Uploaded by Roland Hynscht

8 Specific Performance

Specific Performance
SP is an equitable remedy that orders the defaulting promisor to keep their contractual bargain
under pain of contempt of court
It is a presumptive remedy in that enforcement of realty contracts and of secondary nature in
any contract setting – neither is the full scope of the remedy
SP -> renewed interest in SP as a remedy which closely approximates to “complete”
compensation for breach of contract
A Brief History of the development of Specific Performance
Promisors obligations remain unfulfilled appears that the promise seek specific performance
Promise then receives complete relief
Why as the common law favour substitutionary relief over specific performance
o Early on emerged the idea of monetary payment as being a substitution for actual
o Common law had not developed assumpsit (he promised) making the promise as being
a central tenet of contract law
18th 19th century the creation of bilateral executory contract – contracting not only functioned to
effect a transfer in title to property – but became an important instrument to protect against
charges in supply and price in a market economy
o Bilateral contract created a new form of property the expectation interest of a promise
o Specific performance perfect to vindicate these promises – becoming the remedy of
choices (did not happen) – it was curtailed
 1) equity jurisprudence notion was “fairness” and “good conscience” – contract
“just price” where a commodity is priced on the day it is delivered – enforcing
the contracted price promised would violate “just price”
 2) decline of expeditious proceedings before the chancery courts
 Legal formalism – finding an appropriate role for damages as a primary
remedy for breach of contract
o Hadley v Baxendale – imposed limits on the recoverability of
consequential losses particularly speculative profits
o Obligations for the defendant to mitigate
 Deep suspicion of specific performance – ones the Holmesian view of contract
had taken hold that availability of specific performance became an anachronism
 The free wild nature of equity was somewhat of an issue
 Doctrine equity only steps in to supplement the common law
Supremacy of Damages
The laws job is to place the plaintiff in a position they would have been had the contract
been completed
o Must assess a promisee’s expectation and choose an appropriate remedy
1) Economic Efficiency
o Relationship between specific performance and damages is -> economic efficiency
Law current approach to remedies helps attain economic efficiency argue that damages
for breach of contract ensures that the breaching promisor can resell a commodity to a
person who places greater value on the commodity that then present promise
 As long as the promises expectations are satisfied by substitutionary damages
remedy (generally taken – otherwise the promise pays more in order for specific
 All parties walk away happy/satisfied and economically efficient
o Cases where specific performance is available when the commodity is unique – is
justified because substitutionary damages would be problematic possibly because
courts cannot calculate damages on similar market commodities – risk of under or over
compensation can be avoid ruling for specific performance
o Arguments for specific performance to be awarded more often argue economic
efficiency – due to plaintiff being under compensated – SP would avoid litigation costs
 This would then prevent a promisor from breaking contract to sell the
commodity to another who places a higher value. Would have to negotiate
release from specific performance obligations – promisee is in an exploitive
position against the promisor
One remedy over the other is justified if it minimizes the cost incurred in negotiating around an
inefficient remedy
2) Efficient Breach
o Built around the Holmesian view of contract “only consequent of a legally binding
promise is, the promisor pays damages if the promised event does not happen”
o SP gives the promisee exactly contracted for even if they do not care for completion
o Efficient Breach favours the promisor
 In that the cost of protecting the promisee is less than the promisors gain
through the breach
 If the promisee pursues SP then this is evidence that they value the contract
o Generally a promisee in these cases is not entitled to the gains made by the promisor
 However there is growing recognition that in a case of opportunistic breach a
restitutionary remedy may be appropriate
o Contract damages aim is to compensate a plaintiff for their actual loss and not remove
benefits from the defendant
 If specific performance was routinely available result in the promisor being
forced into pre or post judgement negotiations to arrange a release of the
specific performance decree
 Would be more problematic than simply damages
 When damages are hard to determine – specific performance per se is
 Pre and post judgement will stall delivery of commodity to a third party
 Compensatory damages speed up the process
3) Consumer surplus
o Central tenet of the efficient breach argument is that a promisee’s expectation can
always be substituted by payment of monetary equivalent (damages)
This is correct in markets where the commodity can be sold to a subsidiary, even be
unique, but acquired for economic or investment value rather than intrinsic value
Where the promisee’s expectations are Intrinsic value (family heirloom or unique good)
failure to award specific performance deprives the promisee of this good – this
idiosyncratic value is “consumer surplus” – represents subjective value upon
performance of the contract because performance has a unique meaning to the
 Often exceeds any objective value (market)
 Difficulty in damages are avoided if specific performance is granted
 Law is suspicious of these claims – identifies them sometimes as bogus claims
 Designed for a windfall to the plaintiff
The argument requires the plaintiff to prove that damages are an inadequate remedy
4) Rights-based theories of contract law and specific performance
Arguments of economic efficiency and efficient breach and consumer surplus are from contract
Economic analysis – rights based theories make a better fit with what courts actually say they do
o Rights based theories assert that contract law centrality is a promise exercise of free will
and exercise of personal autonomy
o Acts of promising are worthy of enforcement – create a right like property, necessary
matter of convention, both justified as building trust between individuals
o The basis for enforcing a promise is not because it advances utility rather it is a good
thing to do or it is the morally correct thing to do
5) Uniqueness
Unique goods damages would be inadequate
Mark of “uniqueness” is the contracted good cannot be readily replaced
Uniqueness is rather narrow – applies to objects of art only a single piece in existence another
conception is “consumer surplus” individual intrinsic value on articles or things
o This form of uniqueness Pretium affectionis
o The contractual nature of the commodity can make a good unique (shortages etc)
Uniqueness is rather persuasive in reality contracts
Canada this has become a harder argument as reality is a readily exchangeable commodity
6) Mitigation
Whether damages are adequate remedy depend on the availability of a market which assess the
Plaintiff must accept “market-price-rule” (difference between contract price and market price at
the date of breach for assessment of damages)
o MPR includes mitigation – assuming the plaintiff sought other goods upon the breach
o Where the plaintiff seeks SP then mitigation is suspended
 Plaintiff must always be willing to fulfill their side of the contract
o There is a burden test – plaintiff must prove that damages are wholly inadequate in
order to received specific performance
7) Sundry Areas where damages are an inadequate remedy
A) avoidance of a multiplicity of suits
o Breach of contract where contract performance amounts to the payment of annuity or
similar outgoing acts of performance – court faces the fact the plaintiff will have to
return to court – therefore multiple actions for damages – the court in these cases will
favour specific performance
 Beswick v Beswick – widow entitled to payments of annuity court could award
specific performance to enforce the annuity scheme – result could differ today
where a monetary damages remedy could be used to purchase an equivalent
annuity scheme as a substitution
B) enforcement of obligations owed to a third Party
o Where a contract obligation is owed to third party law of contract is deficient in
o Damages are usually unsatisfactory – because the promisee may have experienced no
o Third party who does not enjoy privity of contract is denied a remedy based on the
contracts breach
o Equity has allowed a promisee to seek specific performance even though there is not
actual loss to a third party
C) Insolvency (unable to pay debt) and Financial Responsiveness
o Promisor becoming insolvent – specific performance must be granted to promisee
o Financial responsiveness of a defendant as a reason damages are an inadequate remedy
and that an injunction or SP should be granted
o However does not advance a plaintiff over third party creditors
 Here plaintiff gains specific performance to the good or property he gains and
advantage over creditors – lead courts to exercise caution in these areas
 Where the plaintiff has justification for specific performance other than
insolvency or where the plaintiff is the sole creditor of the defendant court may
grant specific performance
 Balancing plaintiff vs third party creditors claims over a defendant
 Kristian Equipment Ltd v Urano Rentals Lts
o Purchaser of special electrical equipment sough SP
o Prior to the action defendant sold to a third party and then
borrowed money from the third party to buy equipment back
o Third party claims a security interest in the equipment
o Court grant SP on terms which required the defendant to give
possession of equipment to plaintiff for the plaintiff to post
security for the claimed outstanding purchase amount – bring
clear title of the property
o If the third parties security claim was valid then the order is
wound back and the plaintiff is confined to damages against the
insolvent defendant
 Generally courts are willing to grant plaintiff specific performance in these
cases. However, SP will be denied when it harms the third party creditors
Problems with Supervision
A court would decline specific performance where the order may result in the court being asked
to provide ongoing supervision of the decree
Ryan v Mutual
o Case dealing with specific performance of a landlords obligation to appoint a porter for
the benefit of his tenants
 “court was unable to seek the work carried out” – in building contracts
Later in
o Wolverhamption v Emmons – had never seen the force of the above cases rejection to
specific performance in building contracts
Problems associated with the possibility of repeated applications to ensure compliance
o Problem when the court is unable to articulate what the defendant must do to carry out
the decree
o Leaving the plaintiff to repeated attempts to clarify or state what the defendant has
Problems associated with court supervision
o Damages remedy is self administered
o Breach of specific performance amounts to a contempt of court and engages the courts
attention to enforce it
 Plaintiff is still active having to initiate contempt proceedings – the prospect of
the court have to supervise with its own personal is burdensome to the granting
of specific performance
 Another issue is public cost for specific relief is higher than of simply damages
Problems with enforcement of specific performance through contempt of court power
o Enforcing SP with contempt of court is seen as high handed
o Concept leads to possible imprisonment
o To use such a power for breach of contract seems unproportionable – other than
imprisonment other things can be used to impose compliance, a fine or sequestration of
defendants property
Problems of placing cost of compliance on defendant
o Disproportionate to the benefit gained by the plaintiff
Problems associated with forcing the recalcitrant (uncooperative) defendant back into contract
o Relationships have fall apart there is resistance to go back into relationship between the
o Pursing specific performance – plaintiff sometimes is only maximizing post judgement
bargaining powers extracting the defendants gains
o Relationship based on trust have been lost
o Shiloh Spinners v Harding – in orbiter the need to rethink the impossibility of court
supervision as a reason for denial of specific relief
o When should a ruling of Specific Performance be made
 1) is there sufficient definition of what has to be done in order to comply with
the court order
2) will enforcing compliance involve superintendence by the court to an
unacceptable degree
 3) what are the respective prejudicies or hardships that will be suffered by the
parties if the order is made or not made
Pg 292-300
Mutuality of remedies
o Negative mutuality – states a plaintiff will be denied specific relief if the defendant
would be ineligible to get specific on the plaintiff obligations
 Serves to protect the defendant from a court requiring compliance yet having
no assurance that the plaintiff will perform reciprocal obligations
o Affirmative mutuality – states that a plaintiff will be granted specific performance if the
defendant would be granted specific performance of the plaintiffs obligations (if one is
entitled to SP then so is the other)
Both the mutualities address the defendant from being left to an unsatisfactory remedy, no
remedy if specific performance is granted to plaintiff
Partial Performance (pg 306)
Number of cases there are statements to the effect unless specific performance can be ordered
of the entire contract it will not be awarded
o Leading case for his Ryan v Mutual
 Refused SP of a lease obligation on the grounds of difficulty with supervision
 “when a court cannot compel specific performance as a whole it will not compel
SP in par”
o Gaspari v Creighton – court saw not difficulty in severing the contractual obligations in
real estate between the house and its chattels
 Award SP for the house for the vendor
 Confined to damages for the sale of chattels
How are parties protected from suffering a loss of unfulfilled contract obligations
o Defendant in default – no reason to deny the plaintiff specific relief if they are willing to
accept some lessor performance
o The Plaintiff in addition entitled to compensation to cover any deficiency in
Manchester and District v Fearnley Construction
o Contract between plaintiff and defendant for homes to be built and upon complete for
the land to be transferred to the plaintiff
o Defendant then went into receivership building were only partly complete
o Plaintiff sought Specific performance of the land being transferred accepting that the
houses were not complete
o Want an abatement on the price
o This was granted
o Plaintiff was entitled to the next best thing, as if the remedy was not granted the
defendant would have benefited from its own breach
Courts can award specific performance on their own terms and conditions
Remedy Stipulation
Common law contracting parties will sometimes use liquidated damages clauses to express what
they believe is the most appropriate remedy for breach of contractual obligations
o Court generally enforced these clauses
o Pre-estimation of loss, not disproportionate to the actual loss and is not a penalty
If there is a remedy stipulation for SP courts generally do not uphold them
o Prefer a market were a breach can be made with compensatory damages given in order
to pursue a better contract
o Would circumnavigate (efficient breach)
o Equitable remedies are discretionary – strict compliance is a SP stipulation would
abrogate a courts decision
SP stipulation can be evidence for difficulties in determining damages for instance,
Negative stipulation – Warner Brother v Nelson – plaintiff claimed an injunction preventing an
actress from working on another film
o Actress had particular skills needed that would cost production greatly if lost
 Parties cannot contract themselves out of the law but these clause help by
proving evidence in why one would bring an action for an injunction and its
applicability (can sometimes be more appropriate than damages)
Clauses are the parties agreeing to damages are adequate remedy
Courts still have great discretion in upholding or ruling against the contracted clauses.
Elsley estate v jg collins insurance agencies ltd (enforcement of a trade clause)
o 1) fix sum stipulated for as liquated damages upon breach, one must elect between
damages or an injunction
o 2) if damages may recover the stipulated sum not matter what
o 3) where sum is a penalty only recover damages to what can be proven
o 4) elects to an injunction may recover damages in equity for actual loss sustained upon
until the injunction or till the date he should have sought an injunction
o 5) damages chosen the sum stipulated as payable for each breach, one can recover this
sum in respect to distinct breaches may also be grant an injunction to restrain future
Specific Performance and the sale of Land
Land is considered unique therefore a presumption of specific performance
o Since the SCC decision in Semelhago v Paramadevan; Southcott Estates v Toronto
Catholic this no longer accurately reflects the law in Canada – land is not consider
unique unless extensive evidence is give, damages have been substituted in lieu of SP
Purchasers application
o Adequacy of damages
 The position for this is the relative efficiency of resolving disputes – however
can be injustice for not taking the subjective stance of the plaintiff into
 Purchasers desire for land is for subjective reasons – “dream home”
The reality is the property that is chosen to be purchased is simply on
the facts what a person can afford
 Suberbia has undercut the special “uniqueness of property”
Despite the presumption of SP this was reversed in Semelhago v Paramadevan and
then confirmed in Southcott Estates v Toronto Catholic
In Semelhago
 Vendor refused to close a real estate transaction when the respondent agreed
to purchase the home for 205 000
 Purchaser intend to sell his current home within six months of completion on his
new home
 At trial the vendors home was not worth 325 000 – 120 000 difference
 Purchaser elected to take 120K being the difference in price
 Assessment kept with 306793 Ontario Ltd v Rimes
 Vendor appealed award amount to a windfall – alternate assessment proposed
and rejected
 Went to the SCC – what was the appropriate damages
 There must be some real fair and substantial justification for the claim
of specific performance
o To prove this the plaintiff must show that the damages would
fail to be adequate to account for the loss
 Articulation of varying concepts of uniqueness
 Domowicz v Orsa Investments Ltd
o Plaintiff had been investing in apartment buildings
o Entered into an agreement with defendant for the purchase of a
o Sale did not close plaintiff were successful in specific
o COA set judgement aside
o On retrial – judge determined that SP should be able to
rebuttable and dependent upon real exploration of the
inadequacy of monetary relief
o 3 attributes must be satisfied by plaintiff in order for SP
 1) particular physical characteristic of the property
 2) particular transactional characteristics of the
property (rent etc on the property)
 3) where there personal or subjective attributes the
plaintiffs forwarded over the property
 John E Dodge Holdings v 805062 Ontario Ltd
o Here it was held the plaintiff was entitled to specific
performance between the justified
 1) proof of the subjective characteristics that made the
property unique to the plaintiff
2) proof that there are no comparable substitute
1) proof of the subjective characteristics that made the property unique to the
 Three types of inadequacy of monetary relief terminology
o 1) physical attributes of the property
o 2) commercial or transactional attributes
o 3) personal factors of the purchaser
 Other examples are – custom built home, location was exclusive or the
presence of something
 Examples of commercial/transactional attributes – zoning, ability to
acquire adjacent properties
 Examples of personal factors – Fossum v Visual Developments Ltd –
plaintiff successful in SP in downtown Edmonton – property was
described as the most valuable retail space – had on cite parking which
was rare, as well as a usable basement for retail – significant factor –
the biggest factor was the plaintiffs adjoining property
o Other examples – return strata property in a hotel for
commercial reasons
 Proximity to other family members
 Proximity to religious facilities
 Proximity to existing plaintiff properties
2) proof that there are no comparable substitute properties
 No real way to determine this
 However the defendants attack on the plaintiffs claim in evidence can
somewhat help determine if other properties are available
 Other evidence is the plaintiffs had been search for the subjective
criteria property for a considerable period of time before the disputed
property became available
 A plaintiff will lose if they are unable to show that the home was
different from another
 If a plaintiff purchases a different home say with similar attributes will
prove that damages were an adequate remedy
3) the Acquisition of property for investment or development purposes
 developer or investor it is very hard to argue for specific performance
has they are trying to make a profit so damages as a remedy would
 If an investor/developer pursues SP keep the option for damages in lieu
of specific performance thus avoiding the breach rule of damage
assessment and the duty to mitigate – courts have said they will not
tolerate it
 Because of the fact developer/investors are in it to make money make is
very hard to justify SP when damages would suffice
Developer/Investors forwarded the more favourable argument that
developments that were to take place over a considerable amount of
time assessing damages would be problematic
o Carttera Management v Palm Holdings Canada
 Plaintiff was going to rezone the hotel into condos
 Plaintiff argued it would be hard to quantify damages as
the density level could not be determined– point that
damages would be inadequate
 This argument was successful
 Southcott – recent property developer case
o SCC – recent remedy decision for property developers
 Plaintiff wished to purchase vacant land – defendant
need to put forward the appropriate planning
application despite countless extensions the defendant
never completed
 Trial plaintiff argued SP or Damages in Lieu
 SP was not allowed
 Issue: was what damages were allowed – trial judge was
not satisfied the defendant had proved the plaintiff
failed to mitigate
 SCC affirmed the availability of specific performance
 The property was an investment
 Plaintiff did not have an intention to mitigate
 In determining damages SCC held that damages were
The “Interest” in land
 Most common action for SP is the enforcement of purchase and sale agreement
 Remedy is available else where
 Verral v great council
 National front political party known for xenophobic views
 Local council aware it would bring protest but went ahead and rented
the hall
 Election change leadership to a liberal head – who rescinded the
decision to rent the hall
 National front tried to rent other halls but could not find any brought an
action for specific performance
o Trial judge awarded it – COA affirmed the trial judge
o Specific performance allowed
 Commonly held a right of first refusal or option to purchase land will be upheld
under specific performance – plaintiff must establish the uniqueness test
 Specific performance of foreign land
 Where the court has jurisdiction and the plaintiff and defendant are
disputing land held elsewhere – specific performance can be applied
 4 criteria must be met
1) court must have in personam jurisdiction over the defendant
2) personal obligation between parties
3) domestic court be able to supervise the execution of the
4) court will not exercise jurisdiction if the order will be of no
effect in the foreign country
Vendors application
Is limited to the lost expectancy on the sale
If the purchaser has breached the vendor should be expected to mitigate his loss
Rational for allow SP of vendors is affirmative mutuality
After Semelhago – a vendor must prove why damages would not suffice and SP be used
o Westwood Plateau v WSP Construction
 Vendor entered into a complex two stage sale of land
 Stage one completed – was the intention of purchaser to develop lands
 Local municipality require drainage to be construction – vendor did so
 Purchaser then refused to complete the deal that the vendor altered the lands
 Court awarded the vendor Specific performance
 This agreement was not executory – rather partly executed
 Purchaser was in possession for a considerable period of time and made
improvement to the land expecting to be closed
o Hoover v Mark Minor Homes
 Vendor agreed to sell land to purchaser
 Prior to completion purchaser became aware part of the land used as abattoir
and contained a blood pit
 Changes were made to the contract making the vendor fill the pit with sand
 Vendor chose to truck in clay and demolished the pit
 Purchaser refused close claimed the agreement was breached – sought recovery
of mortgage
 Vendor counter claim specific performance
 Vendor received notice the purchaser was going to repudiate the
contract and had sough unsuccessful to sell the property
 Vendor was granted SP – uniqueness of the property made damages inadequate
 Here the deal was partly completed – vendor has let the purchaser into early
possession – justify SP
 Rarely is there not a market for land – treated differently than goods –
damages could have been used
o Inmet Mining Corp v Homestake Canada
 Raises sale where the vendor could properly claim an inability to sell
 Purchaser and vendor contract to sell a gold mine
 Purchaser breach – vendor commenced action for SP and damages
 Trial judge accepted damages in lieu of SP
Specific performance with abatement
Is it possible for a purchaser to accept less than what was promised seeking abatement of the
purchase price or compensated for deficiency
Purchaser could forward an abatement claim that the vendor promised more than was
delivered – court closely scrutinize abatement claims
o Purchaser must show that the abatement arises from either a deficiency in respect to
title or some other contractual term not fulfilled
 Example vendor is unable to convey all property described in contract or some
property cannot be removed
 Plaintiff is not allowed to based an abatement claim on an innocent
 Or if the plaintiff knows and accepts – no abatement
 Claim for abatement is lost after a contract is fully completed unless closed by a
court order abatement still available
o Sokoloff v Rosehill Avenue Developments
 Condo develop anxious to secure sales promised certain features
 Failed to incorporate the features to the purchasers satisfaction
 Forced the purchaser to take possession
 Time of tendering performance purchaser sought an abatement of the purchase
 It was allowed and compensation was quantified by
 A) assessing compensation is the same as assessing damages for breach
of contract
 B) instances involving specific performance – is to be placed in a
position had the contract been completed – purchaser recover damages
for lost bargain
 C) damages loss bargain established
o 1) providing purchaser with a reduction
o II) reimbursing the purchaser cost of remediation
o III) providing the difference between value of the land without
the defect and with the defect
o IV) providing purchaser with difference between purchase price
and value of the land without defect
 In this case abatement assessed at 55k difference in purchase price without the
Vendors action for specific performance with abatement or compensation
Is possible for a vendor to impose a less than complete performance on a purchaser subject to
abatement in the contract price
If the vendor is able to substantial covey what was contract for to the purchaser then the vendor
is entitled to specific performance and abatement
If the encumbrance or short fall is of little percentage and affect of the purchaser a vendor can
claim specific performance and abatement
Specific performance of building contracts
SP and building contracts has given us anomalous (deviating from standard) results
Because they arise issues of court supervision – specific performance has often been denied
Wolverhampton Corp v Emmons – classical test for specific performance of contracts
o General rule court will not enforce specific performance of a building contract
o Exception – plaintiff establish 3 things
 1) building works he seeks is defined in the contract – court can see what is to
be done
 2) plaintiff has a substantial interest in having the contract performed – cannot
be simply compensated for the breach by damages
 3) defendant has by the contract obtained possession of land on which the work
is contracted to be done – no longer a requirement – sufficient the defendant is
in possession of the land
Chan v Chadha Construction
o Plaintiff purchased a home from the defendant it had constructed – defendants agreed
to make modifications for the plaintiffs elderly parents
o Those modification never completed
o Plaintiff stated the cost to remedy this would be 89K
o Defendant claim it could do them for less under the supervision of an agreed upon
engineer appointed by the plaintiff and order sp on these lines
o Court accepted this
o COA stated that damages were the usual course for this course of action as supervision
was difficult
Specific Performance and discretionary defences
Issues relating to contract formation and enforcement
o Equity plays a significant role in contract law in a number of doctrines in addition to
specific performance
 Recission for fraud, undue influence, unconscionability, misrepresentation and
mistake all bring a contract to end
o Mistake
 Where parties have entered into contract under a common mistake the contract
will not be specifically enforced if the mistake is so fundamental that it prevents
the formation of an agreement
 Entered into contract where the defendant has made a unilateral mistake –
which was known by the plaintiff or induced by their conduct contract is
 Where the defendant has made a mistake not known or influenced by the
plaintiff the contract is enforced unless enforcement amounts to an injustice
 Hope v Walter
 Plaintiffs were trustees for the sale of property, unknown to them their
tenant had been convicted of running a brothel
 Learning this the purchaser did not want to complete
 Denied the vendor SP on the grounds that it would not require the
purchaser to complete in circumstances where the purchaser be
exposed to criminal conviction for knowingly renting a property in which
a brothel was operating
 Court confirmed that the vendor could still proceed for common law
o Misrepresentation
 Where the plaintiff has been induced by the defendant into a contract by
making a misrepresentation of fact (innocently or fraudulently) – defendant has
a successful defence against specific performance and may have the contract
 Panzer v Zeifman
 Vendor through his agent represented that his property had a private
driveway – when the drive was share with another owner
 Purchaser unaware signing the agreement – waiting some time to seek
legal advice – tried to mortgage failed – asked the vendor for permission
to sell his equity
 Only then did the purchaser seek legal advice and wished to have the
contract rescinded over the driveway
 Vendor sough SP -held that the representation had created the contract
however time and the purchases affirmation of contract did not allow
recinding therefore SP granted
 COA the awarded for SP was not upheld on grounds the vendor
misrepresented and had not come to court with clean hands – therefore
damages substituted
 IN realty contracts where misrepresentation amounts to a misdescription of
property contained in contract – in addition to recission or SP court may order
SP with compensation for the error
Problems associated with consideration “equity will not assist a volunteer
o Equity will not perfect and imperfect gift
o Consideration of some sort is needed
o Inadequacy may be evidence of an improvident bargain leading to a finding of
unconscionable dealings contract and SP denied
Equitable estoppel
o A representor is not allowed to deny the truth of a representation made to and acted
upon by the representee
o Either be promissory estoppel or proprietary estoppel – it can arise when one party
seeks to enforce their strict legal rights after having indicated in word or actions they
would not do so – put in a state of suspension
o Estoppel prevents a representor from enforcing their strict legal rights if it would be
inequitable to do so
o Promissory estoppel – shield not a sword cannot be used to found an action to enforce a
promise in the absence of consideration
 Applies where one party encourages another to believe that the latter will
receive an interest in land in return for laying our resources to the formers
benefit or latters detriment
Arises when on party makes an improvement to land – with the encouragement
of another – it would be unconscionable for the other person to rely on existing
legal rights to deny the former person relief – this does create a form of action
Estoppel highlights that SP is granted of “promises”
Promissory vs proprietary estoppel
 Promissory estoppel – is a shield and only used as a defence. Party relying on
this must establish that the other parties conduct (making a promise or
assurance) which affected their legal relationship must be acted on- reliance on
this promise the claimant acted upon this and it influenced their decision
 Proprietary estoppel – is utilized as both a sword (stand alone cause of action),
arise from promises in respect to an interest in land. An assurance or
representation has been made to someone in respect to their rights in land or
property. Law is clear that it is unfair for the other party to then go back on their
word where the assurance or reliance has been acted on
 Elements of both are the same
 1) a promise or assurance
 2) reliance
 3) detriment
The Statute of Frauds and the Doctrine of Part Performance
o Doctrine of part performance – where one party to an oral agreement partially performs
their undertaking the oral agreement may be enforced to avoid injustice to the party
conferring value
 based on a wider notion of fraud, linked to the concept that it would be
unconscionable conduct for defendant to take advantage of the lack of written
memorandum to avoid their obligations
 either the contract must be completed or the plaintiff is able to sue for
damages, the contract itself is not enforced rather the equities arising out the
acts of part performance
o Following criteria in order to raise part performance
 1) the acts of part performance relied upon must be referable to some contract;
they prove the existence of some contract
 2) acts of part performance relied upon have been performed by the plaintiff
 3) the contract must be one that if it had been evidenced in writing would have
been specifically enforceable
 4) there must be clear and proper evidence of the existence of a contract
o What constitutes acts of part performance
 (first criteria)Payment of a deposit under the former view did not constitute
part performance – now it can be viewed as part performance Steadman v
 (second criteria) – look to acts of both parties when determining whether there
are sufficient acts of part performance
(third criteria) – contract must be one that if written capable of SP – as long as
the contract was at some time capable of SP then damages in lieu of SP can be
For example, in the case of Mason v Clarke there was an oral agreement for
hunting rights. Clarke (the lessee) tried to prevent Mason (the hunter) from
exercising these rights by citing the lack of a written agreement. The court held
that Mason’s hunting conducted to date constituted acts of part performance.
He had acquired a relevant interest in the land, and had legal standing against
Clarke who had tried to prevent these rights from being exercised.
Taking possession of title deeds (for deposit)
Improvements made to property
Taking possession of land
o A contact must be certain enough that it can be interpreted and performed
o Lack of certainty renders the contract void
o Contract must be certain enough the court can instruct the defendant on what to do to
Issues relating to the plaintiff conduct (Specific Performance)
1) Plaintiff must be “ready willing and able to perform”
o Making a request for SP plaintiff affirms want to move forward with the contract
o Therefore they must be able to perform on their own contractual obligations
o Must not be hot or cold in his obligation but always ready to go and eager to complete
the contract
o Plaintiff ready to tender documents on the day to perform
o By tendering shows the plaintiff is ready to perform
o For tendering to be valid
 1) read willing and able to close on date
 2) is not responsible for the default
 3) remains ready willing and able to close on the date the court sets
o If tendering refused plaintiff can elect to either accept the repudiation, terminate and
sue for damages, affirm the contract and seek SP
o Time of the essence is generally not considered of the essences unless stated in the
 Where time of the essence and date of completion
 If at the date of completion plaintiff must be ready willing and able to
complete to maintain an action for specific performance
 Tendering is the best evidence providing willingness to complete
 Alternative is to accept the breach – if it Is an essential term to bring the
contract to an end and treat it as discharged for breach
o If elected to treat as discharged cannot later action for SP
 If time of essence is not an essential term plaintiff must continue with
performance of the contract and be ready willing and able to complete
and maintain an action for damages
Where time is of the essence at date of completion but plaintiff has waive term
 If time stipulation is waved by plaintiff – is estopped from later arguing
that the other party was in breach of contract for failure to observe that
 Plaintiff can restore time of essence with reasonable notice to the
 With the new time stipulation of the plaintiff is not ready willing and
able then they are in breach themselves
Where time is of the essence at date of completion but neither party is able to
 For a plaintiff to have action he must be ready willing and able
 Basra v Carhoun – plaintiff only has to be able to prove that they are
ready willing and able to complete by the date set by the court order
o Not essential to prove they were ready at the original
contracted date or through the time till the court set date
 If nether party is every ready to complete the contract is abandoned
Plaintiff in breach of other contractual obligations
General rule before a plaintiff can seek specific performance he must be in compliance with his
own contractual obligations
Equitable maximum – “he who seeks equity must do equity”
Party cannot take advantage of their own wrong
However a plaintiff can be in breach of trivial terms and still be granted SP
Delay (SP defence)
Prior to the limitations Act
Common law had no doctrine of limitation periods
Doctrines of laches and acquiescence developed to restrict the time frame in which a plaintiff
could prosecute his action
Every province has a limitation act controlling periods when an action must be commenced
However the limitations act provides reservation preserving the rules of equity relating to the
doctrines of laches acquiescence and delay
Doctrine of delay as a defence to an action of SP is built on the notion that it would be
inequitable to allow a plaintiff to recover equitable relief where their delay has occasioned
prejudice to the defendant
Defence of delay
o 1) There must be unreasonable delay in the commencement or prosecution of
o 2) in all the circumstances the consequences of delay must render the grant of relief
unreasonable or unjust
o Delay occurs when performance of the contract and time at which the plaintiff decides
to commence proceedings – if they fail to commence proceedings in a timely fashion the
court may consider the plaintiff to have acquiesced to the breach
 Not set time – rather relies on context and prejudice caused to the defendant
Clean hands
He who comes to equity must come with clean hands
When a defendant is able to prove the plaintiff does not have clean hands the defendant is able
to resist the plaintiffs claim
Unfairness and hardship
Focuses on the plaintiffs conduct but with specific reference to the particular circumstances of
the defendant
A plaintiff cannot simply take advantage of a defendant
If hardship operates to deny relief it will either lead to the recission of the agreement in equity,
make it void or will be unenforceable at common law
o Bowser v Prager
 Vendor suffered from psychiatric disorders led to a period of admission of
 Contract enter 1 month after release from hospital
 Vender on social assistance, had debts, continued depression and was forced to
vacate house
 Purchasers application for SP court decline to award
 Vender trial to argue agreement be rescinded on grounds of mental capacity
court rejected this as the purchaser had no knowledge and therefore not acted
 SP was declined in spite of finding property was unique to the purchaser on
grounds of hardship to the vendor if forced to vacate the premises under the
o Hardship focuses on the impact of an order of say SP would have on the defendant if it
were made
o Were SP would amount to severe hardship it will be denied – plaintiff left to his remedy
in damages
o Defence of hardship is not based on any wrongdoing by the plaintiff behalf – it is the
consequences of the remedy on the defendant where the remedy results in unjust and
unreasonable burden
o Type of hardship must be serious in order to be granted the defence
 Patel v Ali
 At the time of contracting defendant was in good health, married, child
but spoke little English
 Date of judgment 4 years later – vendor diagnosed with bone cancer,
husband bankrupt spent time in prison
 Defendant reliant on the support of friends and family
 Under the change in circumstances court denied specific performance
 Hardship amount to “extraordinary and persuasive circumstances”
amount to injustice
 Still required the defendant to pay 10K in damages – failure to follow
this would result in SP of original order
Stewart v Ambrosina
 Hardship was also a change in circumstance after signing agreement
 Time of completion vendor was a widow, caring for 6 children, solely
dependent on social assistance
 Weight the hardship on both sides
Denial of specific relief in the above circumstances does not mean a denial of damages
Denying SP under these circumstances does not destroy sanctity of contract
Impossibility and futility
SP is not available if the Defendant is unable/impossible to perform
Commonly occurs where the defendant has sold or created third-party rights in the property
and those parties are unaware of the plaintiffs prior claim
Traditional support that equity has accorded bona fide purchaser for value without notice
o 1) plaintiff must show that he has a reasonable claim to an interest in land – must show
SP is the only available remedy as damages would not go far enough
o 2) is the land unique, intention of parties (investment or occupation), alternative claim
for damages, ease or difficult to quantify damages, presence or absent another
purchaser, damages a satisfactory remedy, plaintiff a shell company, harm to each party
if certificate is maintained or removed
o Plaintiff act with reasonable due diligence
A third party can be involved in a claim of specific performance when they had notice of the
plaintiffs prior contractual interests in the property.
o If the third party has been given no notice then they are not a party to SP
o There are some cases like in Medical Laboratories v Windsor Drug store where the third
party was involved in a SP claim without any prior notice of the plaintiffs interests
(plaintiff in this case had an exclusivity clause) – ruled an injunction against the third
party benefiting the plaintiff
A plaintiff can protect themselves against eh possibility of third-party rights adversely impacting
the availability of SP by registering a certificate of pending litigation on title (notice to all other
parties that a prior claim has been made)
o Test
 1) plaintiff must have a reasonable claim to an interest in the land - must show
that SP is necessary and damages would not substitute
 2) Land unique, intention of parties acquiring the land investment or
occupation, is there an alternative claim in damages, can damages be
quantified, is there another purchaser, damages a sufficient remedy, harm to
each party
 Plaintiff must act with reasonable diligence
o “equity does not act in vain”
o Futility means the order would have not practical effect or the plaintiff receives no
Example – an order for the enforcement of a lease for a term that has already expired
will not be ordered
Tito v Waddell – defendant refused to plant trees etc because the island had already
been extensively mined and would amount to a waste of time
When a promise decides which way to go following the actual breach or anticipatory breach
Actual breach
o Promise has two choices 1) accept the breach and repudiate contract 2) affirm the
contract and seek SP
Anticipatory breach
o Promise has the same options 1) accept the breach and repudiate contract 2) affirm the
contract and seek SP – however the promisee can continue with performance of their
own promises and thus effectively enforce a performance on the defaulting promisor
 Imposes effectively a performance on the defendant
 Purchasers have third option – the restoration of benefits and demand a return
of deposit – this brings a contract to end promisee then not entitled to specific
performance – accepting return of purchase price terminates contract
Election requires no formal documentation
Where a promisee pleading for SP -must continue to be ready willing and able to perform –
contract is alive for both parties
Sky Petroleum Ltd v VIP Petroleum Ltd
Concerned the possibility of claiming specific performance of a promise after breach of contract
VIP agree to sell Sky fuel all fuel needs at fixed prices and a minimum quantity
1973 oil crisis lead to shortages sky could not find any alternative supply
VIP terminated the contract on the grounds sky exceeded the credit provisions in contract
Sky sought an injunction for VIP to sell the fuel rather than just pay damages so that it could stay
in business
o J held that the general rules is that courts grant only damages for breach of contract to
supply goods
o The unusual state of the market made specific performance of supply fuel the
appropriate remedy – damages were not adequate
Semelhago v Paramadevan – heavily restricted the use of SP in land disputes between seller and buyer
Purchaser buy house from vendor for 205K
Prior to closing vender reneged and sold the house to a third party
Purchaser sued for SP or damaged in lieu
Property had increased to 325K at the date of trial
SP would have been granted in this case but purchaser chose to pursue damages instead
Purchaser at the time had not yet sold his current home which increased from 190K to 300K
Modern law real estate really is no longer unique – damages usually are an adequate remedy
SP not be granted as a matter of course rather only when evidence that the property is unique
to the extent a substitute will not be found
Purchaser was awarded the difference between the contracted price and current price at trial
120 000
Defendant argued over compensation and windfall to the plaintiff – yes – SP would also be a
windfall – in order for damages to substitute they must be equal to SP
“uniqueness” and “adequacy of damages”
Harle v 101090442 Saskatchewan Ltd
Defendants agreed to sell 1600 acre farm for 3.05m to plaintiff company, which was
incorporated just for this sale of land for its corporate parent company (development company)
Defendants wanted to lease the land back from the plaintiffs
Land began to increase in value rapidly after the agreement
Plaintiffs sent a draft lease not quite what the defendants agree and advanced money prior to
closing – defendants refused to close on the date
Plaintiffs sued for SP of the agreement – trial judge agreed – defendants appealed COA held SP
as an agreement was made
o Trial judge award SP because land was unique and substitute not readily available
o Purchaser bears the burden of adducing evidence that the subject property is specially
suited to the purchaser and a comparable property is not readily available
o A buyer deprived of an investment property must show that money is not a complete
remedy because the land has a peculiar and special value – the value here is the
substantial increase in value after the land is developed
On appeal the specific performance ruling was set aside and remitted to the trial judge for an
assessment of damages
Question to start with are damages an adequate remedy
o SP was set aside – trial for damages
Aulakh v Nahal
Dispute over a failed real estate transaction
Plaintiff argues that the defendant sellers breached the contract failing to deliver vacant
possession on closing date
Plaintiff seeks SP or alternatively damages
Property had a large home 8600sqft and a detached home
Appealed to the plaintiffs for a number of reasons
Cited Semelhago – SP only granted if the property is unique and damages are inadequate
Argued the plaintiffs evidence falls short of establishing SP
o Made numerous offers to buy other properties
o After the property deal failed they purchased another property
o Testified the second home was bigger
o Second home was in the same area
o Wife was not looking for any particular features in the home
Evidence in this case is lacking for SP
Failed to show he suffered any damages
Able to get the return of his 100k deposit
Falcke v Gray
The parties contracted for the sale and purchase of two Chine Vases. The seller did not
complete, and the buyer sought specific performance.
Held: A purchaser of ‘articles of unusual beauty rarity and distinction’ was entitled to obtain
them in specie.
The Court will enforce specific performance of a contract to purchase chattels, if damages will
not be an adequate compensation: ‘a mere compensation in damages is not a sufficient remedy
and satisfaction for the loss of the performance of the contract’.
But where the contract, although not actually fraudulent, was one in which the parties were not
on an equal footing, the Plaintiff knowing, and the purchaser being ignorant, of the value of the
thing sold, and the price appeared to be inadequate, the Court refused relief.
Beauchamp v Coastal Corporation
Innocent party has the option of election between sp and damages
Claim against appellants when they failed to complete a contract for the sale of a vessel
Respondents sought in the alternative SP or damages and the seizure of the vessel
The appellants had tendered documents to complete the transaction – respondents refused
o Contract at the time was open to complete – ready willing an able if claim SP
o Respondents refusal was a repudiation of contract – now the respondent was in breach
of contract
 Respondents had a right of election between SP and damages – however not
willing ready and able to complete the contract they are in breach
- - Buyers’ election for specific performance or damages
A dispute arose out of an agreement to sell the vessel Wayward Princess . At first instance,
Walsh J. held that on 16 November 1983 the buyers entered into a binding contract of sale
and had tendered payment, but the sellers refused to complete. Walsh J. held, accordingly,
that the buyers were, on 17 November 1983, entitled to institute proceedings for specific
performance or alternatively damages for failure to complete the contract, and to arrest the
vessel. The sellers had argued that the buyers’ only remedy was specific performance, by
virtue of an affidavit filed on the buyers’ behalf on 23 February 1984 stating that the buyers
intended to pursue their claim for specific performance. In rejecting the sellers’ argument,
Walsh J. awarded the buyers $207,500 damages for repudiatory breach of contract.
Dobson v Winton & Robbins Ltd
Failure to close real estate (Ontario) damages
General measure of damages outlined in this case
Measure of damages in this case is the difference between price provided for in the first
contract 75k and the price in the second contract 70k
Counsel for the appellant admits that against the difference of $5,000 must be credited the
deposit of $4,000.”
More recent case law suggests that almost all costs the vendor incurs in relation to reselling the
property should be factored in. The general principle is to put the seller in the place they
otherwise would have been had the buyer completed the transaction
“I agree with this analysis. While the agreement only specifically calls for the deposit to be
credited to the purchase price on completion of the agreement, the measure of damages is
based on the difference between the purchase price and the lesser amount that the property
sold for after the purchaser’s default. In other words, it is based on the vendor receiving the
purchase price that was bargained for. One can infer that the intent of the parties was that the
deposit be applied to the purchase price whether received on completion or as damages.”
In Azzarello, the purchaser agreed to pay $1,555,000 and subsequently failed to complete the
transaction. The seller ultimately was able to sell the house to a different purchaser for
$1,280,000. The Ontario Court of Appeal awarded the seller damages for staging, legal fees,
carrying costs of the property, interest on the line credit and most importantly the difference in
sales price.
Nagel’s Debt Review Inc v Mosiuk
action out of a building burning down
building owned by plaintiff who was order to remedy structural components of the building
plaintiff did not comply – town provided notice that the building would be demolished
plaintiff consulted the defendant Nagel for advice – land was transferred to Nagel with a lease
back to the plaintiff
transfer designed to evade the demolition order by the town which the transfer was not
registered on title
building burnt down – Nagel insured it against fire got 37K
plaintiffs sued nagel for the insurance proceeds and a declaration that Negal held the property
on trust for the plaintiffs
Action to succeed plaintiffs needed a resulting trust or part-performance
Trial judge awarded plaintiff – Nagel argued plaintiff was precluded because clean hands
doctrine from being awarded any equitable relief
No interest would be pertained in permitting the appellants to retain insurance funds and land
as they were the ones that came with unclean hands given the ordinal plaintiffs (Midtown