Small Claims

Small Claims

A court may decide to grant an order of specific performance if it is persuaded that an award of damages only would be unjust. However, this a necessary but not a sufficient condition. This paper considers case law and conflict minimisation.

The question in Evans Marshall & Co. Ltd v Bertola SA [1973] 1 WLR 349 (379H) was, ‘Is it just, in all the circumstances, that a plaintiff should be confined to his remedy in damages?’ General principles are outlined by Pearce and Barr (2020 533–46). Courts order specific performance to avoid ‘encouraging’ the breaking of a contract. In Decro-Wall International SA v Practitioners in Marketing [1971] 1 WLR 361, the defendant had worked to create a market for the claimant’s goods. The claimant apparently found a distributor it preferred and argued that the defendant’s late payments were a repudiation of their agreement. The court stated: ‘Damages in such a case are very difficult to prove and I do not believe that they would by themselves be an adequate remedy’ (371–).

However, Decro-Wall may have been decided differently. Difficulty in valuating damages is not a reason to award specific performance (Zinc Cobham 1 Ltd v Adda Hotels [2018] EWHC 1025 (Ch)), and courts avoid ‘creating oppression caused by the defendant having to do things under threat of proceedings for contempt’ (Co-operative Insurance Society Ltd v Argyll Stores ([1997] UKHL 17).

Specific performance is considered an ‘exceptional’ remedy and is not ordered where common law damages are adequate. Indeed, in Co-operative, it was argued that it may be refused even when damages are not an adequate remedy. The quasi-criminal enforcement mechanism, punishment for contempt, moderates the court’s discretion. ‘Specific’ performance entails an assessable result.

Circumstances must sometimes be ‘very’ exceptional as ‘the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance’ (Co-operative). In VTB Commodities Trading DAC v JSC Antipinsky Refinery [2020] EWHC 72 (Comm), the claimant prepaid nearly €195 million for oil but learned the refinery was instead delivering oil elsewhere. VTB obtained an injunction in arbitrations. The High Court lifted the injunction. The defendant was double selling its product, but equitable relief is unjustified ‘even where the seller is dishonest in taking prepayment and has sold its entire production to a third party’ (81).

The minimum condition for an order of specific performance is that the innocent party has a legitimate interest beyond financial compensation (Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67 at 30). MacMahon (2018) argues that ‘self-interested exchange relationships often contain the seeds of conflict, and that the best hope for legal and social institutions is to manage the conflict’ (272–3). MacMahon suggests that courts should enforce contracts as agreed but that conflict minimisation should be imperative. Specific performance can prolong a dispute (or ‘a continuing hostile relationship’ Co-operative) – when the aim should be to end the dispute.

AB v. CD [2014] EWCA Civ 229 discussed a contract with a limitation clause involving the adequacy of damages as a remedy for a breach. The court found that an agreement regarding damages did not constitute an agreed price to permit breach of the contract. ‘The primary obligation of a party is to perform the contract. The requirement to pay damages in the event of a breach is a secondary obligation’; the court argued that equitable relief would reflect ‘the substantial justice of the situation’ (27). (It is perhaps interesting that ‘justice’ here apparently required the qualifier.)

Parties to a contract can include performance clauses. However, courts may not enforce these either (Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1991] 11 WLUK 378). MacMahon asserts that courts retain the discretion to deny specific performance ‘to put an end to a conflict-ridden contractual relationship’ (288).

Doctrine was discussed in Yaxley v. Gotts & Anr [1999] EWCA Civ 3006. The court decided that the doctrine guiding the statute made an oral contract for real property unenforceable but not void. Under the heading of ‘The public policy principle’, the judgement referred to various authorities, but the contexts were deemed too varied. Ultimately, the court found that the doctrine of joint enterprise and that of constructive trust overlapped and thus ordered Gotts to perform.

In a discussion of the sale of land, Davies (2018) notes that in the past, orders to perform were made only to the vendor; because the vendor wanted only the purchaser’s money, ‘he should be limited to remedies at law and specific performance should not be awarded’ (330). However, purchasers may now be ordered to follow through with a purchase. Davies speculates that an emphasis on mutuality is responsible (a remedy available to the purchaser should also be available to the vendor). Common law damages better protect parties’ freedom of action and autonomy since parties may change their minds (327). Nevertheless, Davies argues that courts should ignore developments elsewhere (e.g. Canada) and continue to order specific performance in contracts concerning land.

Chattel which is ‘intrinsically valuable’ (Garcia v De Aldama [2002] EWHC 2087 (Ch)) is susceptible to claims for specific performance. As for what courts mean when they refer to ‘value’ in claims of this nature, one might be required to look to aesthetics or perhaps anthropology (Graeber 2001).

Even where a statute specifically provides for the availability of specific performance, difficulties arise, as Jan v Torrance [2002] EWCA Civ 431 illustrates. The Court of Appeal allowed an order for repairs but, arguably for better conflict management, remitted the matter to the county court to sort out. (Pearce and Barr refer to Consumer Rights Act 2015 s 58, but a citation of this section has yet to be reported.)

An assumption of Marxist theory of law is that ‘parties to capitalist exchange relationships are inherently antagonistic (MacMahon n15). Arguments against equitable relief may be motivated by the desire to minimise conflict, which, for MacMahon, is ‘part of what it means […] to do justice’ (298).

 

References

Books

Pearce, R and Barr, W (2020) ‘Chapter 23 - Specific Performance’ in Equity, Trusts and Land Law 4th ed, Oxford University Press.

Graeber, D (2001) Toward an Anthropological Theory of Value: The False Coin of Our Own Dreams, Palgrave Macmillan.

Articles

Davies, PS (2018) ‘Being Specific About Specific Performance’ CPL 4 pp 324–338.

MacMahon, P (2018) ‘Conflict and Contract Law’ OJLS 38(2) pp 270–298.

Cases

AB v CD 153 [2014] EWCA Civ 229, [2015] WLR 771.

Cavendish Square Holding BV v Talal El Makdessi (Rev 3) [2015] UKSC 67, [2015] 3 WLR 1373.

Co-operative Insurance Society Ltd v. Argyll Stores [1997] UKHL 17, [1997] 2 WLR 898.

Decro-Wall International SA v Practitioners in Marketing [1971] 1 WLR 361, [1971] 2 All ER 216.

Evans Marshall & Co. Ltd v Bertola SA [1973] 1 WLR 349, [1973] 1 All ER 992.

Garcia v De Aldama [2002] EWHC 2087 (Ch), [2002] 10 WLUK 323.

Jan & Anor v Torrance [2002] EWCA Civ 431, [2002] WL 1876255.

Quadrant Visual Communications Ltd v Hutchison Telephone (UK) Ltd [1991] 11 WLUK 378, [1993] BCLC 442.

VTB Commodities Trading DAC v JSC Antipinsky Refinery [2020] EWHC 72 (Comm), [2020] WLR 1227.

Yaxley v Gotts & Anr [1999] EWCA Civ 3006, [1999] 3 WLR 1217.

Zinc Cobham 1 Ltd v Adda Hotels [2018] EWHC 1025 (Ch) [2018] WL 02048910.

Legislation

Consumer Rights Act 2015 c 15.

 

 

 

 

 

 

 

 

 

 

 

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