter of the contract is an article of unique value. The reasoning is that because the chattel is a rare commodity or unusual beauty etc damages will not be adequate.
There are several cases where courts granted specific performance because the chattels were of unique value.
Falcke v. Gray
Purchase of two china jars apparently worth 200 pounds
Thorn v. Commissioners. Of Public Works – subject matter of the contract was a stone from the Old West Minister Bridge in England which was deemed to be a very special item.
Philips v. Lamdin – the subject matter was a door in a house (Adam door) it was a door of unique value
Behnke v. Bede Shipping Co. It was a ship of unique and peculiar value to the Plaintiff.
Sky Petroleum v. VIP Petroleum
There was a contract in this case between the plaintiff and the defendant. Under this contract the Plaintiff was to buy all the petrol for its garages from the defendant and the defendant was to supply the plaintiff with all its requirements for the petrol. The defendant alleged breach and he purported to terminate the contract in November 1973. This was at a time when petrol supplies were limited. The result of this was that the Plaintiff had little prospect of finding an alternative supply of fuel. And so an interlocutory injunction was granted to restrain the defendant from withholding the supplies of petrol. The judge in this case acknowledged that it amounted to specific performance. But the judge held that the court had jurisdiction to order specific performance of a contract to sell chattels even though they were not specific or ascertained where the remedy of damages was inadequate. Further the usual rule that specific performance was not available to enforce contracts for the sale of chattels was well established but it was based on the adequacy of damages and was therefore not applicable to the present case because in the present case the plaintiff might be forced out of business if the remedy was not granted.
The court in this case is looking at special circumstances since in 1973 petrol was scarce. The court could not order the defendant to pay damages as no amount of money would help the plaintiff who needed specific performance to force the Defendant to supply the petrol. It is the uniqueness of the case that made the court exercise its discretion in ordering for specific performance.
In Cohen v. Roche the article was an ordinary commodity of commerce and the court refused to grant specific performance. The articles in question were a set of 8 Hepplewhite Chairs. There was a contract to deliver specific or ascertained goods within the meaning of Sale of Goods Act Section 52 of Cap 31. the Court argued and said that these were ordinary articles of commerce and that damages would be adequate. Whenever one talks of adequacy of damages, one has to relate it to the discretionary nature of the court to order specific performance.
A CONTRACT TO PAY MONEY TO A THIRD PARTY
The court has recognised if the court is to pay money to a third party, then discretion is called for
Beswick v. Beswick (1968) - two people in the contract and the contract was for payment of money to the wife of one of the parties. Case was unique because she was suing as an administratrix.
CONTRACT TO SECURE LOAN AND MONEY IS LENT BEFORE MORTGAGOR EXECUTES THE MORTGAGE DEEDS
In a situation like this the mortgagee can obtain an order of specific performance ordering the mortgagor to execute the mortgage instrument. Usually the banks will rely on the loan agreement as there is a clause in the loan agreement that the mortgagor when called upon to do so shall sign the mortgage.
Where a contract is with a company to take up and pay for debentures (document by which a company acknowledges a debt) – this contract is specifically enforceable against the company.
CONTRACTS THAT ARE NOT SPECIFICALLY ENFORCEABLE
1. A Contract requiring constant supervision. Such a contract is not specifically enforceable because equity does not act in vain. The court will not grant specific performance if the contract requires constant supervision as it may be difficult for the court to ensure supervision. A case to illustrate this point is
Ryan v. Mutual Tontime Westminister Chambers
Some tenants had leased a block of flats with the term that there would be a resident porter with specified duties. But the porter got a job as a chef in a neighbourhood café and would delegate his duties to someone else not recognised under the lease. The tenants applied for specific performance but the court refused to make the order on the basis that supervision would be impracticable.
Building Contracts: the general rule is that specific performance will not be granted in respect of a contract to build or a contract to repair.
The court has however developed exceptions
If three conditions are met, then that building contract will be enforceable
In Wolverhampton Corp v. Emmons
1. The building work must be sufficiently defined by the contract and the way to do this is by having detailed building plans. If the builder has provided everything,
2. The Plaintiff must have a substantial interest in the performance of the contract such that damages would not compensate him for the defendant’s failure to build. For example according to Hanbury if the building is to take place on the Plaintiff’s land, damages will normally be adequate. The reason is that the Plaintiff can always hire another contractor to complete the work and if there is any fluctuations in cost, that can always be recovered from the Defendant as damages.
3. The Defendant must be in possession of the land so that the Plaintiff cannot employ another person to build without committing a trespass.
When these 3 conditions are met, specific performance will then be granted.
Carpenters Estates Ltd. Explains Wolverhampton
CONTRACT INVOLVING PERSONAL SKILL IS NOT ENFORCEABLE
The reason why this contract cannot be enforced is that the court does not have to decide in subsequent applications whether that contract has been properly performed. We are talking of a contract where a person is to give personal services. The court does not want to assume that burden because it is impracticable.
C.H. Giles & Co. Ltd v. Morris.
The court does not want to force a person to remain in the relationship of employer and employee when there is indication that they no longer want to continue with that relationship. According to Fry L.J. in the case of Francesco V. Barnum states “the courts are bound to be jealous lest they should turn contracts of service into contracts of slavery.”
CONTRACT LACKING IN MUTUALITY/CONTRACT LACKING MUTUALITY
The rule is that where specific performance is available to one party, it must also be available to the other party i.e. where it is available to a purchaser it will be available to the seller so that either party can sue or be sued. We say in this case that there is mutuality between the parties. Examples of circumstances where there is no mutuality is where in a contract one of the parties is a minor. The law is that specific performance cannot be ordered against a minor. There is no mutuality here. The minor cannot obtain an order of specific performance the case is
Flight v. Bolland
Incapacity to enter into contract. Where there is lack of capacity at the time of entering the contract, the contract will not be enforceable.
A type of contract that is specifically enforceable in part only, this means that there may be some matter that can be isolated from the contract (severance of the contract) and then specifically enforce them. One will actually be enforcing the contract in part. If those matters are dependent on one another then severance is not possible so the contract cannot be enforceable in part.
Ryan v. Mutual
Burnes v. City of London
Ogdden v. Fossick
In this case an agreement was entered into between Fossick and Ogden that Fossick should grant Ogden a lease of a coal wharf at a certain rent, and should be employed throughout the tenancy at a salary of £300 pa plus a commission on the coal sold at the wharf. Although the first part of the agreement was typical of the kind of matter of which specific performance is decreed, this remedy was refused on the ground that it was inseparably connected with the second part of the agreement which was clearly of the kind of which specific performance is not granted. It is an a fortiori case where the term sought to be enforced by specific performance is merely an ancillary or subsidiary term of a contract, the principal terms of which are unenforceable by specific performance.
Frith v. Frith
In that some contract, some matters may be legal while other matters may be illegal. The legal matters can only be enforced if they are not dependent on the illegal matters but if they depend on one another the contract cannot be enforced.
Agreement without consideration
An agreement where the party has not provided consideration will not be specifically performed. Equity does not aid a volunteer. The exception is trust but the general rule is if not supported by consideration it cannot be enforced.
DEFENCES FOR AN ACTION FOR SPECIFIC PERFORMANCE
Equity will hold the defendant to the enforcement of his bargain. The court will require the defendant to perform part of his bargain and can only depart from that rule in certain recognised instances. Essentially the recognised instance will act as defences.
The following are defences:
1. There is no effective contract; - this happens when the requirements of a contract or the prerequisites have not been met.
2. The absence of writing for land transactions. S. 3 (3) Law of Contract Act Cap 23 is echoed in this defence which is to the effect that in the case of land transaction, for there to be a proper disposition there must be a written memorandum on the contract. Until July 2003 there was an exception to the requirement of writing. The rule regarding that exception was that, if there was no written document but there was an oral contract coupled with part-performance, the interest in land could pass. Note that it is not just every type of interest in land, there are some that are required by law to be registered. In case of leases, unless it is over 12 months under ITPA and 24 months under RLA, the law requires that the lease be in writing. Part performance can be constituted, transfers and mortgages need registration as well and therefore there must be a document in writing. That was the position until July 2003, there were two Acts that were passed through parliament one in 1990 and the other one in 2002. the Act passed in 1990 was Act NO. 21 of 1990 and Act No. 2 of 2002 they were both amending Section 3 so that for any matter taken to court in relation to a transaction regarding land, there must be a Memorandum in writing. Essentially the amendment reflected in two Acts. It does away with the doctrine of part performance so that when someone sues, the court will not accept the doctrine of part performance and there must be a Memorandum in writing. The Attorney General passed two Gazette Notices in November 22 2002, these were Legal Notice NO. 188 and Legal Notice NO. 189. By means of these two legal notices these two Acts came into effect and the commencement date was July 2003. The amendments have amended S. 3(3) Laws of Contract and go on to say that documents should be signed and who will witness the signing. This means that a Defendant can plead lack of memorandum in writing as a defence.
3. CONDUCT OF THE PLAINTIFF: - Here the Court is saying that if the Plaintiff is guilty of some conduct that would disentitle him from getting his remedy. He who comes to equity must come with clean hands, he who seeks equity must be prepared to do equity or equity does not aid the indolent but the vigilant. The doctrine of laches is limited by Cap 22 and the maxim is that Equity follows delay defeats equities, or, equity aids the vigilant and not the indolent.
4. Hardship: - The general rule is that where the Defendant pleads hardship, he may escape specific performance. The general rule is that the Defendant will be ordered to perform his part of the bargain even if it causes him hardship. The Defendant can plead hardship but there are rules as to what hardship the court will consider, it is not just inconvenience but hardship that amounts to injustice. If the hardship is that it will cause the Defendant injustice, it will accept the Defendant’s Defence. There is a way of assessing the hardship. The Court will exercise discretion in giving specific performance
Patel V. Ali (1983) Ch. 283
This is a case where the seller and her husband were co-owners of a house that they had contracted to sell. The husband’s bankruptcy caused a long delay in completion of the sale transaction for which neither the seller nor the purchaser was to blame. After the contract had been entered into, the seller got bone cancer and had her leg amputated. She later delivered her second and third children. The purchaser obtained an order of specific performance against which the seller appealed on the ground of hardship. She spoke little English and relied on help from nearby friends and relatives. Hence it would be hard to leave the house and move away.
The court allowed the Appeal stating that although a person of full capacity before the contract took the risk of hardship the court in a proper case could refuse to grant specific performance on the ground of hardship occasioned subsequent to the contract even if it is not caused by the Plaintiff and is not related to the subject matter of the suit. On the facts of this case, the court held that there would be hardship amounting to injustice and therefore the appropriate remedy was damages. This is sort of a locus classicus in specific performance. The other one being Sky Petroleum v. VIP Petroleum here the court granted a prohibitory injunction.
Hardship to either the Plaintiff or the Defendant
Warmington v. Miller
Mountford v. Scott
Hardship to a third party
Earl of Sefton v. Tophams
Sullivan v. Henderson
Watts v. Spence.
Is financial inability to complete a contract hardship sufficient to escape specific performance.
Financial inability to complete is not hardship.
Nicholas v. Ingram  this case is of persuasive authority.
5. FUNDAMENTAL MISTAKE: - The mistake may be of such a nature that it precludes the consensus ad idem that is required in every contract and such a mistake is a good defence to an action for specific performance.
Webster v. Cecil (1861) 30 Beav. 62
Parties agreed on a contract where the price was £2,250 but when the seller issued a letter he mistakenly wrote £1,250 which was not the purchase price. The seller gave notice of the error immediately he realised and so he was not compelled to specifically perform the contract. Defence of fundamental mistake was claimed.
Malins v. Freeman (1837)
The rule is that even if the mistake is that of the Defendant himself and not in any way induced by the Plaintiff, specific performance will be refused if its imposition would cause the Defendant hardship amounting to injustice.
In this case this Defendant bid for and bought one lot at an auction believing that he was buying a totally different lot. So when he was sued for specific performance, he pleaded hardship. He had bid for the wrong lot being drunk.
The court refused to grant specific performance, it accepted the defence of hardship, the court stated that intoxication of the Defendant when the contract is made is a ground for refusing specific performance even though it is not induced by the Plaintiff. It would have been a great hardship on him to compel him to take the property the court went on to say. The court here is looking at the total picture.
Contrast that decision with
Tamplin v. James (1880) 15 Ch. D. 215
This is a case where a purchaser agreed to buy some property at an auction in the belief that two pieces of garden plots at the back of the shop formed part of the purchased property. The particulars of sale and the reference plans exhibited at the auction described the property correctly. The garden plots were not included in the sale as they did not belong to the vendor even though they had commonly been occupied together with the property being auctioned. The property subject matter of the auction was an inn and a shop.
The defendant was acquainted with the property and knew that the garden plots were occupied along with the inn and shop. However he did not look at the plans and agreed to buy in the belief that he was buying the inn and shop together with the two garden plots. The vendor brought an action for specific performance. The Defendant pleaded mistake as a defence.
The court held the Defendant to his bargain, he had a means of finding out the exact dimensions of the plots he was bidding for. Equity aids the vigilant. Specific performance was issued
Craddock v. Hunt
This case is to the effect that where the mistake is in the written record of the transaction the Plaintiff may obtain rectification and specific performance in the same action i.e. the court will be applying the maxim equity looks to the substance rather than the form.
There are two cases where the Plaintiff has contributed to the Defendant’s mistake even if unknowingly
Denny v. Hancock
Wilding v. Sanderson.
Where the mistake is that of the defendant, See the case of
Steward v. Kennedy
Van Praagh v. v Everidge
Where there is a unilateral mistake
Mountford v. Scott
Riverlate Properties Ltd v. Paul
6. MISREPRESENTATON BY THE PLAINTIFF
8. LAPSE OF TIME/LACHES/DELAY
11. DEFECTIVE TITLE