Specific Performance: Discretionary Defences

AuthorJeffrey Berryman
In this chapter we wi ll explore a number of discretionary defences
to the granting of specif‌ic performance. Some of these defences are
intimately connected to issue s of contract formation and enforceability.
Others are related to equity ’s method and approach — in particular,
they build upon notions of fairnes s and avoidance of unconscionable
behaviour. Finally, some are simply historical anachronisms that may
have outlived their usage. Although these m atters 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 th at can happen;
rather, they operate as signposts alert ing a court to matters that may
affect the justice of awarding equ itable relief. In many of these are as we
are dealing wit h gradations of a person’s conduct that must be analyzed
in the particul ar context of the litigants’ dispute. Often, a number of
these “defences” will arise, and it is the totality or cumulative effect
which is ultimately determi native of the court’s discretion.
Historically, the denial of specif‌ic rel ief 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 plaintiff ’s improprieties, simply meant that t he plain-
tiff would receive equivalent justice in common law damages. But this
was not the case while determ ination of damages was left to juries who
ameliorated their awards to ref‌lect the pla intiff’s conduct. Thus, the
denial of specif‌ic relief ca rried with it signif‌icant risk of the plaintiff
being under-compensated as well as having the expense and inconven-
ience of starting a new action at common law. Now, since control has
been placed on jury damage assessments, and chancer y and common
law procedures have been fused, some of the discretionary defences
appear anachronist ic. 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 inadequ ate,
denying the plainti ff her remedy of choice will have a signif‌icant impact.
Before specif‌ic performance can be decreed there must be a contract in
existence.2 Thus, any inter vention that makes t he contract void or void-
able will also deny speci f‌ic performance as a remedy. Equity plays a
signif‌icant role in contract law through a number of doctrines in addi-
tion to the granting of specif‌ic performance — in particular, rescis-
sion for fraud, undue inf‌luence, unconscionability, misrepresentation,
and mistake which operates to bring the contract to an end. There is
some controversy 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 t heir original positions. Historica lly, a common feature to
1 In one study undert aken in the United States, t he authors concluded that where
specif‌ic relie f has been denied based on s ome equitable defence it is in fact a
f‌inal deni al of the case. It is very rar e for a plaintiff to be able to resor t to a
common law remedy af ter denial of specif‌ic per formance. See J.P. Frank & J.
Endicott, “Defens es in Equity and ‘Legal R ights’” (1954) 14 La. L. Rev. 380. E.L.;
and Sherwi n, “Law and Equity in Contra ct Enforcement” (1991) 50 Md. L. Rev.
253, who suggests t hat where an equitable defence has re sulted in the denial of
specif‌ic per formance, then based on t he same grounds, a court wil l often resort
to compensati ng the promisee for his lost reli ance interest rather th an his
expectat ion interest. The former damage s will be lower. The decision in Jacobs v.
Bills, [1967] N.Z.L.R. 249 (S.C.) would appear to exempli fy this suggestion: t he
plaintif f was denied specif‌ic per formance but then allowed to recover d amages
based upon the old r ule of Bain v. Fothergill (1874), L.R. 7 H.L. 158 (lim iting
damages to t he cost of exploring the title) rat her than for his loss of the prop-
erty value unde r the contract.
2 For an explan ation, see the discussion on e stoppel in Section B(4), below in this
Specif‌ic Perform ance: Discretionar y Defences 315
equity’s intervention in these areas was that it would aris e even though
at common law the contract could be treated as valid. This was based
on the fact that chancery’s notion of what conduct constituted impro-
priety, often referred to as “equitable or constructive fraud,”3 was wider
in ambit than equivalent common law doctr ines. Whether it is still
relevant to maintain a d istinction between treatment of contracts at
common law and in equity with re spect to substantive doctrine s
on formation and enforcement is beyond the scope of this book. If
a contract is resci nded ab initio it appears futile to suggest that it could
have remained enforceable at common law, and in any case, this has
nothing to do with the avai lability of specif‌ic performance. The dom-
inant issue in most of these c ases is whether either part y has a right
to rescission. This section looks at the question, under what circum-
stances will specif‌ic performance be denied and t he plaintiff left to
damages at common law, which was recognized as a possible scenario
before the enactment of the Judicature Acts.4
1) Mistake
Where the parties have entered into a contract under a common mis-
take the contract wil l not be specif‌ically enforced if the mistake is so
fundamental th at it prevents the formation of an agreement. Where the
parties have entered into a contract in which the defendant has made
a unilateral mistake, which was known by the plai ntiff or induced by
the plaintiff ’s conduct, then the contract will be rescinded. Where the
defendant has made a unil ateral mistake that is neither known nor
contributed to by the plaintif f, the contract will be enforced unless
there are some other circumstances present that make enforcement a
hardsh ip amounting to i njustice.5 Apart from cases where rescission
is granted, where the denia l of specif‌ic performance logically follows,
3 In the case of mi srepresentation, equit y’s intervention is justi f‌ied even for an
innocent mis representation before the contr act has been executed. See gen er-
ally G.H.L. Frid man, The Law of Contract in Canada, 6t h ed. (Scarborough, ON:
Carswell, 2011) at 761ff.
4 See R.J. Sharpe, Injun ctions and Specif‌ic Performance, lo oseleaf (Aurora, ON:
Canada L aw Book, 2012) § 10.100; and I.C.F. Spry, The Principles of Equita ble
Remedies: Specif‌ic Performance, Injunctions, Rectif‌ication and Equitable Damages,
7th ed. (Sydney: LBC Inform ation Services, 2007) at 155–57.
5 See Tamplin v. James (1880), 15 Ch. D. 215 (C.A.); and Foderaro v. Future Homes
Constructio n Ltd. (1991), 17 R.P.R. (2d) 258 (Ont. Ct. Gen. Div.) [Foderar o];
Sharpe, abo ve note 4 at § 10.110; G.H. Jones & W. Goodhart, Spec if‌ic Perfor-
mance, 2d ed. (London: Butte rworths, 1996) at 105; Spry, above note 4 at 157;
and Taylor v. Johnson (1983), 151 C.L.R. 422 (H.C.A.).

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