1.
What is specific performance ?
Pettit in Equity & Law Of Trust (4th Ed) describes specific performance as an order of the court directing a
party to a contract to perform his
obligations thereunder according to its terms. [ Yong Kon Fatt & Anor v Hock Seng Contsruction Sdn Bhd & Anor [2000] 5 MLJ 551,HC] An order for specific performance has the effect of ordering a contracting party to do what he has undertaken to do. It is an equitable remedy. It cannot be asked for as of right. It is certainly a discretionary remedy but the discretion cannot be exercised arbitrarily or capriciously. The exercise of the discretion is always governed by fixed rules and principles . [ Caesar Lamare v. Thomas Dixon [1873] 6 LRHL 414, at p. 423)]
2.
Power
of
the
Court
to
order
specific
performance
is
discretionary Power is given to this court in its discretion to order the specific performance of certain contracts by virtue of the Specific Relief Act 1950 (Act 137) [SRA] .
Section 11 SRA lays down the conditions under which the discretionary powers are exercisable . Specific performance may be enforceable :a)
When the act agreed to be done
is in the performance ,wholly or
partly, of a trust : Section 11(1)(a) SRA . 1 | Page
b)
Where there is no standard to ascertain damages caused by the nonperformance of the act agreed to be done : Section 11(1)(b) SRA .
Gan Realty Sdn. Bhd. & Ors. v. Nicholas & Ors. [1969]2 MLJ 110, HC : Defendant refused to sell shares of company. Plaintif claimed for specific performance of the agreement and a permanent injuction. The court held that where the shares of the bank were not available in the open market, the court could therefore order specific performance of an agreement for the sale of the shares. H.A. Securities Sdn. Bhd. v. Ng Kong Yeam [1993] 4 CLJ 433, HC : Defendant specific
refused to sell
shares of company . Plaintif
claimed
for
performance of the agreement . An order for specific
performance was not granted, on the grounds, inter alia, that the shares contracted for were freely available in the open market, and that damages would be an adequate remedy.
c)
When the act agreed to be done is such that pecuniary compensation (money) is no an adequate relief : Section 11(1)(c) SRA . Boo Kok Ngeak & Anor v Lim Kian Hoe & Anor [1998] 6 MLJ 727,HC : Where a valid sale and purchase agreement is sought to be terminated by the vendor in order to demand additional purchase price,the court held that an order for
specific performance is the
correct remedy for the plaintiffs.
3.
Rebuttable Presumption Under Section 11(2) SRA
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The law rebuttably presumes that the breach immovable
property
is
not
remediable
by
of contract for the sale of an
award
of
monetary
compensation If the Defendant fails to raise anything which could rebut the presumption under Section 11(2) SRA that in an application for specific performance of an agreement for the sale and purchase of immovable property, damages in the form of money was not adequate, the court will order specific performance of the agreement. Sekemas Sdn Bhd v Lian Seng Co. Sdb Bhd [1989] 2 MLJ 155, SC : Plaintif agreed to sell land to Defendant, however the Defendant failed to pay the last installment on the agreed date. The Plaintif then claimed for specific performance.The Supreme Court held that the Section 11(2)SRA will prevail in a case involving contracts dealing with sale and purchase of property and an order for specific performance is appropriate in this case.
4.
Comparison between
Section 11(2) SRA and Section 20(1)(a)
SRA In Sekemas Sdn Bhd v Lian Seng Co. Sdb Bhd [1989] 2 MLJ 155(SC) , the Supreme Court held that the equitable principles of specific performance are provided in Section 20 and 21 SRA . Section 20(1)(a) provides that a contract will not be specifically enforced
if compensation
adequately relieve
of the agreement. This section
the non-performance
in money can
however has to be read with some reservation in dealing with contracts for the sale
and purchase of property. Section 11(2)
states that there is a
presumption that in contracts for the sale of immovable property monetary compensation cannot be an adequate remedy;and that Section 20 (1)(a) is of a general application while Section 11(2) deals specifically with contracts for
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the sale of land. Section 11(2), therefore, will prevail in cases involving contracts dealing with sale and purchase of property.
The burden in on the Defendant to rebut the presumption. [ Loh Koon Moy & Anor v Zaibun SA Binti Syed Ahmad [1978] 2 MLJ 29,FC.] Instances where presumption can be said to have been rebutted :
In the case where due to the changes in the area of the land
it is
difficult for the parties to agree on a particular location to be demarcated for sub-division for alienation to the Plaintiff’s pursuant to the agreement between them . [
Ho
Ah
Kim
&
Ors.
V
Paya
Trubong
Estate
Sdn
Bhd
[1987] 1 MLJ 143]
Instances where presumption is not rebutted:
Where there is established a valid contract for the sale of immovable property and a breach there of proved coupled with the fact that there is no allegation or evidence that the conduct of the Plaintiff’s have been such as to disentitle them to the equitable relief they seek, the conditions required for the presumption
under Section 11(2) SRA
would be considered to be present. [ Yong Kon Fatt & Anor v Hock Seng Construction Sdn Bhd & Anor [2000] 5 MLJ 551 ]
Hardship is a defence to a decree to a decree of specific performance and should be pleaded. When there is no such plea in the seller’s defence and there is no evidence of hardship or to rebut the 4 | Page
presumption in Section 11(2) an agreement for sale and purchase of an immovable property will be a proper one to be specifically enforced and may be so enforced. [ M Nithyananathan v Soong Ba Cheek [1998] 2 MLJ 633,CA ]
5.
Specific Performance of part of contract
Section 16 SRA stipulate that the
court shall not direct
the specific
performance of a part of a contract except in cases coming under :a)
Section 13 SRA : Where part unperformed is small, court may direct specific performance of part that can be performed and compensation of unperformed part. Kheng Chwee Lian v. Wong Tak
Thong [1983] 2 MLJ 320,FC :
The Respondent had bought a half share in a piece of land from the appellant and had paid the purchase price. Subsequently the Respondent was induced to sign another agreement under which he was allocated a small portion of the land. The Respondent alleged that he was induced by the false representation of the Appellant to sign the second agreement. He applied to the court for a declaration that he was the owner of one half of the land and an order that the land be subdivided. Portions of the land had however been transferred to the sons of the appellants. The sons were not parties to the action. It was held that either Section 13 or Section 18(3) SRA may properly
be
invoked to the facts of this case. b)
Section 14 SRA : Where part unperformed is large, court will not grant specific performance small part
that may be
further performance
but may direct specific performance for
pereformed
provided plaintif
relinquishes
and right to claim compensation for any
deficiency of performance. 5 | Page
c)
Section 15 SRA : court may grant specific performance
for
independent part of contract
[ City
Investment
Sdn Bhd v. Koperasi Serbaguna Cuepacs
Tanggungan Bhd [1985] 1 MLJ 285, FC. ] 6.
Power to award compensation in certain cases
Compensation can be asked for by a party to a contract and awarded by the court only in cases where specific performance are claimed.
Lee Hoy & Anor v. Chen Chi [1971] 1 MLJ 77 ,FC : This is an appeal by the defendants against the judgment of the High Court at Kuala Lumpur where the plaintiff claimed (a) for the recission of an agreement made between them and the return of $16,300, or alternatively;(b) for the refund of $6,794.20 from the defendants. The Federal Court held that the appeal should be allowed. It would appear that the Court may award compensation under Section 18 only in a case where the plaintiff asks for specific performance, and the Court decides that specific performance ought not to be granted, though there has been a breach of the contract by the defendant, or where though specific performance ought to be granted, but that it is not sufficient to justify the justice of the case, and that some compensation for breach of the contract should also be made, to the plaintiff. Only in those circumstances may the Court award compensation. In the present case, in the first place, the plaintiff did not ask for specific performance, and even if he did, most probably the Court would dismiss it because there was nothing that was still required to be done by the defendants under the contract made between them.
6 | Page
Section 18 SRA provides for a prayer for compensation and can be summarize as follows:a)
Section 18(1) SRA provides the right of the party suing for specific performance to ask for compensation in addition to or in substitution for, specific performance.
b)
Section 18(2) SRA
deals with the power of the court to award
compensation where it considers specific performance claimed ought not to be granted. c)
Section 18(3) SRA contemplates a situation in which both specific performance and compensation,respectively,ought to be granted and awarded because specific performance alone would not be a sufficient remedy.
Ismail Bin Mohd Yunos & Anor v. First Revenue Sdn Bhd [2000]
5
MLJ 42 , HC: In this case, the court invoked Section 18(2) SRA and granted compensation in lieu of specific performance. 7.
Liquidation of damages not a bar to specific performance
Section 19 SRA provides that the existence of the money provision in an agreement does not prevent the court from ordering specific performance under Section 19 of SRA. M Nithyananathan v. Soong Ba Cheek [1998] 2 MLJ 633 , CA. Lim Sinn Oo & Ors. v. Cheah Tjeng Siong [1989] 2 MLj 44, HC
8.
Contracts which may not be specifically enforced
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Section 20 SRA set down eight (8) instances of contract which cannot be specifically enforced. There are as follows:i)
Section 20 (1)(a) SRA stipulates that no specific performance can be granted
if monetary compensation is an adequate relief. This
section have to be read together with s.11(1)(c) & s.11(2) SRA. Sekemas Sdn Bhd v. Lian Seng
Co Sdn Bhd [1989] 2 MLJ
155,SC : Specific performance was granted by the court as Defendant could not rebut presumption under S.11(2) SRA. Ho Ah Kim & Ors. v Paya Trubong Estate Sdn Bhd [1985]1 LNS 13 : Specific performance was not granted by the court as presumption under S.11(2) was rebutted by Defendant. ii)
Section 20 (1)(b) SRA lay down
3 instances
where specific
performance will not be granted : If it involve a contract contains minute/numerous details. If it involve a contract for personal services. Penang Han Chiang Associated Chinese School Assocation v. National Union Of Teachers in Independent Schools, West Malaysia [1988] 1 MLJ 302 ,SC. Dato' Abdullah Bin Ahmad v. Syarikat Permodalan Kebangsaan Bhd & Ors [1990] 3 MLJ 505 ,HC.
If the nature of contract shows specific performance is not a suitable remedy . Mohammad Bin Baee v Pembangunan Farlim Sdn Bhd [1988] 2 MLJ 211,HC: Where the facts of a case show that the court will not be able
to
superintend
the
works
required,
say,to
complete
the
construction of a house,no order for specific performance will be granted bearing in mind Section 20(1)(b) SRA. 8 | Page
ii)
S.20(1)(c) SRA provides that no specific performance can be granted if the terms in the contract is uncertain.
Ismail Bin Mohd Yunos & Anor v First Revenue Sdn Bhd [2000] 5 MLJ 42, HC : Any property in respect of which specific performance of a contract for sale is soughtmust be clearly identifiable. No specific performance
can be ordered when there is uncertainty as to the
identity of the property. iii)
S.20(1)(d)
SRA
provides that
no specific performance can be
iv)
granted if it involve a contract which is in its nature revocable. S.20(1) (e) &(f) SRA provides that no specific performance can be granted if the contract is void or ultra vires.
v)
S.20(1)(g) SRA provides that no specific performance can be granted if the contract involved a term of a
continuos period exceeding 3
years. Marble Terrazzo Industries Sdn Bhd v Anggaran Enterprise Sdn Bhd & Ors [1991] 1 CLJ (Rep) 691 vi)
S.20 (1)(h) SRA provides that
no specific performance can be
granted if the subject matter of the contract ceases to exist. vii)
S.20(1)(2) SRA provides that the court does not enforce specific performance of agreements to refer to arbitration. Yip Chee Seng & Sons Sdn Bhd v Ornaconstruction Corporation Sdn Bhd [1998] 7 MLJ 655.
9.
Discretion of the Court
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A decree of specific performance is a decree issued by the court which contrains a contracting party to do that which he has promised to do. It is a form of relief that is purely equitable in origin and the purpose of such decree is to ensure that justice is done. [Tay Tho Bok & Anor v Segar Oil Palm Estate Sdn Bhd [1996]3 MLJ 181] Section 21 (1)
SRA provides that the jurisdiction to decree specific
performance is discretionary , and the court is not bound to grant any such relief because it is lawful to do so but given with sound and reasonable reason ,guided by judicial principles and capable of correction by a court of appeal. Section 21(2) SRA lay down instances where the court may properly exercise a discretion not to decree specific performance :(i) if plaintif has unfair advantage over defendant although no fraud or misrepresentation by plaintif (ii)
where the performance of the contract would cause undue and
unforeseen hardship on defendant & non performance would not cause hardship on plaintif Sekemas Sdn Bhd v. Lian Seng Co Sdn Bhd [1989] 2 MLJ 155,SC : Defendant raised defence under S.21(2)(b) and argued if SP enforced,he would be bankrupt and suffer undue hardship. The court rejected Defendant's argument and held that financial problems could not be undue hardship. If Defendant undertook expensive project he shoud have foreseen financial problems. Therefore, specific performance was granted.
S.21(3) SRA states that the court is may properly used its discretion to decree specific performance is where the Plaintif has done substantial
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acts or suffered losses in consequence of a contract capable of specific performance.
10.
For Whom contract may be specifically enforced
Section 22 SRA provides that specific performance of a contract may be obtained by :a)
any party to a contract.
b)
the representative in interest unless the contract provides that his interest shall not be assigned - no sp
c)
any beneficiary in contract of settlemet for marriage/ familiy dispute
d)
a new company arises out of amalgamation of
a contract between
public companies. f)
any public company
provided the contract that
has been entered
before its corporation is entered for the purposes of the company and warranted by the terms of the incorporation.
11.
Personal bars to relief
Section 23 SRA provides that specific performance cannot be enforced in favour of a person :a)
if the applicant is someone who could not recover compensation for its breach - not a party to the contract 11 | P a g e
b)
if the applicant
is incapable of performing the contract ie; become
insolvent /bankrupt. c)
if the applicant already sued under breach of contract and obtained his remedy.
d)
if the applicant had notice that a settlement of the subject matter had been made and already in force.
Plaintif need to show that he was ready and willing to perform on the contract. Where the plaintiffs were ready and willing to complete at all times and the purported repudiation of the contract by the vendors had not been accepted by them, they will be entitled to specific performance. [ Caltex Oil (Malaya) Ltd. V Ho Lai Yoek & Anor (1964) MLJ 76 ]
In a suit for specific performance, a party treated and was required by the court to treat the
contract as still subsisting. He has in that
allege,and if the fact was traversed, he was
suit to
required to prove a continuous
readiness and willingness,from the date of the contract to the time of the hearing,to perform
the contract on his part. Failure to make good that
averment brought with it the inevitable dismissal of his suit. [ Ganam d/o Rajamany v Somoo s/o Sinnah [1984]2 MLJ 290 ]
12.
Relief against parties and persons claiming
under them
by
subsequent title
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Section 26(b) SRA : Specific performance of a contract may be enforced against any other person claiming under a party to the contract by a title arising subsequently to the contract,except a transferee for value who has paid his money in good faith and without notice of the original contract. The effect of Section 26(b) SRA is that the burden lies on defendant who asserts that he took the interest without notice of the prior contract. Ong Chat Pang & Anor v Valiappa Chettiar [1971] 1 MLJ 224,FC : The onus is on the defendant to prove that he is a bona fide purchaser . Who is or is no a bona fide purchaser? Where the person to whom the land was transferred was the son of the original landlord and there is no evidence to show that any consideration was paid for the transfer,in such circumstances, the tenant is entitled to an order of specific performance against the new landlord as he is a volunteer and is not protected by Section 26(b) of SRA as the protection afforded under that section is only to a bona fide purchaser for value without notice. If the subsequent transferee has given no consideration and is a mere volunteer, he has no right against the first promisee. [Holee Holdings (M) Sdn Bhd v Chai Him & Ors [1997] 4 MLJ 601,HC]
13.
Against whom contract cannot be specifically enforced
Section 27 SRA provides that specific performance of a contract cannot be enforced against a party in any of the following instances:a) b)
If the consideration received by the defendant is grossly inadequate. If the contract is entered under misrepresentation, concealment, circumvention or unfair practices.
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c)
If the contract is entered under the influence of mistake of fact, misapprehension or surprise.
However, if the contract provides for compensation in case
of mistake,
compensation & specific performance can be granted. [Letchemy Arumugam v N. Annamalay [1982] 2 MLJ 198,HC.]
14.
The effect of dismissing a suit for specific performance
Section 28 provides that the dismissal of a suit for specific performance of a contract shall bar the plaintiff’s right to sue for compensation for breach of contract.
15.
Summary application for specific performance
Order 81 RHC 1980 governs the procedure for summary judgment in an action for specific performance. This order provides a procedure similar to Order 14 RHC 1980 (pari materia with Order 26A SCR 1980) enables a plaintiff, where there is no triable defence to the action, to obtain summary judgment in an action for specific performance of a contract (irrespective of whether it is in writing) for the sale and purchase of land without having to proceed to a full trial.
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There are procedural
differences
between Order 81 RHC 1980 and
Order 14 RHC 1980. The major ones are as follows :-
Order 81 RHC 1980
Order 14 RHC 1980
Plaintiff can apply for summary judgment without awaiting entry of appearance by the Defendant .[ Or 81 r (1)(2) RHC 1980 ]
Statement of claim should have been served on the Defendant and the Defendant must have entered appearance before the Plaintiff can apply for summary judgment . [Or 14 r (1)(1) RHC 1980]
The summons must set out or have attached thereto minutes of judgment sought. [ Or 81 r (2)(2) RHC 1980 ]
-
The application should relate whole action/claim.
to the The application may relate to the whole action/claim or to a particular part of the claim. [Or 14 r (1)(1) RHC 1980]
The affidavit supporting the application should be made by a person who can swear positively to the facts verifying the cause of action. [Or 81 r (2)(2) RHC 1980]
The affidavit supporting the application may be made by the Plaintiff, or the Solicitor for the Plaintif or the Plaintiff’s or solicitor’s clerk or person duly authorized by the Plaintiff. [ Form 18 RHC 1980 & Malayan Banking Bhd v Chua Keng Seng [1991] 3 CLJ 2522]
The Defendant cannot utilize the Or 81 Defendant entitled to file summary procedure for summary judgment of a judgment to be entered against Plaintiff counterclaim in an action under Or 81. for counter claim . [Or 14 r 15 RHC 1980] There is no corresponding provision to Or 14 r 5 RHC.
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16.
Bar to actions against Government No
application may be made
under
Order 81 RHC 1980
in
proceedings against the government . Section 29 (1) Government Proceedings Act provides that in any civil proceedings against the government, the court shall not make an order specific performance. This section has to be read together with
Order 73 r 5 (1) RHC
1980. Nonetheless, by virtue of Order 73 r 5 (2) RHC 1980, an application may be made
by the government under Order 81 RHC for specific
performance.
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