Cynthia entered into an oral agreement to take a lease of a flat in St. Michael, Barbados. Marcia, the
landlady, agreed under the oral agreement to make certain modifications and alterations as dictated by
Cynthia. The alterations and modifications were effected at considerable cost and under the supervision
of Cynthia, who paid Marcia the sum of $12,000 as an advance rent, to defray the expenses incurred by
Marcia in making the modifications and alterations. On completion of the work, Cynthia refused to take
the lease as agreed. Marcia seeks specific performance of the contract.
i. Advise Marcia
ii. Consider what the position would be if, on the other hand, Marcia refused to deliver possession
to Cynthia who was ready and willing to move into possession.
Answer:
Specific performance has been described as “an order of the court directing a party to a contract to
perform his obligations thereunder according to its terms.” The Court will consider the type of contract,
its mutuality at the time of judgment, the inadequacy of damages, and whether there are any defences.
By virtue of the doctrine of part performance, equity may enforce a contract even if, through lack of
writing, it is unenforceable at law by reason of the Statute of Frauds.
The Validity of the Contract
The contract must be valid and binding, and there must be valuable consideration. A valid contract is
one in which there is offer and acceptance, agreement as to the terms, and consideration. A valid
contract may be in writing or it may be oral.
Although a contract may be legally binding without valuable consideration, equity will not enforce such
a contract: Jeffreys v Jeffreys (1841) Cr & Ph 138; 41 ER at 444. (This is the doctrine “Equity will not assist
a volunteer” where volunteer means someone who gets something for nothing.)
Nor will equity enforce a contract which is so indefinite, precise or vague in its terms that it cannot
determine what it must order each party to perform: Joseph v National Magazine Co [1959] Ch 14.
In the present case, Marcia has agreed to make modifications to an apartment and then grant a lease to
Cynthia. Cynthia has agreed to supervise the renovations, pay advance rent, and take the lease. There
has been offer and acceptance, and agreement as to the terms of the offer. Both parties have offered
consideration. The contract is therefore valid.
The Type of Contract
Equity will generally not enforce a contract which requires constant supervision: Cooperative Insurance v
Argyll. As Lord Hoffman explained in that case, there was never any expectation that officers of the
Court would personally have to supervise a contract. Rather, the rationale behind the rule is that the
parties would have to constantly return to court for rulings on whether the order had been breached.
“First, the defendant, who ex hypothesi did not think that it was in his economic interest to run
the business at all, now has to make decisions under a sword of Damocles which may descend if
the way the business is run does not conform to the terms of the order. This is, as one might
say, no way to run a business.
Secondly, the seriousness of a finding of contempt for the defendant means that any application
to enforce the order is likely to be a heavy and expensive piece of litigation. The possibility of
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repeated applications over a period of time means that, in comparison with a once-and-for-all
inquiry as to damages, the enforcement of the remedy is likely to be expensive in terms of cost
to the parties and the resources of the judicial system.”
However, a distinction may be made where the order is one to achieve a result. “Even if the
achievement of the result is a complicated matter which will take some time, the court, if called upon to
rule, only has to examine the finished work and say whether it complies with the order.” It is for this
reason that a Court may enforce a building contract: Wolverhampton Corporation v. Emmons [1901] 1
Q.B. 515 (building contract) and Jeune v. Queens Cross Properties Ltd. [1974] Ch. 97 (repairing covenant).
Equity will also refuse to enforce a contract for personal service. This is due to a repugnance to force
parties into a personal relationship: Giles v Morris [1972] 1 All ER 960.
In the present case, the contract requires personal supervision on the part of Cynthia. However, the end
result is more akin to a building contract. As will be seen, however, the fact that the work has already
been completed makes this factor a moot point.
Mutuality
For a contract to be specifically enforced, there must be mutuality. Equity would not generally compel
one party to perform his obligations if it could not also compel the other to do so. The time for mutuality
is the time of hearing: Price v Strange [1978] Ch 337. Thus, a minor would not be able to specifically
enforce a contract since the other party would not be able to seek the same remedy against him.
In the present case, the renovations of the apartment have already been completed. At the time of
hearing, therefore, the lack of mutuality is no longer an issue.
Part Performance
In law, a contract for a disposition of interest in land is only enforceable if it is in writing. This principle
dates back to the Statute of Frauds (1677). However, equity may enforce the contract under two
circumstances: i) where there is fraud on the part of the plaintiff (“Equity will not allow a statute to be
used as an instrument of fraud”) and ii) where there have been sufficient acts of part performance on
the part of the plaintiff.
Part performance is an equitable principle that allows a court to recognize and enforce an oral contract
despite its legal deficiencies. It allows a party to establish the existence of a contract by showing his
execution of the contract’s requirements.
A party must meet three requirements:
1. The party’s acts must be in performance of the contract: Maddison v Alderson (1883) 8 App Cas
467. It is not necessary for the contract to specifically require or authorize the act: Millett v
Regent [1975] 1 NSWLR 62.
2. The act must involve a change of position on the part of the plaintiff such that he would be
unfairly prejudiced if the other party were to take advantage of the absence of written
evidence:
3. The party’s acts must be referable to the alleged contract. In Maddison the Court found that
such was not the case and refused to grant the specific performance. In that case, the deceased
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promised his housekeeper that he would leave her a life interest in his will. Because of this, she
continued for many years as his housekeeper without payment. In fact the deceased did leave
her the life estate in his will, but the will failed for lack of due attestation (it was not witnessed
properly). The Court refused to find the existence of the oral contract. It said that merely
continuing as a housekeeper may have shown the existence of some contract, but was not
enough to prove the exact contract alleged.
On the other hand, in Kingswood Estate v Anderson[1962] 2 QB 169, the party was able to make
out her case. She and her invalid son were persuaded by their landlord to move from their Rent
Controlled flat to another which was not protected. The landlord represented to her that they
would be allowed to remain in the new flat for the rest of their lives. The landlord then sought
to renege on the agreement and put them out. The Court found that her action in leaving her
protected flat was sufficient proof of the agreement. The Court approved of the statement of
law laid down by Fry in Specific Performance 6th ed at page 278:
The true principle, however, of the operation of acts of part performance seems only to
require that the acts in question be such as must be referred to some contract, and may
be referred to the alleged one; that they proved the existence of some contract, and are
consistent with the contract alleged.
Following Kingswood Estate, the Court was able, in Wakeham v Mackenzie[1968] 2 All ER 783, to
grant specific performance in a case very similar to Maddison. (The judgment may also reflect
the fact that conditions of employment of servants has changed since Maddison.) In Wakeham,
Mr. Mackenzie persuaded Mrs Wakeham to give up her flat and look after him, promising her an
interest in his will. She did so and also provided money for some of the household expenses,
e.g., food and coal. Mackenzie failed to leave her anything. The Court held that there had been
sufficient acts of part performance.
However, this statement in Fry is perhaps too wide. It was emphasized in Steadman v Steadman
[1976] AC 536 that the acts must prove the existence of some such contract as was alleged. In
Steadman, a husband and wife had a package deal for their divorce, which involved the wife
transferring her interest in the house to the husband, while he would pay her £1,500. He would
also pay £100 in outstanding arrears. The husband paid the £100, his solicitors announced the
terms of the deal to the Court, and his solicitors drew up the conveyance for the wife to sign.
However, the wife reneged on the ground that the property value had increased. The Court
found that the husband had performed specific acts of part performance.
It should be noted that Steadman should not be taken as authority for the fact that mere
payment of money is enough to establish part performance. Even the whole of the payment of
purchase money is generally not sufficient.
Note also that for one person to put the other into possession, and likewise for the other person
to take up possession, are generally considered sufficient acts of part performance.
In Rawlinson v Ames [1925] Ch 96, in the case of an agreement for a lease, the Court found that
there had been sufficient acts of part performance where improvements and alterations were
made to the property by the lessor at the instigation of the lessee. In Pejovic v Malinic (1960) 60
SR (NSW) 184 it was held that payment of the purchase price and the commencement of
improvements were sufficient acts of part performance for the sale of vacant land.
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Finally, in Strachan v Lyall [1953] VLR 81, the Court held that while mere continuance of a lessee
in possession after the expiration of his term was insufficient, if what is alleged is an agreement
for a further lease, it may be sufficient if the possession is coupled with the payment of
additional rent or the performance of obligations which were necessary under the new lease but
not the old.
In the present case, Marcia has completed all of the repairs. It would be difficult for Cynthia to deny the
existence of the contract given that she personally supervised those repairs. It would also be difficult to
suggest that the contract was of a different kind than that alleged given that Cynthia paid advance rent
on the lease. The Court will likely find that there have been sufficient acts of part performance to
enforce the contract despite the lack of writing.
Defences
Common defences include hardship: Patel v Ali [1984] 2 WLR 960, laches (delay): Lazard Bros v Fairfield
Property (Mayfair) (1977) 121 SJ 793, and lack of clean hands: Easton v Brown [1981] 3 All ER 278.
None of these defences arises in this instance.
Adequacy of Legal Remedy
The Court will only grant specific performance if damages are not a sufficient remedy. The Court will
consider the subject matter of the contract, the ease of estimating damages, and whether the damages
would be nominal. In fact, specific performance is not normally ordered for the breach of a contract to
pay money. However, a vendor/lessor may still be allowed to specifically enforce a contract on the
grounds that such a contract would be enforceable against him – “equity is equality”.
In the present case, there is no information as to the length of the lease. Certainly it would seem that
Marcia would be more severely disadvantaged if the lease were a long one. However, in any case, I
would argue that damages seem to be an appropriate remedy, at least to the extent of the cost of the
modifications. The true measure of damages would, in the end, relate to any increase in value of the
apartment and the difficulty in getting a new tenant.
ii) Would the position be different if Marcia refused to deliver possession to Cynthia who was ready and
willing?
Following the reasoning above, the contract is certainly valid, and issues of mutuality do not arise.
Although mere payment of money is generally not sufficient as an act of part performance, in this case,
Cynthia’s payment is coupled with Marcia’s alterations and Cynthia’s supervision of those alterations.
The Court would find that Cynthia has performed sufficient acts of part performance. By being ready
and willing, she is also prepared to “do equity”.
In this case, the Court is likely to find that legal remedies would not be sufficient. First, specific
performance is almost always granted when the subject of the contract is related to land, and second,
above and beyond this, the apartment is now uniquely suited to Cynthia’s needs. It will order specific
performance of the contract, requiring Marcia to execute the lease and put Cynthia in possession.
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