SPECIFIC PERFORMANCE

Beswick v Beswick [1968]

FACTS

The husband agreed to sell his business if the buyer (his nephew) paid an income to his wife (who was not a party to the agreement) after his death. After he died, the wife (C) sued for the payments in her own name and as administrator of the husband’s estate as D did not pay them. She sought specific performance.

OUTCOME

C in her capacity as administrator (not in her personal capacity) is entitled to specific performance as i) only nominal damages could be given as the estate did not suffer any loss from the breach, so normal remedies were inadequate as it would leave her (a widow) without support and ii) specific performance would avoid the multiplicity of actions needed to enforce a continuing obligation.

• “Why should the estate be barred from exercising its full contractual rights merely because in doing so it secures justice for the widow who, by a mechanical defect of our law, is unable to assert her own rights? Such a principle would be repugnant to justice and fulfil no other object than that of aiding the wrongdoer. “

  • Even though C as administrator did not benefit (even though C personally did), “it is no part of the law” that suing on a contract must be in one’s interest.

    • It would be “absurd” if C could not claim specific performance of a house sale just because she could sell it for more to someone else.

Sky Petroleum v VIP Petroleum [1974]

FACTS

C entered into a contract with D to buy all their fuel for the next ten years at a fixed price. Where there were limited fuel supplies and C could not find another source, D tried to terminate the contract on the basis that C had broken the credit terms of the agreement. C brought an action for specific performance to restrain D from withholding supplie

OUTCOME

A specific performance order was granted. Although it is a “general rule” that specific performance is not granted in unspecified sale of goods cases, this rule only exists because damages are usually sufficient in these cases. Here, D’s fuel is the “sole means” of keeping C’s business going, and there is a “serious danger” C would go out of business without the injunction.

Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998]

FACTS

C granted a lease to D for 35 years, with a clause requiring a covenant to keep the premises open for trade during regular business hours. D closed their store. C brought an action seeking damages and/or specific performance.

OUTCOME

An order for specific performance (a “discretionary” and “exceptional” remedy) should not be made as: i) it would require constant supervision by the court, ii) the only punishment for breach would be the “powerful” and “heavy-handed” punishment for contempt (it would be unfair to hold D, who does not think running a business is in his economic interests, to do so “under a sword of Damocles), iii) it would be expensive and wasteful litigation and iv) the order would be imprecise. 

Discretion: The exercise of the discretion can be “flexible and adaptable to achieve the ends of equity” and courts can cope with a “strong degree of imprecision” in orders. 

• But, specific performance can still be refused even where damages are not an adequate remedy. 

• Applied: “A remedy which enables him to secure, in money terms, more than the performance due to him is unjust” as it moves beyond compensation. It is not in the “public interest” to waste resources, force parties together in a “hostile relationship” and force someone to conduct business at a loss if damages are adequate.
  
  

• Lord Hoffmann: Contempt of court (“a sword of Damocles”) hanging over D as a punishment is “no way to run a business” and, as a severe consequence, means that any application to enforce the order is likely to be a “heavy and expensive piece of litigation” that is repeated over time (compared to “once-and-for all” damages).

  • "From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on business at a loss if there is any plausible alternative by which the other party can be given compensation."

OBITER

• Compared to civil law systems: C is entitled as of right to damages. In civil law systems, SP is the prima facie remedy, with damages being exceptional. 

“In practice, however, there is less difference between common law and civilian systems than these general statements might lead one to suppose”, as the discretion is informed by “a number of considerations, mostly of a practical nature, which are of very general application.”

Transport for Greater Manchester v. Thales Transport & Security Ltd [2012

What the court in Argyll held: i) Specific performance is a discretionary remedy which is “flexible and adaptable to achieve equity”. ii) It is unnecessary when damages are sufficient. iii) The need for constant court supervision must be considered. iv) There is a difference between SP requiring the performance of an activity and SP requiring the achievement of a result. v) Precision in the order is important.