Written Submission for Equity

EQUITY AND TRUST LAWUUUK 3073

A 122049 ARIFF HAKIMI BIN ABDUL HAMID

A 121512 MOHD KHAIRI BIN MOHAMMED SAID

A 121909 NADHIRAH NA’IEMAH BINTI SA’DULLAH

A 123044 ZAZA MAISARA BINTI ZAMAN A 122111 NURUL FARAHANA BINTI MOHD AINI

A 122084 NAJMUDDIN BIN HAKIM

A 121890 NURSURAYA BINTI KHAIRUL ANUAR

A 122082 SHAFIKA BT ABU BAKAR

A 122282 NUR ZAHIDAH BINTI ABDULLAH

A 122288 DAYANG NOOR AILANI BT. PUYUNGAN RAZALI

A 121838 NURAINI BINTI SELAMAT

A 124806 NORASHIDA BINTI PANDI

A 126284 UNGKU NOOR AFIQ BT. UNGKU HASSAN

A 125981 MUHAMMAD FAKHRI BIN SUHAIMI

A 122108 NORAZLIN BT NORDIN

A 122093 SHARIFAH SARA SHAHIRA BT. SYED AHMAD

In the law of Remedy, an order of specific performance is an order of the court which requires a party to perform a specific act, usually what is stated in a contract. It is commonly used in the form of injunctive relief concerning confidential information or real property. While specific performance can be in the form of any type of forced action, it is usually used to complete a previously established transaction, thus being the most effective remedy in protecting the expectation interest of the innocent party to a contract. It is usually the opposite of a prohibitory injunction but there are mandatory injunctions which have a similar effect to specific performance.

Under the common law, specific performance was not a remedy, with the rights of a litigant being limited to the collection of damages. However, the court of equity developed the remedy of specific performance as damages often could not adequately compensate someone for the inability to own a particular piece of real property, land being regarded as unique. Specific performance is often guaranteed through the remedy of a right of possession, giving the plaintiff the right to take possession of the property in dispute. However, in the case of personal performance contracts, it may also be ensured through the threat of proceedings for contempt of court.

Orders of specific performance are granted when damages are not an adequate remedy, and in some specific cases such as land sale. Such orders are discretionary, as with all equitable remedies, so the availability of this remedy will depend on whether it is appropriate in the circumstances of the case.

1. 0 General Principle of Specific PerformanceSpecific performance was the equitable remedies consist of an order of the

court directing a party to a contract to perform his obligations there under

according to its terms1.

The basis of the jurisdiction to grant specific performance is according to the

general principles which are;

1. Discretionary remedy

2. Remedy ‘in personam’

3. Damages as a common law is inadequate

4. Possibility of compliance is a must (observance to the order is a must)

5. Positive contract may be specifically performed

6. Damage may be awarded in substitution for, or in addition to, specific

performance

7. Specific performance unaffected by waiver

8. Consideration of hardship and expiry of limitation period may not

necessarily defeat specific performance

9. Specific performance dependent on an option is not exercised strictly in

the prescribed manner

10.Specific performance may be claimed and granted even before the time

of performance has arrived

1.1.Discretionary remedy

‘From the very first, when specific performance was introduced it has

been treated as a question of discretion whether it is better to interfere and

give a remedy which the common law knows nothing at all about, or to leave

the parties to their rights in a Court of Law.’2 It is undoubted however that this

discretion is not arbitrary or capricious, but it governed so far as possible by

fixed rules and principles.3 As Romilly MR explained,4 the discretion ‘must be

exercised according to fixed and settled rules; you cannot exercise a

discretion by merely considering what, as between the parties, would be fair to

1 Phillips H Petit, Equity and the Law of Trust , at Chapter 29 (Ninth Edition Butterworth) 2 Per Rigby LJ in Re Scott and Alvarez’s Contract [1895] 2 Ch 603 at 615, CA.3 White v Damon (1802) 7 Ves 30; Lamare v Dixon (1873) LR 6 HL 414.4 In Haywood v Cope (1858) 25 Beav 140 at 151.

be done; what one person may consider fair, another person may consider

very unfair; what one person may consider very unfair; you must have some

settled rule and principle upon which to determine how that discretion is to be

exercise’. The result is that in many cases, where the parties under no

disability and there is nothing objectionable in the nature or circumstances of

the contract, a decree of specific performance is as much a matter of course in

equity as damages are in common law,5 and will be ordered even though the

judge may think it to be a hard case for the defendant.6 But, as will be seen,

matters which would be irrelevant at common law, such as the conduct of the

plaintiff, may be material in a claim for specific performance.7 Further, the

court may have to take into account other equitable doctrines.

Thus in Langen and Wind v Bell8 the purchaser brought a specific

performance action for the sale of shares, under a contract whereby the

purchase price could not be ascertained for about two years after the agreed

date for the transfer of share. The court had regard to the equitable principle

that an unpaid vendor is entitle to a lien on the subject matter of the sale,

refused to grant an order for specific performance except in a form which

would effectively safeguards the equitable lien.

1.2. It is a remedy ‘In Personam’

In relation to specific performance equity, as always, acts in personam,

where it was against the individual defendant not his property. If the defendant

is within the jurisdiction of the court and can be compelled personally to carry

out his obligation, the court may order him to do so even though the subject-

matter of the contract is outside the jurisdiction of the court. In relation to

specific performance equity, as always, acts in personam.

The leading case to be referred is Penn v Baltimore9 where the plaintiffs

and defendant entered into a written agreement fixing the boundaries of

5 Hall v Warren (1804) 9 Ves 6056 Haywood v Cope (1858) 25 Beav 140.7 Cox v Middleton (1854) 2 Drew 209; Lamare v Dixon (1873) LR 6 HL 4148 [1972] Ch 685, [1972] 1 All ER 296.9 (1750) 1 Ves Sen 444, [1558-1774] All ER Rep 99.

Pennsylvania and Maryland, the former of which belonged to the plaintiffs and

the latter to the defendant. The plaintiffs sued the defendant in England to

have the agreement specifically performed, and one of the objections takes by

the defendant was to the jurisdiction of the court. This objection was overruled

by Lord Hardwicke on the ground that decreed specific performance of an

English agreement relating to the boundaries between Pennsylvania and

Maryland, despite the inability of the court to enforce its remedy in rem. In

addition, in Richard West Partners (Inverness) ltd v Dick10, specific

performance was decreed of a contract for sale of land outside the

jurisdiction11 against a defendant within it. Although the land was not within the

jurisdiction, the defendant was, and the court would hold him in contempt

unless he complied.

But this jurisdiction is not, perhaps so wide as might at first appear. The

land in question was subject at that time to the crown. The court was invited in

Re Hawthorne12 to apply it to land in Saxony (not subject to the Crown) but

refused to do so. It appears that the tendency of modern decisions is to restrict

the limits within which this jurisdiction will be exercised.

1.3.Damage as a Common law remedy is inadequate

In general, equity does not intervene if the remedy of law is adequate.

This is the true of specific performance and of the very similar remedy of

specific remedy of specific restitution of chattels. The usual remedy at law for

breach of contract is damages, for failure to return to return a chattel to its

owner, it is damages for detinue. Damages has been regarded as inadequate

to put the plaintiff in the same position as if the contract had been formed (or

the property return to him) by the defendant in a number of different areas.

However, contract to lend money are not specifically enforceable because

debts can be raised from any money lender and so damages may be

10 [1969] 1 All ER 289.11

12 (1883) 23 Ch. D 743

awarded in such cases, keeping in view any higher rate interest that may have

to be paid in raising the art alternate loan.13

Section 11(1)(c) of the Specific Relief Act 1950 provides: “Specific

performance of any contract may, in the discretion of the court, be in enforced,

where the act agreed to be done in such that pecuniary compensation for its

non performance would not afford a relief”.

Illustrations

(a) A contract with B to sell him a house for $1000. B is entitled to a decree

directing A to convey the house to him, he paying the purchase money.

(b) A contracts to sell to B contracts to buy a certain number of railway

shares of particular description. A refuses to complete the sale. B may

compel A specifically to perform this agreement, for the shares are

limited in number and not always to be had in the market and their

possession carries with it the status of share holder which cannot

otherwise be procured.14

(c) A contract with B to paint a picture for B who agrees to pay

therefore$1000. The picture is painted. B is entitled to have it delivered

to him on payment or tender of $1000.15

Subsection (2) of section 11 of the SR Act 1950 raises a presumption

that “the breach of a contract to transfer immovable property cannot be

adequately relieved by compensation in money, unless the contrary is

proved”. Similarly, it is presumed that the breach of contract to transfer

movable property can be thus relieved.”

In the case of Gan Realty Sdn. Bhd v. Nocholas,16 the defendant

negotiated with the plaintiff the sale of their respective shares on the Oriented

Bank of Malaya Berhad. The terms and conditions of the agreement were

13 JD. Heydon PL Laughlan. Butterworh, Cases and Materials on Equaty & Trust 6 th Edition, Butterworth, pg. 99.14 Syed Khalid Rashid, Cases and Materials on Equity & Trust s in Malaysia in Malaysia Vol 1, In ternational Islamic University, 1995. p.g 213.15 Syed Khalid Rashid, Cases and Materials on Equity & Trust s in Malaysia in Malaysia Vol 1, In ternational Islamic University, 1995. p.g. 213.16 [1969] 2 MLJ 110.

confirmed in the letter. The plaintiff had reason to believe that the defendants

were about to dispose of their shares in the bank and they obtained

injunctions restraining the defendants from parting with their shares. The

plaintiff claimed specific performance of the agreement.

Raja Azlan Shah, J held that, “The shares are not available in the open

market. That is not disputed. Mr. Chung for the plaintiffs relies on the

propositions that the court can order specific performance of an agreement for

the sale of shares which are not available in his open market. In Duncuft v.

Albrecht17 the court decreed specific performance of an agreement for the sale

of railway shares which are limited in number and not always to be had in the

open market. But the shares in question are such that they can easily obtained

from the open market, so that the loss can easily be quantified in money, the

court will not grant specific performance of the contract as in the case of

Schwaacher Stern v Schalwabacer Koritshoner’s18 claim. Applying that it is

beyond doubt that the agreement to transfer the bank’s shares which are not

available in the open market can be specifically enforced, for there is no

standard for ascertaining the actual loss which would have been caused by its

on performance as sated under section 11. Here, the inconvenience caused to

the plaintiffs would be irreparable and could not be remedied by the damages.

In H.A. Securities Sdn.Bhd V Ng Kong Yeam,19 in 1988, Roxy had

proposed a right issued of 135646 shares at RM1 each plaintiff and the

defendant entered into two memorandum of understanding (MOU), whereby

the plaintiff deposited with the defendant two and a half million shares (fully

paid) in Roxy Co. in exchange for a payment of RM5 million by the defendant.

It was agreed that if the proposed rights issue was cancelled, the plaintiff

could claim back the said 2 ½ million shares on payment of RM5 Million by the

defendant. It was agreed that if the proposed rights issue was cancelled, the

plaintiff could claim back the said 2 ½ million shares on payment of RM 5

million to the defendant. The right issued was aborted. A year elapsed, and

then only the plaintiff claimed back the shares after paying RM 5 Million, but

17 59 E.R. 110418 [1969] 2 MLJ 110 at 110.19 [1993] 2 AMR 43

before the defendant had already sold out the shares. The plaintiff is now

claiming specific performance of the agreement. The defendant says that four

month after the cancellation of rights issued they wrote to the plaintiff but he

did not respond for any apparent reason. No explanation was given. It was

held to the KL High Court;

“Why did not the plaintiff respond to that letter at all? No valid

explanation had been forthcoming and the only conclusion is that they

were either waiting for the price to go up or they had then decided not

to exercise their option to demand the return of the shares. The

defendant had acted strictly as required. RM 5 Million was at stake and

stoke shares are a volatile commodity. In these circumstances, the

plaintiff surely cannot now ask for specific performance because;

(a) The shares were freely available in the open market, unlike the

decision in Gan Realty Sdn. Bhd. V Nicholas20 (1969) 2 MLJ 110.

(b) Damages would be an adequate remedy as decided in Yeo Long

Seng v. Lucky Park Pt. LTD 21

(c) The plaintiff had ignored the defendants letter for one year

(d) Of the fact that the shares had actually been sold before the

plaintiff’s delayed decision to demand...”

1.4.Possibility of compliance is must (Observance to the order is a must)

Equitable remedies will never issue unless the court can ensure that

they will be observed. As equity does not act in vain, specific performance will

be decreed only where the defendant is in a position to comply with the order.

According to the case of Jones v. Lipman22 the defendant entered into a

contract to sell some land to the plaintiff, and then sought to avoid specific

performance by selling the land to a company acquired by him solely for this

purpose and controlled by him. While specific performance would not

normally be ordered against a vendor who no longer owned the property,

20 (1969) 2 MLJ 110.21 (1971) 1 MLJ 20.22 [1962] 1 W.L.R. 832

here the defendant was still in the position to complete the contract, because

as Russel J said that the company was ‘the creature of the vendor, a device

and a sham, a mask which he holds before his face in an attempt to avoid

recognition by the eye of equity. This specific performance was decreed

against the vendor and the company.

1.5.Only positive contracts may be specifically performed- Positive contracts alone could be specifically performed

Unlike the injunction, the remedy of specific performance is confined to

the enforcement of positive contractual obligations. These obligations must be

binding on the defendant. A prohibitory injunction is appropriate to restrain the

breach of a negative contract, while a mandatory injunction is used to force

the defendant to take positive steps to undo an act already done in breach of

contract. But this classification is not inflexible. Even where the plaintiff

wishes to enforce a positive contractual obligation, he may ask for an

injunction instead of specific performance. The advantage of such course is

that an injunction can be obtained on an interlocutory basis, while specific

performance cannot. It should also be added that specific performance does

not lie against the Crown, means that it have been stated in Crown

Proceeding Act 1947, Section 21(1)(a), the proper remedy is a declaration.

In Malaysia, this principle can be seen from the case of Hafsham v.

Zenab23 when Privy Council emphasized that the basis of specific

performance is a valid contract in which one party must have given adequate

consideration to the other party. A gratuitous agreement is not liable to be

specifically performed.

According to Section 17 of Specific Relief Action 1950, it clearly

enacted that example in what circumstance purchaser’s rights against vendor

with imperfect title to explain this principle.

Where a person contracts to sell or let certain property, having only an

imperfect title thereto, the purchaser or lessee (except as otherwise provided

by this Chapter) has the following rights:

23 [1958] 3 All ER 719

(a) if the vendor or lessor has subsequently to the sale or lease

acquired any interest in the property, the purchaser or lessee may

compel him to make good the contract out of that interest;

(b) where the concurrence of other persons is necessary to validate the

title, and they are bound to convey at the vendor’s or lessor’s request,

the purchaser or lessee may compel him to procure the concurrence;

and

(c) where the vendor or lessor sues for specific performance of the

contract, and the suit is dismissed on the ground of his imperfect title,

the defendant has a right to a return of his deposit (if any) with interest

thereon, to his costs of the suit, and to a lien for the deposit, interest,

and costs on the interest of the vendor or lessor in the property agreed

to be sold or let.

Another authority is Section 24 of Specific Relief Action 1950, which is

a contract to sell property by one who has no title, or who is a voluntary

settler.

A contract for the sale or letting of property, whether movable or

immovable, cannot be specifically enforced in favour of a vendor or lessor, to

who, knowing himself not to have any title to the property, has contracted to

sell or let the same, who, though he entered into the contract believing that he

had a good title to the property; cannot, at the time fixed by the parties or by

the court for the completion of the sale or letting, give the purchaser or lessee

a title free from reasonable doubt or who, previous to entering into the

contract, has made a settlement (though not founded on any valuable

consideration) of the subject matter of the contract.

Section 24 can be interpreted clearly by the illustration given;

(a) A, without C’s authority, contracts to sell to B an estate which A

knows to belong to C. A cannot enforce specific performance of this

contract, even though C is willing to confirm it.

(b) A, out of natural love and affection, makes a settlement of certain

property on his brothers and their issue, and afterwards enters into a

contract to sell the property to a stranger. A cannot enforce specific

performance of this contract so as to override the settlement and thus

prejudice the interests of the persons claiming under it.

1.6.Damage may be awarded in substitution for, or in addition to, specific performance.

This general principle provided that ‘once the specific performance had

been given, it does not mean that the plaintiff does not get for the other

compensation. The applications of this general principle have been applied in

the Malaysian statutes where we can refer in the Specific Relief Act 195024.

These statuses mentioned about the specific performance of part of contract

unperformed is small; specific performance of part of contract unperformed is

large; power to award compensation in certain case and the liquidation of

damage not a bar to specific performance.

In the case of Binaan Sentosa Sdn Bhd25, plaintiff files the Writ of

Summons and Statement of Claim against the defendant claiming for specific

performance and the other consequential relief. In this case, plaintiff enters a

Joint Venture Agreement and Supplementary Agreement with Che Soda bin

Che Hassan (the deceased) for the purpose to develop two of land. Pursuant

to the said agreement, a Power of Attorney was executed by the decease in

favor of the plaintiff to act, conduct and managed all the deceased’s affairs in

relation to the land. The deceased too had received a consideration of RM 30,

500.00 from the plaintiff in respect of the joint venture project. It was the term

of the said Agreements that the deceased to deliver the Lands free from

encumbrances, to give necessary written consent and to execute Power of

Attorney in favor of the plaintiff or its nominee for the purpose of execution of

charges and financier’s documents to finance the development project. The

Joint Venture project went on without any hitch until the demised of the

deceased. The defendants being the heirs of the deceased had refused to

honour their obligations under the said Agreements. Upon the death of the

deceased, the defendant was adamant and refused to cooperate with the

plaintiffs to execute the new power of Attorney. For that reasons, the plaintiffs

24 Section 13;14;18;19; of Specific Relief Act 195025 Dalam Mahkamah Tinggi Malaya Di Alor Setar Di Dalam Negeri Kedah Darul Aman [Guaman Sivil No: 22-04-2000]

could not developed the Lands within 6 month as stated under the said

Agreements. The court held that, after take into consideration on the fact of

the circumstances, the court allows the plaintiff’s claim with cost.

1.7.Specific performance unaffected by waiver

Lord Denning’s in WJ Allen v. El Nasr Export26 stated that “the principle

by waiver is simply where, if one party, by his conduct, leads another to

believe that the strict rights arising under the contract will not be insisted on,

intending that the other should act on that belief, and he does act on it, then

he first party will not afterwards be allowed to insist on the strict legal rights

when it would be inequitable for him to do so.

In Plasticmoda Societa Per Azioni v Davidsons (Manchester) 27there

must be no consideration moving for him who benefits by the waiver. There

may be no detriment to him by acting on it. There may be nothing in writing.

Nevertheless, the one who waives his strict rights cannot afterwards insist on

them. His strict right cannot at any rate suspended so long as the waiver lasts.

He may on occasion be able to revert to his strict legal right for the future by

giving reasonable notice in that behalf, or otherwise making it plain by his

conduct that he will thereafter insist on them.

In Plenitude Holdings v Tan Sri Khoo28, the plaintiffs, a company, under

registered a written agreement of sale and purchased, purchase a piece of

land from its chairman of the board of directors of the second defendant. The

plaintiffs were required on execution of the said agreement to pay 10% of the

purchase price by way of forfeitable deposit amounting to $4,793,995.80. The

balance of the purchase price was to be paid within six months from the date

of execution, with provisions for extension of time for completion. The second

defendant granted several extensions for completion to the plaintiff as

requested. On 12 December 1988, after some three and a half years, the

solicitors for the second defendant wrote to the plaintiffs informing them that

the second the second was terminating forthwith the said agreement on the

26 [1972] 2 ALL ER 127 at 140.27 LTD [ 1952],28 (1992) 2 MLJ 68

ground that the plaintiffs were unable to complete the purchase of the said

land, and subsequently filed the present action.

The plaintiff managing director testified that through the help of a

mutual friend he spoke on the telephone with the first defendant who promise

that he and the second defendant would obtain a loan to enable the plaintiffs

to pay the balance of the purchase price, failing which the second defendant

would enter into a joint venture with the plaintiff to develop the said land.

Acting on such assurance and in reliance on the oral undertaking of the first

defendant, the plaintiffs entered into the said agreement. The plaintiffs

contend that the instant termination of the said agreement was invalid as time

was no longer of the essence of the contract. They contend that they had

been negotiating with Sohaimi, the resident director of the second defendant

for joint venture, and Sohaimi had assured that the defendants would not

terminate the said agreement and forfeit the deposit. The plaintiffs further

contend that they had arrived at a compromised arrangement on joint venture

with Sohaimi who was representing both the defendants. The plaintiffs claim

specific performance of the said agreement, damages and cost.

It was held that “on the evidence viewed in totality I am satisfied that the

plaintiffs have made out a case to merit an order for specific performance. A

court of equity enforces specific performance of a contract affecting land

because its act upon the equities caused by the acts of the parties in the

execution of the contract and not upon the contract itself.

The defendant by their indulgence in granting the plaintiffs a series of

extensions to complete the terms of the agreement have lulled the plaintiffs

into a false sense of security and have given the plaintiffs reason to believe

that they would be given a reasonable time within which to complete the

contract. It would be inequitable, in vie of the dealings which had taken place

between the parties, to allow the defendants to enforce their strict legal rights

against the plaintiffs after they have led the plaintiffs to believe that they had

no intention to enforce such right.

The plaintiffs are accordingly entitled to an order for specific

performance of the sale and purchase agreement dated 20 August 1984, with

damages to be assessed and paid by the second defendant to the plaintiffs for

wrongful termination of the agreement and by both defendants for breaches of

their undertakings with costs.”

This contract must also be positive nature, wherein one is required to

do so something. Negative contract, on the other hand, should be enforced

through a prohibitory injunction and not specific performance. Positive

contracts can also be enforce through mandatory injunctions. It depends on

the plaintiff whether he wishes to pray for specific performance or injunction.

Generally, in case where urgent action is required, injunction is preferred, and

in case otherwise, courts generally prefer to issue a decree of specific

performance after giving on opportunity to both the parties of being heard.

Interlocutory injunctions are generally issued exparte, and are thus liable to be

discharge easily.

1.8.Consideration of hardship and expiry of limitation period may not necessarily defeat specific performance (kak shida)

In general, specific performance may be refused in the discretion of the

court where a decree would cause unnecessarily hardship to either of the

parties, or to third party. In adequacy of price is not standing by itself , a

ground for refusing specific performance, but it may be evidence of other

factors, such as fraud or undue influence, which would render enforcement

inequitable.

These matters arose in Patel V Ali,29 where the vendor and her

husband were co owners of a house which were co own of a house which they

contracted to sell in 1979. The husband bankruptcy caused a long delay in

completion for which neither the vendor had a leg amputated. She later gave

birth to her second and third children. The purchaser obtained an order for

specific performance against the vendor appealed o the ground of hardship.

She spoke little English and relied on help from nearby friends and relatives,

hence it would be hardship to leave the house and move away. Goulding J

held that the court in a proper case could refuse specific performance on the

ground of hardship subsequent to the contract, even if not caused by the

29 [1984] Ch.283; (1984) 100 L.Q.R. 337.

plaintiff and not related to the subject matter. On the facts, there would be

hardship amounting to injustice, therefore the appropriate remedy was

damages.30

In R.M. Venkatachalam Chettiar v. N.K.R. Arunasalam Chettiar,31 in

1943 the fully authorized agent of the registered proprietor negotiated with the

plaintiff regarding the sale of land. In due course, an oral agreement was

entered into, the agreed purchase money was paid in full a transfer in

accordance with the provisions of the Land Code was executes the

purchasers were let into the occupation and after a short delay while the

vendor’s agent complied with the condition of sale of that land should be so

free from encumbrances, there was delivery to the purchasers of the

document of title there was some subsequent delay in presenting the

executed transfer for registration. That delay, however was due not to nay

blameworthy on laxity on the part of the purchasers but in large part to the

delay of the time government authorities in assessing a tax which under the

law is there stood, had to be paid before registration could be affected. And

when the tax was ultimately assessed, the purchasers took immediate steps to

pay it and to enable their transfer to be registered. It was not in fact registered.

No doubt the immediate cause of its non registration was the collapse of the

Japanese Government but we know that it was in fact incapable of registration

by reason of the death in January 1945 of the registered proprietor. Now, the

administrator of the deceased proprietor having refused to take the necessary

steps to complete the contract, the plaintiffs sued for an order of specific

performance. Specific performance has been resisted by the defendant on two

grounds. The firsts is that the plaintiff’s claim is barred by the limitation, the

second is that there would be hardship if the court were exercise its discretion

as it is asked. Following is the verdict of the court on the effect of expiry of

limitation period;

“The provision in the Debtor and Creditor Ordinance on which

the defendant relies is contained in section 11(5)(c) the effect of which

30 JD. Heydon PL Laughlan. Butterworh, Cases and Materials on Equaty & Trust 6 th. Edition.Butterworth, pg. 10531 (1953) 19 MLJ 234.

is that any case where a difference or dispute has arisen touching the

reinstatement of any security under the section, any person interested

may within 18 months apply to the court by way of originating

summons, “for such relief as the nature of the case requires”. That

provision has to be read in its ordinary grammatical sense and it seems

to me so reading it does not deregulate in any way from the ordinary

provisions of the Limitation Enactment but it can only apply in case

where a dispute has arisen regarding the reinstatement of a security

under the ordinance and where some relief is asked for as provide by

the section it self. I fail to see that does not stem from such a dispute. It

is true that the parties to this suit have previously been engaged in

other proceedings in a dispute regarding the enforcement of a contract.

In short the provision of section 11(5) of the Debtor and Creditor

Ordinance is purely ancillary to the provisions of section 11 as a whole

and ca have no relation to a question of contract which is not effected

one way or other way by the provisions of the ordinance. I then pass to

the effect of the Title to Land (occupation period) Ordinance. That

ordinance is in instituted “An Ordinance to provide for the rectification of

titles to land in Malay States affected by the transactions during the

period enemy occupation. Section33 of the ordinance commences with

the statement that the limitation Enactment shall apply to any

proceedings to lay down that the period of limitation in regard to such

proceeding shall be two years. Again there is no derogation from the

general provisions of the Limitation Enactment and it seems clear

beyond doubt that the period of limitation of two years mentioned in the

section can only apply in the case of proceedings which are

maintainable by the virtue of the ordinance. It is a proceeding that is

maintainable by the ordinary law of contract. And therefore I must hold

that section 33 has no application whatsoever.

Regarding to the issues of hardship, the decision in the case of

R.M Venkatachalam Chettiar v. N.K.R. Arunasalam Chettiar32 also

stated regarding the hardship,” that bring to me the question of

32 (1953) 19 MLJ 234.

hardship as effecting the exercise of its discretion by the court. I will

preface what I have to say by reading the statutory “explanation”

annexed to section 11 of the Specific Relief Ordinance that reads,

Specific performance ordered, unless and until the contrary is proved

the court may presumed that the breach of a contract to transfer

immovable property cannot be adequate relieved by the compensation

in money..” , Section 21 gives the relevant portion of which reads, “The

following are cases in which the court may properly exercise a

discretion not to decree specific performance where the performance of

a contract would involved some hardship to the defendant which he did

not foresee, whereas its non performance would involve no such

hardship on the plaintiff. It may well be that the performance of this

contract would involve some hardship on the estate of the vendor which

he vendor did not foresee. I’m not prepared to say that on the other

hand non performance would involve no such hard ship on the

purchaser. It may well be there are hardship on both sides. If the

vendor’s estates are held to his bargain, there will be hardship in the

sense that as a result of circumstances beyond anyone’s control the

bargain has turned out worse than was anticipated. On the other hand,

it is not performed it seems to me that it will be at least a

commensurate hardship on the plaintiff to be derived of the fruits of

their bargain which may have turn out better than any they had

anticipated. The courts have no hesitation in exercising his discretion in

the way of ordering specific performance.”

In Haji Osman Bin Abu Bakar v. Saiyed Noor Bin Saiyed

Mahmud,33 the defendant in the original proceedings and the

respondent to this appeal is the administrator of the estate of one

Saiyed Mahamad (henceforth referred as the vendor) who died on 11

the July 1949. On the25th September 1944, the vendor sold a piece of

land to the present appellant for the sum of 2250. The purchase price

was paid in Japanese currency, the transfer was executed by both

parties before the Collector of Land Revenue and the transfer together

33 (1952) 18 MLJ 37.

with the document of title to the land was handed by the vendor to the

appellant. For the reason which are by no means clear but with I ‘am

not concerned at this stage, the transfer was not presented for the

registration until 25th October 1949 that is some six month after the

death of the vendor and registration was then refused by the reason of

section 85(ii) of the Land Code which reads as: “ the death of an person

prior to the presentation of any instrument executed by him shall

prevails so as to prohibit the registration of such instrument and such

instrument if registered shall be void”. Administration to the estate of the

vendor was granted to the present respondent on 28 the December

1949 and after some preliminary correspondence between the solicitors

concerned, the appellant commence proceedings against him on 7 th

October. The appellant asked for specific performance of the

agreement of 25 the September 1944, whereby in the vendor agreed

to sell the land to him, together with mesne profits down to the date of

judgment.

In his judgment, Thomson J held, “if the purchaser agrees to buy

a piece of land pays the purchase price ten subject to the terms of the

contract and in the absent of fraud misrepresentation or mistake he is

entitled to a good title to the land and to possession, and the death of

the vendor does not abate his rights by one jota. To my mind that

proposition requires no show of authority to support it and the

expressed it crystal clear terms or wholly unavoidable force of

implication. It is admitted that the only section of the land Code which

has any bearing on the matter is section 85(ii), and I must decline even

to consider whether that section was intended in effect to avoid every

and any contract for the sale of land where the vendor dies before

registration when there is available the simple explanation I have

already suggested. In other words, every canon relating to the

interpretation of statutes compels me to the view that the intention of

the section is to protect the estate of a deceased person against

fulfilling the lawful and binding obligations of the deceased. To my mind

the result at which I have thus arrived concludes the matter. If an order

for the specific performance is made it will have to be complied with.

The difficulties which I have been suggested as likely to arise in

connection with complying with such as an order are in my opinion

largely hyphothetical. There was certainly delay on the part of the

purchaser, but I’m not prepared to say that I was wholly unreasonable

in the circumstances prevailing in this country during the material years

nor can I discover any evidence to support the argument that there is

hardship to the beneficiaries of the state in depriving them of the fruits

of being allowed to avoid a bargain made by the deceased in good faith

which with the lapse of years has apparently turned out to be not so

good as bargain as was anticipated. I would allow the appeal an order

specific performance as prayed with cost to the appellant both here in

court below. These costs should come out of the state as I see no

reason to suppose that the respondent has no acted in good faith in

what he has conceived, though mistakenly, to be the interests of the

state.

1.9.Specific performance dependant on an option is unaffected if the option is not exercise strictly in the prescribe manner

In Kau Nia Enterprise (Pte) Ltd. v Teck Wah Corporation (Pte) Ltd34 the

fact that by an option in writing given on June 10, 1980, the defendants for the

sum of $5000 gave the plaintiff an option to purchase a property in Singapore

with vacant possession and at the price of $720 000.00. Completion of the

sale and purchase was to take place on November 10, 1980. The option was

exercisable at or before 4 p.m on July 30, 1980. The acceptance was

prescribed. The plaintiffs had to sign at the foot of the option at the portion

entitled “Acceptance Copy” and deliver it duty signed together with the

balance of the 10% of the purchase price at or before the time aforesaid.

The plaintiff did not exercise the option in the mode prescribed. Instead,

they handed to the defendants and the defendants accepted two cheques

aggregating the sum of $67 000 which together with the option fee amounted

to 10% of the purchase price.

34 [1982] 1 MLJ 10.

It’s was held that “ although the Plaintiff did not exercise the option in

the manner and within the time prescribe, I am satisfied that defendants had

waived these terms and had in truth and in fact accepted the plaintiffs’ belated

and altered mode of converting the option into a conclude contract. This is

conclusive evidence by letter dated July 31, 1980 and written by the

defendant. The letter acknowledge the receipt of the two cheques, one of

which was for $5000 and the other for $62 000 which was post-dated to

August 23, 1980. It made reference to the option fee. The defendants

“confirmed the sale” to the plaintiffs. By saying “you have already exercised

the said sale” they meant or must be taken to mean that the plaintiffs had

been deemed by the defendants to have duly exercised the option. The letter

even went on to provide for interest to be charged if the post-dated cheque

was not only honoured on presentation. The letter was accepted by the

plaintiffs.

On 8 September 1980 the plaintiffs requested the defendants to encash

the post-dated cheque. The defendants did. Completion of the sale and

purchase was delayed. On 6 December 1980 the defendants’ solicitors stated

that the transfer had been executed by the defendants. They asked for a firm

date for the completion. Up to this stage, it is clear that every act of the

defendants was in affirmation that the agreement for sale and purchase was

concluded and the actions of the defendants were steps taken by them

towards the completion of the sale.

On 21 January 1981 the defendants took an extraordinary step. They

wrote to their mortgagee bank to auction the property. It was calculated to

deprive the plaintiffs of the property. It was stated by counsel on both sides

that the property was by then about $1.6m. The defendants should not be

allowed to renege on their contract just because the property market was

rising. The plaintiffs gave notice of completion. The defendants could not give

vacant possession of the property. The encroachments mentioned earlier in

this judgment were still there. The plaintiffs insisted on completion

notwithstanding the encroachments. As evidenced by the letter dated 3 April

1981 and written by the plaintiffs’ solicitors, both parties agreed price to meet

the cost and expense of removing the encroachments. No agreement was

reached on the amount of the abatement.

As the defendants failed to complete the sale notwithstanding repeated

notices from the plaintiffs, these proceedings were commenced from specific

performance and for an appropriate abatement of the price in view of the

encroachments. On behalf of the defendants, it was argued that the option,

not having been exercised in the mode and within the time prescribed, had

lapsed. It was also argued that the letter of 31 July 1980 was not a sufficient

memorandum, as it allegedly did not contain the essential terms. The first

contention is not consistent with the plain words and tenor of the defendants’

letter of 31 July 1980, the effect of which I had already dealt with. It is so clear

and unambiguous. This is one case where happily the contemporaneous

documents are such that they conclusively demonstrate the conclusion of a

contract in writing.

1.10 Specific performance may be claimed and granted even before the time of performance has arrived.

Specific performance was a remedy for a breach of contract, but it may

in some circumstances be obtained before the time for performance has

arrived. The general principle of this specific performance rule that the party

to the contract can seek for specific performance if they can foresee that the

other party could perform the obligation when the time arrived.

As an instance, B enters into contract selling of the goods with C. B

realize that C could not perform its obligation on the contract at the time what

was promised. So in this circumstance, B can seek for specific performance

on the grounds of anticipatory breach.

It can be illustrated in the case of Leeds Industrial Co-operative Society

Ltd. V Slack35 where Lord Sumner held that “so far, as specific performance is

concerned, they must always be cases where there has been an anticipatory

breach”.

We can also refer in the case of Khatijabai Jiwa Hasham v Zenab

Harji36. In this case, a contract signed by the defendant for the sale by her to

the plaintiff of a 2 acre plot of land in Nairobi, provided inter alia, for payment

35 [1924] A.C. 851, 866; 40 T.L.R 74536 (1960) AC 316

of a deposit immediately and the balance of the purchase price on

presentation of documents of title to be executed by both parties within 6

months from the date of the contract. The defendant then repudiate the

contract and tore it up within a few minutes of signing it on the ground that

she had never agreed to sell the whole 2 acres but only an area of half an

acres. Only July 2, 1954, some weeks before the last day for competition,

August 19, the plaintiff instituted proceeding claiming specific performance of

the contract of February, 19. The defendant contended inter alia, that the

plaintiff was issued prematurely, and that the plaintiff should have waited until

there had been a failure to perform the contract within the period fixed hereby,

notwithstanding that she had previously intimated her refusal to do so.

In this case, Lord Denning held that the plaintiff was entitled to an order

of specific performance. The fallacy of the defendant’s contention consisted in

equating the right to sue for specific performance with a cause of action at

law. In equity all that was required was to show circumstances which would

justify in the intervention by a court of equity.

The order of specific performance often fell into two parts, the first being

of a declaratory nature and the second containing consequential direction.

The court would not, of course, compel a party to perform his contract

before the contract date arrived, and would give relief from any order in the

event of an intervening circumstance frustrating the contract.

2.0 Specific performance under the Specific Relief Act 1950

2.1 Specifically enforced contract

2.1.1 Section 11 of Specific Relief Act 1950

Specific relief may be ordered for contract for land whereby each piece of land

is regarded as unique37, contract for the sale of stock and shares which cannot

37 Section 11 Specific Relief Act 1950.

be bought in open market, and contract of sale of chattels which are especially

rare or of a particular manner.

Section 11(1) of the Specific Relief Act 1950 contains four situations which

specific performance may be specifically enforced. When the act agreed to be

done is in the performance, wholly or partly, of a trust, the specific

performance of any contract may, in the discretion of the court, be enforced.38

For example, A holds certain stock in trust for B. A wrongfully disposes of the

stock. The law creates an obligation on A to restore the same quantity of stock

to B, and B may enforce specific performance of this obligation.39

Any contract may be specifically enforced when there is no standard for

ascertaining the actual damage caused by the non-performance of the act

agreed to be done.40 For example, A agrees to buy and B agrees to sell a

picture by a dead painter and two rare China vases. A may compel B

specifically to perform this contract, for there is no standard for ascertaining

the actual damage which would be caused by its non-performance.41

Section 11(1)(c) of the SRA 1950 provides that specific performance of any

contract may, in the discretion of the court, be enforced where the act agreed

to be done is such that pecuniary compensations for its non-performance

would not afford adequate relief. For example, A contracts with B to paint a

picture for B who agrees to pay therefore $1000. The picture is painted. B is

entitled to have it delivered to him on payment or tender of the $1000.42

38 Section 11(1)(a) Specific Relief Act 1950.

39 Illustration Section 11(1) (a) Specific Relief Act 1950.

40 Section 11(1)(b) Specific Relief Act 1950.

41 Illustration Section (1)(b) Specific Relief Act 1950.

42 Illustration (d) Section (1)(c) Specific Relief Act 1950.

The specific performance may also be enforced when it is probable that

pecuniary compensation cannot be given for the non-performance of the act

agreed to be done.43 For example, in Illustration section 11(1)(d) of the SRA

1950, A transfers without endorsement, but for valuable consideration, a

promissory note to B. A becomes insolvent, and C is appointed his assignee.

B may compel C to endorse the note, for C has succeeded to A’s liabilities and

a decree for pecuniary compensation for not endorsing the note would be

fruitless.

Sub-section (2) of section 11 of the SRA 1950 raises a presumption that “the

breach of a contract to transfer immovable property cannot be adequately

relieved by compensation in money, unless the contrary is proved.” Similarly, it

is presumed that “the breach of a contract to transfer movable property can be

thus relieved.”

Loh Koon Moy & Anor. v. Zaibun SA binti Syed Ahmad [1978] 2 MLJ 29

Facts of the case:

The first appellant had agreed to buy a piece of land from the respondent, the

administratix of an estate. An order of court had been given empowering the

respondent to sell the land. The learned trial judge found in favour of the

appellant but found that there was an oral agreement enabling the respondent

to pay damages for breach. He therefore gave damages in favour of the

appellant. However, the learned judge refused to order specific performance

because of the damages available through the oral agreement. The appellant

appealed.

Issues:

Whether, if an alternative remedy is available, a specific performance can be

granted.

43 Section 11(1)(d) Specific Relief Act 1950.

Principle:

Specific Performance is an equitable remedy for breach of contract; an

alternative when money damages, the usual legal remedy; is inadequate.

Judgement:

Chang Min Tat J, delivering the judgement of the Court, held that, in

accordance with sections 18 and 19 of the Specific Relief Act 1950 provides

for a prayer of compensation and though a sum be named in default is willing

to pay the same, a contract may be enforced by an order for specific

performance. The learned judge followed the judgement of the Privy Council in

the case of Oxford & Ors. v. Provand & Anor.44 whereby the Lordships

declared that the court may exercise a discretion in granting or withholding a

decree of specific performance taking into account the circumstances of the

case, conduct of the parties and their interests under the contract.

Furthermore, section 11(2) Specific Relief Act 1950 has provided that, in

favour of a contract to sell land, the court shall presume that monetary

compensation is not adequate to relief the breach of contract to transfer

immovable property.

Moreover, in the court’s view, there was an element of public policy which

operates in favour of an order of specific performance in this case.

Based on the findings of the court stated above, the appeal is allowed. The

administratix was ordered to specifically perform the agreement to sell by

executing proper and valid transfers of the lands in question upon payment of

the full purchase money and a further order that if she defaults, the Senior

Assistant Registrar be empowered to execute the relevant documents on her

behalf.

Hoh Ah Kim v. Paya Trubong Estate Sdn. Bhd. (1978) 1 MLJ 14344 (1868) L.R. 2 P.C. 135, at page 151.

Facts of the case:

The plaintiffs are the executors of the estate of Liew Yeong Choy, deceased,

who entered into an agreement in writing, dated 19 February 1972 with the

managing director of the defendant company whereby the deceased agreed to

buy and the defendant company agreed to sell a portion of its land to the

extent of about 15 acres. Upon the execution of the agreement, the deceased

paid the sum of $18,000. Clause 1, spells out the terms of the agreement for

sale. Clause 2, states that the defendants shall from time to time keep the

deceased informed about the Penang government's option. Correspondence

passed between the defendants and the deceased. The defendants indicated

to the deceased that he could buy the land at $7,000 per acre, not at the old

price of $4,000. Eventually on 20 January 1980, the defendants' solicitors

wrote to the plaintiffs' solicitors refunding the sum of $18,000 which purported

to discharge the defendants from the said agreement, thus giving rise to the

present proceedings by the plaintiffs for specific performance or damages for

breach of contract.

Issues:

Whether the agreement for sale enforceable at law so that the plaintiff can

claim for specific performance.

Principle:

In granting the specific performance, court will take into account all the

circumstances in that case then identified whether the deceased deserve for

the damages only or damages and specific performance.

Judgement:

Chang Min Tat J, delivering the judgement of the Court, held that, in an action

for specific performance of an agreement for sale of land, Section 9(1) of the

Limitation Act 1953 (Act 254)45 will apply. In the present case, the alleged

breach occurred on 20 January 1980. Therefore time began to run from that

date. Even if the right of action accrued from the expiry of the 'option' on 10

July 1973, the plaintiffs were still within the 12-year period from 24 May 1980,

when the plaintiffs filed their statement of claim. The plaintiff’s action is not

statute-barred. Besides, the agreement for sale is not void ab initio for

uncertainty but enforceable at law. In addition, on the defence of laches and

acquiescence as pleaded in para 10 of the defence, there is clear evidence

from the correspondence and the defendant DW1 that the parties were at all

times negotiating for specific performance of the said agreement. In fact, the

defendants through their solicitors impliedly gave the deceased a false hope of

furnishing a detailed agreement to be executed between the parties. This was

followed by the negotiations about the price. The court is therefore satisfied

that the defence of laches and acquiescence cannot succeed. Then, the court

did not grant specific performance but awarded compensation for breach of

the agreement. It is fair and reasonable to assess compensation on the basis

of $4,000 per acre which is the purchase price originally agreed between the

parties. The defendants were ordered to pay the plaintiffs the sum of $60,000

as compensation. They must also refund the sum of $18,000 which was paid

as deposit and the costs of the action to the plaintiffs.

Mohamed v. Ho Wai (1961) 27 MLJ 7

Facts of the case:

Plaintiff prayed for specific performance of an agreement to grant a monthly

tenancy. The plaintiff’s uncle obtained a monthly tenancy of the premises in

question in1929. After more than twenty years of peaceful enjoyment of this

45 Section 9(1): No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him, or if it first accrued to some person through whom he claims, to that person.

tenancy, the plaintiff’s uncle had to vacate the premises when in 1951 the

Menteri Besar ordered the vacation of the whole area. In 1957, when the area

was made a “white area”, plaintiff’s uncle applied to the proper authorities for

re-occupation of the premises and this permission was given to him a year

later. However, the owner of the premises entered into possession of the

premises because plaintiff’s uncle did neither inform the owner of his vacation,

nor about his whereabouts, nor paid rent, giving an impression of

abandonment.

In the meantime, the plaintiff became a partner in his uncle’s business and

started proceedings against the defendant.

Issue:

Whether the Court will grant specific performance in the case of executed

contract.

Principle:

It is an elementary principle of equity that specific performance will only be

granted in the discretion of the Court in the case of executory contracts.

Judgment:

Per Adams J, the plaintiff prays for specific performance of the agreement

dated 12th September 1929, which had been fulfilled, in other words, its an

executed and not an executory contract. An “executed contract” is one which

is already fulfilled. Meanwhile, “executory contract” is a contract where it

remains to be carried into effect. It is an elementary principle of equity that

specific performance will only be granted in the discretion of the Court in the

case of executory contracts.

Section 11 of the Specific Relief Act 1950 lays down the conditions under

which the discretionary powers are exercisable which is, executor contracts.

Following the case of J.M. Abdul Kadir v Shaw Bros46, the court would not

grant specific performance for the monthly tenancy. The more suitable remedy

for the plaintiff is in section 747 and section 848 of the Specific Performance Act

1950.

Accordingly the plaintiff fails and the action is dismissed with costs.


This section provides relief against parties and persons claiming under them

by subsequent title. Section 26(a) of the SRA 1950 stated that except as

otherwise provided by this Chapter, specific performance of a contract may be

enforced against either party thereto; while sub-section (b) stated that any

other person claiming under a party to the contract by a title arising

subsequently to the contract by a title arising subsequently to the contract,

except a transferee for value who has paid his money in good faith and

without notice of the original contract. For example, A contracts to convey

certain land to B by a particular day. A dies intestate before that day without

having conveyed the land. B may compel A’s heir or other representative in

interest to perform the contract specifically.49

According to section 26(c) of the SRA 1950, specific performance of a contract

may be enforced against any person claiming under a title which, though prior

to the contract and known to the plaintiff, might have been displaced by the

defendant. Under sub-section (d), specific performance may be enforced

when a public company has entered into a contract and subsequently

becomes amalgamated with another public company, the new company which

46 [1940] MLJ 270.

47 Section 7: Recovery of specific immovable property.

48 Section 8: Suit by person dispossessed of immovable property.

49 Illustration (a) Section 26(b) Specific Relief Act 1950.

arises out of the amalgamation; and sub-section (e) stated when the

promoters of a public company have, before its incorporation, entered into a

contract, provided that the company has ratified and adopted the contract and

the contract is warranted by the terms of the incorporation.

2.2 Contracts which cannot be specifically enforced


This section laid down the situations whereby the contracts are not specifically

enforceable. They are:

a. A contract for the non-performance of which the compensation in money is an adequate relief. For example: A contracts to sell an B contracts to buy, $10,000 in the four per

cent loan of the City if Penang.

b. A contract for personal service will or volition. For example: A, an author, contracts with B a publisher, to complete a literary

work, B cannot enforce specific performance of these contract.

c. An uncertain contract.For example: A, the owner of a refreshment-room, contracts with B to give him

accomodation there for the sale of his goods and to furnish him with the

necessary appliances. A refuses to perform his contract. The case is one for

compensation and not for secific performance, the amount and nature of the

accomodation and appliances being undefined.

d. A contract which is in nature revocableFor example: A and B contract to become partners in acertain business, the

contract not specifying the duration of the proposed partnership. This contract

cannot be specifically performed, either A or B might at once dissolve the

partnership.

e. A contract made by the trustee either in excess of their powers or in breach of their trust.For example: Two trustees, A and B, empoered to sell trust property worth

$10,000, contract to sell it to C for $3000. The contract is so disadvantageous

as to be a breach of trust. C cannot enforce its specific performance.

f. A contract made by or on behalf of a corporation or public company created for special purposes, or by the promoters of the company, which is in excess of its power.For example: A company existing for the sole purpose of making a railway

contracts for the purchase of a piece of land for the purpose of recting a

cotton-mill thereon. This contract cannot be specifically enforced.

g. A contract the performance of which involves the performance of a continuous duty extending over a longer period than three years from its date.For example: A contracts to let for twenty-one years to B the right to use such

part of a certain railway made by A as was upon N’s land, and that B should

have a right of running carriages over the whole line on certain terms, and

might require A to supply the necessary engine-power, and that A should

during the term keeping the whole railway in good repair. Specific

performance of this contract must be refused to B.

h. A contract of which a material part of the subject matter supposed by both parties to exist, has, before it has been made, ceased to exist.For example: A contracts to pay an annuity to B for the lives of C and D. It

turns out that, at the date of the contract, C, though supposed by A and B to

be alive, was dead; the contract cannot be specifically performed.


Section 23 of the Specific Relief Act 1950 laid out four circumstances whereby

specific performance of a contract cannot be enforced for a person. If a person

would not recover compensation for breach of the contract, incapable of

performing or violates any essential term of the contract, has been remedied

and obtained satisfaction for the alleged breach of contract, or; if, prior to the

contract, had notice that a settlement of the subject matter had been made

and was then in force although it was not founded on any valuable

consideration; specific performance cannot be enforced for him.

A person who is not party to the contract cannot provide compensation for its

breach. For example, A, in the character of agent for B, enters into an

agreement with C to buy C’s house. A is in reality acting not as agent for B but

on his own account. A cannot enforce specific performance of this contract.50

If a person has become incapable to perform a vital part of the contract which

he ought to perform or has violated the part, he is barred from being granted a

special performance for the said contract. For instance, if A contracts to sell B

a house and to become tenant thereof for a term of fourteen years from the

date of the sale at a specified yearly rent and then A becomes insolvent,

neither he nor the official receiver of his estate, B, can enforce specific

performance of the contract.51

When a person has already chosen his remedy and obtained satisfaction for

the alleged breach of contract, he may not be granted a specific performance

against the other parties to the contract.52


50 Illustration (a) section 23(a) Specific Relief Act 1950.

51 Illustration (b) section 23(b) Specific Relief Act 1950.

52 Illustration section 23(c) Specific Relief Act 1950.

Section 25 of the Specific Relief Act 1950 highlights ‘fraud’ as a ground on the

basis of which specific performance may be refused. Specific performance is

dependent on a complete and definite contract. Thus, a contract cannot be

specifically enforced if it is suffering from illegality, uncertainty, fraud, undue

influence, mistake, misrepresentation or lack of consent. A contract which

lacks in any of the three essentials of proposal, acceptance or consideration is

also not enforceable. Similarly, varied and vague contracts where the meaning

may not be ascertained cannot be enforced.

in writing to let a house to B, for a certain term, at the rent of RM100 per

month, putting it first into tenantable repair. The house turns out to be not

worth repairing, so, with B’s consent, A pulls it down and erects a new house

in its place. B contracting orally to pay rent at RM120 per month. B cannot

sues to enforce specific performance of the contract in writing except with the

variations made by the subsequent oral contract.53


According to section 27 of Specific Relief Act 1957, specific performance of a

contract cannot be enforced against a party if his consent was obtained by

misrepresentation, concealment, circumvention, or unfair practices, or; if his

assent was given under the influence of mistake of fact, misapprehension, or

surprise, or; if the consideration to be received is grossly inadequate.

This is subject to a proviso which stated that, when the said contract provides

for compensation in case of mistake, compensation may be made for a

mistake within the scope of the provision, and the contract specifically

enforced in other respects if it can be enforced.

Usually, a defendant is not allowed to resist specific performance by alleging

his own fault or mistake or mistaken understanding of the legal effects of the

contract. However, if the court feels that it would amount to hardship or may

53 Illustration (c) section 25 Specific Relief Act 1950.

amount to injustice, it may refuse to order specific performance. The plaintiff

may obtain simultaneously both rectification and specific performance if a

mistake is detected in a written contract.

Mere inadequacy of consideration is not a defence, unless fraud is evident or that

the plaintiff is taking undue advantage of it.

Tan Meng San v. Lom Kim Swee

Facts of the case:

The appellant on August 30, 1958, agreed to the transfer of a certain piece of

land to the respondent in consideration of the respondent settling the

appellant’s debt to C (S.J Coelho) for $16,000 and paying the appellant’s

solicitor, Mr Kaher Singh, his professional fee of $5000. The respondent

subsequently paid off the appellant’s debts to C and arranged with the said

solicitor whereby the said solicitor no longer looked upon the appellant for

payment of his said professional fee. The appellant despite these

arrangements refused to transfer the said land to the respondent. Thus, the

respondent appealed to the Appeal Court to obtain specific performance of the

agreement of 30th August 1958.

Issues:

1. Whether the contract can be specifically enforced.

2. Whether the respondent is guilty for delay in seeking remedy.

Principle:

Specific performance cannot be enforced against a party if his consent was

obtained by unfair practices.

Judgement:

The appellant had received in the fullest measures all that he bargained for

and the Court should not exercise the powers under section 21 of the Specific

Relief Ordinance 1950, to vary the findings of the trial judge.

In view of the evidence, the second ground must fail because the respondent

testified that he paid into Court the amount found to be due to Coelho and

produced Courts receipts therefore and the appellant admitted that he became

aware on the 22nd December 1959 that the payment had been made.

The proof of the respondent’s willingness to perform his part of the bargain lay

in the fact that he paid C. This is due to the fact that the respondent has come

to an arrangement with Mr. Kaher Singh whereby Mr Kaher Singh no longer

looks to the appellant for the payment of his fee. (This was admitted by Mr.

Kaher Singh in his evidence in chief)

In all circumstances of the case the respondent was not guilty of unreasonable

delay in seeking his remedy. As time was not the essence of the contract only

the second principle in Aberfoyle Plantations Ltd. v. Kiaw Bian Cheng54 applied

which stated that, “ where a conditional contract of sale fixes no date for

completion of a sale, then the condition must be fulfilled within a reasonable

time”.

The appealed was dismissed.

3.0Defences to specific performance

3.1Mistake and Misrepresentation

There are situations in which equity, although refusing to rescind a

contract or cancel a deed for mistake or misrepresentation, will not give the

other party positive equitable help in enforcing it. The plaintiff will be left to his

54 [1960] MLJ 47 PC.

remedy in damages.55 The court is not bound to decree specific performance

in every case in which it will not set aside the contract, or to set aside every

contract that it will not specifically enforce.56

A defendant cannot usually resist specific performance by alleging

merely his own fault and mistake,57 or on the ground that he was mistaken as

to the legal effect of the agreement,58 although “unilateral mistake may, in

some circumstances, afford an answer to a claim for specific performance.”59

Generally, equity will hold the defendant to enforcement of his bargain unless

it can be shown that this would involve real hardship amounting to injustice.60

There are several cases which illustrated this type of defence as can be

seen in the case of Watkin v. Watson-Smith,61 where it stated that “no specific

performance where elderly vendor offered bungalow for sale at 2,950 by

mistake, intending 29, 500. There was no contract.” Besides, there is a case

that goes further in Malins v. Freeman,62 where an estate was purchased at an

auction and the defendant bid under a mistake as to the lot put up for sale.

Specific performance was refused although the mistake was due to entirely to

the defendant’s fault and not in any way caused by the vendor; and the

defendant waited until the auction was over before declaring the mistake.

Basically, where the mistake is in the written record of the contract, the plaintiff

may obtain rectification and specific performance in the same action.63

55 Lord Eldon in Mortlock v. Buller (1804) 10 Ves.Jr. 292.

56 Wood v. Scarth (1855) 2 K. & J. 33 (in equity); 1 F. & F. 293 (at law).

57 Duke of Beaufort v. Neeld (1845) 12 Cl. & F. 248 at p. 286.

58 Powell v. Smith (1872) L.R. 14 Eq. 85.

59 Brightman J. in Mountford v. Scott [1975] Ch. 258 at p. 261.

60 Van Praagh v. Everidge [1902] 2 Ch. 266.

61 The Times, July 13, 1986, p. 863.

62 (1837) 2 Keen 25.

63 Craddock Bros v. Hunt [1923] 2 Ch. 136.

3.2Conduct of the Plaintiff

A plaintiff must come to equity with clean hands. Before specific

performance can be decreed in his favour, he must show that he has

performed all his own obligations under the contract, or has tendered

performance, or is ready and willing to perform them.64 Thus, a person holding

under an agreement for a lease is not entitled to a decree of specific

performance of the lease if he is himself in breach of one of its covenants.65

Nor could a purchaser obtain specific performance if he had taken advantage

of the illiteracy of a defendant who was not separately advised.66 The conduct

in question must be connected to the contract of which specific performance is

sought.

Besides, if both parties have “unclean hands”, there is no question of

balancing the misconduct of the one against that of the other. The “clean

hands” defence is concerned with the conduct of the plaintiff alone, although

all the circumstances, including the conduct of the defendant, are relevant to

the exercise of the discretion.67 Similar also in Wilton Group plc v. Abrams68,

where it mentioned that “no specific performance of ‘commercially

disreputable’ agreement”.

3.3Laches or delays

Generally in equity time is not held to be of the essence of a contract,69

thus specific performance may be decreed although the contractual date for

64 Lamare v. Dixton (1873) L.R. 6 H.L. 414.

65 Walsh v. Lonsdale (1882) 21 Ch.D. 9.

66 Mountford v. Scott [1975] Ch. 258.

67 Sang Lee Investment Co. Ltd v. Wing Kwai Investment Co. Ltd, The Times, April 14, 1983.

68 The Times, February 23, 1990.

69 This rule now applies also at law;L.P.A.1925, s41(time may be made of the essence in a contract for the sale of land by the service of a notice to complete)

performance has passed. Failure to complete on the contractual date may,

however render the delaying party liable to damages for breach of contract.

The fact that time is not of the essence in equity does not negative a breach of

contract in such a case. It means that the breach does not amount to a

repudiation of the contract. Thus the delaying party, although liable to

damages, does not lose the right to seek specific performance, nor will he

forfeit his deposit, provided he is ready to complete within a reasonable time.70

There is no statutory period of limitation barring claims to specific

performance or to the refusal of relief on the ground of acquiescence,71 but a

plaintiff who delays unreasonably in bringing an action for specific

performance may lose his claim. 72There is no rule to lay down what is meant

by unreasonable delay. One relevant factor is the subject-matter of the

contract. If it has speculative or fluctuating values, the principle of laches will

be especially applicable.73 It was once thought that the plaintiff must normally

seek specific performance well within one year,74 but it now seems that the

approach may be too strict.

In Lazard Bros. & Co.Ltd v Fairfield Property Co. (Mayfair) Ltd,75 a

contract was entered into on March 12, 1975. The plaintiffs issued a writ for

specific performance on May 14, 1977. In ordering specific performance,

Megarry V.-C, said that if specific performance was to be regarded as a prize,

to be awarded by equity to the zealous and denied to the indolent, then the

plaintiffs should fail. But whatever might have been the position over a century

ago that was the wrong approach today. If between the plaintiff and defendant

it was just that the plaintiff should obtain the remedy, the court ought not to

withhold it merely because the plaintiff guilty of delay. There was no ground

70 Raineri v. Miles [1981] A.C.1050;

71 Limitation Act 1980, s.36(1),(2)

72 Southcomb v. Bishop of Exeter (1847) 6 H.213

73 Mills v. haywood (1877) 6 Ch.D. 196

74 Huxham v. Llewellyn (1873) 21 W.R 570 (delay of five months in the case of commercial premises prevented specific performance)

75 (1977) 121 S.J 793;[1978] Conv. 184

here on which delay could properly be said to be bar to a decree of specific

performance.

An exceptional case where delay will not be a bar is where the plaintiff

has taken possession under the contract,76 so that the purpose of specific

performance is merely to vest the legal estate in him. In William v Greatrex77 a

delay of 10 years is such circumstances did not bar specific performance. But

in a significant factor there was that the transaction creating the proprietary

interest was not in issue. It is otherwise where the contract itself is disputed. In

such a case the doctrine of laches does apply.78

Where the plaintiff has delayed, but specific performance is refused for

another reason, the effect of his delay may be that the date of assessing

damages in lieu of specific performance under Lord Cairns’ Act is moved back

from the date of judgement to the date upon which the matter might have been

disposed of.79

The situation discussed above is where the delay has occurred before

the plaintiff has sought specific performance. Where the plaintiff issued the writ

for specific performance promptly but then delays in bringing the matter to trial,

he may, in clear a case, be disentitled to the remedy.80 Where the plaintiff

obtains a decree for specific performance but then delays in enforcing it for a

long period, leave to enforce81 it will be refused only if there is an insufficient

explanation and detriment to the defendant. Thus in Easton v. Brown,82 a

delay of eight years in seeking to enforce the decree was no bar where the

defendant’s former wife and children had remained in occupation and the

76 It is otherwise if possession has been taken other than pursuant to the contract: Mills v. Haywood, supra.

77 [1957] 1 W.L.R 1170

78 Joyce v. Joyce [1979] 1 W.L.R 1170

79 Malhotra v. Choudhury [1980] Ch 52

80 Du sautoy v. symes [1967] Ch.1146 at p.1168. Towli v. Fourth River Property Co. Ltd. The Times, November 24, 1976 (delay of nine years between writ and hearing) was such a clear case.

81 See R.S.C. Ord.44,r.2(1)

82 [1981] 3 All E.R.278. The plaintiff also obtained an order for inquiry as to damages arising from the defendant’s failure to complete.

plaintiff had been legally advised that it would be difficult to remove them. The

plaintiff had an explanation for the delay and had acted reasonably; detriment

to the defendant was not on its own a ground for refusing leave to enforce the

order.

Finally, in cases where time is of the essence, specific performance is

not normally available after the stipulated date. It has been held in Australia,

however, that the court may, in the exercise of its equitable jurisdiction to

relieve against forfeiture, grant specific performance to prevent the ‘forfeiture’

of the purchaser’s equitable interest under the contract.83 The Privy Council

has rejected the Australian approach, although leaving open the possibility of

relief based on restitution or estoppels if injustice would otherwise result.84

3.4Hardship

In general, specific performance may be refused in the discretion of the

court where a decree would cause unnecessary hardship to either of the

parties,85 or to a third party.86 Inadequacy of price is not, standing by itself,

aground for refusing specific performance; but it may be evidence of other

factors, such as fraud87 or undue influence,88 which would render enforcement

inequitable.

These matters arose in Patel v.Ali,89 where the vendor and her husband

were co-owner of a house which they contracted to sell in 1979. The

husband’s bankruptcy caused a long delay in completion, for which neither the 83 Legione v. Hateley (1983) 57 A.L.J.R 292;(1983) 99 L.Q.R. 490

84 Union Eagle Ltd v. Golden Achievement Ltd [1997] 2 W.L.R. 341, applying Steedman v. Drinkle [1916] 1 A.C 275.

85 Denne v. Light (1857) 8 De G.M. & G.774

86 Earl of sefton v. tophams Ltd [1966] Ch 1140

87 Coles v. Trecothick (1804) 9 Ves.Jr 234 at p. 246; Callaghan v. Callaghan (1841) 8 Cl & F.374

88 Fry v. Lane (1888) 40 Ch.D 312(sale set aside)

89 [1984] Ch 283; (1984) 100 L.Q.R. 337. There was evidence that the Muslim community would pay the damages.

vendor had a leg amputated. She later gave birth to her second and third

children. The purchaser obtained an order for specific performance against

which the vendor appealed on the ground of hardship. She spoke little

English, and relied on help from nearby friends and relatives, hence it would

be a hardship to leave the house and move away. Goulding J. Held that the

court in a proper case could refuse specific performance on the ground of

hardship subsequent to the contract, even if not caused by the plaintiff and not

related to subject-matter. On the facts, there would be hardship amounting to

injustice, therefore the appropriate remedy was damages.

3.5Misdescription of subject-matter

3.5.1 specific performance subject to compensation

In the contract the vendor cannot fulfill his promise to transfer

property if the property agreed is incorrectly described. For example in

most cases is an inaccurate measurement in the plan90. Description is a

fundamental to a contract and it becomes one a condition. Misdecription

will put a vendor in breach. To deny him specific performance on that

account would introduce a rigid rule capable of producing injustice. Equity

adopts a more flexible approach by compensating the purchaser by

allowing him a reduction in the price he had agreed to pay91. This course

will not be followed if it would prejudice the rights of a third party interested

in the estates92. On the other hand the misdescription may be so serious

that to decree specific performance would be in effect to force the 90 Watson v Burton [1957] 1 W.L.R 19

91 If the misdescription goes against the vendor, he cannot increase the price : Re Lindsay and Forder’s

Contract (1895) 72 L.T. 832

92 Cedar Holdings Ltd v. Green, supra (specific performance with abetment not appropriate where vendor’s

interest merely a co-ownership share)

purchaser to take something wholly different from what he intended

Misdescription must be distinguished from non-disclosure. A vendor is

under a duty to disclose latent defects in title but not physical defects,

where the doctrine of caveat emptor applies. Thus, in the case of latent

physical defects, the purchaser can only resist specific performance if there

has been a misdescription or misrepresentation93. If so the only way of

achieving justice may be to permit the purchaser to rescind or to refuse to

grant specific performance.

3.5.2 Refusal of specific performance

The general rule is that a purchaser will not be force to take

something which is different in substance from what he had contracted

before94. In matters regarding the differences of quality or quantity will not

by themselves suffice as a defense to an action for specific performance

unless it can be proved that the property is different in substance from what

contracted to be sold. A misdescription is substantial for this purpose of it

so far affect “the subject-matter of the contract that it may be reasonably

supposed, that, but for such misdescription, the purchaser might never

have entered into the contract at all.”95 This will always be a question of

fact in each case: obviously A, who contracted to sell Black acre to B,

cannot force him to take White acre, even if White acre is larger, more

valuable and better suited to B’s purposes. It is often difficult to say

whether a misdescription of the area of land involves a difference of

substance or of quantity; the rule is easy to be understood, though often

difficult of application. However, although the vendor cannot compel a

93 Re Puckett and Smith’s Contract [1902] 2 Ch. 258

94 Flight v Booth (1834) 1 Bing.N.C. 370

95 Flight v. booth (1834) 1 Bing N.C 370 at p.377

purchaser to take something different from that contracted to be sold, it is

only just to give the purchaser the option of insisting on completion, and

being paid compensation96 for what he has lost. If it were not so, a person

in default could in effect take advantage of his own wrong. Thus the

purchaser has a choice he may elect to take the property, notwithstanding

that it may be substantially different from the contract description.

3.5.3 Condition of sale

Parties are free to make their own conditions to regulate what is to

happen if there is a misdescription. In the case of contracts for the sale of

land, most contracts prepared by a solicitor will now be made subject to the

Standard Conditions of Sale. In every case, therefore, the first question

must be: what does the contract provide? But even then caution is

necessary, since the courts have been reluctant to permit either party to

contract out of the rights conferred on him by equity.97

3.5.4 Want of good title

The court will not force a doubtful title on a purchaser. The phrase

“defect title” is loosely used in some in some of the cases to indicate that

the vendor, through some material error in description, fails in effect to

convey to the purchaser the property he intended to buy. In other cases

the expression may be used in a more literal sense; where, for example,

the vendor’s land is burdened with restrictive covenants. Yet there are

other cases where there is not merely a defect in the vendor’s title, but no

96 Mortlock v Buller (1804)

97 Topfell v. Galley properties Ltd [1979] 1 W.L.R. 446

title at all. Clearly that purchaser cannot be compelled to take a bad title,

nor be allowed to refuse a good one.

3.5.5 Public Policy

The court will not decree specific performance of a contract where the

result would be contrary to public policy.

In Wroth v. Tyler,98 a husband, the owner of the matrimonial home, entered

into a contract to sell with vacant possession. Before completion, his wife

registered a charge under the Matrimonial Homes Act 1967.99 The purchaser

sued for specific performance, and failed on two grounds:

i. The husband could only carry out his obligation by obtaining a

court order terminating the wife’s right of occupation, and this

would depend on the discretion of the court. To grant a decree

would compel the husband to embark on difficult and uncertain

litigation. He had attempted to obtain the wife’s consent by all

reasonable means short of litigation, and it would be most

undesirable to require a husband to take proceedings against his

wife, especially where they were still living together.

ii. Nor could the purchasers get specific performance subject to the

wife’s right of occupation. The husband and daughter would

remain liable to eviction by the purchasers, and the family would

be split up. The court would be slow to decree specific

performance in such circumstances.

4.0 An Effect of a Decree of Specific Performance on Other Remedies.

4.1 Common Law Remedy is Not Excluded.98 [1974] Ch. 30.

99 Now Family Law Act 1996.

If a person asks for specific performance, he also can ask for common law

remedy i.e. claims for any damages due to the breach. Common law remedy

is not excluded if a person already for specific performance. For example if a

person breaches a contract, the other party can ask from the court a specific

performance and also ask for damages in order to recover al the loses from

the breach.

If a plaintiff claim for specific performance and the performance will bring

hardship to the defendant, the decree will not be granted and only damages

will be granted. If the court feels like specific performance is not necessary to

the plaintiff, then only damages will be granted.

If the defendant already repudiates or revokes the contract, the plaintiff cannot

seek for the decree of specific performance since the defendant already

discharge his obligation towards the plaintiff.

For example, in the case of Johnson v. Agnew100, the plaintiff in this case is a

vendor and the defendant in this case is the purchaser. The vendor having

contracted to sell mortgaged properties to the defendant i.e. the purchaser

obtained a decree of specific performance. Subsequently, owing the

defendant’s delay the properties were sold to by the mortgagees so that it

becomes impossible to comply with the decree. The price obtained by the

mortgagees was lower than the contract price, so the plaintiff sought damages

from the defendant at common law for breach of contract. The defendant

claimed that the plaintiff election to seek specific performance was irrevocable,

so that he could not claim for damages in common law. The house of lord held

in favour of the plaintiff. Lord Wilberforce explain that if a purchaser fail to

complete, the vendor can treat this as a repudiation and claim damages for

breach of contract or he can seek for specific performance. If an order for

specific performance is made, the contract is still exist and if the defendant

fails to comply with the decree, the plaintiff may apply either to enforce or to

dissolve the contract. It follows from the fact that the contracts still exist and

the plaintiff can recover for damages at common law. If the plaintiff afterwards

100 [1980] A.C. 376

accepts the repudiation, he cannot seek fro specific performance since the

defendant already discharge from the obligation of the contract between them.

4.2 The Court’s Discretion

The control of the court is exercised according the equitable principles: the

relief sought by the plaintiff will be refused if it would be unjust to the other

party grant it. In Johnson v. Agnew101 it was the purchaser’s fault that it had

become impossible to enforce the decree, therefore the vendor was entitled

not only to an order discharging the decree of specific performance and

terminating the contract, but to damages at common law for breach of

contract.

4.3 Subsequent Performance Regulated by Terms of Decree

After specific performance is granted, a contract still exists and it does not

merge into the decree until the legal title is conveyed. However, the rights

under the contract may be affected by the decree. By applying for specific

performance, the plaintiff puts into the hands of the court how to contract is to

be carried out. Therefore, the performance of the contract is regulated by the

provisions of the ordered not those of the contract.

In simple words, upon the granting of specific performance, the court will hold

the power to the provisions of the contract. The terms as agreed earlier on by

both parties are no longer enforceable. To clarify this, in the case of Singh v

Nazeer102, a purchaser was granted specific of a contract for the sale of land.

The purchaser then delayed, so the vendor served a completion notice and

claimed damages and forfeiture of the deposit. Megarry J. held that the

completion notice was invalid. The machinery provisions of the contract, for

101 Ibid.

102 Singh v. Nazeer [1970] Ch. 474; criticized in (1980) 96 L.Q.R. 403 (M. Hetherington). Cf. (1981) 97 L.Q.R. 26 (D. Jackson)

example as to mode and date of completion, were intended to apply to

performance out of court. Once specific performance was granted, they must

yield to any directions in the order. Unless the parties agree, the working out,

variation or cancellation of an order for specific performance is a matter for the

court. Applying these principles, a vendor who obtains specific performance is

not free to sell to a third party if the purchaser fails to comply with the decree.

Unless the purchaser agrees to the resale, the vendor’s remedy in such a

case is to apply to court either for enforcement of the decree or for an order

terminating the contract.

It is the same case in GKN Distributors Ltd. v Tyne Tees Fabrication Ltd.103

whereby a vendor’s claim against purchaser for declaration, forfeiture of

deposit and damages was dismissed.

103 GKN Distributiors Ltd. V. Tyne Tees Fabrication Ltd. (198) 50 P & CR 301

5.0 Hypothetical question

Schumacher is a successful Formula One Driver and due to his success in Formula

One, he has been listed as one of the richest person in the world.

On March 12, 2010 Schumacher has agreed to purchase a piece of land where a 3-

storey bunglow house to be built on it for RM 5.2 Million from Alonso Sdn Bhd, a

licence developer of Whistler Olympic Park, the venue of the Winter Olympic Games

2010 which now has left vacant after the Olympic ends. Schumacher has paid the

deposit of RM 500,000 and the booking fee of RM 10,000. On the same day,

Schumacher had sign the contract which ends with this following paragraph-“ I

hereby agree to sign the agreement 14 days on receipt of the vendor’s notice for

signing same, falling which the vendor is entitled to cancel this booking and re-sell

the property. I further agree that the completion date of handing over of house with

vacant possession is expected by before or on 31.12.2012. all of these contracts are

signed at Alonso’s headquater at KLCC. However, there is no specific clause that

stated the sum of money to be paid to either party if the contract is not completed.

On November 3rd , 2010 due to economic downturn, Alonso has decided to sell 65%

of his shares ion the company to Hamilton and Button Corp and Alonso LTD has

been renamed to Koyak Senantasia Sdn Bhd, still incorporated under the Malaysian

Law. Alonso is still one of the shareholder of the company and has been appointed

as the managing director of the company. Due to avoid Koyak Senantasia to go into

liquidation, they have decided to withdraw several projects which are high in cost and

low in terms of sale, one of the projectis the project at Vancouver and Koyak

Senantasia has decided to repudiate all the all the contract previously made by them

and that inclused their contract with Schumacher.

By a letter on 11th February 2011, Alonso purported to inform Schumacher that his

booking was cancelled and they have sent a cheque for $ 500,000 to Schumacher as

refund of the deposit which he had paid. Schumacher through his solicitors returned

the cheque informing Alonso that he wished to proceed with the purchase. But this

has been refused by Alonso as he is bound to follow the decision of the board of

directors of Koyak Senantasia Sdn Bhd. Schumacher is very angry with the decision

but he is too occupied going for races all around the world in order to chase the world

record of 6 consecutive world titles, and wins the 2011 World Championship. After

that, he has been busy preparing for 2012 session until he has forgotten that he is

going to take a legal action against Alonso. He only filed the case against Alonso on

August 2012, after his son’s graduation.

In this action the Schumacher claimed for specific performance of the contract and in

the alternative for damages for breach of contract. Schumacher contended that the

receipt issued by Alonso for the deposit taken together with the letter of the same

date which the Schumacher was asked to sign and hand over to Alonso constituted

sufficient written memorandum for the and accordingly there was a contract at

common laws. Alonso however claimed that they merely granted Schumacher an

option to purchase a house to be built and that such option was subject to a formal

contract of sale and they had validly revoked the option.

1.0 General Principle

1.1 Whether Schumacher can claim specific performance under the discretion of the Court.

Discretion illustrated by consideration of matters such as the conduct of the

claimant. In this case, Schumacher apply to the court for the specific performance.

When specific performance was introduced it has been treated as a question of

discretion whether it is better to interfere and give a remedy which the common law

knows nothing at all about, or to leave the parties to their rights in a Court of Law104. It

is undoubted however that this discretion is not arbitrary or capricious, but it

governed so far as possible by fixed rules and principles.105 As Romilly MR

explained,106 the discretion ‘must be exercised according to fixed and settled rules;

you cannot exercise a discretion by merely considering what, as between the parties,

would be fair to be done; what one person may consider fair, another person may

consider very unfair; what one person may consider very unfair; you must have some

settled rule and principle upon which to determine how that discretion is to be

exercise’.

The result is that in many cases, where the parties under no disability and

there is nothing objectionable in the nature or circumstances of the contract, a decree

of specific performance is as much a matter of course in equity as damages are in

common law,107 and will be ordered even though the judge may think it to be a hard 104 Per Rigby LJ in Re Scott and Alvarez’s Contract [1895] 2 Ch 603 at 615, CA.105 White v Damon (1802) 7 Ves 30; Lamare v Dixon (1873) LR 6 HL 414.106 In Haywood v Cope (1858) 25 Beav 140 at 151.107 Hall v Warren (1804) 9 Ves 605

case for the defendant.108 But, as will be seen, matters which would be irrelevant at

common law, such as the conduct of the plaintiff, may be material in a claim for

specific performance.109 Further, the court may have to take into account other

equitable doctrines.

Thus in Langen and Wind v Bell110 the purchaser brought a specific

performance action for the sale of shares, under a contract whereby the purchase

price could not be ascertained for about two years after the agreed date for the

transfer of share. The court had regard to the equitable principle that an unpaid

vendor is entitle to a lien on the subject matter of the sale, refused to grant an order

for specific performance except in a form which would effectively safeguards the

equitable lien.’

In our present case, Schumacher want the bungalow to be built as what

Alonso had promised. Schumacher had taken all the effort by giving the deposit of

RM500, 000. Even though Schumacher has paid the deposit, he still could not get

the specific performance due to inability on the part of Alonso to perform his

obligation. Based on discretionary, the court will take into consideration on the

condition of both parties as to obtain fairness.

Thus, in our present case the court may decree the remedy of compensation

rather than specific performance. It can be illustrated in the case of Yeo Long Seng v

Lucky Park111, the court held that the specific performance cannot be given because

the compensation as a remedy is adequate

1.2 Whether Schumacher can take an action against Koyak Senantiasa Sdn Bhd

In relation to specific performance equity, as always, acts “in personam”,

where it was against the individual defendant not his property. If the defendant is

108 Haywood v Cope (1858) 25 Beav 140.109 Cox v Middleton (1854) 2 Drew 209; Lamare v Dixon (1873) LR 6 HL 414110 [1972] Ch 685, [1972] 1 All ER 296.

111 (Pte) Ltd [1971] 1 MLJ 20

within the jurisdiction of the court and can be compelled personally to carry out his

obligation, the court may order him to do so even though the subject-matter of the

contract is outside the jurisdiction of the court. In relation to specific performance

equity, as always, acts towards individual or “in personam”.

The leading case to be referred is Penn v Baltimore112 where the plaintiffs and

defendant entered into a written agreement fixing the boundaries of Pennsylvania

and Maryland, the former of which belonged to the plaintiffs and the latter to the

defendant. The plaintiffs sued the defendant in England to have the agreement

specifically performed, and one of the objections takes by the defendant was to the

jurisdiction of the court. This objection was overruled by Lord Hardwicke on the

ground that decreed specific performance of an English agreement relating to the

boundaries between Pennsylvania and Maryland, despite the inability of the court to

enforce its remedy in rem.

In addition, in Richard West Partners (Inverness) ltd v Dick113, specific

performance was decreed of a contract for sale of land outside the jurisdiction114

against a defendant within it. Although the land was not within the jurisdiction, the

defendant was, and the court would hold him in contempt unless he complied.

Applying to our present case, Schumacher can claim against Alonso and

Koyak Senantiasa Sdn Bhd as the corporation are incorporated under Malaysian law.

1.3 SP may be claimed and granted even before the time of performance has arrive

Specific performance may be claimed and granted even before the time of the

contract. Specific performance in some circumstances can be obtained before the

time of the performance has arrived. This remedy can be granted based on the

principle of anticipatory breach, where dictum from Lord Sumner in Leeds Industrial v

112 (1750) 1 Ves Sen 444, [1558-1774] All ER Rep 99.113 [1969] 1 All ER 289.114

Slack115 stated that “so far as specific performance is concern they must always be

cases where there has been anticipatory breach”.

In the case of Khatijabai Jiwa Hasham v Zenab Harji116, it concern about the

contract signed by the plaintiff to buy two acre plot of land from the defendant.

Defendant then repudiates the contract within the few minutes of signing it on the

ground that she had never agreed to sell the land. Some day before the time of the

performance arrived the plaintiff for specific performance for the contract.

Defendant stated that the plaintiff should waited until there had been the

failure to perform on the part of the defendant within the period hereby

notwithstanding that she had previously intimated her refusal to do so.

In our present case, Schumacher does have the knowledge that the economic

situation all around the world has worsened day to day. He can foresee the

anticipatory breach on the part of defendant on the ground of recession. At first,

specific performance might be grant, but on the ground of hardship the remedy might

affect Mr. Alonso due to his inability to perform the obligation.

The inability of Alonso can be seen in the situation below;

i. Where he decide to restrict his future plans and development of his company;

ii. Alonso’s company performance on last quarter of 2010 drops to 43%;

iii. Alonso had ditch several project and revoke all the contract made by him

before;

iv. Alonso had sold 65% of his share to Hamilton & Button Corp.

1.4 Damages as a common law is inadequate

Sec 11117 stated that “the breach of contract to transfer immovable property

cannot be adequately relived by compensation in money the contrary is proved”.

115 [1924] A.C. 851, 866; 40 T.L.R 745

116 (1960) AC 316117 Specific Relief Act 1950

It shows in our present case, the immovable property and agreement to

purchase a piece of land with three story house shows it was constituted as

immovable property.

At the first place, Mr. Schumacher may entitle for specific performance but

according to the earlier presumption in section 11(2)118, Schumacher would not get

the SP as the property can also available or offered by other developer. Thus the

“contrary” had been proved as accordance with the section 11 (2) above.

Section 11(12)119 provide that “the breach of contract to transfer immovable property

cannot be adequately relived by compensation in money unless or until the

contrary is proved”.

It can be distinguished in the case of Gan Reality Sdn. Bhd. V Nicholas120, where

Raja Azlan Shah held that “the shares are not available in the open market”. In the

case of Duncuft v. Albrecht121, the court decreed the specific performance of an

agreement for the sale of railway shares which are limited in number and not always

to be had in the open market.

1.5 Damage may be awarded in substitution for, or in addition to, specific performance.

In this case, Alonso failed to perform his obligation, based on his act of

cancelling Schumacher’s booking and returning the deposit of RM500, 000.00. The

cancellation is due to recession of the economic world.

In our present case, the chance of Schumacher to get specific performance

was slim. However, he still can get compensation on the ground of breach of contract

on the part of Alonso and accordance with the section 8(2)122 where its provide “if in

any such suit the court decides that specific performance ought not to be granted, but

118 Specific Relief Act 1950119 Specific Relief Act 1950

120 [1969] 2 MLJ 110.121 59 E.R. 1104122 Specific relief Act 1950

that there is a contract between the parties which has been broken by the defendant

and that the plaintiff is entitled to compensation for that breach, it shall award him

compensation accordingly”

1.6 The enforcement of Positive Contractual

Then, the contract that was entered by Schumacher and Alonso can be

claimed a positive contract. One of the general principle of specific performance is

only positive contract may be specifically performed – Positive contract alone could

be specifically performed (the enforcement of positive contractual)

Unlike the injunction, the remedy of specific performance is confined to the

enforcement of positive contractual obligations. These obligations must be binding on

the defendant. A prohibitory injunction is appropriate to restrain the breach of a

negative contract, while a mandatory injunction is used to force the defendant to take

positive steps to undo an act already done in breach of contract. But this

classification is not inflexible. Even where the plaintiff wishes to enforce a positive

contractual obligation, he may ask for an injunction instead of specific performance.

The advantage of such course is that an injunction can be obtained on an

interlocutory basis, while specific performance cannot. It should also be added that

specific performance does not lie against the Crown, means that it have been stated

in Crown Proceeding Act 1947, Section 21(1) (a), the proper remedy is a declaration.

In Malaysia, this principle can be seen from the case of Hafsham v. Zenab

[1958] 3 All ER 719 when Privy Council emphasized that the basis of specific

performance is a valid contract in which one party must have given adequate

consideration to the other party. A gratuitous agreement is not liable to be specifically

performed.

According to Section 17 of Specific Relief Action 1950, it clearly enacted that

example in what circumstance purchaser’s rights against vendor with imperfect title to

explain this principle.

Where a person contracts to sell or let certain property, having only an

imperfect title thereto, the purchaser or lessee (except as otherwise provided by this

Chapter) has the following rights:

(a) if the vendor or lessor has subsequently to the sale or lease acquired any interest

in the property, the purchaser or lessee may compel him to make good the contract

out of that interest;

(b) where the concurrence of other persons is necessary to validate the title, and they

are bound to convey at the vendor’s or lessor’s request, the purchaser or lessee may

compel him to procure the concurrence; and

(c) where the vendor or lessor sues for specific performance of the contract, and the

suit is dismissed on the ground of his imperfect title, the defendant has a right to a

return of his deposit (if any) with interest thereon, to his costs of the suit, and to a lien

for the deposit, interest, and costs on the interest of the vendor or lessor in the

property agreed to be sold or let.

Another authority is Section 24 of Specific Relief Action 1950, which is a

contract to sell property by one who has no title, or who is a voluntary settler.

A contract for the sale or letting of property, whether movable or immovable,

cannot be specifically enforced in favour of a vendor or lessor, to who, knowing

himself not to have any title to the property, has contracted to sell or let the same,

who, though he entered into the contract believing that he had a good title to the

property; cannot, at the time fixed by the parties or by the court for the completion of

the sale or letting, give the purchaser or lessee a title free from reasonable doubt or

who, previous to entering into the contract, has made a settlement (though not

founded on any valuable consideration) of the subject matter of the contract.

Section 24 can be interpreted clearly by the illustration given.

(a) A, without C’s authority, contracts to sell to B an estate which A knows to belong

to C. A cannot enforce specific performance of this contract, even though C is willing

to confirm it.

(b) A, out of natural love and affection, makes a settlement of certain property on his

brothers and their issue, and afterwards enters into a contract to sell the property to a

stranger. A cannot enforce specific performance of this contract so as to override the

settlement and thus prejudice the interests of the persons claiming under it.

Thus, Schumacher can ask the court to grant a specific performance based on

this general principle.

1.7 Consideration of hardship and expiry of limitation period may not necessarily defeat specific performance

In general, specific performance may be refused in the discretion of the court

where a decree would cause unnecessarily hardship to either of the parties, or to

third party.

These matters arose in Patel V Ali,123 where the vendor and her husband were

co owners of a house which they contracted to sell in 1979. The husband bankruptcy

caused a long delay in completion for which neither the vendor had a leg amputated.

She later gave birth to her second and third children. The purchaser obtained an

order for specific performance against the vendor appealed o the ground of hardship.

She spoke little English and relied on help from nearby friends and relatives, hence it

would be hardship to leave the house and move away.

Goulding J held that the court in a proper case could refuse specific

performance on the ground of hardship subsequent to the contract, even if not

caused by the plaintiff and not to the subject matter. On the facts, there would be

hardship amounting to injustice related, therefore the appropriate remedy was

damages.

Thus, in our situation, if the courts grant specific performance to the

Schumacher, it will cause hardship on part of Alonso as he would not be able to

proceed the obligation due to recession. This fact proven on the date of November 3

2010. Alonso has decided to sell 65% of his shares in his company to Hamilton &

123 [1984] Ch.283; (1984) 100 L.Q.R. 337.

Button Corp. In order to avoid Koyak Senantasia Sdn Bhd goes into liquidation, they

has decided to restricted their future plans and development. Thus, the relevance

remedy may be given by the court is by award damages to the Schumacher rather

than specific performance as laid down the principle under the Patel’s case.

Regarding to the issues of hardship, section 11 of the Specific Relief

Ordinance that reads, specific performance ordered, unless and until the contrary is

proved the court may presumed that the breach of a contract to transfer immovable

property cannot be adequate relieved by the compensation in money..” , Section 21

gives the relevant portion of which reads, “The following are cases in which the court

may properly exercise a discretion not to decree specific performance where the

performance of a contract would involved some hardship to the defendant which he

did not foresee, whereas its non performance would involve no such hardship on the

plaintiff. It may well be that the performance of this contract would involve some

hardship on the estate of the vendor which he vendor did not foresee. It may well be

there are hardship on both sides. If the vendor’s estates are held to his bargain, there

will be hardship in the sense that as a result of circumstances beyond anyone’s

control the bargain has turned out worse than was anticipated. On the other hand, it

is not performed it seems to me that it will be at least a commensurate hardship on

the plaintiff to be derived of the fruits of their bargain which may have turn out better

than any they had anticipated. The courts have no hesitation in exercising his

discretion in the way of ordering specific performance.”

In Haji Osman Bin Abu Bakar v. Saiyed Noor Bin Saiyed Mahmud124, the

respondent to this appeal is the administrator of the estate of one Saiyed Mahamad

(henceforth referred as the vendor) who died on 11 the July 1949. On the25th

September 1944, the vendor sold a piece of land to the present appellant for the sum

of 2250. The purchase price was paid in Japanese currency, the transfer was

executed by both parties before the Collector of Land Revenue and the transfer

together with the document of title to the land was handed by the vendor to the

appellant. The appellant asked for specific performance of the agreement of 25 the

September 1944, whereby in the vendor agreed to sell the land to him, together with

manse profits down to the date of judgment.

124 [1952] MLJ 37

Thomson J held, “if the purchaser agrees to buy a piece of land pays the

purchase price ten subject to the terms of the contract and in the absent of fraud

misrepresentation or mistake he is entitled to a good title to the land and to

possession, and the death of the vendor does not abate his rights.

Conclusion

Apart from the general principle given above, there are other general

principles that can be used for claiming for specific performance.

First, the observance of specific performance order is a must. Equitable

remedies will never issue unless the court can ensure that they will be observed. As

equity does not act in vain, specific performance will be decreed only where the

defendant is in a position to comply with the order.

Thus, the court will not be decreed against a vendor who had already sold

the property to an innocent purchaser without notice. However, where the vendor

sells the property to a company which in fact is owned or controlled by him in order to

avoid the specific performance of a contract between him and the plaintiff, the court

may grant specific performance notwithstanding the mask which the defendant holds

before his face. In an attempt to avoid recognition by the eye of equity. This is what

was held in Jones v. Lipman125.

Next, specific performance dependant on an option is unaffected if the option

is not exercise strictly in the prescribe manner where the principle was clearly used in

the case of Kau Nia Enterprise (Pte) Ltd. v Teck Wah Corporation (Pte) Ltd126.

The case of Plenitude holding v Tan Sri Khoo127 and the case of Allen v El

Nasr Export128 has been applied the general principle of specific performance which

is “specific performance is unaffected by waiver” as stated by Lord Denning’s dicta;

“the principle by waiver is simply, if one party, by his conduct, leads another to

believe that the strict rights arising under the contract will not be insisted on,

125 [1962] 1 W.L.R. 832126 [1982] 1 MLJ 10.127 Ltd [1952]

128 (1972) 2 All ER 127 at 140

intending that the other should act on that belief, and he does act on it, then

he first party will not afterwards be allowed to insist on the strict legal rights

when it would be inequitable for him to do so”

At the end of the day, the court could not grant the remedy of specific

performance to Schumacher under the principle of discretionary whereby the court

would not cause hardship to any of the parties and at the same time, the other

parties will gain benefit from it. Specific performance promotes fairness

5.2 Whether the contract for the house and land (immovable property) can be specifically enforced.

In the present case, Schumacher claimed for specific performance of the contract. According to the fact of the case, the plaintiff has already paid deposit amounting to RM500,000 with RM10,000 being the booking fee for a piece of land with a 3 storey-bungalow house to be built on it, for RM 5.2 Million at Vancouver, Canada to Alonso. However, at the time of the breach, the land was owned by Koyak Senantiasa Sdn. Bhd.

That been said, according to section 26(c) of the SRA 1950, specific performance of a contract may be enforced against any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant. For this reason, in this case, Schumacher can claim for specific performance against Alonso.

According to the facts of the case, the position of the land that the plaintiff was meaning to purchase is at Whistler Olympic Park which is the place where Olympic was held. Therefore, it can be assumed that the land is unique.

Section 11 of the Specific Relief Act 1950 asserts that, specific relief may be ordered for contract for land as each piece of land is unique and the general rule is an award of damages is not adequate compensation for the purchaser.129

Referring to the case of Sudbrook Trading Estate Ltd. v. Eggleton130, the normal remedy for breach of contract for purchase of land is by a decree of specific performance by the vendor of his primary obligation to convey, on the purchaser’s performing or willing to perform his own primary obligations under the contract.

In this case, Schumacher has shown that he is willing to perform his contract obligation by paying the deposit for the land. Therefore, specific performance can be granted to him.

Moreover, in the case of Loh Koon Moy & Anor. v. Zaibun SA binti Syed Ahmad131, by virtue of section 11(2) of the Specific Relief Act 1950, Chang Min Tat J held that in favour of a contract to sell land, the court shall presume that monetary compensation is not adequate to relief the breach of contract to transfer immovable property.

129 Heydon, Gummow and Austin, Cases and Materials on Equity and Trusts (4th ed.), Sydney, Butterworths, 1993 at p. 946

130 [1983] 1 A.C. 444 at p. 478

131 [1978] 2 MLJ 29

Applying the principles in the statutes and previous cases, it can be said that although according to the present case Alonso, on behalf of Koyak Senantiasa Sdn. Bhd. is willing to refund the RM500,000 deposit made by the appellant, the amount is not adequate to relief the breach because based on the circumstances of the land in dispute which is situated at an exclusive place which was the venue of the Olympics, it can be deemed that the land is unique. Thus, it can be concluded that the contract between the parties to the suit can be specifically enforced and the plaintiff deserve to be granted a decree of specific performance against the defendant.

5.3 Defences

According to the facts of the case, Alonso is no longer the main shareholders

of the company now known as Koyak Senantiasa Sdn. Bhd. The new shareholder

had decided to restricted their future plans, development and ditch several projects

due to the uneconomical performance of the company. It includes Schumacher’s

project in Vancouver, Canada. Schumacher was disappointed with this and wants to

claim for specific performance towards the Alonso and also the company to continue

builds his bungalow. Basically, the court will take into account several factors to

decree specific performance. In this case, since the company faced with financing

problem it is hard for the company to continue with the project. Section 21(2)(b)

stipulate that where the performance of a contract (between the Alonso(company)

and Schumacher) would involve some hardship on the defendant (Alonso) which he

did not foresee, whereas its non-performance would not involve no such hardship on

the plaintiff (Schumacher) the court will not decree specific performance due to

unnecessary hardship.

In the case RM Venkatachalam Chettiar & ors v. Saiyed Mohamed132,

Thomson J, as he then was, held that no great hardship would be caused to the

vendor’s representative to complete the transaction even if it would incur some

unanticipated expenditure. The appellant in Patel & Anor v. Ali & Anor133 was

successful in her appeal against an order of specific performance on the ground of

hardship. There was in that case a period of more than four years’ delay and it would

be just to leave the plaintiffs to their remedy in damages. Finally, in the New Zealand

case of Nicholas v Ingram134 where the defence was based solely on financial

inability to complete. In an action for specific performance of a contract for the sale of

land, hardship on the part of the defendant may operate as a defence. But the

hardship must, in general, be such as existed at the time of the contract and not such

as has arisen subsequently from a charge of circumstances.

132 [1952] MLJ 37

133 [1984] 1 All ER 978

134 [1958] NZLR 972

Besides, Schumacher who had delays unreasonably for two years in bringing

an action for specific performance may lose his claim. In Lazard Bros. & Co.Ltd v Fairfield Property Co. (Mayfair) Ltd,135 a contract was entered into on March 12,

1975. The plaintiffs issued a writ for specific performance on May 14, 1977. In

ordering specific performance, Megarry V.-C, said that if specific performance was to

be regarded as a prize, to be awarded by equity to the zealous and denied to the

indolent, then the plaintiffs should fail. But whatever might have been the position

over a century ago that was the wrong approach today. If between the plaintiff and

defendant it was just that the plaintiff should obtain the remedy, the court ought not to

withhold it merely because the plaintiff guilty of delay. There was no ground here on

which delay could properly be said to be bar to a decree of specific performance.

Therefore based on the authority given, it is clear to show that there is a

hardship on part of Alonso due to unstable economy of the company to continue with

the project with Schumacher. Schumacher also failed to claim due to his delayed

which based on Latin maxim, delay defeats equity.

135 (1977) 121 S.J 793;[1978] Conv. 184

Written Submission for Equity

Documents

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order of specific performance

specific performance

orders of specific performance

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