Specific Performance

February 1, 2018 | Author: Farah Farhana | Category: Specific Performance, Equity (Law), Damages, Breach Of Contract, Judiciaries
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Specific Performance Definition  When a court directs a party to perform the obligation imposed on it by the contract;  It is a remedy which compels the execution of a contract which requires some definite thing to be done before the transaction is completed;  The parties’ rights are settled and defined in the manner intended;  A   party   to   a   contract   is   generally compelled to perform what he has agreed to   do   when   damages   may   not   be   an adequate   remedy   the   decree   of   specific performance may be refused.

Applicable Law

Wong Kup Sing v Jeram Rubber Estate Ltd

The P entered into an agreement with the D to buy from him a rubber estate within a period of time clearly stipulated. The P failed to buy within   stipulated   time   and   requested extension, on 6 occassion which were given to him. However, the P still failed to buy at that day. Later, the D refused to sell and consequently the P claimed SP. Held: the D should give a reasonable notice of their intention to abandon the contract if the balance of the purchase money was not paid. However, the P proves a continuous readiness and willingness to perform the contract from the   date   of   the   contract   until   the   date   of hearing. Therefore, SP ordered. 

Yeo Long Seng v Lucky Park (Pte) Ltd 

Section 11 – 29 of Specific Relief Act

Court refused to grant SP as damages could provide an adequate remedy.

General Principle

Langen and Wind v Bell

1. Discretionary remedy

 In Malaysia, Section 21 of SPA deals with   the   discretion   of   the   court   to decree specific performance.  SP may be decreed by a court solely at its   discretion,   except   in   cases   where clear cut provision deprives the court of this discretion.  The   court   exercise   their   discretion   to grant or refuse a decree of SP mainly in cases   involving   delay,   hardship, mistake or conduct of the Plaintiff.

The purchaser brought a specific performance action for the sale of shares, under a contract whereby   the   purchase   price   could   not   be ascertained   for   about   two   years   after   the agreed date for the transfer of share. The court had regard to the  equitable  principle  that an unpaid vendor is entitle to a lien on the subject matter of the sale, refused to grant an order for specific performance except in a form which would   effectively   safeguards   the   equitable lien.

2. It is remedy ‘in personam’

 Acts in personam, where it was against the   individual   defendant   not   his property.  Court will order SP of a contract for the sale of land which may be located in a foreign   country   but   whose   owner   is within court’s jurisdiction; or the court may order for the administration of the assets   abroad   if   the   executor’s   are within the court’s jurisdiction.

Penn v Lord Baltimore

Where   the   plaintiffs   and   defendant   entered into a written agreement fixing the boundaries of Pennsylvania and Maryland, the former of which belonged to the plaintiffs and the latter to   the   defendant.   The   plaintiffs   sued   the defendant in England to have  the agreement specifically   performed,   and   one   of   the objections takes by the defendant was to the jurisdiction of the court. This   objection   was   overruled   by   Lord Hardwicke on the ground that decreed specific performance of an English agreement relating to  the   boundaries   between  Pennsylvania   and Maryland, despite the inability of the court to enforce its remedy in rem. SP of an agreement was decreed, even though the subject matter was not in England but in North America

Richard West Partners (Inverness) Ltd v Dick

Specific   performance   was   decreed   of   a contract   for   sale   of   land   outside   the jurisdiction     against   a   defendant   within   it. Although   the   land   was   not   within   the jurisdiction, the defendant was, and the court would   hold   him   in   contempt   unless   he complied.

3. Damages not adequate remedy

 In general, equity does not intervene if the remedy of law is adequate.  The usual remedy at law for breach of contract   is   damages,   for   failure   to return to return a chattel to its owner, it is damages for detinue.  Damages   has   been   regarded   as inadequate   to   put   the   plaintiff   in   the same   position   as   if   the   contract   had been formed (or the property return to him) by the defendant in a number of different areas.

Section 11(1)(c) “Specific performance of any contract may, in the   discretion   of   the   court,   be   in   enforced, where the act agreed to be done in such that pecuniary   compensation   for   its   non­ performance would not afford a relief”.

Illustrations (a) A contract with B to sell him a house for $1000. B is entitled to a decree directing A to   convey   the   house   to   him,   he   paying   the purchase money. (b) A contracts to sell to B contracts to buy a   certain   number   of   railway   shares   of particular description.  A  refuses  to  complete the   sale.   B   may   compel   A   specifically   to perform   this   agreement,   for   the   shares   are limited in number and not always to be had in the market and their possession carries with it the   status   of   share   holder   which   cannot otherwise be procured.  (c) A contract with B to paint a picture for B   who   agrees   to   pay   therefore$1000.   The picture   is   painted.   B   is   entitled   to   have   it delivered   to   him   on   payment   or   tender   of $1000.

Section 11(2) Raises   a   presumption   that   “the   breach   of   a contract   to   transfer   immovable   property

cannot   be   adequately   relieved   by compensation in money, unless the contrary is proved”.   Similarly,   it   is   presumed   that   the breach   of   contract   to   transfer   movable property can be thus relieved.”

Gan Realty Sdn Bhd v Nocholas

The defendant negotiated with the plaintiff the sale of their respective shares on the Oriented Bank   of   Malaya   Berhad.   The   terms   and conditions of the agreement were confirmed in the letter. The plaintiff had reason to believe that the defendants were about to dispose of their   shares   in   the   bank   and   they   obtained injunctions   restraining   the   defendants   from parting with their shares. The plaintiff claimed specific performance of the agreement.  If the loss can easily be quantified in money, the court will not grant SP. 

Duncuft v Albrecht

The court decreed specific performance of an agreement for the sale of railway shares which are   limited   in  number  and  not  always   to  be had   in   the   open   market.   But   the   shares   in question are such that they can easily obtained from   the   open   market,   so   that   the   loss   can easily be quantified in money, the court will not grant specific performance of the contract.

H.A. Securities Sdn.Bhd V Ng Kong Yeam

in 1988, Roxy had proposed a right issued of 135646 shares at RM1 each plaintiff and the defendant   entered   into   two   memorandum   of understanding   (MOU),   whereby   the   plaintiff deposited with the defendant two and a half million   shares   (fully   paid)   in   Roxy   Co.   in exchange   for  a  payment of  RM5  million  by the   defendant.   It   was   agreed   that   if   the proposed   rights   issue   was   cancelled,   the plaintiff could claim back the said 2 ½ million shares   on   payment   of   RM5   Million   by   the defendant. It was agreed that if the proposed

rights issue was cancelled, the plaintiff could claim   back   the   said   2   ½   million   shares   on payment   of   RM   5   million   to   the   defendant. The right issued was aborted. A year elapsed, and then only the  plaintiff claimed back the shares after paying RM 5 Million, but before the defendant had already sold out the shares. The   plaintiff   is   now   claiming   specific performance of the agreement. The defendant says that four month after the cancellation of rights issued they wrote to the plaintiff but he did not respond for any apparent reason. No explanation was given. It was held to the KL High Court; “Why did not the  plaintiff respond to that letter at all? No valid explanation had   been   forthcoming   and   the   only conclusion   is   that   they   were   either waiting for the price to go up or they had then decided not to exercise their option   to   demand   the   return   of   the shares. The defendant had acted strictly as required. RM 5 Million was at stake and   stoke   shares   are   a   volatile commodity. In these circumstances, the plaintiff   surely   cannot   now   ask   for specific performance because; (a) The shares were freely available in the open market, unlike the decision in   Gan   Realty   Sdn.   Bhd.   V   Nicholas (1969) 2 MLJ 110. (b) Damages would be an adequate remedy as decided in Yeo Long Seng v. Lucky Park Pt. LTD   (c) The   plaintiff   had   ignored   the defendants letter for one year (d) Of  the   fact  that  the   shares   had actually been sold before the plaintiff’s delayed decision to demand...”  S.11(2) – Presumption o 1.   Court   always   presume transaction   of   immovable property   is   always   inadequate damages   unless   can   prove otherwise (Df must prove)

o 2. Movable Property transaction always adequate damages unless prove otherwise (Pf must prove)

4.   Damages   may   be   awarded   in substitution for or in addition to specific performance  General   Principle:   ‘once   the   specific performance   had   been   given,   it   does   not mean that the plaintiff does not get for the other compensation.

Section 13 of SRA Section 14 of SRA ­

Damages may be awarded for apart unperformed

give necessary written consent and to execute Power of Attorney in favor of the plaintiff or its   nominee   for   the   purpose   of   execution   of charges and financier’s documents to finance the   development   project.   The   Joint   Venture project   went   on   without   any   hitch   until   the demised of the deceased.  The defendants being the heirs of the deceased had refused to honour their obligations under the   said  Agreements.   Upon  the   death  of   the deceased,   the   defendant   was   adamant   and refused   to   cooperate   with   the   plaintiffs   to execute the new power of Attorney. For that reasons, the plaintiffs could not developed the Lands within 6 month as stated under the said Agreements.  The   court   held   that,   after   take   into consideration on the fact of the circumstances, the court allows the plaintiff’s claim with cost.

Ibrahim bin Saidin v Hitam bin Ali

Section 18 of SRA Section 19 of SRA ­

SP even where damages are agreed upon

5.   Specific   Performance   unaffected   by waiver Allen v El Nasr Export

Binaan Sentosa Sdn Bhd Plaintiff   files   the   Writ   of   Summons   and Statement   of   Claim   against   the   defendant claiming   for   specific   performance   and   the other consequential relief.  In   this   case,   plaintiff   enters   a   Joint   Venture Agreement   and   Supplementary   Agreement with Che Soda bin Che Hassan (the deceased) for the purpose to develop two of land.  Pursuant   to   the   said   agreement,   a   Power   of Attorney was executed by the decease in favor of the plaintiff to act, conduct and managed all the deceased’s affairs in relation to the land.  The deceased too had received a consideration of RM 30, 500.00 from the plaintiff in respect of the joint venture project. It was the term of the   said   Agreements   that   the   deceased   to deliver the Lands free from encumbrances, to

“The principle by waiver is simply where, if one   party,   by   his   conduct,   leads   another   to believe that the strict rights arising under the contract will not be insisted on, intending that the other should act on that belief, and he does act on it, then he first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.

Plasticmoda Societa Per Azioni v Davidsons (Manchester)

There   must   be   no   consideration   moving   for him who benefits by the waiver. There may be no detriment to him by acting on it. There may be   nothing  in   writing.   Nevertheless,   the   one who waives his strict rights cannot afterwards insist on them. His strict right cannot at any

rate suspended so long as the waiver lasts. He may on occasion be able to revert to his strict legal right for the future by giving reasonable notice in that behalf, or otherwise making it plain   by   his   conduct   that   he   will   thereafter insist on them.

Plenitude Holdings v Tan Sri Khoo

Held:   A   court   of   equity   enforces   SP   of   a contract affecting land because it acts upon the equities   contract   and   not   upon   the   contract itself.

6.   Only   Positive   contracts   may   be specifically performed Section 55

Hafsham v. Zenab

When Privy Council emphasized that the basis of specific performance is a valid contract in which   one   party   must   have   given   adequate consideration to the other party. A gratuitous agreement   is   not   liable   to   be   specifically performed.

Section 17 Section 24

7.   Considerations   of   “hardship”   and expiry   of   “limitation   period”   may   not necessarily defeat SP

 In   general,   specific   performance   may be refused in the discretion of the court where   a   decree   would   cause unnecessarily hardship to either of the parties, or to third party.   In adequacy of price is not standing by itself   ,   a   ground   for   refusing   specific performance, but it may be evidence of

other   factors,   such   as   fraud   or   undue influence,   which   would   render enforcement inequitable.  Civil Proceeding = 6 years  In rem property=12 years

Patel v Ali

The vendor and her husband were co owners of   a   house   which   were   co   own   of   a   house which   they   contracted   to   sell   in   1979.   The husband   bankruptcy   caused   a   long   delay   in completion for which neither the vendor had a leg   amputated.   She   later   gave   birth   to   her second and third children.  The purchaser obtained an order for specific performance   against   the   vendor   appealed   on the ground of hardship.  She   spoke   little   English   and   relied   on   help from   nearby   friends   and   relatives,   hence   it would   be   hardship   to   leave   the   house   and move away.  Goulding J held that the court in a proper case could   refuse   specific   performance   on   the ground of hardship subsequent to the contract, even   if   not   caused   by   the   plaintiff   and   not related   to   the   subject   matter.   On   the   facts, there   would   be   hardship   amounting   to injustice,   therefore   the   appropriate   remedy was damages.

Haji Osman Bin Abu Bakar v. Saiyed Noor Bin Saiyed Mahmud R.M Venkatachalam Chettiar v. N.K.R. Arunasalam Chettiar 8.   SP   dependant   on   an   option   is unaffected if the option is not exercised strictly in the prescribed manner.  Kau Nia Enterprise Ltd v Teck Wah Corporation

The fact that by an option in writing given on June 10, 1980, the defendants for the sum of

$5000 gave the plaintiff an option to purchase a   property   in   Singapore   with   vacant possession   and   at   the   price   of   $720   000.00. Completion of the sale  and purchase  was to take place on November 10, 1980. The option was exercisable at or before 4 p.m on July 30, 1980.   The   acceptance   was   prescribed.   The plaintiffs had to sign at the foot of the option at the portion entitled “Acceptance Copy” and deliver   it   duty   signed   together   with   the balance of the 10% of the purchase price at or before the time aforesaid. The plaintiff did not exercise the option in the mode prescribed. Instead, they handed to the defendants   and   the   defendants   accepted   two cheques   aggregating   the   sum   of   $67   000 which together with the option fee amounted to 10% of the purchase price. Held:   that   “   although   the   Plaintiff   did   not exercise the option in the manner and within the   time   prescribe,   I   am   satisfied   that defendants had waived these terms and had in truth   and   in   fact   accepted   the   plaintiffs’ belated   and   altered   mode   of   converting   the option   into   a   conclude   contract.   This   is conclusive   evidence   by   letter   dated   July   31, 1980 and written by the defendant. The letter acknowledge the receipt of the two cheques, one of which was for $5000 and the other for $62 000 which was post­dated to August 23, 1980. It made reference to the option fee. The defendants   “confirmed   the   sale”   to   the plaintiffs.   By   saying   “you   have   already exercised the said sale” they meant or must be taken   to   mean   that   the   plaintiffs   had   been deemed   by   the   defendants   to   have   duly exercised the option. The letter even went on to   provide   for   interest   to   be   charged   if   the post­dated cheque was not only honoured on presentation.   The   letter   was   accepted  by  the plaintiffs. On 8 September 1980 the plaintiffs requested the   defendants   to   encash   the   post­dated cheque.   The   defendants   did.   Completion   of the   sale   and   purchase   was   delayed.   On   6 December   1980   the   defendants’   solicitors

stated that the transfer had been executed by the defendants. They asked for a firm date for the completion. Up to this stage, it is clear that every act of the defendants was in affirmation that the agreement for sale and purchase was concluded   and  the   actions   of   the   defendants were   steps   taken   by   them   towards   the completion of the sale. On 21  January 1981  the  defendants  took  an extraordinary   step.   They   wrote   to   their mortgagee bank to auction the property. It was calculated   to   deprive   the   plaintiffs   of   the property.   It   was   stated   by   counsel   on   both sides   that   the   property   was   by   then   about $1.6m. The defendants should not be allowed to   renege   on   their   contract   just   because   the property   market   was   rising.   The   plaintiffs gave   notice   of   completion.   The   defendants could   not   give   vacant   possession   of   the property.   The   encroachments   mentioned earlier in this judgment were still there. The plaintiffs   insisted   on   completion notwithstanding   the   encroachments.   As evidenced by the letter dated 3 April 1981 and written   by   the   plaintiffs’   solicitors,   both parties   agreed   price   to   meet   the   cost   and expense of removing the encroachments. No agreement was reached on the amount of the abatement. As the defendants failed to complete the sale notwithstanding   repeated   notices   from   the plaintiffs, these proceedings were commenced from   specific   performance   and   for   an appropriate abatement of the price in view of the   encroachments.   On   behalf   of   the defendants, it was argued that the option, not having been exercised in the mode and within the   time   prescribed,   had   lapsed.   It   was   also argued that the letter of 31 July 1980 was not a sufficient memorandum, as it allegedly did not   contain   the   essential   terms.   The   first contention   is   not   consistent   with   the   plain words and tenor of the defendants’ letter of 31 July 1980, the effect of which I had already dealt with. It is so clear and unambiguous.  This   is   one   case   where   happily   the contemporaneous   documents   are   such   that

they conclusively demonstrate the conclusion of a contract in writing.

9.   SP   may   claim   and   granted   even before   the   time   of   performance   has arrived.  General   Rule   =   the   party   to   the   contract can seek for specific performance if they can   foresee   that   the   other   party   could perform   the   obligation   when   the   time arrived.  Eg:   B   enters   into   contract   selling   of   the goods with C. B realize that C could not perform its obligation on the contract at the time   what   was   promised.   So   in   this circumstance,   B   can   seek   for   specific performance on the grounds of anticipatory breach

Leeds Industrial Co­operative Society Ltd. V Slack

Held:   “so   far,   as   specific   performance   is concerned, they must always be cases where there has been an anticipatory breach”.

Khatijabai Jiwa Hasham v Zenab

Facts: a contract signed by the defendant for the sale by her to the plaintiff of a 2 acre plot of   land   in   Nairobi,   provided   inter   alia,   for

payment   of   a   deposit   immediately   and   the balance of the purchase price on presentation of documents of title to be executed by both parties within 6 months from the date of the contract.  The defendant then repudiate the contract and tore it up within a few minutes of signing it on the ground that she had never agreed to sell the whole 2 acres but only an area of half an acres. Only July 2, 1954, some weeks before the  last day  for  competition,   August  19,  the plaintiff   instituted   proceeding   claiming specific   performance   of   the   contract   of February, 19.  The   defendant   contended   inter   alia,   that   the plaintiff was issued prematurely, and that the plaintiff   should   have   waited   until   there   had been a failure to perform the contract within the period fixed hereby, notwithstanding that she had previously intimated her refusal to do so. Held: The plaintiff was entitled to an order of specific   performance.   The   fallacy   of   the defendant’s   contention   consisted   in   equating the right to sue for specific performance with a cause of action at law. In equity all that was required   was   to   show   circumstances   which would justify in the intervention by a court of equity.  The   order   of   specific   performance   often fell   into   two   parts,   the   first   being   of   a declaratory   nature   and   the   second containing consequential direction.  The court would not, of course, compel a party   to   perform   his   contract   before   the contract date arrived, and would give relief from   any   order   in   the   event   of   an intervening   circumstance   frustrating   the contract.

10.   Possibility   of   compliance   is   must (Observance to the order is a must) 

 Equitable remedies will never issue unless the   court   can   ensure   that   they   will   be observed.   As   equity   does   not   act   in   vain,   specific performance   will   be   decreed   only   where the   defendant   is   in   a   position   to   comply with the order.

Jones v Lipman

Facts: defendant entered into a contract to sell some land to the plaintiff, and then sought to avoid specific performance by selling the land to a company acquired by him solely for this purpose and controlled by him.  While   specific   performance   would   not normally be ordered against a vendor who no longer owned the property, here the defendant was   still   in   the   position   to   complete   the contract,   because   as   Russel   J   said   that   the company  was   ‘the   creature   of   the   vendor,   a device   and   a   sham,   a   mask   which   he   holds before   his   face   in   an   attempt   to   avoid recognition by the eye of equity.  This specific performance was decreed against the vendor and the company.  

performance, wholly or partly, of a trust, the   specific   performance   of   any   contract may,   in   the   discretion   of   the   court,   be enforced.  Eg: A holds certain stock in trust for B. A wrongfully disposes of the stock. The law creates  an  obligation on  A  to  restore  the same  quantity of  stock to B, and B  may enforce   specific   performance   of   this obligation

Section 11(1)(b)

 Any contract may be specifically enforced when there is no standard for ascertaining the   actual   damage   caused   by   the   non­ performance of the act agreed to be done  Eg: A agrees to buy and B agrees to sell a picture   by   a   dead   painter   and   two   rare China vases. A may compel B specifically to   perform   this   contract,   for   there   is   no standard for ascertaining the actual damage which   would   be   caused   by   its   non­ performance.

Section 11(1)(c)

Specific Performance under SRA 1950 1. Contract can be specifically enforced wholly  Specific relief may be ordered for contract for   land   whereby   each   piece   of   land   is regarded as unique , contract for the sale of stock and shares which cannot be bought in   open   market,   and   contract   of   sale   of chattels which are especially rare or of a particular manner. 

Section 11(1)(a)  Contains   four   situations   which   specific performance may be specifically enforced. When the act agreed to be done is in the

 Specific performance of any contract may, in the discretion of the court, be enforced where   the   act  agreed   to   be   done   is   such that pecuniary compensations for its non­ performance   would   not   afford   adequate relief.  Eg: A contracts with B to paint a picture for B who agrees to pay therefore $1000. The picture is painted. B is entitled to have it delivered to him on payment or tender of the $1000

Section 11(1)(d)

 The specific performance may also be enforced   when   it   is   probable   that pecuniary   compensation   cannot   be given   for   the   non­performance   of   the act agreed to be done  A transfer without endorsement, but for valuable   consideration,   a   promissory note to B. A becomes insolvent, and C is   appointed   his   assignee.   B   may

compel C to endorse the note, for C has succeeded   to   A’s   liabilities   and   a decree for pecuniary compensation for not   endorsing   the   note   would   be fruitless

Section 11(2)

 Raises a presumption that “the breach of   a   contract   to   transfer   immovable property cannot be adequately relieved by compensation in money, unless the contrary   is   proved.”   Similarly,   it   is presumed that “the breach of a contract to   transfer   movable   property   can   be thus relieved.

Loh Koon Moy & Anor. v. Zaibun SA binti Syed Ahmad Facts: The first appellant had agreed to buy a piece of land from the respondent, the administratix of an estate. An order of court had been given empowering   the   respondent   to   sell   the   land. The learned trial judge found in favour of the appellant   but   found   that   there   was   an   oral agreement   enabling   the   respondent   to   pay damages   for   breach.   He   therefore   gave damages in favour of the appellant. However, the   learned   judge   refused   to   order   specific performance because of the damages available through   the   oral   agreement.   The   appellant appealed. Issue: Whether, if an alternative remedy is available, a specific performance can be granted. Principle: Specific Performance is an equitable remedy for   breach   of   contract;   an   alternative   when money   damages,   the   usual   legal   remedy;   is inadequate Judgment: In accordance with sections 18 and 19 of the Specific Relief Act 1950 provides for a prayer of compensation and though a sum be named

in default is willing to pay the same, a contract may   be   enforced   by   an   order   for   specific performance. The learned judge followed the judgement of the   Privy   Council   in   the   case   of  Oxford   & Ors.   v.   Provand   &   Anor.    whereby   the Lordships declared that the court may exercise a   discretion   in   granting   or   withholding   a decree   of   specific   performance   taking   into account the circumstances of the case, conduct of   the   parties   and   their   interests   under   the contract. Furthermore, section 11(2) Specific Relief Act 1950 has provided that, in favour of a contract to   sell   land,   the   court   shall   presume   that monetary   compensation   is   not   adequate   to relief   the   breach   of   contract   to   transfer immovable property. Moreover, in the court’s  view,  there was  an element   of   public   policy   which   operates   in favour of an order of specific performance in this case. Based   on   the   findings   of   the   court   stated above,  the   appeal   is   allowed.   The administratix   was   ordered   to   specifically perform   the   agreement   to   sell   by   executing proper   and   valid   transfers   of   the   lands   in question   upon   payment   of   the   full   purchase money and a further order that if she defaults, the Senior Assistant Registrar be empowered to   execute   the   relevant   documents   on   her behalf.   The respondent had not in any way rebutted the presumprtion raised in S.11(2)

Hoh Ah Kim v. Paya Trubong Estate Sdn. Bhd. Facts: The plaintiffs are the executors of the estate of Liew Yeong Choy, deceased, who entered into an   agreement   in   writing,   dated   19   February 1972   with   the   managing   director   of   the defendant   company   whereby   the   deceased

agreed   to   buy   and   the   defendant   company agreed to sell a portion of its land to the extent of about 15 acres. Upon the execution of the agreement,   the   deceased   paid   the   sum   of $18,000. Clause 1, spells out the terms of the agreement  for   sale.   Clause   2,   states   that  the defendants  shall  from  time  to  time   keep  the deceased   informed   about   the   Penang government's   option.   Correspondence   passed between the defendants and the deceased. The defendants  indicated to  the  deceased that  he could buy the land at $7,000 per acre, not at the   old   price   of   $4,000.   Eventually   on   20 January 1980, the defendants' solicitors wrote to the plaintiffs' solicitors refunding the sum of $18,000 which purported to discharge the defendants   from   the   said   agreement,   thus giving rise to the present proceedings by the plaintiffs for specific performance or damages for breach of contract. Issues: Whether the agreement for sale enforceable at law so that the plaintiff can claim for specific performance.

and acquiescence as pleaded in para 10 of the defence,   there   is   clear   evidence   from   the correspondence and the  defendant DW1 that the   parties   were   at   all   times   negotiating   for specific performance of the said agreement. In fact,   the   defendants   through   their   solicitors impliedly gave  the deceased a false hope  of furnishing a detailed agreement to be executed between the parties. This was followed by the negotiations about the price.

Principle: In   granting   the   specific   performance,   court will take into account all the circumstances in that case then identified whether the deceased deserve for the damages only or damages and specific performance.

Mohamed v Ho Wai

Judgment: In   an   action   for   specific   performance   of   an agreement for sale of land, Section 9(1) of the Limitation Act 1953 will apply. In   the   present   case,   the   alleged   breach occurred on 20 January 1980. Therefore time began to run from that date. Even if the right of   action   accrued   from   the   expiry   of   the 'option'  on 10  July 1973,  the   plaintiffs   were still within the 12­year period from 24 May 1980, when the plaintiffs filed their statement of claim. The plaintiff’s action is not statute­ barred. Besides, the agreement for sale is not void ab initio for uncertainty but enforceable at law. In addition, on the defence of laches

The   court   is   therefore   satisfied   that   the defence   of   laches   and   acquiescence   cannot succeed.   Then,   the  court   did   not   grant specific   performance   but   awarded compensation for breach of the agreement. It is fair and reasonable to assess compensation on the basis of $4,000 per acre which is the purchase price originally agreed between the parties.   The   defendants   were   ordered  to   pay the   plaintiffs   the   sum   of   $60,000   as compensation. They must also refund the sum of $18,000 which was paid as deposit and the costs of the action to the plaintiffs. Facts: Plaintiff prayed for specific performance of an agreement   to   grant   a   monthly   tenancy.   The plaintiff’s   uncle   obtained   a   monthly   tenancy of the premises in question in1929. After more than   twenty   years   of   peaceful   enjoyment   of this tenancy, the plaintiff’s uncle had to vacate the premises when in 1951 the Menteri Besar ordered   the   vacation   of   the   whole   area.   In 1957, when the area was made a “white area”, plaintiff’s   uncle   applied   to   the   proper authorities   for  re­occupation  of  the   premises and this permission was given to him a year later.   However,   the   owner   of   the   premises entered   into   possession   of   the   premises because   plaintiff’s   uncle   did   neither   inform the   owner   of   his   vacation,   nor   about   his whereabouts,   nor   paid   rent,   giving   an impression of abandonment.  In   the   meantime,   the   plaintiff   became   a partner   in   his   uncle’s   business   and   started proceedings against the defendant.

Issue: Whether   the   Court   will   grant   specific performance in the case of executed contract. Principle:  It   is   an   elementary   principle   of   equity   that specific performance will only be granted in the   discretion   of   the   Court   in   the   case   of executory contracts. Judgment: The plaintiff prays for specific performance of the   agreement   dated   12th   September   1929, which had been fulfilled, in other words, its an executed   and   not   an   executory   contract.   An “executed   contract”   is   one   which   is   already fulfilled. Meanwhile, “executory contract” is a contract   where   it   remains   to   be   carried   into effect. It is an elementary principle of equity that specific performance will only be granted in the discretion of the Court in the case of executory contracts. Section  11  of the  Specific  Relief Act  1950 lays   down   the   conditions   under   which   the discretionary powers are exercisable which is, executor contracts. Following the case of J.M. Abdul Kadir v Shaw Bros , the court would not grant specific performance for the monthly tenancy.   The   more   suitable   remedy   for   the plaintiff is in section 7  and section 8   of the Specific Performance Act 1950. Accordingly   the   plaintiff   fails   and   the action is dismissed with costs.  SP   through   interlocutory   mandatory injunction.

Section 20

 This   section   laid   down   the   situations whereby   the   contracts   are   not specifically enforceable. They are: a)   A   contract   for   the   non­ performance   of   which   the compensation   in   money   is   an adequate relief  Eg:   A   contracts   to   sell   and   B contracts to buy, $10,000 in the four per cent loan of the City of Penang. b)   A   contract   for   personal   service will or volition.  Eg: A, an author, contracts with B   a   publisher,   to   complete   a literary work, B cannot enforce specific   performance   of   these contract.

Lumley v Wagner Ms.Wagner, a well­known opera star, agreed with   Lumley   to   sing   in   a   particular   theater during the period of the contract, and not sing for anyone else. She however, agreed to sing for   another   person   in   contravention   of   her contract   with   Lumley,   who   successfully obtained   an   injunction   to   restrain   her   from singing for anyone else during the period of contract.   It   is   to   be   noted   that   SP   of   the promise to sing was neither asked for nor was enforceable. Because it is well established that there is no SP of contracts which are personal and involve rendering of personal services.

Sivaperuman v Heah Seok Yeong Realty Sdn Bhd Tinta Press v BIMB 2. Contract cannot specifically enforced


c) An uncertain contract  Eg:   A,   the   owner   of   a refreshment­room,   contracts with   B   to   give   him accommodation   there   for   the sale of his goods and to furnish

him   with   the   necessary appliances. A refuses to perform his contract. The case is one for compensation   and   not   for specific   performance,   the amount   and   nature   of   the accommodation   and   appliances being undefined.  A misdescription of the property agreed to be sold in the contract document   make   the   contract unenforceable.  But when a misdescription is a trivial nature, then the purchaser who   contracted   to   buy   cannot allowed to repudiate on account of his triviality which is no way affects the value or utility of the property.  However,   where   misdescription is of a serious nature, then SP is refused   on   the   ground   that   the purchaser   cannot   be   compelled to purchase something which is substantially different from what he contracted to buy. d)   A   contract   which   is   in   nature revocable  Eg: A and B contract to become partners   in   a   certain   business, the   contract   not   specifying   the duration   of   the   proposed partnership. This contract cannot be specifically performed, either A   or   B   might   at  once   dissolve the partnership.   e)   A   contract   made   by   the   trustee either in excess of their powers or in breach of their trust.  Eg:   Two   trustees,   A   and   B, empoered   to   sell   trust   property worth $10,000, contract to sell it to C for $3000. The contract is so   disadvantageous   as   to   be   a

breach of trust. C cannot enforce its specific performance. f) A contract made by or on behalf of a   corporation   or   public   company created   for   special   purposes,   or   by the promoters of the company, which is in excess of its power.  Eg: A company existing for the sole   purpose   of   making   a railway   contracts   for   the purchase of a piece of land for the purpose of erecting a cotton­ mill   thereon.   This   contract cannot be specifically enforced. g)   A   contract   the   performance   of which involves the performance of a continuous   duty   extending   over   a longer period than three years from its date.  Eg: A contracts to let for twenty­ one years to B the right to use such   part   of   a   certain   railway made   by   A   as   was   upon   N’s land, and that B should have a right   of   running   carriages   over the whole line on certain terms, and   might   require   A   to   supply the necessary engine­power, and that   A   should   during   the   term keeping   the   whole   railway   in good   repair.   Specific performance   of   this   contract must be refused to B. h)   A   contract   of   which   a   material part of the subject matter supposed by both parties to exist, has, before it has been made, ceased to exist.  Eg:   A   contracts   to   pay   an annuity to B for the lives of C and  D.   It   turns   out   that,   at  the date   of   the   contract,   C,   though

supposed by A and B to be alive, was dead; the contract cannot be specifically performed.

Scope of Section 20

 The situation which a contract may not be   specifically   enforceable   are   not exhaustive  Even if the contract is not covered by the   section,   the   court   may   still   order against its SP.  Eg   of   contract   which   cannot   be specifically enforced: o Illegal   and   immoral   contract, agreements   without consideration Contracts Lacking Mutuality  Equity   will   not   permit   a   party   to enforce   a   party   to   enforce   a   contract which   the   other   part   could   not   have enforced against him.

Flight v Bolland

An infant who entered into bilateral contract with   an   adult,   filed   a   bill   through   his   next friend for its SP. The bill was dismissed. The principle of mutuality in contracts admits of many exceptions like; i.   A   similar   contract   procured   by   the fraud or misrepresentation of one of the parties   may   be   enforced   against   him, although not by him. ii.A contract between an infant and an adult may be enforced against the adult after the infant comes of age, although no   decree   could   be   made   against   the plaintiff.

Mir Sarwarjan v Fakhruddin

Held: a contract which can only be enforced at the option of one party cannot be specifically enforced.

3. For whom Contract cannot be specifically enforced

Section 23 Section 20(1)(e) – Contract by Trustee in breach of trust cannot be enforced Chun Peng Chee v Cho Yew Fai Facts: The defendants are the present trustee of Sin Sze Si Sze Ya Temple. In January 1945 an   agreement   was   entered   into   between   the plaintiff and the then surviving trustees of the Temple,   for   the   sale   of   a   shop­house belonging   to   the   Temple   for   which   the purchase­price was fixed and has been paid. The plaintiff, subsequent to the agreement was permitted to collect the rent from the tenant of the   shop­house   and   did   so   until   December 1,1950, when as a result of a latter, the tenant paid   rent   to   the   trustee   which   he   had previously   done   before   the   date   of   the agreement. Held: S 20(e) of the specific relief ordinance 1950­ contract by trustees in breach of trust cannot been forced. S 2(g) of the contract ordinance­ an agreement not enforceable by law is said to be void S   66   of   the   contract   ordinance­   when   a contract   become   void,   any   person   who   has received any advantage under such contract is bound to restore it to the person from whom he   received   it.   The   agreement   cannot   be enforced and the defendants must repay to the plaintiff   the   amount   which   the   surviving trustees received from him.

4. For whom contracts cannot be specifically enforced except with a variation

Section 25

 Section   25   of   the   Specific   Relief   Act 1950 highlights ‘fraud’ as a ground on the basis of which specific performance may be refused.   Specific performance is dependent on a complete and definite contract.   Thus, a contract cannot be specifically enforced   if   it   is   suffering   from illegality,   uncertainty,   fraud,   undue influence,   mistake,   misrepresentation or lack of consent.   A   contract   which   lacks   in   any   of   the three essentials of proposal, acceptance or consideration is also not enforceable.  Similarly,   varied   and   vague   contracts where   the   meaning   may   not   be ascertained cannot be enforced.

R paid off the A debt to C & arranged with the solicitor   whereby   by   the   said   solicitor   no longer looked upon the A for the payment. The A despite this agreement refuse to transfer the said land to the R. It was contended that: 1) The contract was unfair 2) No proof of fulfillment 3) Was no proof that the R was able n willing toperform the contract 4) There was undue delay on the part of R 5)   Payment   to   C   was   a   condition precedent Held:  The A had received in the fullest measure all that he bargained for and the court should not exercise the powers under S.21 In   view   of   the   evidence,   the   second   ground must fail 7. No SP of part of contract

Section 16 Exception: Section 13­15 5. Against whom contract cannot be specifically enforced

Section 27

 Specific performance of a contract cannot be enforced against a party in case: o If the  consideration to be  received by   him   is   so   grossly   inadequate/ couple   with   other   circumstances evidence of fraud./ undue influence o If assent was obtained by the misrep ,concealment, circumvention/ unfair practices o If   assent   was   given   under   the influence   of   mistake   of   fact, misapprehension/ surprise

Tan Meng San v Lom Kim Swee

A   agreed   to   transfer   a   land   to   the   R inconsideration of the R settling the A debt to C &paying the A solicitor his fee.


i. Ineffective Contract

 A contract cannot be enforced if there is illegality,   uncertainty,   fraud,   undue influence,   mistake,   misrep   or   laps   of consent.  A   contract   which   lacks   in   proposal, acceptance   or   consideration   is   also   not enforceable

Section 25

 Highlight   fraud   which   specific performance may be refused.

was refused although the mistake was due to entirely to the defendant’s fault and not in any way caused by the vendor; and the defendant waited   until   the   auction   was   over   before declaring the mistake.

Craddock Bros v Hunt

Basically, where the mistake is in the written record of the contract, the plaintiff may obtain rectification   and   specific   performance   in   the same action.

Section 27 (a)

 Mere   in   adequate   is   not   a   defense unless fraud is evidence

iii. Unfair Advantage Section 21(2)(a) Polygram Records Sdn bhd v The Search

ii. Misrepresentation, Mistake of fact Section 27  Specific   performance   cannot   be   enforced which   obtained   by   misrep,   concealment, mistake n etc.  D   not   allowed   to   resist   specific performance by alleging his own fault or mistake.  (Duke of Beaufort v Neeld)  However if the court feel it would involve hardship,   it   may   refuse   to   order   specific performance.  P   may   obtain   rectification   &   specific performance if a mistake is detect.

Watkin v Watson­Smith

“no   specific   performance   where   elderly vendor offered bungalow for sale at 2,950 by mistake,   intending   29,   500.   There   was   no contract.”

Malins v Freeman

Where an estate was purchased at an auction and the defendant bid under a mistake as to the lot put up for sale. Specific performance

iv. Delay

 Generally in equity time is not held to be of the essence of a contract,  thus specific performance may be decreed although the contractual   date   for   performance   has passed.   Failure to complete on the contractual date may,   however   render   the   delaying   party liable to damages for breach of contract.   The fact that time is not of the essence in equity   does   not   negative   a   breach   of contract in such a case.   It means that the breach does not amount to a repudiation of the contract.   Thus the delaying party, although liable to damages,   does   not  lose   the   right   to  seek specific   performance,   nor   will   he   forfeit his   deposit,   provided   he   is   ready   to complete within a reasonable time.

v) Hardship Section 36(1), (2) Limitation Act 1980 England No statutory period of limitation to bar claims of specific performance, except ´unreasonable delay: Delay become irrelevant if:­  The P has taken possession under the contract  He is seeking specific performance to get the legal title of the property Delay become relevant:­    the contract itself is disputed, and not its formalization

Section 6(1)(a) of Limitation Act 1953 Actions founded on a contract which naturally includes   specific   performance   shall   not   be brought after the expiration of six years from the date in which the cause of action accrued.

Section 22

 Exempts trust properties from period of limitation

Section 21 (2) (b)

The   court   might   refuse   to   grant   specific performance   where   the   performanc   would involve some hardship on the D which he did not foresee.

Patel v Ali

The vendor and her husband were co­owner of a house which they contracted to sell in 1979. The husband’s bankruptcy caused a long delay in   completion,   for   which   neither   the   vendor had a leg amputated. She later gave birth to her second and third children. The purchaser obtained   an   order   for   specific   performance against   which   the   vendor   appealed   on   the ground of hardship. She spoke little English, and   relied   on   help   from   nearby   friends   and relatives, hence it would be a hardship to leave the house and move away. Held:   Hardship may be define as one which the D could not foresee at the time to entering the contract. The court has to take the relative view of the hardship   to   P   and   D   before   ordering   and refusing specific performance. 

Section 23

 Nothing   in   this   act   shall   effect   any equitable jurisdiction to refuse relief on the ground of acquiescene.

Venkatachalam v Arumasalam

It   may   well   be   that   the   performance   of   his contract would involve some hardship on the estate of the vendor which the vendor did not foresee. There are hardships on both sides: ­If   the   vendor   estate   is   held   to   his bargain,   there   will   be   hardship   in   the sense that as a result of circumstances beyond anyone control the bargain. ­If it is not performed it will be at least a commensurate hardship on the P to be deprived of the fruit of their bargain

vi) Defect in Title

 A   purchase   cannot   be   compelled   to take a bad title, where the defect in title is due to reason: ­ misdescription   of property in the contract of sale  Land   being   burdened   with   respective covenants  Vendor   having   no   title   the   purchaser may   rescind   the   contract,   unless   the vendor removes the defect in title

Section 24 of SRA

A contract for the sale or letting of property, whether   movable   or   immovable,   cannot   be specifically enforced in favour of a vendor or lessor who: ­knowing himself not to have any title to his property ­thought he entered into the contract believing that he had a good title to the property ­Previous   to   entering   into   the   contract   has made a settlement of the subject matter

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