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					COURT OF APPEAL

PRICE v STRANGE [1977] 3 WLR 943

27 April 1977

Full text

Editor’s comments in red.

GOFF LJ:

... The facts are simple. The defendant, Mrs. Strange, is and was at all
material times the lessee of 96 Lexham Gardens, London, for the residue
of a term of 99 years from June 24, 1933. The property is divided into
flats and maisonettes and the plaintiff, who is a builder, was living in the
maisonette on the first and second floors, and had been so since 1966 or
1967, but his tenancy had expired in 1971 and he was holding over. He
was sharing this accommodation with his brother and sister-in-law and
another gentleman, which was a breach of the covenants in the expired
lease, so that if he were to have a fresh tenancy this term would require to
be altered. There was also a further minor breach of those covenants in
that they forbad the keeping of pets whereas the plaintiff had two cats.
His rent was £550 per annum which he paid down to February 10, 1974.

The plaintiff’s position was, therefore, very insecure, but the defendant
was also in trouble because the premises were out of repair and her
landlords had served a notice under section 146 of the Law of Property
Act 1925. The defendant did not live on the premises but at 122 Lexham
Gardens. She had a friend and companion, a Mrs. Walsh, who occupied
the basement flat at no. 96.

The landlord’s notice caused concern to the defendant, Mrs. Walsh and
the plaintiff, and on the morning of Sunday, February 10, 1974, Mrs.
Walsh approached the plaintiff on the subject, and as a result he went that
evening to see the defendant. After some discussion, they reached an oral
agreement, and the next day the plaintiff wrote a letter to the defendant
recording what had happened, and in the fourth paragraph of that letter he
said:

‘In these circumstances it was agreed that in consideration of carrying out
the necessary repairs with all reasonable speed, thereby putting the
property into a good state of repair by effecting external repairs and
decorations, including extensive repairs to the roof and by effecting
internal repairs and decorations to the common parts of the property,
upon the completion of these repairs, you will grant to me and I will
accept, a new lease of my flat being the first floor maisonette of the above
property, for a term to expire upon the expiry of your existing lease of the
entire property ... at a rent throughout of £600 per annum, and otherwise
upon the terms of the previous lease dated May 31, 1966, except that the
existing use of the flat is permitted, in so far as it is at variance with the
terms of that lease.’

In May 1974 when the plaintiff had completed half the work the
defendant refused to allow him to continue and repudiated the agreement,
but she continued until September 1974 to accept rent at the rate agreed
for the new underlease. The plaintiff brought an action for specific
performance of the agreement for the underlease or damages.
 ...
The [trial] judge accepted as good law certain statements in Fry on
Specific Performance, 6th ed. (1921), and quoting from Fry he said: Fry
says: `A contract to be specifically enforced by the court must, as a
general rule, be mutual, - that is to say, such that it might, at the time it
was entered into, have been enforced by either of the parties against the
other of them ... The mutuality of a contract is, as we have seen, to be
judged of at the time it is entered into ... From the time of the execution
of the contract being the time to judge of its mutuality it further follows,
that the subsequent performance by one party of terms which could not
have been enforced by the other will not prevent the objection which
would arise from the presence of such terms.’ ...
 ...
The plaintiff’s main case is that the statement in Fry on Specific
Performance that mutuality has to be determined at the date of the
contract is not good law, and that on the contrary the question of
mutuality is simply one of the factors, which like hardship, mistake and
delay has to be considered in the exercise of a judicial discretion when
the court is considering whether or not to order specific performance,
and, therefore, the relevant time is that of the hearing, and, he argues, if
that be the proper rule, then having regard to all the circumstances this is
a proper case for an order, especially as the work has now been finished
and complete justice can be done by a monetary adjustment ...
...
Spry in his work, Equitable Remedies (1971), says, at p. 7: ‘A further
matter which illustrates the danger of attempting to formulate inflexible
rules, such as those generally applicable in courts of law, when what is in
question is in truth no more than an equitable discretionary
consideration.’ - note particularly those words - ‘is the doctrine of
mutuality, as it was set out by Sir Edward Fry in 1858.’

Then Spry says, at p. 8: ‘Yet two important criticisms, which taken
together are decisive may be made of the proposition of Fry. In the first
place, all, or virtually all, of the authorities which are commonly adduced
in it favour ought properly to be regarded as dependent, not upon a
special doctrine of mutuality, but upon the application of ordinary
equitable principles of a less questionable nature. In the second place,
moreover, there are many authorities which are inconsistent with any
such general proposition, and if it is attempted to explain them as
exceptions, then it is found that there are so many exceptions, which take
away so much of the operation of the general proposition itself, that it is
left more or less empty of content or of utility. It is proposed to consider
each of these criticisms more closely, and then to suggest a formulation
of equitable principles which is more in accordance with the actual
practice of courts of equity.’

Again, it is said, at p. 87:

‘This assertion has not yet been examined critically in any English
authorities, but it appears nonetheless that it is possible to establish that it
has no basis in principle; nor, as will be shown, is it consistent with the
actual practice of courts of equity; and finally, it has been expressly
disapproved by judges and textbook writers in Australia, Ireland and the
United States. Indeed, the authorities which were relied upon by Sir
Edward Fry in its support may be seen on analysis either to be properly
explicable on other and narrower grounds or else to be at any rate
ambiguous.’

Finally, Spry formulates the rule thus, at p. 92:

‘Although, therefore, the authorities on these questions are by no means
clear, the view which appears to be most widely supported, and to accord
most with equitable principle, is that mutuality, when it is material, need
be looked at only as at the time of the making of the proposed order of the
court.’

I would also quote from the article by Ames ‘Mutuality in Specific
Performance’ (1903):

‘It is evident from a consideration of the eight classes of cases just
discussed, that the rule of mutuality, as commonly expressed, is
inaccurate and misleading. The reciprocity of remedy required is not the
right of each party to the contract to maintain a bill for specific
performance against the other, but simply the right of one party to refuse
to perform, unless performance by the other is given or assured.’

... I must now consider ... how the matter stands in principle. In my
judgment ... if the rule in Fry on Specific Performance were correct it
should be open to the landowner to say ‘I know I am breaking my
contract, and I know I am liable in damages, but you cannot get specific
performance because at the date of the contract you had obligations, then
executory, of which I could not have got specific performance against
you.’ but he cannot say that.
 ...
Surely the defence of want of mutuality should be governed by the state
of affairs as seen at the hearing, since one is dealing not with a question
affecting the initial validity of the contract, but with whether or not the
discretionary remedy of specific performance should be granted.

In my judgment, therefore, the proposition in Fry is wrong and the true
principle is that one judges the defence of want of mutuality on the facts
and circumstances as they exist at the hearing, albeit in the light of the
whole conduct of the parties in relation to the subject matter, and in the
absence of any other disqualifying circumstances the court will grant
specific performance if it can be done without injustice or unfairness to
the defendant ...

If, therefore, the plaintiff had been allowed to finish the work and had
done so, I am clearly of opinion that it would have been right to order
specific performance, but we have to consider what is the proper order,
having regard to the fact that he was allowed to do an appreciable part
and then not allowed to finish. Even so, in my judgment, the result is still
the same for the following reasons.

First, the defendant by standing by and allowing the plaintiff to spend
time and money in carrying out an appreciable part of the work created an
equity against herself ...

Secondly, the work has in fact been finished. The court will not be
deterred from granting specific performance in a proper case, even
though there remain obligations still to be performed by the plaintiff if the
defendant can be properly protected ...

Thirdly, the defendant can be fully recompensed by a proper financial
adjustment for the work she has had carried out. I am fully satisfied that
the law is as I have stated it to be, but, even if I were wrong and the
defence of mutuality ought to be considered according to the position at
the date of the contract, still it is conceded, and, in my judgment,
unquestionably correctly, that such a defence may be waived.

For these reasons I would allow this appeal and order specific
performance but upon terms that the plaintiff do pay to the defendant
proper compensation for the work done by her ...

Full text

GOFF LJ:

This is an appeal from a judgment of his Honour Judge Thomas sitting as
an additional judge of the Chancery Division, which he gave on 20
February 1976. The action was brought for specific performance of an
oral agreement for an underlease or alternatively damages. The learned
judge refused both claims, albeit with reluctance, and dismissed the
action with costs. The plaintiff now appeals to this court.

The facts are simple. The defendant (the respondent in this appeal), Mrs
Strange, is and was at all material times the lessee of 96 Lexham
Gardens, London, for the residue of a term of 99 years from 24 June
1933. The property is divided into flats and maisonettes and the plaintiff,
who is a builder, was living in the maisonette on the first and second
floors, and had been so since 1966 or 1967, but his tenancy had expired in
1971 and he was holding over. He was sharing this accommodation with
his brother and sister-in-law and another gentleman, which was a breach
of the covenants in the expired lease, so that if he were to have a fresh
tenancy this term would require to be altered. There was also a further
minor breach of those covenants in that they forbade the keeping of pets
whereas the plaintiff had two cats. His rent was £550 per annum which he
paid down to 10 February 1974.

The plaintiff’s position was, therefore, very insecure, but the defendant
was also in trouble because the premises were out of repair and her
landlords had served a notice under s 146 of the Law of Property Act
1925. The defendant did not live on the premises but at 122 Lexham
Gardens. She had a friend and companion, a Mrs Walsh, who occupied
the basement flat at no 96.

The landlord’s notice caused concern to the defendant, Mrs Walsh and
the plaintiff, and on the morning of Sunday, 10 February, Mrs Walsh
approached him on the subject, and as a result he went that evening to see
the defendant at no 122. After some discussion, they reached an oral
agreement, and the next day the plaintiff wrote a letter to the defendant
recording what had happened, and in the fourth paragraph of that letter he
said this:

‘In these circumstances it was agreed that in consideration of carrying out
the necessary repairs with all reasonable speed, thereby putting the
property into a good state of repair by effecting external repairs and
decorations, including extensive repairs to the roof and by effecting
internal repairs and decorations to the common parts of the property,
upon the completion of these repairs, you will grant to me and I will
accept, a new lease of my flat being the first floor maisonette of the above
property, for a term to expire upon the expiry of your existing lease of the
entire property,(less a nominal reversion) at a rent throughout of £600 per
annum, and otherwise upon the terms of the previous lease dated 31 May,
1966, except that the exising use of the flat is permitted, in so far as it is
at variance with the terms of that lease.’

The agreement was pleaded in paras 3 and 4 of the statement of claim as
follows:

‘(3) On the tenth day of February 1974 and in consideration of the
matters contained in paragraph 4 hereof the Defendant orally agreed to
grant to the Plaintiff an Underlease of the Flat (hereinafter called ‘the
Second Underlease’) for a term equivalent in length to the residue of the
term of years held by the Defendant less a nominal reversion from the
tenth day of February 1974 at the yearly rent of £600 per annum and
otherwise upon the same terms as the First Underlease save and except
that the covenant as to user contained in the First Underlease should be
varied in so far as is necessary to permit the continuation of the current
user of the Flat.

‘(4) In consideration for the grant of the Second Underlease the Plaintiff
orally agreed with the Defendant to carry out certain repair works to those
parts of the interior and exterior of the said building which were demised
to the Defendant under the terms of her said lease.’

The agreement was denied in the defence, and it will be seen that the
letter and the pleading are not in identical terms, but there was an express
finding of fact by the learned judge as follows: ‘I am satisfied that an oral
agreement was reached between the parties on 10 February 1974 and that
it was in the terms alleged by the plaintiff in his pleadings.’ The learned
judge further found that the parties had agreed that the new underlease
should commence forthwith on 10 February 1974. Finally in this
connection he was satisfied ‘that what the parties intended was that a sub-
term for as long as possible should be carved out of the term created by
the headlease; that is, a sub-term leaving a nominal reversion’.

It is common ground that as from 28 February 1974 until at least 27
September 1974 the plaintiff paid and the defendant accepted rent at the
increased rate of £50 each month corresponding with the rent of £600 per
annum to be paid under the new underlease.

Strangely enough the repairs to be done under the agreement were not
pleaded, or shown by the evidence, as being those required by the s 146
notice, which the plaintiff actually did not see, but it was never suggested
that there was any such uncertainty in that regard as would invalidate the
agreement. On the other hand counsel for the plaintiff conceded at the
trial that the works were not such as the court would specifically enforce,
and he has accepted that position before us.

The evidence, as the learned judge found, showed that -

‘the plaintiff carried out work of repair and redecoration to the interior of
common parts of no 96 between the middle of February and the middle of
May 1974 and that since then the defendant herself has had the exterior,
including the roof, repaired and redecorated. In other words, the works
required to be done by the plaintiff under the alleged agreement have all
been done.’

The reason why the plaintiff did not himself finish this work was because
the defendant refused to allow him to do so, and repudiated the agreement
by a letter from her solicitors dated 17 May 1974 which led to this action.

Counsel for the defendant conceded at the hearing that if there were an
agreement, as the learned judge held there was, then the repair work done
by the plaintiff and the payment and acceptance of the increased rent
were sufficient acts of part performance to take the case out of s 40 of the
Law of Property Act 1925 if relief could otherwise be granted in equity.
However, the defence was that specific performance could not be granted,
because the remedy was not mutual at the date of the contract. The
defendant also pleaded a case of hardship but that was abandoned at the
trial. Finally, it was contended that there was no jurisdiction under the
Chancery Amendment Act 1858 (Lord Cairns’s Act) to grant damages in
lieu of specific performance.

The learned judge accepted as good law certain statements in Fry on
Specific Performance and quoting from the sixth edition he said this:

‘My understanding of the law is that it is correctly stated in the sixth
edition of Fry on Specific Performance. Fry says: ‘A contract to be
specifically enforced by the Court must, as a general rule, be mutual, -
that is to say, such that it might, at the time it was entered into, have been
enforced by either of the parties against the other of them.’ Further on, he
says: ‘The mutuality of a contract is, as we have seen, to be judged of at
the time it is entered into.’ Then he says: ‘From the time of the execution
of the contract being the time to judge of its mutuality it further follows,
that the subsequent performance by one party of terms which could not
have been enforced by the other will not prevent the objection which
would arise from the presence of such terms.’ See also Re Bayley and
Shoesmith’s Contract [(1918) 87 LJCh 626 at 628, 629] and Hope v
Hope. I hold accordingly.’

So far as damages are concerned he again adopted what was stated in Fry
and disposed of that matter quite shortly as follows:

‘Fry deals with the matter as follows: ‘It has been further held that the
doctrine of part performance does not extend to enable the Court to award
damages on a parol contract of which specific performance could not
have been granted.’ That statement is supported by the case cited by Fry,
namely, Lavery v Pursell [(1888) 39 Ch D 508 at 519]. I cannot therefore
award the plaintiff damages in lieu of specific performance.’

The learned judge cited the opening words only of the first part of the
relevant paragraph in Fry, which continues as follows:

‘So that it is no objection to the plaintiff’s right, that the defendant may
by delay, or other conduct on his part subsequent to the contract, have
lost his right against the plaintiff.’

The concluding part of that paragraph, which the learned judge also read,
was not in the original book, but it was included in the second edition and
as appears from the preface that part of the work was revised or rewritten
by Sir Edward Fry himself.
After counsel for the plaintiff had opened and fully argued his case,
counsel for the defendant in his answer sought to rely on certain agreed
correspondence, which we allowed him to read de bene esse. His purpose
was to show either that there never was any concluded agreement,
because the parties were not ad idem as to the work to be done by the
plaintiff, which was, he suggested, to have been agreed later and
embodied in a schedule to the underlease, or that because of the way in
which the plaintiff was interpreting the agreement he was in default or
threatening to be in default by doing less than he ought, and indeed that
the defendant by her solicitors repudiated the agreement on that very
ground, at least so as to preclude any remedy against her by way of
specific performance. It is true that the agreement alleged in the statement
of claim was formally denied in the defence, but that was not the case
made at the trial and there is the specific finding by the learned judge
which I have already mentioned. I do not see how we can possibly go
behind that. Default or repudiation was not even pleaded, and in my
judgment we cannot have regard to this correspondence, or draw any such
inference from it, as counsel for the defendant wishes us to do. We have
to deal only with the defence of want of mutuality and the issue as to
damages.

There was a respondent’s notice contending that the plaintiff must fail in
any case, because the agreement as found by the learned judge was for an
underlease whereas the plaintiff’s evidence was that he wanted what
would in law have amounted to an assignment, but that was abandoned at
the hearing before us.

The plaintiff’s main case is that the statement in Fry that mutuality has to
be determined at the date of the contract is not good law, and that on the
contrary the question of mutuality is simply one of the factors, which like
hardship, mistake and delay has to be considered in the exercise of a
judicial discretion when the court is considering whether or not to order
specific performance, and therefore the relevant time is that of the
hearing, and he argues if that be the proper rule, then having regard to all
the circumstances this is a proper case for an order, especially as the work
has now been finished and complete justice can be done by a monetary
adjustment.
I must return to consider that in detail, but first counsel for the plaintiff
made an alternative submission that even if Sir Edward Fry were right,
and if the plaintiff had not been allowed to do any of the work, still the
court would have granted an adjournment to give him an opportunity of
doing it, or else it would have made a conditional order or have granted
an injunction to restrain the defendant from preventing him from doing
the work on the principle laid down in Lumey v Wagner. For my part I do
not think that the court could have granted any such relief before any of
the work had been done, and as I see it the contrary was expressly
decided in Peto v Brighton, Uckfield & Tunbridge Wells Railway Co.
Different considerations might apply after part performance. However, in
my judgment it is unnecessary for us to reach any conclusion on these
alternative submissions. No application for an injunction was in fact
made, and the time for an application had long since passed when it came
to the trial. I turn, therefore, to the question whether Sir Edward Fry was
right or wrong.

In the first part of the relevant paragraph Fry was dealing with the
defence of mutuality in a very different context, namely that a party
cannot rely on a want of mutuality which has arisen from his own post
contract default. The authorities cited there are South Eastern Railway Co
v Knott and Eastern Counties Railway Co v Hawkes. In the former the
purchaser had lost his right by delay. In the latter the railway company
wished to purchase land from a person who was tenant for life only, and
the contract provided that they would in their special Act obtain a
provision which would enable him to make a good title. This they did,
and in any case the general power of compulsory purchase in their special
Act would have enabled them to obtain a title from the vendor under the
Railway Clauses Consolidation Act and the Land Clauses Consolidation
Act. Unfortunately, however, they allowed both the special and the
general power to expire, and it was held that in those circumstances they
could not rely on the vendor’s lack of title but must for better or worse
accept such title as he could give. The decision in that case does not
therefore assist the defendant, but as I shall show hereafter there is a
passage in the judgment which affords considerable support to the
plaintiff’s argument.

The second part of para 463, on which the learned judge relied, is of
course a categorical statement of the defendant’s case, and has the
authority of Sir Edward Fry himself to back it. However, Hope v Hope
cited in Fry on Specific Performance as authority for the proposition,
does not bear it out. That was a case of illegality, and it was held, not
unnaturally, that a party could not gain a right to specific performance of
an illegal agreement by performing the illegal part of it. Turner LJ (8 De
GM & G 731 at 746) is reported thus:

‘Lastly, it was urged on the Plaintiff’s behalf, that whatever objection
there may have been to the agreement in its inception, what remains to be
performed is legal and unobjectionable; that to hold that an agreement
was so objectionable as that this Court would not perform it, can be
rendered capable of performance by the objectional parts of it having
been carried into execution, is a doctrine to which I cannot assent.’

At first sight that does not show clearly that it was a case of illegality, but
a perusal of the case as a whole indicates that it was, and Turner LJ (8 De
GM & G 731 at 746) did say ‘what remains to be performed is legal and
unobjectionable’. It is made quite clear in the report in Law Journal
Chancery Reports (26 LJCh 417 at 425), where Turner LJ’s judgment
reads as follows:

‘It has been urged that everything that remains to be done under this
agreement is legal, - but I cannot accede to the doctrine that an agreement
containing illegal provisions is to be carried into effect by the Court
because all the illegal parts of it have been already performed.’

The learned judge relied on Re Bayley and Shoesmith’s Contract and so
of course did counsel for the defendant. There Sargant J (87 LJCh 626 at
628) in fact adopted Fry, saying:

‘Counsel for the vendors has argued that the critical date is not the date of
the contract, but the date when the purchaser first suspects or discovers
that the vendors have not a good title. But this proposition is at variance
with the statement in Fry on Specific Performance [Then he quoted from
para 461 of the fourth edition and proceeded:] and in [para] 463 [4th Edn
(1903), p 206; 6th Edn (1921), p 222] where it is said: ‘The mutuality of a
contract is as we have seen, to be judged of at the time it is entered into’.’
The passages there cited from Fry did not however include the specific
example given in the second part of the paragraph that the subsequent
performance by one party of terms which could not have been enforced
by the other will not prevent the objection which would arise from the
presence of such terms. In any event what Sargant J said was obiter since
the vendor had failed to comply with a Stickney v Keeble type notice to
complete and was not, therefore, entitled to specific performance on any
showing.

The proposition in Fry has, however, been much criticised. Thus in
Hanbury and Maudsley’s Modern Equity there is a section headed
‘Criticisms of Fry’s Rule’ followed with a paragraph C headed ‘An
Alternative Rule’, which reads as follows:

‘These matters, among others, are considered in a famous article by
James Barr Ames in which he offers as an alternative to Fry’s rule of
mutuality a principle that ‘Equity will not compel specific performance
by a defendant if, after performance, the common law remedy of damages
would be his sole security for the performance of the plaintiff’s side of
the contract’. Such a formulation has not satisfied everyone, but it is the
basis of the rule accepted by the Restatement of Contract. In England,
Fry’s rule is often still stated in its wide form. It is submitted that Ames’
principle is much to be preferred.’

‘A further matter which illustrates the danger of attempting to formulate
inflexible rules, such as those generally applicable in courts of law, when
what is in question is in truth no more than an equitable discretionary
consideration [note particularly those words], is the doctrine of mutuality,
as it was set out by Sir Edward Fry in 1858.’

In a later passage Spry says:

‘Yet two important criticisms, which taken together are decisive, may be
made of the proposition of Fry. In the first place, all, or virtually all, of
the authorities which are commonly adduced in its favour ought properly
to be regarded as dependant, not upon a special doctrine of mutuality, but
upon the application of ordinary equitable principles of a less
questionable nature. In the second place, moreover, there are many
authorities which are inconsistent with any such general proposition, and
if it is attempted to explain them as exceptions, then it is found that there
are so many exceptions, which take away so much of the operation of the
general proposition itself, that it is left more or less empty of content or
utility. It is proposed to consider each of these criticisms more closely,
and then to suggest a formulation of equitable principles which is more in
accordance with the actual practice of courts of equity.’
Later it is said:

‘This assertion has not yet been examined critically in any English
authorities, but it appears nonetheless that it is possible to establish that it
has no basis in principle; nor, as will be shown, is it consistent with the
actual practice of courts of equity; and finally, it has been expressly
disapproved by judges and textbook writers in Australia, Ireland and the
United States. Indeed, the authorities which were relied upon by Sir
Edward Fry in its support may be seen on analysis either to be properly
explicable on other and narrower grounds or else to be at any rate
ambiguous.’
Finally Spry formulates the rule thus:

‘Although, therefore, the authorities on these questions are by no means
clear, the view which appears to be most widely supported, and to accord
most with equitable principle, is that mutuality, when it is material, need
be looked at only as at the time of the making of the proposed order of the
court.’
I would also quote from the article by Ames [Mutuality in Specific
Performance (published in the Columbia Law Review for January 1903
and reprinted in Ames’s Lectures on Legal History, p 370); see p 376]:

‘It is evident, from a consideration of the eight classes of cases just
discussed, that the rule of mutuality, as commonly expressed, is
inaccurate and misleading. The reciprocity of remedy required is not the
right of each party to the contract to maintain a bill for specific
performance against the other, but simply the right of one party to refuse
to perform, unless performance by the other is given or assured.’

Such being the state of the authorities cited in Fry, I must now consider
what guidance can be obtained from the many other authorities which
were cited to us, and consider how the matter stands in principle.

It is significant in my view that as early as 1846, 12 years before Fry, the
court in Dietrichsen v Cabburn granted an injunction to restrain the
defendant from breaking a negative covenant not to sell to anyone other
than the plaintiff on the plaintiff showing that he had performed his
obligation to act as the defendant’s wholesale agent down to the hearing,
although the court was fully conscious of the fact that it could not enforce
his obligation to continue in that capacity; and in an illuminating note to
Hills v Croll ((1845) 2 Ph 60 at 63, 64), which had been cited in that case
and reported in the same volume, the learned reporter exactly
foreshadowed the plaintiff’s case. I read from that note as follows:

‘But even supposing that the obligation of the contract was reciprocal, the
Court appears to have overlooked the distinction between contracts which
remain wholly executory and those which have been executed or acted on
to such an extent as to give to one of the parties an equity arising from
part performance of the contract, to insist upon an adherence to its terms
by the other. So long as a contract, which is not mutual in point of
remedy, rests merely in covenant, the maxim that the Court will not
enforce a part of an agreement where it cannot compel the performance of
the whole - in other words, will not give one-sided relief - is undoubtedly
true, and applies, it is conceived, as much to the jurisdiction by way of
injunction as to that by specific performance; for where the Court does
interpose by injunction to restrain the violation of a negative term in a
contract, it is, in many cases, avowedly done with a view of thereby
inducing the Defendant to perform some other term which the Court has
no direct means of enforcing. But it seems perfectly consistent with this,
that when such a contract has been executed or acted upon so far as to
have altered the relation between the parties, and to have given to one of
them an equity arising out of those dealings, as distinguished from his
original right under the contract itself, the Court will, notwithstanding the
original non-mutuality of the contract, give effect to that equity either
directly by a decree for specific performance, or partially and indirectly
by an injunction, according as the nature of the case may admit of the
more or less complete measure of relief. Whether the dealings which may
have taken place under a contract not originally mutual in its nature have
or have not given to the Plaintiff such an equity, and, whether, supposing
that they have, the jurisdiction of the Court can in other respects be safely
and properly exercised, is a question of discretion which must be
determined by the particular circumstances of each case. And the two
preceding cases are authorities, among others, to show that the mere
circumstance of a portion of what the Plaintiff may have agreed to do
remaining executory, and being of such a nature that this Court has no
means of enforcing it, will not prevent the Court from interfering in his
behalf, if he appear to have so far performed the contract on his part as to
render it inequitable for the Defendant to withdraw from it.’

In my judgment the vendor and purchaser cases show that want of
mutuality raises a question of the court’s discretion to be exercised
according to everything that has happened up to the decree; see first
Halkett v Earl of Dudley, where Parker J, after referring to the
purchaser’s right of recission, said ([1907] 1 Ch 590 at 596, 597, [1904–
7] All ER Rep 465 at 469):

‘If this be so, the right of repudiation in question must be distinguished
from the common law right of recission, and arises out of that want of
mutuality which, unless waived, is generally fatal to relief by way of
specific performance.’

The significant word there is ‘generally’ and, quoting from the judgment
of the Vice-Chancellor in Salisbury v Hatcher, Parker J went on to say
([1907] 1 Ch 590 at 598, [1904–7] All ER Rep 465 at 470):

‘In cases of specific performance the want of mutuality is a consideration
generally material, but it is contrary to principle and authority to say that
perfect mutuality is requisite in order to call a Court of Equity into action.
There are cases in which plaintiffs have had a decree for specific
performance against defendants, who, when the bill was filed, were not in
a condition to enforce specific performance in their own favour. Where
no legal invalidity affects the contract, the enforcement of it in this Court
is a matter of judicial discretion.’

Secondly, see Stickney v Keeble ([1915] AC 386 at 417, [1914–15] All
ER Rep 73 at 81), where Lord Parker said:
‘In considering whether it would give relief by restraining proceedings at
law the Court of Chancery took cognizance of everything which had
happened up to the date of the decree …’
It is true that where the vendor has no title the purchaser can on
discovering the defect repudiate the contract forthwith in this sense, that
thereby the vendor loses any right to specific performance, albeit he is
able to make title before the date fixed for completion. This, however, is
in my judgment a special right arising out of the difficulty of making title
to land in England: see Elliott v Pierson ([1948] 1 All ER 939 at 942,
[1948] Ch 452 at 456). It does not affect the general principle that one
should ordinarily look to the date of the hearing, and even in that case,
unless the right to repudiate is exercised promptly, the vendor is allowed
to put his title in order after the contract and claim specific performance.
In that type of case also I have no doubt that if both parties knew at the
time of the contract that the vendor’s title was defective and nevertheless
contracted for a good title, the purchaser could not repudiate, at all events
before the vendor had been allowed a reasonable time to perfect it.

Next there are the building agreement cases which in my view strongly
support the plaintiff’s case. They are Wilkinson v Clements, Lowther v
Heaver and Rawlinson v Ames. It is true that the point was not taken in
any of those cases, but if it is a good defence it is indeed strange that it
did not occur to any of the eminent judges or counsel engaged therein.

Wilkinson v Clements is particularly significant, because there the
defence of mutuality was relied on, and it was defeated because the
contract was divisible and the relevant part had been performed. It is very
odd if the court overlooked the answer that that did not matter anyway
because even the divided part was not mutual in its inception.

The decision of Cross J in Kirkland v Bird follows the same lines, and the
learned judge said:

‘The defendants’ contention with regard to the plaintiff’s claim for
specific performance was misconceived. Where the obligations binding
on a person seeking specific performance had been fully carried out
before the obligations on the other side were sought to be enforced it was
hard to see how the mutuality principle came in at all.’

Counsel for the defendant sought to distinguish these authorities as being
cases of conditional contracts so that no question of mutuality could arise,
because if the condition were not performed there would be no obligation
to be enforced, and if it were performed then the liability to grant the
lease or convey the land would arise only when the building had been
done or the services rendered, so that there could be no want of mutuality
on any showing. In my judgment, however, that is not sound. There are
concurrent obligations from the start, albeit performance by the
landowner is dependent on performance by the builder or servant, but as a
term of the contract and not a condition precedent or subsequent. If the
rule in Fry were correct it should be open to the landowner to say: ‘I
know I am breaking my contract, and I know I am liable in damages, but
you cannot get specific performance because at the date of the contract
you had obligations, then executory, of which I could not have got
specific performance against you’, but he cannot say that. This is clearly
brought out by Wakeham v McKenzie ([1968] 2 All ER 783 at 785,
[1968] 1 WLR 1175 at 1177), where Stamp J said:

‘It was submitted on behalf of the defendant executor, first, that apart
from s 40 of the Law of Property Act, 1925, there was no contract
enforceable against Mr. Ball; there was, it was said, want of mutuality.
The plaintiff might have looked after the house and Mr. Ball well or she
might have done so badly. Had she done it badly or had she failed
otherwise to fulfil her promise, Mr. Ball would have had no remedy. His
promise to leave her the house and contents was no more, so it was said,
than a statement of his then present intention. These and other similar
submissions, in my judgment, assume the non-existence of a contract. If
there was a contract in the terms that I have found and the plaintiff had
failed to perform her obligations, Mr Ball could, not have had an action
for a specific performance because the contract was a contract for the
performance of personal service; but I cannot see why he should not have
had damages, whether substantial or only nominal, for her failure to
perform her part of the contract. Nor does the submission that there was
no more than a unilateral promise by Mr Ball that, if the plaintiff looked
after him for the rest of his life, he would leave her the house and
contents appear to me well-founded.’
In any case I do not think the suggested distinction is a valid one, because
I see no reason why when the respective obligations are concurrent, and
not one dependent on the other, when one party has in fact wholly
performed his part of the agreement, the other should be able to refuse to
perform his part merely because at an earlier stage he could not have
enforced the other party’s obligations specifically, but could only have
claimed damages. In principle the two cases are alike.

Surely the defence of want of mutuality should be governed by the state
of affairs as seen at the hearing, since one is dealing not with a question
affecting the initial validity of the contract, but with whether or not the
discretionary remedy of specific performance should be granted. I find
support for this view in Eastern Counties Railway Co v Hawkes, to which
I have already referred, where Lord Campbell said (5 HL Cas 331 at 364,
365):

‘But I am of opinion that whereas, in considering the validity of the
agreement, the proper time to regard is the time when it was entered into -
as to the specific performance, regard is to be had to the state of things
when the bill was filed.’

In my judgment, therefore, the proposition in Fry is wrong and the true
principle is that one judges the defence of want of mutuality on the facts
and circumstances as they exist at the hearing, albeit in the light of the
whole conduct of the parties in relation to the subject-matter, and in the
absence of any other disqualifying circumstances, the court will grant
specific performance if it can be done without injustice or unfairness to
the defendant. In Ogden v Fossick specific performance was refused, but
in that case there were continuing obligations of service on the part of the
plaintiffs commensurate with the whole term of the lease contracted to be
granted.

If, therefore, the plaintiff had been allowed to finish the work and had
done so, I am clearly of opinion that it would have been right to order
specific performance, but we have to consider what is the proper order,
having regard to the fact that he was allowed to do an appreciable part
and then not allowed to finish. Even so, in my judgment the result is still
the same for the following reasons.

First, the defendant by standing by and allowing the plaintiff to spend
time and money in carrying out an appreciable part of the work, created
an equity against herself. This is supported first by Hart v Hart ((1881) 18
Ch D 670 at 685) and Parker v Taswell ((1858) 2 De G & J 559 at 571),
which shows that where there has been part performance the court will
struggle against difficulties to secure total performance, but much more
strongly, by the principles laid down in Chalmers v Pardoe ([1963] 3 All
ER 552, at 555, [1963] 1 WLR 677 at 681, 682). That case shows that
where A encourages or permits B to build on or improve A’s land on the
faith of an understanding or assurance, short of a binding contract, that he
will permit him to have it or use it for B’s own benefit, equity will in a
proper case not merely give B a lien for recovering his expenditure but
compel A to implement the understanding. A fortiori must it be so where,
as here, the plaintiff was allowed to start work on the defendant’s
property on the faith of an actual contract which, notwithstanding the
want of writing, was by the very act of part performance made
enforceable in equity.

Secondly, the work has in fact been finished. The court will not be
deterred from granting specific performance in a proper case, even
though there remain obligations still to be performed by the plaintiff, if
the defendant can be properly protected: see Langen & Wind Ltd v Bell, a
sale of shares where the purchase price could not be ascertained for two
years, and the defendant was ordered to execute transfers and deliver
them and the certificates to stakeholders. See also C H Giles & Co Ltd v
Morris ([1972] 1 All ER 960 at 969, [1972] 1 WLR 307 at 318), where
Megarry J said:

‘… the court may refuse to let the disadvantages and difficulties of
specifically enforcing the obligation to perform personal services
outweigh the suitability of the rest of the contract for specific
performance, and the desirability of the contract as a whole being
enforced. After all, pacta sunt servanda.’

Still more readily should it act where the work has been done so that the
defendant is not at risk of being ordered to grant the underlease and
having no remedy except in damages for subsequent non-performance of
the plaintiff’s agreement to put the premises in repair.

Thirdly the defendant can be fully recompensed by a proper financial
adjustment for the work she has had carried out.

I am fully satisfied that the law is as I have stated it to be, but even if I
were wrong and the defence of mutuality ought to be considered
according to the position at the date of the contract, still it is conceded,
and in my judgment unquestionably correctly, that such a defence may be
waived. Halkett v Earl of Dudley is alone sufficient authority for that
proposition. Then on the facts of this case the defence clearly was
waived. Not only did the defendant permit the plaintiff to start on the
work which would of itself be sufficient in my view, but she also
accepted the increased rent payable under the contemplated underlease
and went on doing so after her purported repudiation.

For these reasons I would allow this appeal and order specific
performance but on terms that the plaintiff do pay to the defendant proper
compensation for the work done by her. As a matter of strict right that
must take the form of an enquiry what amount it would have cost the
plaintiff to complete the works himself, with an order that he do pay or
allow the defendant the amount certified with a set-off against any costs
payable by the defendant, the costs of the enquiry being reserved. The
plaintiff has however offered, subject to any question whether the
expense incurred by the defendant was unnecessary or extravagant, to
compensate her more handsomely by paying or allowing the actual cost
to her, and it may well be possible, and certainly in the best interests of
the parties, for them to agree a figure and so obviate proceeding with the
enquiry, which could well involve them in further considerable litigation
and expense.

Taking the view I have it is unnecessary for me to decide the other
question whether if specific performance were refused damages could be
awarded in lieu, but as it was very fully argued I think it right to express
my views on it. Having regard to s 40 of the Law of Property Act 1925
damages could not be awarded at law, but in my judgment that would not
prevent an award of damages in equity under the Chancery Amendment
Act 1858 (Lord Cairns’ Act). One purpose and a very important purpose
of that Act was, of course, to avoid circuity of action by enabling the old
Court of Chancery to award damages at law, but the Act clearly went
further and enabled that court to give damages where there was no cause
of action at law. This was envisaged as early as 1863 in Eastwood v
Lever, which was an action for breach of a restrictive covenant where
there was no privity at law; and in the like case damages were awarded in
Wrotham Park Estate Co Ltd v Parkside Homes Ltd ([1974] 2 All ER 321
at 338, [1974] 1 WLR 798 at 811). That the Act has this wider scope was
settled beyond question by the House of Lords in Leeds Industrial Co-
operative Society Ltd v Slack, a quia timet action in respect of a
threatened tort.

The absence of a right of action at law in this case is therefore immaterial;
nor in my judgment does the case fall within Lavery v Pursell. In that
case it was impossible to grant specific performance because it was too
late. It was not refused either because of the type of contract involved or
in the exercise of discretion, and in my view that case decides nothing
more than this, that the court cannot grant damages in lieu of specific
performance when it is impossible to effect specific performance.

It was argued, however, that where the court refuses specific
performance, not on discretionary grounds, but in accordance with some
settled principle, then the court has not ‘jurisdiction to entertain an
application for the specific performance of any covenant contract or
agreement’ within the meaning of the 1858 Act. So far as this case turns
on want of mutuality that is in my view discretionary, but it was argued
that this contract, being for the execution of building repairs, was one of
which, in accordance with settled principles, the court could not, or would
not, grant specific performance. I suppose that may be true of some
contracts, where damages at law are always an adequate remedy and in
consequence the old Court of Chancery and modern equity has never
interfered, at all events positively, such as a contract for the sale of
potatoes, pictures in general, or shares in ICI. If in the future in such a
case for some reason or other there is no remedy at law, and damages are
sought in equity under the Act, it can be considered on its facts when it
comes before the court. It is I think unlikely to arise. The present case,
however, is in my judgment not of that character. Although the court does
not often order specific performance of a contract to build or do repairs,
either because of difficulty in ascertaining precisely what has to be done,
or more usually because of the difficulty of supervising performance, still
it has jurisdiction to do so, and sometimes does: see Chitty on Contracts:

‘Building contracts. The general rule is that a contract to erect a building
cannot be specifically enforced. There seem to be three reasons for this
rule. First, damages may be an adequate remedy if another builder can be
engaged to do the work. Secondly, the contract may not specify the work
to be done with sufficient certainty. And thirdly specific performance
may require ‘constant supervision’. But specific performance of a
contract to build will be decreed if (i) the work is precisely defined;(ii)
damages will not adequately compensate the plaintiff; and (iii) the
defendant is in possession of the land on which the work is to be done.’

Even in a case of a contract for personal services in which the court is
still more chary of granting specific performance, Megarry J said this
(with which I entirely agree) in C H Giles & Co Ltd v Morris ([1972] 1
All ER 960 at 970, [1972] 1 WLR 307 at 318, 319):

‘In general, no doubt, the inconvenience and mischief of decreeing
specific performance of most of such contracts will greatly outweigh the
advantages, and specific performance will be refused. But I do not think
that it should be assumed that as soon as any element of personal service
or continuous services can be discerned in a contract the court will,
without more, refuse specific performance. Of course a requirement for
the continuous performance of services has the disadvantage that repeated
breaches may engender repeated applications to the court for
enforcement. But so may many injunctions; and the prospects of
repetition, although an important consideration, ought not to be allowed
to negative a right. As is so often the case in equity, the matter is one of
balance of advantage and disadvantage in relation to the particular
obligations in question; and the fact that the balance will usually lie on
one side does not turn this probability into a rule.’

Therefore, if it were necessary to decide the point I would allow the
appeal on the second limb and award damages under Lord Cairns’s Act,
but it is not necessary, since for the reason I have already given I would
allow the appeal on the first point and order specific performance on the
term as to compensation which I have indicated.

BUCKLEY LJ:

Each of the two main questions for decision on this appeal is of a
considerable historical age, of some general importance and remarkably
devoid of direct judicial comment. Coincidently they both date from the
year 1858, in which year Fry on Specific Performance was first published
and the Chancery Amendment Act 1858 (Lord Cairns’s Act) was enacted.
They are, first, whether Sir Edward was right in the view expressed in his
celebrated work [Specific Performance (1858), pp 133, 135, paras 286,
289; 6th Edn (1921), pp 219, 222, paras 460, 463] that the date at which
the existence of mutual availability of specific performance as a remedy
for a breach of a contract must be found to exist is, as a general rule, the
date of the contract; and, second, whether Lord Cairns’s Act is applicable
in the present case.

I will deal first with the question of mutuality. It is easy to understand
that, as the equitable jurisdiction to enforce specific performance of
contractual obligations developed, it should have become an accepted
rule that equity would not compel one party to perform his obligations
specifically in accordance with the terms of the contract unless it could
also ensure that any unperformed obligations of the other party would
also be performed specifically. For breaches of some kinds of contract,
pre-eminently contracts for the sale of land, the common law remedy of
damages was inadequate. The courts of equity consequently
supplemented the common law by introducing the equitable remedy of
specific performance, compelling the defendant to carry out his contract
instead of penalising him in damages for failing to do so.

Considering the position a priori and apart from authority, it would seem
that the questions which should be asked by any court which is invited to
enforce specific performance of a contractual obligation should be: (1) is
the plaintiff entitled to a remedy of some kind in respect of the alleged
breach of contract? (2) if so, would damages be an adequate remedy? (3)
if not, would specific performance be a more adequate remedy for the
plaintiff? (4) if so, would it be fair to the defendant to order him to
perform his part of the contract specifically? The first question goes to the
validity and enforceability of the contract. Only if it is answered
affirmatively do the subsequent questions arise. If the second question is
answered affirmatively there is no occasion for equity to interfere, so that
again the subsequent questions do not arise. If the second question is
answered in the negative it will not necessarily follow that the third
question must be answered affirmatively. For instance, the circumstances
may not be such as to admit of specific performance, as where the
subject-matter of the contract no longer exists. Only in the event of the
third question arising and being answered in the affirmative can the
fourth question arise. It is here, as it seems to me, that the alleged
principle of mutuality comes in.

If one party were compelled to perform his obligations in accordance
with the terms of the contract while the obligations of the other party
under the contract, or some of them, remained unperformed, it might be
unfair that the former party should be left to his remedy in damages if the
latter party failed to perform any of his unperformed obligations. This is a
consideration which bears on the appropriateness of specific performance
as a remedy in the particular case; it has no bearing on the validity or
enforceability of the contract, that is to say, on whether the plaintiff has a
cause of action. A contract of which mutual special performance cannot
be enforced may yet afford a good cause of action for a remedy in
damages at law. It would seem therefore that the appropriate time at
which to consider the fourth question, and the appropriate circumstances
to consider, must be the date of judgment and the circumstances then
existing. And yet Sir Edward Fry said in very clear terms:

‘A contract to be specifically enforced by the Court must, as a general
rule, be mutual, - that is to say, such that it might, at the time it was
entered into, have been enforced by either of the parties against the other
of them.’

The words ‘as a general rule’ did not appear in the first edition: they were
introduced in the third edition, which was the last edition for which Sir
Edward was himself responsible. I shall refer to this statement as ‘the Fry
proposition’. Sir Edward elaborated on it in the later paragraph referred to
in these terms:
‘The mutuality of a contract is, as we have seen, to be judged of at the
time it is entered into; so that it is no objection to the plaintiff’s right, that
the defendant may by delay or other conduct on his part subsequent to the
contract, have lost his right against the plaintiff.’

In his second edition Sir Edward added at the end of this paragraph the
following passage:

‘From the time of the execution of the contract being the time to judge of
its mutuality it further follows, that the subsequent performance by one
party of terms which could not have been enforced by the other will not
prevent the objection which would arise from the presence of such terms.’

Counsel for the defendant relies strongly on that passage in the present
case.

The Fry proposition has not gone uncriticised. Mr Ashburner, in his book
on the Principles of Equitycc , first published in 1902, wrote:

‘The illustrations of this proposition [ie the Fry proposition] which are
given by the learned author hardly support it … The question whether
there is mutuality is really important, not with reference to the time at
which the contract is entered into, but with reference to the time when it
is sought to be enforced. A. cannot get a conveyance from B. unless the
court is able to secure that B. gets his purchase-money. The cases which
Lord Justice FRY cites as exceptions to the doctrine are much more
numerous than those which are alleged to support it … The doctrine of
want of mutuality, as laid down by Lord Justice FRY, appears to be an
unfortunate invention of Lord REDESDALE’S; and although it has often
been spoken of with respect, it does not appear to form the ratio decidendi
of any line of cases.’

In the following year the distinguished American jurist, J B Ames, in a
paper on ‘Mutuality in Specific Performance , which repays study, also
questioned the correctness of Sir Edward’s view on this point. See also
the Law Quarterly Review. For more recent criticisms of the Fry
proposition, see Anson on the Law of Contract, Maitland’s Equity
(Maitland says that on examination the doctrine of mutuality seems to
disappear, but he does not examine the subject in any depth); Snell’s
Equity ; Hanbury’s Modern Equityi; Chitty on Contracts; Treitel’s Law of
Contrac; Spry’s Equitable Remedies.

Fry on Specific Performance is a work of very high authority, but in the
face of these criticisms the correctness of Sir Edward’s opinion on the
point in question must of course be considered in the light of judicial
authority. It is a remarkable thing that, in spite of what might justly be
called a chorus of academic criticism and dissent, the Fry proposition has
occasioned virtually no judicial comment. In only one of the cases to
which our attention has been called has any direct judicial reference been
made to it and then only in circumstances in which it was unnecessary for
the decision of the case (Re Bayley and Shoesmith’s Contract, where the
vendor was not able at any relevant time to make a good title and the
purchaser had quite legitimately repudiated the contract).
In New Zealand, in Macaulay v Greater Paramount Theatres Ltd ((1921)
22 SRNSW 66 at 74), Harvey J said:

‘If the part of the contract which was not certain, or could not be
specifically performed, has been rendered certain, or has been performed
before suit brought, in my opinion, this Court can and should enforce
specific performance.’

In the United States of America, in Epstein v Gluckin ((1922) 135 NE
861 at 862), Cardozo J said:
‘If there ever was a rule that mutuality of remedy existing, not merely at
the time of the decree, but at the time of the formation of the contract, as
a condition of equitable relief, it has been so qualified by exceptions that,
viewed as a precept of general validity, it has ceased to be a rule today …
What equity exacts today as a condition of relief is the assurance that the
decree, if rendered, will operate without injustice or oppression either to
plaintiff or to defendant … mutuality of remedy is important in so far
only as its presence is essential to the attainment of that end.’

In Australia, in C J Williamson Ltd v Lukey and Mulholland ((1931) 45
CLR 282 at 298), Dixon J said:
‘The doctrine of the Court of Chancery was against decreeing one party
to perform specifically obligations which the contract imposed upon him,
if it were unable to secure to him the performance by the other
contracting party of the conditions upon which those obligations
depended, and could only leave him to his action of damages at law in the
event of the conditions being unperformed.’

These judicial views are all at variance from the Fry proposition. The
American Restatement contains the following formulation:

‘Specific performance may properly be refused if a substantial part of the
agreed exchange for the performance to be compelled is as yet
unperformed and its concurrent or future performance is not well secured
to the satisfaction of the court.’

We have been referred to a large number of English decisions, in none of
which has the Fry proposition been commented on but which nevertheless
have a bearing on its correctness. It may be convenient if I collect them
into three categories. First, cases of contracts for sale where at the date of
the contract the vendor was unable to show a good title to the property
agreed to be sold. These are: Hoggart v Scott, Leach MR; Salisbury v
Hatcher, Knight Bruce V-C; Murrell v Goodyear, Court of Appeal;
Halkett v Earl of Dudley, Parker J; and Elliott v Pierson, Harman J, in
each of which specific performance was ordered; and Re Bayley and
Shoesmith’s Contract, Sargant J; and Joseph v National Magazine Co
Ltd, Harman J, in each of which specific performance was refused.

Secondly, cases in which the consideration on one side consisted of an
obligation to perform services or carry out works. These are: Mundy v
Jolliffe, Lord Cottenham LC; Sutherland v Briggs, Wigram V-C; Parker v
Taswell, Chelmsford LC; Kirland v Bird, Cross J; and Wakeham v
McKenzie, Stamp J, in each of which specific performance was ordered;
and Peto v Brighton, Uckfield and Tunbridge Wells Railway Co, Page-
Wood V-C; Ogden v Fossick, Westbury LC, and Maddison v Alderson
where either specific performance or an injunction was refused.

Thirdly, cases in which the obligation of one party was not to be
performed until the obligation of the other party had been performed.
These are: Soames v Edge, Page-Wood V-C; Wilkinson v Clements,
Court of Appeal; Lowther v Heaver, Court of Appeal; Rawlinson v
Ames, Romer J, and Wakeham v McKenzie, in each of which specific
performance was ordered or it was held that jurisdiction to order specific
performance existed; and Eastern Counties Railway Co v Hawkes, House
of Lords; Maddison v Alderson, where specific performance was not
ordered.

Unless there is something particular about contracts for the sale of land as
for instance that neither party is bound to complete immediately, and I am
not aware of any case in which such an argument has been considered,
there was lack of mutual availability of the remedy of specific
performance at the date of the contract in all the cases of the first class
because of the vendor’s initial inability to convey what he had contracted
to sell. At law this does not affect the validity of the contract, for the
vendor’s obligation is to convey a good title at completion. If a purchaser
becomes aware that in some material respect the vendor has not the title
he contracted to sell he may, if he acts promptly, repudiate the contract in
the sense of saying that he will not complete it. This will afford him a
good defence to a claim by the vendor to specific performance, but, if the
vendor can cure the defect in his title before completion becomes due, the
purchaser will, notwithstanding his repudiation, be liable in damages for
breach of contract (Halkett v Earl of Dudley). Yet in none of the cases of
the first category except Joseph v National Magazine Co Ltd was it
suggested that the lack of initial mutuality afforded a defence to the claim
to specific performance; and in the last-mentioned case, although specific
performance was not ordered because the exact terms of the article which
was the subject-matter of the contract had never been agreed between the
parties, Harman J ([1958] 3 All ER 52 at 54, [1959] Ch 14 at 20)
expressly declined to accept an argument based on lack of mutuality at
the date of the contract.

A vendor who cannot convey what he has contracted to sell cannot, of
course, rely on that fact as a defence to a claim by the purchaser for
specific performance. This would be to allow him to rely on his own
fault. Where a purchaser sues for specific performance the court does not
enquire whether the vendor has a good title before making its order. The
usual specific performance order includes a direction of an enquiry
whether the vendor can make a good title in accordance with the contract.
If it is found that he cannot, the purchaser can either insist on
performance to the extent of the vendor’s ability with an appropriate
abatement in the purchase price or be relegated to his remedy in damages,
faute de mieux, not on any ground of lack of mutuality. Lack of mutuality
is only of significance where the defendant from whom specific
performance is sought can show that at whatever may be the relevant date
the plaintiff cannot be, or (if a past date is relevant) could not have been,
ordered to perform his unperformed obligations specifically.

Initial mutuality was lacking in the cases of the second category because
the services to be rendered or the works to be done were such as the court
would not order to be specifically performed; but where, as in Mundy v
Joliffe, Sutherland v Briggs, Kirkland v Bird and Wakeham v McKenzie,
the plaintiff had fully performed or carried out those services or works,
the court ordered specific performance of the other party’s obligations
which were of kinds the specific performance of which the court could
enforce. In Kirkland v Bird Cross J said that where the plaintiff had fully
carried out his obligations it was ‘hard to see how the mutuality principle
came in at all’.

Counsel for the defendant has submitted that the principle of mutuality
has no relevance to the third category of cases, in which he says that the
obligation of one party is conditional on the prior performance of the
other party’s obligation. Such contracts are not truly conditional, and
counsel for the defendant does not, I think, suggest that they are, in the
sense that the bargain is intended to have contractual effect only if a
precedent condition is satisfied, eg a contract to assign and to accept
assignment of a lease if the landlord’s consent can be first obtained. In the
class of case now under consideration there are mutual binding
obligations from the start, but the terms of the contract are such that the
obligation of one party does not fall to be performed until the other party
has performed his obligation or some specified part of it. In O’Regan v
White O’Connor LJ, having stated ([1919] 2 IR 339 at 392) that he
thought the Fry proposition required some modification, said ([1919] 2 IR
339 at 393, 394):

‘Generally speaking, at any rate, it would not be even-handed justice to
compel specific performance against the one party, where the same
remedy would not be available against the other party in respect of
matters to be by him performed under the contract. But has the reason for
this limitation on the powers of the Court any application when the party
seeking specific performance has done everything by him to be done
under the contract? Take a very simple case: A says to B,’If you agree to
go to India and transact such and such a business there, I will, on your
completing your agreement, convey to you my lands of Blackacre.’ B,
who would not have undertaken the business at all but for the tempting
offer of Blackacre, accepts, goes to India, transacts the business he
engages for, and on his return demands Blackacre from A. Shall he not
have it? If not, why not? Is it on the ground of want of mutuality? What
mutuality? The contract itself provided that the obligation on A should
never arise until B had entirely performed his obligation; in other words,
the contract negatived all idea of mutuality at the time A’s obligation to
convey arose. In such a case, in my opinion, the defence as to the want of
mutuality fails. I am confirmed in this view by the circumstances that in
Maddison v Alderson, which to all intents and purposes was a suit for
specific performance, and the contract in which did not in essentials vary
from the illustration I have given, the elaborate discussion and judgments
as to part performance would have been wholly unnecessary if the point
as to mutuality were a good point in a case of the kind.’

The learned judge’s reason for saying that the contract in his illustration
negatived all idea of mutuality clearly was that under such a contract,
although A’s obligation to convey Blackacre was binding as from the
date of the contract, B could not insist on its being performed until he, B,
had done everything that he was required to do by the contract. Under
such a contract there could never be a time when A could say, in response
to a claim by B for specific performance, that an order should not be
made on the ground that B’s obligations were not such as could be
specifically enforced for B could never sue for specific performance until
he had himself performed all his obligations. So an occasion for relying
on a defence of lack of mutuality could never arise, unless A could say
that because he could not at the date of the contract have sued for specific
performance of B’s obligations, he should be excused specific
performance of his own obligation notwithstanding that B had done all
that he was bound to do. O’Cnnor LJ was obviously of opinion that A
could not do so. This passage, in my opinion, demonstrates that his view
was that the relevant time at which to consider mutual availability of the
remedy of specific performance is not the date of the contract but the date
of trial or at any rate of the commencement of the action.

O’Connor LJ went on ([1919] 2 IR 339 at 394):

‘The illustration I have put is one in which the obligation sought to be
enforced arises only and is dependant upon the other party’s completion
of his obligation. There are other cases in which the obligations on both
sides are concurrent - that is to say, they arise immediately on the
execution of the contract. In such cases it may in future be argued that the
complete performance by the plaintiff of an obligation in its nature not
capable of being specifically enforced gives him the right to specific
performance as against the defendant of an obligation in its nature
capable of being specifically enforced. I express no final opinion as to
that; but I can imagine cases where, the plaintiff having, at the time of
action brought, performed all his obligations under the contract, it would
be a hardship to refuse him specific performance merely on the ground
that at the date of the contract the plaintiff’s obligation could not have
been specifically enforced against him.’

He then pointed out, rightly in my opinion, that Hope v Hope, cited in Fry
, is not authority for the Fry proposition, and he said ([1919] 2 IR 339 at
395):

‘I have said enough to show that the doctrine of mutuality as generally
stated needs some modification. On the extent of that modification I give
no opinion save so far as is necessary for this case; but it seems to me that
there is a great deal of force in the observations of the learned writer in
[the] Law Quarterly Review [(1903) 19 LQR 341](cited in Fry [6th Edn
(1921), p 223, n 2]), that the exceptions to the doctrine of mutuality ‘are
all referable to one and the same general principle, viz., that the defence
of want of mutuality will not avail to prevent the Court from exercising
its beneficial jurisdiction where the contract can be properly enforced
without any possible injustice to the defendant, provided a corresponding
equitable remedy’(he might have said ‘if necessary’)’becomes available
against the plaintiff on or before his institution of the action’.’
The case there for decision was one of a contract under which the party
claiming specific performance had to perform, and had performed, his
whole obligation before the other party’s obligation to convey arose. It
was a case in my third category. The Court of Appeal in Ireland (by a
majority) held that it was a proper case for specific performance. That
decision, which is not binding on us but is of persuasive authority, gives
support to the academic criticisms to which I have referred earlier.

Although the point about mutuality seems not to have been taken in the
English authorities I have mentioned, except before Harman, Cross and
Stamp JJ, their trend is clearly inconsistent with the Fry proposition.
Indeed those cases in the second category in which specific performance
was decreed could not have been decided as they were if the Fry
proposition were correct. In my opinion Lord Cranworth LC stated the
true position succinctly and clearly in Blackett v Bates ((1865) 1 Ch App
117 at 124) when he said that ‘the court does not grant specific
performance unless it can give full relief to both parties’. I think it is also
worth recalling what Knight Bruce V-C said in Salisbury v Hatcher
((1842) 2 Y & C Ch Cas 54 at 63, 64):

‘In cases of specific performance the want of mutuality is a consideration
generally material, but it is contrary to principle and authority to say that
perfect mutuality is requisite in order to call a court of equity into action.
There are cases in which plaintiffs have had a decree of specific
performance against defendants, who, when the bill was filed, were not in
a condition to enforce specific performance in their own favour. Where
no legal invalidity affects the contract, the enforcement of it in this Court
is a matter of judicial discretion. In this case it has not been contended
that there is any legal invalidity. Suppose Mrs. Salisbury to have obtained
a legal conveyance of the fee before the time fixed for completion of the
contract, and to have done and tendered all other things requisite to be
done and tendered. If this were done in sufficient time, she would, I
apprehend, have been entitled to recover, at law, on the contract. The
contrary, indeed, has not been argued, and I do not understand that on that
point the counsel for the defendant desire a case for the opinion of a court
of law. If so, this becomes a case for the judicial discretion of the court of
equity to which application for specific performance is made.’
I can discover nothing in principle to recommend the Fry proposition, and
authority seems to me to be strongly against it. Accordingly in my
judgment it should be regarded as wrong. The time at which the mutual
availability of specific performance and its importance must be
considered is, in my opinion, the time of judgment, and the principle to be
applied can I think be stated simply as follows: the court will not compel
a defendant to perform his obligations specifically if it cannot at the same
time ensure that any unperformed obligations of the plaintiff will be
specifically performed, unless, perhaps, damages would be an adequate
remedy to the defendant for any default on the plaintiff’s part. On the
learned judge’s findings of fact in the present case the defendant’s
obligation to grant a sub-lease to the plaintiff was immediate. The case
consequently falls into my second category. The plaintiff remained in
occupation of the maisonette but, as from 10 February 1974, at the
increased rent. The defendant however repudiated the agreement before
the plaintiff had completed the repairs and without having executed a new
sub-lease. She has subsequently completed the agreed repairs at her own
expense.

The present case differs from any decided case to which I have referred in
this respect, that, although all the agreed repairs have been done, they
have not all been done by the plaintiff. In my judgment, however, this is
no bar to the plaintiff’s right to a grant of a sub-lease in accordance with
the contract. That the plaintiff did not do all the work was not due to any
default of his; it was due to the defendant’s unjustified repudiation of the
contract. She was, in my opinion, clearly under an implied obligation not
to prevent the plaintiff from performing his part of the contract, but she
did so. This was an incident of her wrongful repudiation of her obligation
to grant him a sub-lease. The financial consequences of the defendant’s
having carried out at her own expense work which under the contract
should have been done by the plaintiff at his expense could be adjusted
by appropriate accounts, enquiries and adjustments under the court’s
order. If, as Goff LJ has said, this part of the case can be dealt with by
agreement, so much the better. For these reasons I agree that in this case
specific performance should be ordered on the lines proposed by Goff LJ.

I now come to the point on Lord Cairns’s Act. The learned judge, having
held that he could not decree specific performance on the ground of lack
of mutuality, held that it followed that he could not award damages under
Lord Cairns’s Act. As I have reached the contrary conclusion on specific
performance, it is not necessary for the decision of this appeal that I
should consider the position under the Act, but as it has been argued I
will state my opinion on it. The learned judge posed this question:

‘If specific performance should not be decreed because of lack of
mutuality, is the plaintiff nevertheless entitled to damages in lieu of
specific performance?’

It would, I think, have been more accurate to ask whether, if specific
performance should not be decreed because of lack of mutuality, the court
could nevertheless grant damages to the plaintiff in lieu of specific
performance, for it is clear that the Act gives no entitlement to damages:
it confers a discretion on the court to award damages.

Section 2 of the Act provides as follows so far as is relevant to specific
performance:

‘In all cases in which the court of Chancery has jurisdiction to entertain
an application … for the specific performance of any covenant contract or
agreement it shall be lawful for the same court, if it shall think fit, to
award damages to the party injured, either in addition to or in substitution
for such … specific performance and such damages may be assessed in
such manner as the court shall direct.’

Two points are clear. First, the court is invested with the discretion
whenever it has jurisdiction to entertain a claim for specific performance,
but not otherwise. Secondly, the discretion is not confined to cases in
which damages could be recovered at law (Leeds Industrial Co-operative
Society Ltd v Slack, and see Eastwood v Lever and in particular per
Turner LJ (4 De GJ & Sm 114 at 128)). There are, of course, classes of
contracts of which the court acting on accepted principles will not in any
circumstances decree specific performance. Contracts for the sale and
purchase of any commodity readily available on the market at an
ascertainable market price and contracts for personal services are
examples. In the case of any such contract it would, I think, be correct to
say that the court has no jurisdiction to entertain an application for the
specific performance of the contract. Can there be circumstances in which
the court has no such jurisdiction in respect of a contract for a sale and
purchase of land or for the grant of an estate or interest in land? In this
court counsel for the defendant has conceded that, if the court has a
discretion whether to grant or to refuse specific performance, s 2 of Lord
Cairns’s Act applies. So, if I am right on specific performance, the
discretion under the section is available, but the plaintiff does not seek its
exercise. I will return in a moment to the position if the conclusion I have
reached on specific performance is wrong. The learned judge relied on a
statement in Fry , which is in these terms:

‘It has been further held that the doctrine of part performance does not
extend to enable the Court to award damages on a parol contract of which
specific performance could not have been granted.’

That statement is, perhaps, rather misleading. The decision in Lavery v
Pursell ((1888) 39 Ch D 508), which is cited as authority for it, did not
depend on the fact that the contract in that case was an oral agreement on
which damages could not have been recovered at law on account of the
Statute of Frauds; it depended on the fact that specific performance had
become impracticable. The time within which the subject-matter of the
sale, which consisted of materials to be recovered by the demolition of a
house, was to be removed from the site, had run out.

If I am right in my conclusion on the specific performance point it is, in
my judgment, clear that considerations of mutual performance do not
bear on the jurisdiction of the court to entertain a claim to specific
performance but on the exercise of its discretion in granting or
withholding that remedy. If I am wrong in my conclusion on the specific
performance point and the Fry proposition is correct, I remain of the
opinion that considerations of mutuality go to discretion, not to
jurisdiction. If lack of mutuality at the date of the contract were to deprive
the court of jurisdiction to decree specific performance, I find it difficult
to see how subsequent events could confer jurisdiction; and yet it is clear
that a vendor of land who at the date of the contract of sale has a
defective title, but subsequently perfects it before the purchaser has
repudiated the contract, can sue the purchaser for specific performance.
Moreover if want of title at the date of contract deprives the court of
jurisdiction, what need could a purchaser have to repudiate the contract
on discovering the defect? Why should he not rely on the lack of
jurisdiction? In Halkett v Dudley, Parker J described the act of
repudiation as giving rise to an equitable right affecting the equitable
remedy by way of specific performance. This assumes that the remedy
was at least potentially available before the act of repudiation, which
could not be the case if initial lack of mutuality had deprived the court of
jurisdiction to grant the remedy.

In Murrel v Goodyear the plaintiff contracted to sell the fee simple in
land but had a defective title, having only a limited estate in the land. The
fee simple in remainder was outstanding in the heir of a previous owner.
In that state of affairs the plaintiff could not have claimed specific
performance successfully. The defendant purchaser purported to
repudiate the contract and at about the same time bought up the estate of
the heir. The vendor was granted specific performance against the
purchaser with an allowance to the purchaser of the cost of getting in the
estate outstanding in the heir. It was held that the purchaser, having by his
own act cured the defect in the title, could not avail himself of this to
destroy the original contract. It will be observed that the purchaser had by
his transaction with the heir put it out of the power of the vendor to
remedy the defect in his title. I find it easy to explain this decision on the
basis that the court in the exercise of its discretion was achieving justice
between the parties, but I cannot explain it on the basis that the
acquisition by the purchaser of the outstanding estate invested the court
with a jurisdiction which theretofore it had not had.

These considerations lead me to the conclusion that if, contrary to my
own view, the relevant date as at which mutuality must be ascertained is
the date of the contract, lack of mutuality at that date does not result in
the court being without jurisdiction to entertain a claim to specific
performance but it is a matter to be taken into account by the court in
deciding whether to exercise its discretion in favour of granting specific
performance or refusing it.

On this view of the law the court had at all relevant times jurisdiction to
entertain a claim to specific performance of the contract between the
parties, and consequently had at all relevant times a discretion under the
section to award damages in addition to, or in substitution for, specific
performance. Whether, if I am wrong on specific performance, the court
should have made any such award is a question on which I express no
opinion.

Goff LJ in his judgment has dealt with one or two incidental matters
which arose in the course of the appeal to which I have not referred. I
agree with him on those matters, and indeed, I agree with his judgment.

I would allow the appeal and order specific performance with
compensation on the lines indicated by Goff LJ.

SCARMAN LJ:

I have had the advantage of reading the judgments of Goff and Buckley
LJJ; I agree with them and wish to add nothing. I also would allow the
appeal and order specific performance on the terms proposed by them.

				
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