Chapter 2:

Equitable Remedies: Specific

Performance

Outline 2.1 Introduction 2.6 Damages in lieu of, or in addition to,

2.2 The general nature of equitable remedies specific performance
2.3 Specific performance: general nature 2.7 Specific performance and third parties
2.4 Situations where specific performance 2.8 Summary
will not be ordered
2.5 Defences to a specific performance
action

Aims of this Chapter

This chapter will enable you to achieve the following learning
outcome from the CILEx syllabus:

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2 Understand equitable remedies

2.1 Introduction pl
The common law remedy of damages is available as of right, but it often proves
inadequate. Damages are not very helpful if the subject matter of the contract
that has been breached is something unique or irreplaceable. Nor will damages
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suffice if the breach of contract involves continuing conduct or a harm that
once done cannot be reversed. Consider the scenarios below.

Jenny wins the lottery

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Jenny has recently won a large sum on a lottery. She decides to

buy a country house with room to keep a pony, and would like
to live close to her parents. She finds a beautiful Elizabethan
manor house just a few minutes from her parents’ home. It
is perfect and there is nothing similar to it in the area. After
the seller and Jenny have exchanged contracts, the seller
receives another offer for the house. It is twice as much as
Jenny was going to pay. The seller decides that he can afford
the compensation he will have to pay Jenny for breaking the
contract and tells her the sale is off. Jenny does not want
compensation. She wants the house because the house is
perfect and no other house will meet her requirements.

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Equitable Remedies: Specific Performance

David and Victoria

David and Victoria are well-known celebrities. Their nanny has
signed a confidentiality agreement, stating that she must not
reveal any information about the family. The nanny breaks
this agreement and sells a story to a newspaper alleging that
the couple’s marriage is in trouble. If the story is published,
it will have a serious effect on their reputation. David and
Victoria are not going to be satisfied with receiving damages
for the financial loss caused by their nanny’s breach of
contract. What they want is to stop publication of the article
in the newspaper. Once it has been published, it will be too
late because the damage cannot be reversed.

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Equity has developed a number of special remedies that can be used when
damages are not adequate.

The most important equitable remedies are decrees of specific performance and
injunctions. Under an order of specific performance, one party to a contract
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is ordered to perform their contractual obligations. This is the remedy Jenny
would want in the first scenario, as this would mean she could get the house
she wants. An injunction is a court order to a party to refrain from doing,
or possibly to do, a particular act. In the scenario about David and Victoria,
the remedy they would want is an injunction preventing the newspaper from
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printing the story about their marriage. Other equitable remedies include
rescission, rectification, delivery up and cancellation of documents, accounts,
and the appointment of a receiver.

This chapter briefly outlines some common features of equitable remedies and
then explains specific performance in more detail.
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2.2 The general nature of equitable remedies

The remedies developed by the courts of equity differ from the remedies
developed by the common law courts. Equitable remedies supplement rather
than compete with common law remedies. They are not available in every
single case where a claimant has suffered a wrong. In particular:

•• equitable remedies are only available if the relevant common law remedy
is insufficient to protect the claimant or compensate for the wrong he
has suffered;

•• equitable remedies are always discretionary;

•• equity acts in personam;

•• the courts are guided by the maxims of equity. The maxim “equity will
not act in vain” is a prominent example. The court will not make an order
that cannot be observed or intervene where it would be pointless to do
so.

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 Equitable Remedies: Specific Performance

We can now look at these points in more detail.

2.2.1 Remedy available only if remedy at law is inadequate

It is a precondition of the award of an equitable remedy that the remedy at
law (usually damages) is inadequate. Damages might be inadequate where the
justice of the case demands, where damages are difficult to quantify or where
the obligation is such that successive breaches would bring about successive
actions for damages. The aim of the equitable remedy is to “do more perfect or
complete justice” (Wilson v Northampton and Banbury Junction Railway
Co [1874]).

2.2.2 Equitable remedies are always discretionary

The common law remedy of damages for breach of contract is an example of a

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remedy that is available as of right. If the claimant establishes that the defendant
has broken the terms of a contract and the claimant has suffered damage as
a result, then the court will award damages. There are also legal mechanisms
to ensure that the defendant complies with the award of damages, and these
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are available whenever damages are awarded. The court does not have any
discretion as to whether to award damages or assist in their collection.

If the claimant is seeking an equitable remedy such as specific performance, the

court has a discretion – a choice – whether to award that remedy. Although
the court’s discretion is wide, it is exercised in line with established rules and
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principles, so that it should be possible to predict whether an injunction or
specific performance will be available on any given facts.

2.2.3 Equity acts in personam

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Equitable remedies are personal and exercised against a specified individual.

The remedy prevents the specified individual from acting unconscionably and
strikes at the defendant’s conscience and conduct.

2.2.4 The maxim “Equity will not act in vain”

Equitable remedies will be refused if the court cannot ensure that they will be
observed. The defendant must be in a position to comply with the order made.
The court will not interfere where there is not point in doing so.

The operation of this rule is illustrated by Jones v Lipman [1962]. L changed

his mind about selling land to J, even though they had a binding contract. L
knew that if J brought an action for specific performance, J would probably be
successful and L would have to transfer the land. With this in mind, L sold the
land to a third party, hoping that the court would refuse to make an order for
specific performance and award damages instead. This strategy relied on the
maxim that equity will not make a pointless order: since L did not own the land
any more, L could not transfer it to J.

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Equitable Remedies: Specific Performance

However, L’s strategy failed. This was because L did not sell the land to an
innocent third party. L sold it to a company that he had bought for the
purpose of buying the land. As L controlled the company, he was able to make
it complete the contract with J. An order for specific performance was not
therefore pointless. The court made the order against both L and the company.
The result would have been different if he had sold the land to someone else.

2.3 Specific performance: general nature

A decree of specific performance is one of the most important equitable
remedies. It is a court order directed to someone who is party to a contract
to instruct them to perform their obligations under the contract. Refusal to
observe the terms of the order is a contempt of court.

As specific performance is an equitable remedy, it has the following features:

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•• it is an order in personam;
•• it is discretionary;
•• the appropriate remedy at law must be inadequate.

2.3.1 Equity acts in personampl

Because the order to perform the contract is issued against an individual
defendant, it is an order or remedy made in personam. This contrasts with a
remedy in rem, which relates to the property that is the subject matter of the
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remedy. As a result, it does not matter where the subject matter of the contract
is, so long as the defendant is within the court’s jurisdiction.

For example, suppose that Jones and Cox enter a contract in which Jones agrees
to sell chickpeas from Australia to Cox. They are both resident in England.
Due to a worldwide shortage of chickpeas, the price increases dramatically.
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Jones finds another buyer who will pay a lot more than Cox agreed to pay,
and refuses to supply Cox with the chickpeas at the contract price. Although
the chickpeas are still in Australia, Cox can bring an action against Jones in
an English court because Jones is within the court’s jurisdiction (Penn v Lord
Baltimore [1750]). Cox is likely to seek an order for specific performance
rather than damages because he cannot now obtain chickpeas at the price he
contracted to pay for them.

2.3.2 The remedy is discretionary

As with the other equitable remedies, a decree of specific performance
is discretionary, that is, the court may refuse to issue the decree in certain
circumstances. This discretion is not exercised arbitrarily, but in well-defined
situations, for instance, where the contract is one that requires constant
supervision or where the claimant has not behaved properly himself. Where the
claimant has not behaved properly himself he will not be able to claim specific
performance because he has not complied with the equitable maxim “he who
comes to equity must come with clean hands”.

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ISBN 978-1-84256-963-4