Specific Performance

INTRODUCTION

•Only be given n the matter of discretion of the courts even it is based on a settled principle.•Ganam d/o Rajamany v Somoo s/o SinnahIt is under the discretionary of the courts to grant specific

performance; and all of the circumstances of case, the conduct of parties and their respective interest must be taken into consideration.• Section 21 of SRA 1950 – Discretionary to grant SP.

• Effects of SP :•Directing party to contract/trust to perform his obligation according to terms. However, terms must be positive in nature, whereas if there is negative stipulation injunction will be enforced.

MEANING OF SPECIFIC PERFORMANCE• An order from court compelling a person to perform his/her part under the contract/trust that he had undertook to discharge on entering the contract. • Mohamed v Ho Wai - Will not awarded on cases involving executed contract • Haji Osman bin Abu Bakar v Saiyed Noor Bin Saiyed Mohamed• X had executed the transfer of land, the transfer & document of title were handed over the purchaser. Before transfer was presented to the registration, X died & the registration was refused under s.8(ii) of Land Code. Claim for SP was refused. Court claimed that the death of proprietor does not rendered the contract to be void. The legal representative may take reasonable steps on behalf of deceased and is subjected to the terms of contract.

GEN CHARACTERISTICS

• Remedy is discretionary nature – S.21 of SRA 1950• Determined according to the formulated maxims. • Example : Matters such as delay in seeking remedy & conduct of the P may

have a serious impact on the courts to decided whether to grant SP.• Will only be granted if the common law is inadequate• Equity will only be supplementary to common law. • Example : If there is a good remedy be given under common law, Equity will

not intervene. • When time of performance has not arrived, this will be an insufficient ground for

court to grant this remedy for its operation may be postponed until such time. • Hasham v Zenab

The court granted SP even before completion of the contract as the D is found guilty of anticipatory breach of contract.

• To claim damages, mere existence of contract is sufficient to grant SP if only circumstances in the case is equitable for the remedy to be granted.• Not available for conditional contract • Lim Liang Kee v Goh Bee Hwa MabelApplicant agreed to sell 3 pieces of agricultural land to interveners under the

‘Authorization & Agreement’ which gave the land broker, an irrevocable authority to sell the lands free from encumbrances and with vacant possession subject to terms & conditions. The applicants applied for an order approving the sale of lands. The respondents were beneficiaries to estate of deceased. They filed an action and refused to give consent in selling the land. Issue? – Who should protect the rights. The court held that the rights of beneficiaries must be protected as the interveners had know that in order to sell the land, consent must be obtained from the beneficiaries. SP cannot compel 3rd P to grant necessary consent as 3rd P is not a party to contract.• Specific Performance is remedy in personam.

• Issued against defendant who refused to compel with the requirements and ultimately subject to the criminal sanction.

• Equity will not act in vain, SP will be granted only when D is in position to comply with the order.• Ferguson v Wilson - Ct held no SP of contract to allot the shares as the

shares had been validly allotted to other shareholders before equitable rights was sought.

WHEN IS SP IS AVAILABLE Performance of an act• When act, wholly or partially, to be done under agreement. - S. 11(1)(a) of SRA 1950• Example : A holds stock in trust for B. A wrongfully disposes it. Law creates obligation for A to restore

back into it’s original position. No standard to ascertain actual damage• S. 11(1) of SRA 1950 – No standard to ascertain actual damage on the undone performance• Gan Realty S. B v Nicholas - Involving contract for disposal of shares which were not readily

available for an open market thus ct grant SP.• Example : A agree to buy and B agrees to sell a limited edition picture. When the performance of the

act is not complete thus it is hard for the court to ascertain damages that occurred. Therefore the common law principle is applicable – ‘ SP be granted when damages are difficult to quantify’

Pecuniary compensation is not an adequate relief• S. 11(1)(c) of SRA 1950 – Pecuniary compensation for ist non-performance would not afford adequate

relief.• General rule : SP not grant if damages are an adequate relief. • Perbadanan Setiausaha Kjn. Selangor v Metroway S.B - SP were rejected as monetary compensation

is considered as an adequate relief. Therefore, when this happens Equity will not provide SP if compensation given were adequate.

• Question whether adequate/not depends on the types of contract under consideration.

WHEN IS SP AVAILABLE Gen Eg - Precuniary Compensation is not Adequate

1.Contract for disposal of land S.11(2) SRA – Provides presumption that unles and until proven, the court presume that

breach of contract to transfer immovable property cannot be adequately relieved by compensation in money.

Because land has no depreciation. Price becomes higher per day. Sekemas S.B v Lian Seng Co S.B - The app had failed to pay the last installment even it

was given time to pay and the amount even were reduced to $4,500,000. When this was not done the Resp sued and applied for SP. The SC noted that SP was discretionary remedy and made reference to S.11(2), 20(1)(a) and 21(2)(b) and dismissed the appeal.

2. Contract for sale and goods When suitable substitutes could be secured on market, the contract sale of goods is not

specifically enforceable. S.11(2) SRA – Court presumes breach of contract to transfer moavble property can be

adequately relieved by compensation in money. SP granted not generally but exceptionally. Illustration (d) to S. 11(1)(c) SRA – A contracts w B to paint picture for B, who agrees to

pay $1000. The picture is painted. B is entitled to hv it delivered to him on payment/ tender $1000.

3.Contract for disposal of shares Similar application. If only it is hard to find compensation in money – not adequate Illustration (c) to S. 11(1)(c) – Gan Realty S. B v Nicholas - ...The inconvenience cause is impossible to repair and

could not be remedied by damages.

4.Contracts to lend money General rule : Contract in lending money can be adequate remedied by money,

thus SP would normally be refused. Exceptions : a. If it is not in fact the case/ damage difficult to quantify

a. Contract to create mortgage – agreement to give security for advanced money

b. Contract involves payment to 3rd Party

5.Contracts for Personal Service (Offering Services) Originally court will refuse enforcement of Personal Services bcs:

The existence of problems normally associated with ensuring compliance Policy to avoid turning the same into a kind of slavery

Developed new principle, where SP be given to the appropriateness of remedy according to circumstances of case.

Dayang Nurfaizah bte Awaynf Dowty v bintang Seni S. B - D had failed to obtain SP of a management agreement against P since it calls for the enforcement of personal services.

WHEN IS SP AVAILABLE

Pecuniary compensation cannot be obtained• S. 11(1)(d) SRA - When pecuniary compensation can’t be obtained for non performance, SP will be granted.

• Under English Law – damages may not be adequate, example : where loss complained of may not be recoverable. Similar to difficult in estimating loss, example : Loss of goodwill and trade reputation.

Subject has partially ceased to exist• Contract does not automatically be wholly impossible of performance bcs the portion of its subject matter , though has ceased to exist at the time of scheduled performance.

• Contrast with S. 57 of Contracts Act 1950 – contract to perform an act, which after contract made becomes impossible.

• S 12 SRA 1950

WHEN IS SP AVAILABLE• Specific Performance of a part of a contract

S.16 SRA – Court shall not direct SP of a part of a contract, reflecting the old English rule, except in cases coming under one/ other of the 3:

Where part unperformed is smallWong Siew Choong S.B v Anvest Corp S. B - App is the registered owner of all the land. A dispute arose over the transfer of the said land, the resp had claim for specific performance and damages. Court held: As the payment had been made by the Resp for the purchased land, the beneficial ownership of the remaining land would pass to the Resp. Illustration to S.13 SRA.

Where part unperformed is largeS.14 SRA 1950 – Contracting party is unable to perform the whole of his part, and the left part constitutes as a considerable portion of a whole/ does not admit monetary compensation, SP will not be granted.Nevertheless, the court may direct defaulted party to perform his part so much as he can perform, provided that the P in respect of deficiency/for loss/damage sustained on account of D’s default.

WHEN IS SP AVAILABLEIndependent partS.15 SRA – Parts of contract to be enforced must be severable (divide) from whole contract. City Investment S.B v Kooperasi Serbaguna Cuepacs Tanggungan Bhd.App were the registered owner of land which they decided to developed into housing lots. 2 separate agreements were entered.1st agreement: Selling 60 terrace houses & at the request of the resp, the appellant agreed to appoint themselves as licensed developer. R paid sum of $72,000 to App. 2nd agreement: App agreed to sell 24 subdivided lots, 15 semi-detached & 11 bungalow lots. Resp paid $426,300 to App for these lots.Out of 85 lots sold, App had transferred the Resp only one terrace lot under 1st agreement & 1 semi detached under 2nd agreement.10 of the bungalow were found to be useless as it would cost $13 million to level the land.Ct held: The transfer of the lots could and ought to be specifically performed and this part stood on a separate and independent from the other contract.

GROUNDS - REFUSE SP Contract for non-performance for which compensation in money is adequate relief.• S.20(1)(a)-(h) SRA - When a contract cannot be specifically reinforced, the party defaulted

should compensate in money.• Be read together with s.11(2) – Both movable and immovable property

Contracts that runs into numerous details/dependant on personal qualifications/violation of the parties/otherwise from its nature, the ct cannot enforce specific perf of it material terms.• Example: A, a writer contracts with B a publisher to complete the work. B cannot enforce

SP on these contract. Hence, contract cannot be specifically enforced.• Injunction may be granted under s 55 SRA requiring D to perform a negative agreement.

Court cannot find reasonable certainty in the terms of contract. Cooperative Insurance Society Ltd v Argyll Stores (Holdings) Ltd - The terms of contract is

not certain as it would create an argument as to whether a tenant is doing enough or otherwise.

Lin Nyuk Chan v Wong Sz Tsin - A tenancy agreement failed to stipulate the variation of rent, ct found that the uncertainty did not relate to what the contracting parties had agreed to do. The difficulties did not warrant a refusal for SP.

GROUNDS - REFUSE SP Revocable contract• Gen Rule: SP may be refused on account of futility (pointless).• Puncak Niaga Holdings Bhd v NS Water S.B - Setting aside ex parte

injunction, ct held that if a contract not being able to specifically enforced no injunction can be granted to prevent breach.

Contract made by trustee is in excess of powers/ breach in trust.• Whenever the parties to contract breach the agreement thus contract

cannot be enforced.• Example : A&B empowered to sell property worth $700,000. However sell

to C with the price of $300,000. The contract is disadvantageous as to breach of trust. C cannot enforce SP.

Contract made on behalf of corp/ public comp created for special purposes / by promoters of the comp which excess in power.• Example purpose of company did not follow to what they’ve entered into

contract.• Company to sell oil however sell milk.

GROUNDS - REFUSE SP

Contract of performance involving continuous performance/ duty extending ober longer period more than 3 years.• Si Rusa Beach Resort S.B v Asia Pacific Hotels Management Pte Ltd. - Agreement has

been made between App & Resp. Dispute arose between them & Resp applied for interim injunction to restrain app from interfering in the running hotel. Application was successful – App appeal. Held: the learned trial judge was correct in holding judgment but had failed in considering all material facts that app was in possession of hotel. If status to be maintain the only order that could be made is to allow the App to continue run the hotel until the action Is finally litigated.

A contract which material part of subject matter supposed by both parties to exist, before it has been made ceased to exist.• Ex : A contracts to pay annuity to B for the lives of C&D. Turn out, at the date of

contract, C was dead. Contract cannot enforce.• S.20(1)(a)-(h) : Ct may refuse SP by virtue of S.20(2) for contract relating to civil

procedure/ proceedings against government (S.29 of Government Proceeding Act 1956). The proper remedy is the declaration of rights of parties (S. 54 SRA).

DEFENCE - S.27 SRA Misrepresentation• Fraudulent Misrep – good defence to claim SP.• If gross inadequacy of consideration can be established on basis of fraud/undue advantage

taken by P – sufficient ground.• Tan Meng San v Lim Kim Swee – Attempt to rely on unfairness of contract failed.

Mistake• Mistake must be fundamental nature that strikes the root of contract.• S.27(c) SRA• Ex : A, a executor, enters into contract for sale of land believing him has the authority as co

–executor. B cannot insists on sale being completed. Hardship• S. 21(2)(b) SRA – Ct may refuse to grant SP to P if the granting would give hardship to D

which he did not foresee. No hardship : Haji Osman b. Abu bakar v Saiyed Noor Bin Saiyed Mohamad - Ct granted

SP and rejected the argument that hardship would caused to the beneficiaries Hardship : Warmington v Miller - Court refused SP to grant underleased ground floor

workshop. To do so would leave the D landlord in breach of covenant contained in his head lease & thus cause hardship to landlord.

DEFENCE - S.27 SRA Time clauses

Delay may defeat equity Eads v Williams - 3 ½ years delay defeated a claim for SP. A claimant who brings

action after unreasonable delay may well be unsuccessful. Impossibility & futility

Equity does not act in vain Equity cannot enforce what cannot be done Defence of impossibility can be raise in wtv manner in which impossibility arose bcs

the remedy cannot be awarded where D simply cannot perform his part. Jones v Lipman - Property was transferred to a company controlled by D with the

object of defeating the Claimant’s unprotected contractual interest. Ct held: Sp not be granted

Illegality & Public Policy Illegal contract cannot apply for SP / Outcome of contract will result in breaching

Public policy. Example ; build schools for pick pocketing

-Does not in line with public policy and thus SP will not be awarded.