Specific Performance Flashcards
What is specific performance?
Specific performance is an equitable remedy that compels one party to a contract to fulfill his obligations under that contract. It is based on the principle that a person should be entitled to have that which he has contracted for, rather than merely damages.
What is required for specific performance to be granted?
- The onus is on the plaintiff seeking to establish specific performance that there is a valid and enforceable contract between the parties and that the terms of the contract are sufficiently certain
Wilson v Northampton and Banbury Junction Railway Co
- If damages are a sufficient remedy specific performance will not be granted
Collins v Duffy
- a plaintiff may choose damages in lieu of specific performance and this may be granted at the discretion of the judge
Mount Kennett Investment Company v O’Meara
- the party is not entitled as of a right to have a decree of specific performance discharged and seek, instead, damaged in Lieu of specific performance. A party is entitled to pursue both reliefs up to and at the trial of action and leave it up to the judges discretion to decide which is more appropriate.
What is the court’s approach to contracts requiring supervision?
Traditionally the courts have been unwilling to award sp for contracts which would require supervision on an ongoing basis
Ryan v Mutual Tontine Westminster Chamber Association
- plaintiffs failed in their application for specific performance of the covenant on the basis that it would require ‘constant superintendence by the court’
Recently it has been suggested that this difficulty should not be a bar to sp but one of the facts taken into consideration
Posner v Scott-Lewis
- three factors to be considered in such cases
1) Is there a sufficient definition of what has to be done in order to comply with the order of the court?
2) Whether enforcing compliance would involve superintendence by the court to an unacceptable degree?
3) Prejudices or hardships which would be suffered by the parties if the order is made or not made
Co-Operative Insurance Society Ltd v Argyll Stores (Holding Ltd)
- most frequent reason orders for a person to carry on a business is it could entail an indefinite series of rulings in order to ensure execution of the order
- there is a likelihood of imprecision in the terms of the order and if terms cannot be precisely drawn the possibility of wasteful litigation over compliance is increased
What has the courts approach been to contracts requiring continued supervision in terms of the effect on the parties?
Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd
- requiring a defendant to carry on a business may cause an injustice by allowing the plaintiff to profit at the defendant’s expense
- any loss the defendant may suffer through having to comply with the order may be far greater than that which the plaintiff would suffer from the contract being broken
Dakota Packaging Ltd v APH Manufacturing BV
- Irish courts did not grant the plaintiff sp of a declaration that it was entitled to a 12 month notice of termination of the supplier - customer relationship
- to require the defendant to purchase products from it for a 12 month period would have a disproportionate impact relative to the result intended, which could be achieved by an award of damages.
- referenced Argyll and the point that difficulties will arise where a party is required to carry on a business, involving the courts in constant supervision
Why are courts reluctant to order specific performance of contracts to build or repair?
Biehler - in practise the likelihood of obtaiing sp has tended to hinge on two main issues
1) certainty of terms of the contract
1) degree of supervision which an order for specific performance would require
Rushbrook v O’Sullivan
- Porter MR noted that the dominant view of the court has traditionally been that building contracts should rarely be enforced, particularly as their uncertain nature would make it difficult for the court to determine whether an order had been complied with.
Damages are argued to be an adequate remedy where another builder can be found to carry out the work.
Why are courts reluctant to order specific performance of contracts for personal services (where a self employed person has been contracted to provide a service)?
- It is a general rule that courts in Ireland have always been reluctant to order SP of this type of contract .
C.H Gile & Co v Morris
- Strong reluctance to order the SP of such contracts rather than a rule against it.
- The courts do not want to be engaged in a supervisory role, as established above.
- The court is reluctant to compel the parties to work together even though the relationship of mutual trust and confidence between them has broken down.
When are the courts less reluctant to order SP of a contract for personal services?
Equity is very reluctant to order SP of a positive contractual obligation, ie. one that forces an individual to work for another, but may order SP of a negative contractual undertaking, ie. a term in a contract that states the other person cannot work for anyone else.
Lumley v Wagner
- D agreed to sing a p’s theatre and not to sing anywhere else during this time. Subsequently she agreed to sing elsewhere for more money.
- Court ordered SP of negative obligation not to sing elsewhere but would not enforce positive undertaking.
- Effectively this may force someone to stay working for someone ie. have the same effect as enforcing the positive undertaking
Warner Bros v Nelson
- enforced negative undertaking not to act for another studio for 5 years on the basis that it did not amount to ordering SO by requiring the defendant to work for the plaintiff or remain idle, the defendant could perform other work.
What if the relationship has not broken down?
Hill v C.A Parsons & Co Ltd
- if trust and confidence between the parties still exists the logic that the court should not force a relationship between the parties which has broken down does not apply.
Carroll v Dublin Bus
- a mandatory order which would have the effect of entitling an employee to return to work could only arise in circumstances where it was clear that no other difficulties could be reasonably expected to arise by virtue of making the order
Ahmed v HSE
- Plaintiff was a consultant surgeon
- No breakdown of relationship as in Carrol but there were other issues such as the complex infrastructure, organisation, and practical considerations involved in the provision of surgical services to the public.
- Laffoy J stated that she was not satisfied that an order compelling the making of an appointment which would allow the plaintiff to be involved in major surgery could be properly made and enforced and that the consequences for such an order were no foreseeable
What are the defences to specific performance?
(a) Lack of Mutuality
(b) Misrepresentation
(c) Mistake
(d) Impossibility
(e) Hardship
(f) Latches
(g) Illegality, Immorality, Contrary to Public Policy
What will be sufficient to amount to a lack of mutuality as a defence against SP?
O’ Regan v White
- The court will not grant SP in favour of P if it could not do so also in favour of D
What will be sufficient to amount to misrepresentation as a defence against SP?
A “misrepresentation” is a false statement that induces a person to enter into a contract, without itself becoming a term of the contract.
Northern Bank Finance Corporation Ltd. v Charleton
- If a misrepresentation was fraudulent or negligent, the court will be slow to order SP
Smelter Corporation v O’Driscoll
- Plaintiff’s agent told the defendant that if she did not agree to sell the local authority would accquire the lands compulsorily
- Even thought the agent believe this to be true and had acted in a bona fide manner the defendant had been under a fundamental misrepresentation as to the true position
- Due to the fundamental unfairness in the transaction it would be unjust to grant a degree of SP,
What will be sufficient to amount to mistake as a defence against SP?
Where a defendant seeks to rely on mistake as a defence it may be asked whether the plaintiff contributed in any way to the misunderstanding, or taken advantage of the other’s mistake. In such a circumstance the court will be reluctant to order SP.
Webster v Cecil
- purchaser accepted the offer knowing the vendor had made a mistake, SP was granted
If the mistake is soley on the side of the defendant the court is likely to grant SP
Tamplin v James
- defendant did not look at the plans when purchasing a piece of land and mistakenly assumed a piece of land behind the premises was included in the sale and agreed to buy it on this basis
- ‘If a man makes a mistake of this kind without any reasonable excuse he ought to be held to his bargain’
- endorsed by High Court in O’Neill v Ryan
- also stated that SP should not be granted where a hardship amounting to an injustice would be caused to the defendant
Certain mistakes are not great enough to justify recission or to provide a defence to SP
Ferguson v Merchant Banking Ltd
- mistakenly included a vacant site with great development potential in the parcels of land included in the sale
- accepted that a serious mistake had been made on the defendant’s side but as there was no absence of agreement on an essential term SP was granted
What is sufficient to amount to laches as a defence against SP?
Guerin v Heffernan
- ‘A man who sleeps on his rights does not find favour in a court of equity’
A person who delays unreasonably in bringing proceedings for specific performance may be refused relief.
McGrath v Stewart
- The critical question is whether or not, as a result of P’s delay, granting SP now would cause D prejudice. If it would, SP may not be ordered.
In order to establish that the delay of the plaintiff was excessive it must be apparent that in all material circumstances a reasonable person would have proceeded with greater speed or diligence
What is sufficient to amount to hardship as a defence against SP?
This is a purely discretionary consideration.
Roberts v O’ Neill
- Generally, hardship is to be judged at the time the contract is entered into.
- An increase in value of the land is not to be considered.
Patel v Ali
- In exceptional circumstances, subsequent hardship may be taken into account
- For example a change of circumstances supervening and not in any way attributable to the plaintiff
- In this case the vendor had become seriously ill, had her leg amputated, given birth to her second child, and saw her husband adjudicated bankrupt and sent to prison. The court would not enforce the sale of the house and instead awarded damages to the purchaser.
Aranbel Ltd v Darcy
- A defence of hardship may apply “…in cases where a defendant purchaser could complete, but only by disposing of assets such as a family home or business assets, which action would have significant practical consequences[]”
- The defence of hardship should not be confused with the defence of impossibility. Just because performance of a contract would result in hardship does not necessarily mean that such performance would be impossible.
What amounts to illegality as a defence to SP?
The courts do not order SP of a contract with an underlying illegal purpose. The onus of proving illegality rests on D - Kavanagh v Caulfield.
Equally, if the enforcement of an agreement would be contrary to public policy the courts would be unwilling to order SP - Wroth v Tyler.
