24/9/2022 1 Comment
Written by Phua Syuen Yue and Cheam Yean Quen, final year students at the Faculty of Law, Universiti Malaya.
Edited by Melvin Ng.
Reviewed by Ashley Khor and Ee Jie.
Classically, specific performance, also known as a discretionary equitable remedy, was granted almost automatically in contracts involving lands, as each piece of land is considered unique. However, various common law jurisdictions have altered their positions of this award in such contracts. This article seeks to explore the pros and cons of the traditional English approach, as well as the modified approaches in other common law countries.
In common law, specific performance is a ‘decree by the court that requires the party against whom it is directed, to do what he promised to do under a contract’. Created and developed by the English Court of Chancery, this equitable remedy is a manifestation of the maxim that equity acts in personam — allowing a court of equity to order parties to perform their contractual obligations. Like other equitable remedies, specific performance is also a discretionary remedy unlike damages — which is available as of right.
Unlike civil law, specific performance has traditionally been viewed as a secondary remedy in common law, which is only limited to situations where the primary remedy, i.e. damages, have been found to be inadequate.
II. TRADITIONAL ENGLISH POSITION — A VIRTUALLY IRREBUTTABLE PRESUMPTION
Traditionally, in English law, although the grant of specific performance ultimately lies at the discretion of the courts, such discretion is to be exercised according to settled principles. Among them, it was established that specific performance is available at the court’s discretion if it would ‘do more perfect and complete justice’ than an award of damages. In other words, it is generally not granted in situations where damages are adequate.
Usually, the unique quality of the contract’s subject-matter would render damages an inadequate remedy. Given the classical English approach that ‘the land may have a peculiar and special value’, there can be no substitute to any piece of land. Following this classical approach that has been described as an irrebuttable presumption, it naturally follows that courts allowed for specific performance as a matter of course. In other words, the availability of specific performance in contracts governing transfer of land is automatic due to this presumption. In addition to that, following the principle of mutuality, specific performance is also available to vendors upon breaches made by purchasers, even where damages appear as an appropriate remedy.
Notably, this traditional English position has been adopted by some common law jurisdictions, while others introduced some modifications to it. Hence, the position of various jurisdictions will be discussed and evaluated below, followed by an analysis of whether such assumptions — and the availability of specific performance based on such assumptions — should be reconsidered and supplemented by proposed reforms.
III. MALAYSIAN POSITION — REBUTTABLE PRESUMPTION
In Malaysia, the equitable remedy of specific performance is governed by the Specific Relief Act 1950 (‘SRA’), specifically Chapter II. The Malaysian SRA is modelled closely upon the Indian Specific Relief Act 1877, which in turn is generally a codification of the relevant English common law and rules of equity on specific performance, inter alia, existing at that time.
A. Availability of Specific Performance
As per English law, the availability of specific performance in Malaysia also lies at the discretion of courts. This conferred discretion is not fanciful or arbitrary, for it must be guided by judicial principles and remain capable of correction by an appellate court, as expressly provided in Section 21(1) of the SRA. This was also held in Loo Choo Teng v Cheok Swee Lee and affirmed by other cases.
Section 11(1) of the SRA provides four situations where contracts may be specifically enforced. One of the situations, as provided in Section 11(1)(c), is where the act agreed to be done is such that pecuniary compensation for its non-performance would afford inadequate relief. Section 20(1)(a) is the flip side of Section 11(1)(c), whereby a contract cannot be specifically enforced when the act agreed to be done is such that pecuniary compensation for its non-performance would afford adequate relief. Both provisions reflect the English principle that specific performance will not be awarded where damages would suffice as adequate relief.
B. Contracts Relating to Transfer of Land
Section 11(2) of the Specific Relief Act reads:
Simply put, it provides the rebuttable presumption that pecuniary compensation is an inadequate relief in light of a contractual breach to transfer immovable property — allowing for the remedy of specific performance should be granted.
To elucidate its application, the purchaser in Zaibun Sai bte Syed Ahmad v Loh Koon Moy & Anor applied for specific performance to compel the vendor to perform his contractual obligation to transfer land. In applying the presumption, the court held that liquidation of damages does not displace the presumption. Hence, specific performance was granted.
C. Rebutting the Presumption
As implied by ‘unless and until the contrary is proved’, such a presumption is rebuttable. Malaysia has softened the classical English approach by enacting Section 11(2), which provides for the rebuttable presumption.
However, it would be pertinent to note that up until now, the Malaysian courts have yet to develop a comprehensive guideline as to how the presumption can be rebutted.
In Reignmont Estate Sdn Bhd v Jaya Ikatan Plantations Sdn Bhd (‘Reignmont’), the High Court held that the presumption was rebutted based on a letter that said that the plaintiff had ‘obtained a purchaser to buy the subject property … at a profit’ and that the loss of profit is to be shouldered by the defendant seller. Although the ultimate decision of the High Court was reversed by the Court of Appeal, it did not affirm nor reject the High Court’s reasoning in respect of the presumption. If the High Court’s approach is accepted, then it would be a departure from the classical English approach based on the principles of mutuality, since the court took into account the purchaser’s purpose.
As to whether the presumption can be applied in favour of a vendor, the position is rather unclear. While the courts usually apply the presumption in favour of the purchasers, the approach taken by the court in Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd (‘Sekemas’) appeared more aligned with the English classical rule — where the presumption applies in favour of the vendor as well as under the principle of mutuality. Regrettably, it is unclear as to whether Sekemas would be considered as a general principle or merely one confined to its own set of facts, as it has not been discussed by any subsequent judicial decisions.
To briefly comment on the Malaysian position, the SRA has mitigated the rigidity of the classical approach to a certain extent by introducing a rebuttable presumption.
IV. INTERNATIONAL JURISDICTIONS
Before the case of Semelhago v Paramadevan (‘Semelhago’) was decided, Canadian courts subscribed to the traditional English position that affirmed the uniqueness of land. Despite specific performance being technically discretionary in nature, it has been granted as a matter of course — subject only to rare equitable bars when it comes to land contracts. Hence, under the previous position, it essentially appears as though specific performance is automatically available for sale of land contracts due to the aforementioned assumption.
However, in 1996, the court in Semelhago radically changed the Canadian common law approach to remedies in contracts for the sale of land. The assumption lost its footing when the court decided that specific performance is only available if the plaintiff can prove that the uniqueness of the land. This position has subsequently been followed in other cases.
Canada underwent the most drastic change to the rule, as it places the burden of proving uniqueness on the plaintiff. Along with the abolishment of the rebuttable presumption, specific performance for contractual breaches in sales of land or immovable properties is no longer automatic in Canada.
Singapore generally subscribes to the traditional English approach, where specific performance is awarded if the court finds it just and equitable to do so. To determine this, the court will have regard to whether other remedies, such as damages, are adequate. The court is likely to grant specific performance where the nature of the goods is unique. Specifically, in contracts involving the sale and conveyance of land, the court will usually compel performance as land is considered to have a ‘peculiar and special value’.
Nonetheless, the classical approach was modified by the Singaporean Court of Appeal in the 2011 case of E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appeal.
In this case, the Court of Appeal held, for the first time, that specific performance will not automatically be granted for contracts relating to immovable property. Although the case was eventually decided on other grounds by the Court of Appeal, the High Court departed from the orthodox position and found that Singapore should move towards a more restrictive approach for specific performance in contracts for the sale of land. The High Court doubted that the judges’ pronouncement in Hall v Warren and Adderly v Dixon — where ‘land is deemed to have a special and peculiar value for the purchaser’ and no enquiries need to be posed to the value of the land for damages or the possibility of obtaining a substantially similar piece of land elsewhere — still holds good today. The court supported its reasoning by referring to the Canadian Supreme Court’s decision in Semelhago. It also followed an earlier Singaporean High Court decision, where the court in obiter opined that even if the property was unique, damages may still be considered adequate if the property was purchased not (for) personal enjoyment thereof but for the profit derivable therefrom’.
Although reference was made to Canadian cases, the court did not expressly follow the Canadian approach that places burden on the plaintiff to show the uniqueness of the land. The authors opine that the implication of this case is that the presumption of uniqueness is no longer absolute and courts may consider damages as adequate relief if circumstances warrant it. For example, in this case, it was because of, inter alia, the purchasers’ willingness to forgo its right to acquire the land if given adequate compensation.
Singapore’s latest position seems to have softened the rule in the classical English approach, but not as drastically as the Canadian way. Currently, in Singapore, the rule is not an irrebuttable presumption in effect, and there may be situations where damages may suffice as adequate relief for contracts for transfer or sale of land.
C. New Zealand
In New Zealand, traditionally all land was considered to be unique, and therefore innocent parties in contracts for sale and purchase of land had an almost ‘unfettered election to decide whether to pursue specific performance or damages’.
Notably, the stance has been relaxed in recent years. The court in Landco Albany Ltd v Fu Hao Construction Ltd introduced a distinction between lands purchased for commercial and private purposes. Specific performance would only be available for land purchased for latter, yet not the former. There is a string of precedents which elucidate that specific performance should not be available where the property at issue was acquired purely for economic benefit or financial gain.
V. EVALUATING THE MERITS OF EACH APPROACH
A. Classical Approach — England
The rationale behind this approach to contracts for the sale of land must be seen from a historical perspective, given its strong historical roots. In England, by the 15th century, the jurisdiction to award specific performance was both well-known and well-established, and ‘most petitioners sought the enforcement of agreements to sell land’. At a time where it was relatively difficult to obtain land, specific performance would have been especially important, since there was no open market for real property.
However, the present situation is different. The authors posit that this rationale does not withstand the test of time. In this modern world, land is bought and sold on the open market. Although each parcel of land is unique in the sense that the location of each unit cannot be exactly the same as the other, a piece of property has become — at least to commercial purchasers — just as good as any other. This is especially so since the intention is to sell or rent the property out for a profit. In this regard, two similar properties may be susceptible to the same growth in market value or the production of an equal rental yield. If the purchaser only has an interest in the property due to its financial value, them it is more likely for damages to be awarded rather than specific performance — if the vendor breaches the contract to sell.
Under this old approach however, the combined effect of the irrebuttable presumption that every piece of land is unique and the principle of mutuality would result in a flagrant disregard of this argument. This classical approach has thus been described as over-inclusive.
It is for this reason that many academicians and authors argue for the reconsideration of the assumption that land is inherently and undisputedly unique for the automatic availability of specific performance.
On the flip side, this approach is not without merit. The rule allows for a degree of certainty regarding available remedies, thus resulting in cheaper costs for parties to seek legal advice in this respect. Further, unlike the Canadian approach, it promotes certainty by not placing the burden of mitigating losses on the plaintiff seeking specific performance.
B. Canadian ‘Uniqueness’ Approach
This approach avoids the rigid application of a legal doctrine, where its purpose may not reflect current circumstances or where its rationale has ceased in relevance.
Nonetheless, since the availability of specific performance depends on whether the plaintiff can fulfil their burden of proof, the granting of specific performance is highly unpredictable. This is especially due to the fact that uniqueness is a factual inquiry conducted by the court on a case-to-case basis. A long line of cases have shown that the court, in assessing uniqueness, considered both the subjective characteristics of the buyer and objective characteristics of the property, compared with alternative properties available on the market. Further, there are cases where land purchased for both personal and commercial uses have been found to be unique. However, there is also a large number of such cases where properties have been found to not be unique. Notably, the position is only clear in extreme cases where the land is bought for resale purposes or where an objectively rare property is clearly bought in the pursuit of idiosyncratic personal taste. In less extreme cases, it would be difficult to predict the outcome and for practitioners to advise their clients whether a claim to specific performance would be successful.
Compared to the classical approach, the Canadian ‘uniqueness’ approach would be more costly to apply, for it requires judges to engage in more detailed examinations of cases’ merits — prolonging litigation. In light of the large number of land sale contracts that are legally disputed, this would have a widespread impact in the world of litigation. The uncertainty and the increase in cost would discourage meritorious claims from even being brought at all. Moreover, this might shift significant risk onto innocent purchasers when they bring bona fide claims for specific performance.
C. Distinguishing Personal Use from Commercial Use — Singapore and New Zealand
In New Zealand and arguably in Singapore, the availability of specific performance is somewhat contingent on whether the property being purchased is for personal or commercial use.
The advantage of this approach pertains to the concept of consumer surplus. An individual buying a property for his personal enjoyment might have idiosyncratic preferences, such that he would value a particular property much more than its actual market value. Given that damages are unlikely adequate to compensate losses in such situations, the grant of specific performance would be justified in such cases, as opposed to properties bought for commercial use.
That said, difficulties may arise following this approach. There are situations in commercial settings where the uniqueness of a property can cause damages to be inadequate as a relief, despite the purchaser’s intention to rake profit from the property in question. Where a piece of land is unique and the purchaser plans to use it as part of their business operations, there is a real risk of courts underestimating the derivable profit from such property. It may also be difficult for the purchaser to prove losses related to potential profits. Where there are no substitutes readily available, if the remedy is limited to damages, an innocent purchaser will be prejudiced in their potential loss of future profits from not being able to proceed with original business plans.
One may argue that the upside to this approach would be an improvement in certainty regarding a purchaser’s obligations as compared to the Canadian approach. The achievement of this certainty, however, still depends on a largely arbitrary distinction.
D. Rebuttable Presumption — Malaysia
It is submitted that the notion that land should be presumed unique is intuitively appealing. Perhaps due to this intuition, the classical approach has remained undisturbed in England, or even enforced in Canada, Singapore, and New Zealand for so long before it was modified.
The Malaysian approach is indeed up to scratch in the sense that it reconciles both the fairness of the Canadian unique approach and the efficiency of the classical English approach. By becoming the middle ground, it enjoys the advantages of both approaches without having the concern over too extreme or drastic effects. The over-inclusiveness of the classical approach would be reduced without causing too much uncertainty, as per the happenings in Canada. It is submitted that the Malaysian approach is most efficient among the other aforementioned examples. The reason being is that it creates the most credible balance between the competing considerations of limiting the remedy of specific performance and also the desire to provide certainty.
Turning to the applicability of the presumption in favour of the vendor, it is further submitted that the Sekemas decision— where the presumption can be applied in favour of a vendor — should be confined to its facts. The presumption should only be applied in favour of a purchaser, instead of a vendor. As pointed out by The Right Honourable Lord Andrew Burrows, the purchaser should, prima facie, be entitled to what they have contracted for, while the vendor’s purely monetary interest makes damages a perfectly adequate relief.
VI. SHOULD AUTOMATIC SPECIFIC PERFORMANCE BE RECONSIDERED?
The presumption that each piece of land is unique is still very much in force in England. In light of the abovementioned reasons, the authors submit that the presumption of the classical English approach — which renders the grant of specific performance almost automatic — should be reconsidered. However, this would be less of a problem in Malaysia as the rigidity of the presumption rule has been mitigated by Section 11(2) of the SRA, whereby the presumption remains rebuttable.
Based on the above analysis, it is suggested that Malaysia should retain the rebuttable presumption to provide a more credible balance between relevant considerations as explained above.
The authors further posited that this rebuttable presumption should not be applied in favour of the vendor in a contract for the sale of land, as the vendor’s interest is purely monetary. Thus, it is proposed that the decision in Sekemas should be confined to its peculiar facts, as the Supreme Court could have been influenced by other considerations. The ruling should not be taken as laying down a general principle that the presumption in Section 11(2) can be applied in favour of vendors.
In addition, a more comprehensive set of guidelines pertaining to the way the presumption can be rebutted should be developed by courts. Under this proposed guideline, the presumption can only be rebutted in several restricted categories of cases:
With clearer guidelines as such, a purchaser seeking legal advice would be able to assess, with a fair amount of certainty, whether specific performance would be granted. It would also save them some costs for less evidence and arguments would be required, since open-ended inquiries into ‘uniqueness’ is not needed, unlike the Canadian approach. Moreover, due to the narrow categories, a significant percentage of cases will fall beyond the categories set out in the guidelines. Such is due to the fact that the proposed guidelines do not require an open-ended inquiry into uniqueness, which can be overinclusive sometimes. Evidently, the categories set out in the guidelines posited above merely target the narrow range of cases where specific performance is clearly inappropriate. The proposed guidelines would also clear up the confusion caused by Reignmont and Sekemas on how the presumption can be rebutted.
Lastly, the retention of this rebuttable presumption would remove the hassle of amending or repealing the relevant provisions in the SRA via the cumbersome legislative process in Parliament, as the proposed reforms may be done judicially.
For the above-mentioned reasons, the authors opine that the presumption that every piece of land is inherently and undisputedly unique — thus warranting an automatic availability of specific performance — should be reconsidered in England. However, Malaysia does not subscribe to the English classical approach, as it was modified to the rebuttable presumption under Section 11(2) of the SRA. Following that, it can be said that the availability of specific performance for land contracts is not as automatic as the classical approach. The authors lastly posited for the abovementioned reforms to be adopted to resolve the longstanding problems in the Malaysian approach.
Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with.
 Cheong, M.F. & Lee, Y. H. (2016). Civil Remedies. (2nd ed.). Selangor, Malaysia: Thomson Reuters Malaysia Sdn Bhd, 209.
 See footnote 1 above.
 Yeo, H. Y. (1998). Remedy of Specific Performance – Supervision and Changing Trends. Singapore Journal of Legal Studies. 150, 150.
 Co-operative Insurance Society v Argyll Stores (Holdings) Ltd  AC 1, 11.
 Beswick v Beswick  2 All ER 1197, 1214; see footnote 4 above.
 Turner, C. (2014). Unlocking Contract Law. (4th ed.). Oxford, UK: Routledge, 406; Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd  AC 1 (HL) 9.
 Adderley v Dixon (1824) 57 ER 239, 240; Lawson, F.H. (1980). Remedies of English Law. London, UK: Butterworths.
 Lavoie, M. (2012). Canada’s ‘Unique’ Approach to Specific Performance in Contracts for the Sale of Land: Some Theoretical and Practical Insights. Oxford University Commonwealth Law Journal, 12(2), 207, 208. DOI: 10.5235/147293188.8.131.52
 Davies, P. S. (2018). Being Specific About Specific Performance. Conveyancer and Property Lawyer, 2018(4), 324.
 Beale, H. G. (Ed.). (2008). Chitty on Contracts. (30th ed.). UK: Thomson Reuters (Legal) Limited, [27-007]. See also Flight v Bolland (1828) 4 Russ 298.
 Specific Relief Act 1950 (Act 137) (Malaysia).
 See footnote 11 above, s 11-29.
 Specific Relief Act 1877 (India) Act No. 1 of 1877, 1 May 2022.
 See footnote 1 above.
 See footnote 11 above, s 21(1).
 Loo Choo Teng v Geok Swee Lee & Ors and Another Appeal  2 MLJ 257, 264.
 Lim Kim Swee v Tan Meng San  1 MLJ 262; Ching Yik Development Sdn Bhd v Setapak Heights Development Sdn Bhd 3 MLJ; NGV Tech Sdn Bhd (Receiver and Manager Appointed) (In Liquidation) v Ramsstech Ltd  MLJU 671.
 See footnote 11 above, s 11(1).
 See footnote 11 above, s 11(1)(c).
 See footnote 11 above, s 11(2).
 Zaibun Sai bte Syed Ahmad v Loh Koon Moy & Anor  2 MLJ 92.
 See footnote 1 above, 218.
 Reignmont Estate Sdn Bhd v Jaya Ikatan Plantations Sdn Bhd  9 MLJ 1 (HC).
 Reignmont Estate Sdn Bhd v Jaya Ikatan Plantations Sdn Bhd  MLJU 1630 (CA).
 Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd  2 MLJ 155.
 Semelhago v Paramadevan  2 SCR 415.
 See footnote 8 above, 207.
 See footnote 27 above.
 See footnote 26 above.
 Konjevic v Horat Properties Ltd  OJ No. 2869,  (Ontario Court of Appeal); Ali v 656527 B.C. Ltd  B.C.J. No. 1248,  (British Columbia Court of Appeal); 1244034 Alberta Ltd v Walton International Group Inc  A.J. No. 1260, - (Alberta Court of Appeal); Raymond v Raymond Estate  S.J. No. 313,  (Saskatchewan Court of Appeal).
 Lee Chee Wei v Tan Hor Peow Victor and Others and Another Appeal  3 SLR 537, -.
 See footnote 31 above.
 Phang, A. & Goh, Y.H. (2012). The Law of Contract in Singapore. Singapore: Kluwer Law, para 23.011.
 The Asia Star  2 SLR 1154, .
 EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd and others and another appeal  SGCA 50.
 EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd and another (Orion Oil Ltd and another, interveners)  SGHC 270.
 Hall v Warren [1803-13] All ER Rep 57.
 Adderly v Dixon (1824) 57 ER 239.
 See footnote 36 above.
 See footnote 26 above.
 Good Property Land Development Pte Ltd v Societe Generale  1 SLR 229, 244.
 Mills, S. (2006). Specific Performance: Sale of Land. New Zealand Law Journal, 196, 196-197.
 Landco Albany Ltd v Fu Hao Construction Ltd (2005) 6 NZCPR 813 (Court of Appeal).
 UI International Pty Ltd v Interworks Architects Pty Ltd  QCA 402,  (Queensland Supreme Court). As Keane JA opined: ‘the damage to the claimant's interest in the performance of his or her contract with the builder cannot reasonably be measured by the cost of repair which cannot occur’; Amos v Star Catchers Ltd (2012) 13 NZCPR 559, , ; Pacific Homes Ltd (In Receivership) v Consolidated Joineries Ltd  2 NZLR 652, 656.
 Davies, P.S. (2018). Being Specific About Specific Performance. Conveyancer and Property Lawyer, 4, 324.
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 See footnote 45 above.
 M Chen-Wishart, ‘Specific Performance and Change of Mind’ in G Virgo and S Worthington (eds) Commercial Remedies: Resolving Controversies (CUP, 2017) 122: “English law’s reservation of a special position for land derives from socio-political circumstances that have little relevance today”. J McGhee (ed) Snell’s Equity 33rd edn (Sweet & Maxwell, 2015) 17-008: ‘However, it is unrealistic today to regard land as inevitably a unique item for which damages are an inadequate remedy’.
 See footnote 45 above.
 See footnote 8 above, 209.
 See footnote 8 above, 210.
 Raymond v Raymond Estate  S.J. No. 313,  (Saskatchewan Court of Appeal); 1534818 Alberta Ltd v Tissot Management Ltd.  A.J. No. 152,  (Alberta Court of Queen’s Bench); McDonald v McDonald  M.J. No. 330, - (Manitoba Court of Queen’s Bench); Berryrnan, J. (2002). Recent Developments in the Law of Equitable Remedies: What Canada Can Do for You. Victoria University of Wellington Law Review, 33(1), 51, 81.
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 See footnote 26 above, ; Triden Enterprises Ltd. v Ramsay  B.C.J. No. 294 (British Columbia Supreme Court); Li v Au B.C.J. No. 939 (British Columbia Supreme Court); Alberta Ltd; Serebrennikov v Sawyer’s Landing Investments Ltd I Ltd. B.C.J. No. 1798 (British Columbia Supreme Court); 2068895 Ontario Inc v Snyder  O.J. No. 3987 (Ontario Superior Court of Justice).
 Perell, P. M. (2010-2011). Common Law Damages, Specific Performance and Equitable Compensation in an Abortive Contract for the Sale of Land: A Synopsis. 37; Wells, C. (2011-2012). The Limited Availability of Specific Performance of Agreements for the Sale of Land since Semelhago vParamadevan. The Advocates’ Quarterly. 37, 171.
 See footnote 8 above, 211.
 See footnote 8 above, 222.
 See footnote 57 above.
 See footnote 8 above, 223.
 See footnote 8 above, 225.
 See footnote 25 above.
 Burrows, A. (2005). Remedies for Torts and Breach of Contract. (3rd ed.). Oxford UK: Oxford University Press, 459.
 See footnote 1 above, 221.
 See footnote 22 above.