Specific Performance: Discretionary Defences

• Author: Jeffrey Berryman
• Profession: Professor of Law. Faculty of Law University of Windsor
• Pages: 195-224

CHAPTER

11

SPECIFIC

PERFORMANCE:

DISCRETIONARY

DEFENCES

A.

INTRODUCTION

In

this

chapter

we

will explore

a

number

of

discretionary defences

to

the

granting

of

specific

performance. Some

of

these

defen*

es

are

inti-

mately

connected

to

issues

of

contract formation

and

enforceability.

Others

are

related

to

equity's method

and

approach

— in

particular,

they build upon notions

of

fairness

and

avoidance

of

unconscionable

behavior.

Finally, some

are

simply historical anachronisms that

may

have outlived

their

usage. Although these matters have traditionally

been dealt with under

a

heading

of

"defences" they

do not

necessarily

all

operate

as

would

a

defence

in

say, criminal law. They

do not

invari-

ably

lead

to

denial

of all

equitable

relief,

although that

can

happen;

rather, they operate

as

signposts

alerting

a

court

to

matters that

may

affect

the

justice

of

awarding equitable

relief.

In

many

of

these areas

we

are

dealing with gradations

of a

person's

conduct that must

be

analyzed

in the

particular context

of the

litigants' dispute.

Often,

a

number

of

these "defences" will arise,

and it is the

totality

or

cumulative

effect

which

is

ultimately determinative

of the

court's discretion.

Historically,

the

denial

of

specific

relief

could have

a

serious impact

on the

eventual remedy granted

a

plaintiff.

It

would

be of

little conse-

quence

if the

denial

of

equitable

relief,

based

on

some discretionary

ground

due to the

plaintiffs improprieties, simply meant that

the

plaintiff

would receive equivalent justice

in

common

law

damages.

But

this

was not the

case while determination

of

damages

was

left

to

juries

195

196 THE LAW OF

EQUITABLE

REMEDIES

who

ameliorated their awards

to

reflect

the

plaintiffs

conduct. Thus,

the

denial

of

specific

relief carried with

it

significant risk

of the

plaintiff

being under-compensated

as

well

as

having

the

expense

and

inconve-

nience

of

starting

a new

action

at

common law. Now,

since

control

is

has

been placed

on

jury damage assessments

and

chancery

and

com-

mon law

procedures have been

fused,

some

of the

discretionary

defences

appear

anachronistic.

It is

probably

fair

to say

that

the

factors

that motivate

a

court

in

denying

specific

relief

are

also considered

in

the

assessment

of

damages.1

However, where

specific

performance would

amount

to a

more complete justice, because damages

are

inadequate,

denying

the

plaintiff

her

remedy

of

choice will have

a

significant

impact.

B.

ISSUES

RELATING

TO

CONTRACT

FORMATION

AND

ENFORCEMENT

Before

specific performance

can be

decreed there must

be a

contract

in

existence. (For

an

explanation,

see the

discussion below

on

estoppel.)

Thus,

any

intervention that makes

the

contract void

or

voidable will

also deny specific performance

as a

remedy. Equity plays

a

significant

role

in

contract

law

through

a

number

of

doctrines

in

addition

to the

granting

of

specific

performance

— in

particular, rescission

for

fraud,

undue influence, unconscionability, misrepresentation

or

mistake

which operates

to

bring

the

contract

to an

end. There

is

some contro-

versy

as to the

extent

of

these interventions,

but the net

effect

is to

bring

the

contractual obligations

to an end and to

restore

the

parties

to

their original positions. Historically,

a

common

feature

to

equity's

intervention

in

these areas

was

that

it

would arise even though

at

com-

1 In one

study undertaken

in the

United States

the

authors concluded that where

specific

relief

has

been

denied

based

on

some equitable defence

it is in

fact

a final

denial

of the

case.

It is

very rare

for a

plaintiff

to be

able

to

resort

to a

common

law

remedy

after

denial

of

specific performance.

See J. P.

Frank

& J.

Endicott,

"Defenses

in

Equity

and

'Legal

Rights'"

(1954)

14 La. L.

Rev. 380.

E. L.

Sherwin,

"Law

and

Equity

in

Contract Enforcement"

(1991),

50 Md. L.

Rev. 253, suggests,

that where

an

equitable defence

has

resulted

in the

denial

of

specific performance,

then, based

on the

same grounds,

a

court

will

often

resort

to

compensating

the

promisee

for his

lost reliance interest rather than

his

expectation interest.

The

former

damages will

be

lower.

The

decision

in

Jacobs

v.

Bills,

[1967]

N.Z.L.R.

249

(S.C.)

would

appear

to

exemplify

this

suggestion:

the

plaintiff

was

denied

specific

performance

but

then

allowed

to

recover damages based

upon

the old

rule

of

Bain

v.

Fothergill

(1874),

L.R.

7

H.L.

158

(limiting damages

to the

cost

of

exploring

the

title)

rather

than

for his

loss

of the

property

value

under

the

contract.