Equitable Remedies

Besides common law remedies of damages, the innocent party also has access to equitable
remedies.

The performance of a contract may be done through an order of:

Specific Performance - an order which compels the party in breach to perform the contract.
This is a positive order.

Injunction - an order which prohibits a party from certain actions.

Specific Performance
This generally deals with enforcing a Positive Obligation

Co-operative Insurance Society Ltd v Argyll Stores (1997) HL - Specific Performance is

an exceptional remedy.

When is Specific Performance granted:- When damages are an inadequate remedy.

The courts will consider whether or not, in all the circumstances, an order for specific
performance is just.

o Behnke v Bede (1927) - specific performance was granted when the ship that was
sold was ‘of peculiar and practically unique value [to the claimant]’.

o Societe des Industries Metallurgiques SA v The Bronx Engineering Co Ltd

(1975) - specific performance was refused in respect of a contract to build a
complicated piece of manufacturing machinery that weighed 220 tons and took 9–12
months to complete.

Although there would be an inevitable delay, damages would be an adequate remedy

because they allowed the injured party to purchase replacement goods in the market.

o Damages for a breach of a contract to sell land are viewed as inadequate and the
usual remedy in such a case is an order for specific performance - Johnson v
Agnew (1979).

o Recent cases have concerned specific performance of obligations where if such an

order was not made immediately the possibility of ever doing so would be lost.
 Sky Petroleum v VIP Petroleum [1974] effective specific performance was granted
to force the defendant to maintain fuel supplies to the claimant. The fuel market was
in turmoil and so if this order was refused the claimant had no realistic prospect of
getting a substitute supply.

Thames Valley Power Ltd v Total Gas and Power Ltd (2005) it was said, obiter,
that specific performance would be ordered to enforce a long term contract to supply
gas to an airport’s power facility when the delays involved in a claim for damages
would result in the insolvency of the business.

o Another consideration when awarding specific performance is that in some cases it

may be extremely difficult or impossible to quantify the claimant’s loss - Decro-Wall
International SA v Practitioners in Marketing Ltd (1971).

o The courts have also considered whether or not the defendants would be able to pay
an award of damages. There are indications that where this seems unlikely, an order
for specific performance may be made: Evans Marshall & Co Ltd v Bertola SA
(1973).

Restrictions to the order of Specific Performance

Specific Performance will Not always be granted. There are certain factors that can prevent
an order for specific performance.

An order for specific performance is an equitable remedy, thus it is a discretionary remedy. It

does not follow as a matter of right; it is left to the discretion of the courts to decide whether
or not to make the award.

The court does not exercise this discretion in an arbitrary fashion but in accordance with
strict rules and practices: Co-operative Insurance Society Ltd v Argyll Stores (Holdings)
Ltd (1998).

Grounds on which an order of specific performance is refused is:

✓ Where the order would require the ‘constant supervision’ of the courts.
Argyll case, Lord Hoffmann was careful to point out that the problem was not that the
court would have to physically supervise the order, but that continual appearances for
further orders for a contempt of court would have to be made.

Zinc Cobham 1 Ltd (In Administration) v Adda Hotels [2018] EWHC where specific
performance was refused against the occupiers of 10 hotels who undertook to trade in
accordance with certain standards, partly on the basis that any such order would require
the recurrent supervision of the court.
✓ Claimant’s conduct must be beyond question. This rests upon the equitable maxim that
‘he who comes to equity must come with clean hands’.

✓ If the party claiming the order has performed the contract in an unfair manner the order
will be refused. The court may refuse specific performance of a contract where the
contract has been obtained by means which are unfair.

✓ A court will not make an order for specific performance where this would result in severe
hardship to the defendant. This also includes cases where the cost to the defendant
would substantially outweigh any benefit to the claimant: Tito v Waddell (No 2) (1977).

✓ The court will not order specific performance where it is impossible for the defendant to
comply with the order. Thus, if the defendant has contracted to sell land which he does
not own, a court will not make an order to compel him to sell this land.

✓ There must also be a mutuality of remedy.

Courts will sometimes refuse to order specific performance of a contract at the request
of one party if it could not order it at the request of the other party.

✓ Lastly, courts will not make an order for specific performance with regard to certain
kinds of contracts. The most important of these are contracts for personal services (or
employment) – those contracts where one party has agreed to serve another. Contracts
which involve the performance of personal services are not, on the whole, subject to an
order for specific performance.

Courts are strongly reluctant (although have no particular rule against it) to decree
specific enforcement of an employment contract. It has long been thought undesirable
that parties be forced into an employment relationship. In addition, there is the practical
difficulty of determining whether or not there has been a proper performance.
 Giles v Morris (1972), Megarry J stated:

The reasons why the court is reluctant to decree specific performance of a contract for
personal services (and I would regard it as a strong reluctance rather than a rule) are, I
think, more complex and more firmly bottomed on human nature …who could say
whether the imperfections of performance were natural or self-induced?!

Injunction
This deals with negative obligations – where a party promises not to do something or to refrain
from doing something.

In this case, equity offers the possibility of an injunction by the court prohibiting some form of
conduct. The court is enforcing a negative stipulation.

An injunction is also a discretionary remedy and the courts will only order it where it is just to
do so. The courts will not order it where it would cause such a particular hardship to a
defendant as to be oppressive to him - Insurance Co v Lloyd’s Syndicate [1995]

It is important to consider that a court will not grant an injunction where to do so would be to
indirectly order specific performance: Page One Records v Britton (1968). In many cases,
however, courts have refused to recognise that the grant of an injunction preventing the party
from employment with another effectively compels them to specifically perform the first
contract.