(b) as to the other discretionary matters that bear on the justice or injustice of granting the relief sought immediately.
22 I refer under (b) to the extent of hardship that would be caused by denying specific performance (or an injunction where appropriate) and the gravity of damage or consequence that would be caused from that denial or indeed its grant; also to other relevant matters encompassed within the balance of convenience. As Spry (supra at 394) puts it:
"But the more fundamental enquiry relates to the extent of hardship that would be caused by leaving the plaintiff to resort to damages or to renew his application subsequently if the threat of injury to him should become greater, and this consideration in turn depends not merely on the precise probability that the acts to be enjoined will take place, but also on the gravity of those acts and on the degree of damage or inconvenience that they would cause if they took place. Further, as will be seen, account must be taken of such considerations as the degree of any hardship that might be caused the defendant if an injunction were granted, any inequitable conduct on the part of the plaintiff and other discretionary matters."
23 However that analysis is performed, where as here the likelihood of breach is remote, it is clear that any hardship to the respondent from a denial of a decree of specific performance would be minimal. Moreover, hardship from imposing a decree of specific performance would be exacerbated if costs, as here, were awarded against the party suffering the decree. There is also hardship from becoming potentially liable to contempt of court proceedings in the event of breach, even if the court may be reluctant in practice to exercise that power. I should interpolate here that Bass v Clivley, discussed later with other authorities, is cited as authority for the proposition in Snell's Equity (1990) (at 586) that "a plaintiff who needlessly sues for specific performance of an unbroken contract may obtain his decree but may have to pay the costs", with Marks v Lilley cited by way of contrast.
24 I would respectfully observe that the reasons of the primary judge do not appear, at least explicitly, to take these discretionary matters into account both in awarding the decree and then in ordering costs against the appellant. This appears so, though they were clearly matters properly taken into account by Brereton J in his Honour's earlier decision, Urban Traders Pty Ltd v Proceris Pty Ltd and Others (2005) 12 BPR 23,319, [2005] NSWSC 1192 at [64], discussed later. There Brereton J correctly stated the issue of principle in these terms:
"[64] Accordingly, the issue is whether there were, when Urban instituted these proceedings, such circumstances as would justify the intervention of a court of equity having regard to risk of Proceris not performing, and the balance of convenience and hardship, and if so what relief should now be granted."
25 I turn now to consider cases relied upon by the primary judge for the broader proposition that the mere existence of a contract that gives the plaintiff an equitable interest in the subject matter is sufficient to satisfy equity's intervention, here by specific performance. As I make clear, I do not consider that these authorities go so far, though to the extent Bass v Clivley may be understood as doing so, I consider that it should not be followed.
26 Bass v Clivley was relied upon below and by the respondent on appeal, as authority for the proposition that (in the words of the primary judge at [53]), "a plaintiff may be granted a decree [of specific performance], even where no reasonable apprehension of a breach is established."
27 In Bass v Clivley, the plaintiff had sued the defendant, seeking specific performance of a loan contract. The plaintiff had agreed to lend to the defendant a sum of ₤3,000 over a period of five years, at lawful interest, with security for the loan being mortgages over five leasehold homes. At the time of the proceedings, the plaintiff had advanced ₤600 to the defendant and the defendant's agent had deposited the lease as security. Before the plaintiff would advance the balance of the ₤3,000, however, he insisted on inspecting the lessor's title to the mortgaged properties. The defendant refused to show title, claiming that such a requirement had not formed part of the loan contract.
28 The bill issued by the plaintiff sought a decree of specific performance of the contract by the defendant, namely the showing of the lessor's title, with the plaintiff being ready and willing to advance the balance of the principal upon that being done. Alternatively, the plaintiff sought either an account and repayment of the monies owing to him (both principal and interest) on the ₤600; or sale of the leasehold premises, with proceeds to be applied to discharge of the amount owing on the ₤600; or else the procuring of a transfer of the leasehold premises to the plaintiff by way of mortgage for the amount already advanced.
29 It was successfully contended by the defendant that there had been no term of the contract entitling the plaintiff to inspect the lessor's title to the plaintiff. That in my judgement should have been the end of the plaintiff's case for specific performance, given that there was neither breach nor any threat of non-performance by the defendant borrower of any of her legal obligations or such as to give rise to its reasonable apprehension. Instead, however, the Court placed before the plaintiff this choice; either to accept specific performance of the contract in the form contended for and proved by the defendant, or to suffer dismissal of the bill with costs. The plaintiff naturally enough elected for specific performance of the contract as proved, with the defendant then being awarded costs on the basis that she had at all times been ready and willing to perform the contract in that form. The holding of Sir John Leach MR as to costs was as follows (at 34-5):
"Then the Defendant must have her costs. The Plaintiff does not obtain the decree he asks, that he should inspect the lessor's title. The Court is of opinion, that that was not part of the agreement; and if a Plaintiff insists upon what he is not entitled to, whilst the Defendant has been ready to perform the agreement really entered into, the Defendant is entitled to costs. It is a frequent practice to give costs against a Plaintiff who has a decree - the real question being, by whose fault were the costs incurred."
30 To the extent that Bass v Clivley tends to establish the proposition contended for by the primary judge and the respondent, it is necessary to evaluate its correctness in light its the confined application in later authorities largely to questions of cost. There are also to be taken into account the discretionary factors attending the granting of specific performance. In my view subsequent case law does not support the approach in Bass v Clivley, when the facts of those cases are examined.
31 Turner v Bladin (1951) 82 CLR 463 clearly demonstrates this. The High Court was considering a contract for sale of a quarry business by the respondents (quarry masters) to the appellant. The respondents had claimed that the purchase price had been ₤7,500, the balance to be paid in a series of instalments over five years from the date of payment of an initial deposit of ₤2,100. By the time of trial, the appellant had paid only the ₤2,100 sum, maintaining that that had been the only sum payable under the contract. The High Court determined to the contrary that the ₤7,500 figure had in fact been the amount payable, and found that all other things requiring to be performed under the contract had in fact been carried out.
32 The issue was thus whether a decree of specific performance was available in circumstances where the only thing left to be completed under the contract was the payment of a particular sum of money. The High Court (in a joint judgment of Williams, Fullagar and Kitto JJ), in finding that a decree of specific performance was available where "the claim is merely to recover a sum of money" (at 473), enunciated this general principle in relation to the granting of such decrees (at 472):
"In our opinion proceedings for the specific performance of a contract which is of such a kind that it can be specifically enforced can be commenced as soon as one party threatens to refuse to perform the contract or any part thereof or actually refuses to perform any promise for which the time of performance has arrived. The court can then make a decree that the contract ought to be specifically performed and carried into execution, and can so mould its decree and order such inquiries, accounts and other proceedings under the decree as may be necessary to carry into effect all the promises of both parties whether they are presently performable or are only performable in the future." [emphasis added]
33 This extract makes clear that the trigger for the commencement of a specific performance suit will be some threat of refusal, express or at least implied, or some actual refusal, on the part of a contracting party to perform the contract in whole or part. This is indeed what had occurred in Turner v Bladin (but not here), with the appellant having declined in clear terms to pay the balance of the ₤7,500 claimed by the respondents.
34 Marks v Lilley [1959] 2 All ER 647, was another case relied upon by the primary judge and the respondent on appeal. It was said to support the principle that "the mere existence of a contract that gives the plaintiff an equitable interest in the subject matter is sufficient to justify intervention [by decree of specific performance]" (Judgment at [56]). The facts were these.
35 The plaintiff had agreed in writing to purchase the defendant's house, with what were termed National Conditions of Sale incorporated into the contract. Pursuant to those conditions, the date for completion of the contract was to be 7 January 1959. Completion did not take place on that stipulated date, but the plaintiff did not take steps to issue the defendant with a notice making time of the essence.
36 On 9 February 1959, the plaintiff issued a writ seeking a decree of specific performance of the contract. One week later, the plaintiff was given possession of the house, with completion eventually occurring on 18 February 1959. The issue at trial thus became one of costs only, with Vaisey J determining the issue in favour of the plaintiff. The entitlement of the plaintiff as at 9 February 1959 to issue the writ for specific performance, even absent any notice making time of the essence, formed the basis of costs being awarded to the plaintiff, notwithstanding that the defendant had, though after the agreed date, brought the contract to completion.
37 Vaisey J made these observations (at 648):
"The date which was indicated for the completion of the purchase under the general conditions, ie, the first working day after the expiration of a certain period, was 7 January 1959. The purchase was not completed on that day, and a considerable amount of correspondence took place between the solicitors for the parties. The plaintiff pressed for an early completion, and the defendant said that he was quite willing to complete as soon as he could, but that he was not at present able to do so. One month after that date, ie, after 7 January 1959, the plaintiff issued the writ in this action, on 9 February 1959. I think in a sense he acted rather, precipitately, but the question is: Was he entitled to issue this writ? There had been no default in the strict sense. There had been no firm date for completion of the essence of the contract, and I do not think that there was any doubt that, subject to clearing away the difficulties which were besetting the defendant, the contract would have been completed within a reasonable time . In fact, what happened was that seven days after the issue of the writ, possession of the property was given to the plaintiff on 16 February 1959, and the contract was in fact completed on 18 February 1959." [emphasis added]
38 Marks v Lilley should be understood as recognising that there can still be an implied threat or risk of non-performance from the fact that the stipulated date has passed without actual performance. That threat or risk is not removed, merely because time was not made of the essence. Hence, subject to weighing up the degree of that risk in the particular circumstances, and taking into account balance of convenience factors, specific performance may still lie, though time has not been made of the essence. In effect, equity intervenes with a decree quia timet; see discussion in Meagher, Heydon and Leeming, "Equity Doctrines & Remedies" 2002 at 20-025.
39 Hasham v Zenab [1960] AC 316 again illustrates the awarding of a decree of specific performance quia timet. There the Privy Council considered a contract for sale by the defendant to the plaintiff of the defendant's two-acre property in Nairobi. The contract stipulated payment of a deposit immediately and of the balance upon presentation of title documents. These were to be executed by the parties within six months of the making of the contract. The contract was signed by the defendant on 19 February 1954, but was repudiated by her within minutes. This was on the basis that she had only agreed to the sale of half an acre of her property, rather than the entire two acres. Completion was due by 19 August 1954, but on 2 July 1954 the plaintiff commenced proceedings seeking specific performance. The defendant argued that the application was premature and would have been warranted only in the event of a failure to perform by the completion date, notwithstanding the clear indications that the defendant did not intend to perform the contract.
40 Lord Tucker delivered the advice of the Judicial Committee. On the question of specific performance, their Lordships considered that the defendant had fallaciously equated the right to sue for specific performance with a cause of action at law (at 330):
"Their Lordships are of opinion that the fallacy of the [defendant's] submission consists in equating the right to sue for specific performance with a cause of action at law. In equity all that is required is to show circumstances which will justify the intervention by a court of equity. The purchaser has an equitable interest in the land and could get an injunction to prevent the vendor disposing of the property ." [emphasis added]
41 The emboldened sentences were employed by the primary judge as support for the contention that "the existence of an equitable interest in the subject matter of the contract is sufficient to attract intervention" (Judgment at [57]). But, again, the statements of the Judicial Committee must be taken in their context. The defendant had engaged in repudiatory conduct of the clearest order; the contract had been torn up within minutes of the defendant's signing it. Those circumstances must surely be taken to be part of what in that case "justified the intervention by a court of equity".
42 The sum effect of their Lordships' comments, in light of the factual context, should be taken as enabling that even prior to the stipulated date for completion under a contract for sale of land, an equitable right will have accrued in the purchaser's favour such that, where that right is threatened by the conduct of the vendor, equity will intervene to allow a declaratory order of the existence of a right to specific performance of the contract (see at 329-330). Should the contract not be performed by the vendor at the required time, the court will then make "consequential directions for performance" (at 330). Their Lordships' discussion of various authorities (at 330) merely demonstrates that equity will intervene in circumstances where the law would not, and that those circumstances ought not to be thought fully expressed by the concept of "anticipatory breach" alone. The circumstances obtaining in Hasham were similar to those contemplated by the sort of "[threat] to refuse to perform" considered sufficient in Turner v Bladin.
43 In his Honour's earlier judgment of Urban Traders v Proceris (supra), Brereton J considered whether specific performance was available before a breach of contract occurred. In that case, the plaintiff Urban Traders Pty Ltd co-owned land with the first defendant Proceris Pty Ltd, as joint venturers of a development. The plaintiff was under financial pressure and was required to sell the land to repay bank bills secured on the land. The first defendant was less enthusiastic about a sale. The plaintiff and first defendant came to an agreement to take various steps to cause the land to be sold by public auction as soon as practicable. The plaintiff claimed that the defendants had obstructed the performance of that agreement and the progress of the sale, and brought proceedings for specific performance.
44 In paragraphs [55] to [60], Brereton J discussed the tests espoused in Marks v Lilley [1959] 2 All ER 647; [1959] 1 WLR 749; Hasham v Zenab [1960] AC 316; [1960] 2 WLR 374 and Turner v Bladin (1951) 82 CLR 463; 25 ALJR 35.
45 Following this discussion of relevant legal authority, Brereton J asked, "Were there circumstances justifying equitable intervention?" His Honour then considered the circumstances in which equity should intervene to provide relief by way of specific performance. His Honour stated, at [64]:
"Accordingly, the issue is whether there were, when Urban instituted these proceedings, such circumstances as would justify the intervention of a court of equity having regard to risk of Proceris not performing, and the balance of convenience and hardship, and if so what relief should now be granted".
46 Brereton J proceeded to consider more closely the behaviour of the defendant. At [66], His Honour observed:
"However, there are some aspects of his conduct and evidence which are not so easily explained, and which tend to support a conclusion that Mr Roberts is not facilitating a sale, such as to found a threat, implicit if not explicit, of non-performance of his contractual obligations".
47 This test as correctly enunciated by Brereton J at [64] and applied in [66] in Urban Traders v Proceris, requires a court to consider the likelihood or degree of risk of non-performance before granting specific performance. Also to be considered is the discretionary factor of hardship and balance of convenience. Had Brereton J applied this test in the present case, I consider that his Honour's finding at [67] that the evidence "overwhelmingly favours" the appellant defendant, would have resulted in the correct conclusion that the circumstances of this case did not justify the intervention of equity.