Tutorial 11 (Specific Performance)
1. Crackpot Sdn Bhd is a well-established company that manufactures and trades in
various kinds of cooking pots. It has had a long and prosperous business
relationship with Halfbaked Clay Suppliers Sdn Bhd and Copperhead Metal
Smelters Sdn Bhd.
Last year, Halfbaked Clay Suppliers Sdn Bhd experienced an overhaul in
management. Crackpot Sdn Bhd has had a difficult time with Mr. Tan Ah Red, the
new CEO of Halfbaked Clay Suppliers Sdn Bhd, as he insists on altering the 6 year
term contract signed by the companies in 2014. He has threatened to terminate the
supply of clay to Crackpot Sdn Bhd several times.
2 months ago, relations between the CEOs of both companies broke down.
Halfbaked Clay Suppliers Sdn Bhd has not delivered any clay since October 2016
stating that clay quarries in Malacca, Negeri Sembilan and Johore have been
exhausted.
Crackpot Sdn Bhd has come to you for advice as to whether they may force
Halfbaked Clay Suppliers Sdn Bhd to fulfill their obligation. Advise.
Discretionary remedy
Grant of specific performance is on the discretion of court rather than a matter of right
The court grant it upon sound and reasonable reasoning rather than upon mere pleasure
There are exceptions where clear cut statutory provision deprives the court discretion
S21 of SRA - The jurisdiction to decree specific performance is discretionary, and the
court is not bound to grant any such relief merely because it is lawful to do so; but the
discretion of the judge is not arbitrary but sound and reasonable, guided by
judicial
principles and capable of correction by a court of appeal.
Ganam d/o Rajamany v Somoo s/o Sinniah
oIt was held that the court grant specific performance on discretion and it takes into
account the conduct and interest of the parties.
Performance of an act
S. 11(1)(a) provides that the specific performance may be enforced when the act is
theperformance of trust
Illustration: A holds certain stock in trust for B. A wrongfully disposes of the stock.
Thelaw creates an obligation on A to restore the same quantity of stock to B, and B
mayenforce specific performance of this obligation.
Wood v Rowcliffeospecific delivery of a chattel has been ordered against the person in
a fiduciaryrelationship even if the applicant may receive satisfactory monetary
compensation
Defence of Hardship:
General rule on defence of hardship
S.21(2)(b) – Court may refuse to grant SP to plaintiff if the granting would give
hardship to D which he did not foresee.
o Hardship is not a strong defence
o Financial hardship alone is not sufficient for a successful defence
o Entering into a bad bargain is not hardship
Adams v Weare
It was admitted that the inadequacy existed at the time of the contract and
was known to both parties. The court would not permit the purchaser to be
off from his contract afterwards, because he did not succeed in his
speculation.
Venkatachalam RM Chettiar v NKR Arunasalam Chettiar
The court held that a bargain that turned out worse than expected cannot
constitute hardship.
o Hardship amounting to injustice and unreasonable consequences is a sound
defence
Suttor v Gundowda Pty Ltd
The issue is whether Suttor can rely on clause 12 which gives right to
terminate contract to terminate and refuse performance. The court held that
clause 12 cannot be relied because, despite the wording of the clause, it
does not put the contract to an end but merely give rise to right to
terminate and Suttor affirmed the contract by behaviour.
Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd
o The A had failed to pay the last instalment even it was given time to pay and the
amount even reduced. When this was not done the R sued and applied for SP. The
SC noted that SP was discretionary remedy and made reference to S.11(2), 20(1)
(a) and 21(2)(b) and dismissed the appeal.
o It was held that the key is to balance the interest of both parties and it should be
decided according to the fact of the case
Delay may defeat equity
oEads v Williams3 ½ years delay defeated a claim for SP. A claimant who brings
action afterunreasonable delay may well be unsuccessful
1. Whether Crackpot Sdn Bhd may claim for specific performance of the contract with
Halfbaked Clay Suppliers Sdn Bhd?
2. Whether Halfbaked Clay Suppliers Sdn Bhd may successfully raise the defence of hardship?
Law:
• Definition of Specific Performance.
Discretionary remedy – S.21, Ganam d/o Rajamany v Somoo s/o Sinniah; Oxford v Provana;
Lamare v Dixon
• Exercise of discretion to withhold SP mainly in cases involving delay, hardship, mistake or
conduct of the plaintiff – S.21(2)(a) & (b); Wong Kup Sing v Jeram Rubber Estate Ltd (1969) 1
MLJ 24; Yeo Long Seng v Lucky Park (Pte) Ltd [1971] 1 MLJ 20
• General rules regarding the defence of hardship:
o Hardship is not a strong defence;
o Financial hardship alone is not sufficient for a successful defence;
o Entering into a bad bargain is not hardship – Adams v Weare; Venkatachalam RM Chettiar v
NKR Arunasalam Chettiar;
o Hardship amounting to injustice and unreasonable consequences is a sound defence – Suttor v
Gundowda Pty Ltd; Tamplin v James; Hope v Walter; Patel v Ali.
Sekemas Sdn Bhd v Lian Seng Co Sdn Bhd - key is to balance the interests of both parties. Each
case must be decided on its particular facts.
• Haji Osman b Abu Bakar v Saiyed Noor b Saiyed Mohamed
• Johnson v Agnew – if an order for specific relief became impossible to enforce, the
defendant had the right to ask the court to discharge the order and terminate the contract.
Nicholas v Ingram – in an action for SP of a contract for the sale of land, hardship on the part of
the defendant may operate as a defence. But the hardship must have existed at the time of the
contract.
• He who comes into equity must come with clean hands.
• Co-Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd – conduct of the
plaintiff is also key in determining the award of SP. Gross breach of personal faith and the use of
threat of non-performance of contract as blackmail will result in failure in an application for SP.
• Fraud is a strong ground in denying an application for SP – Ang Hiok Seng @ Ang Yeok
Seng v Yim Yuk Kiu (Personal Representative of the Estate of Chan Weng Sun, deceased);
Rasiah Munusamy v Lin Tan & Sons Sdn Bhd; Summers and Cocks; Holliday v Lockwood;
Walters v Morgan.
• Jericho v Guglieimin – poor grounds for a claim for SP if the applicant has taken
advantage of the weakness or the like of the defendant, e.g. drunkenness, lack of awareness of
one’s right, illiteracy, etc.
Application:
• Halfbaked Clay Suppliers Sdn Bhd cannot raise the defence of hardship as they are
contractually obligated to supply clay. Just because there is no more clay in the nearby states
does not frustrate the contract or make it too difficult to source it from other states. Just because
it will cost Halfbaked Clay Suppliers Sdn Bhd more to do so is not sufficient hardship to remove
Halfbaked Clay Suppliers Sdn Bhd’s liability in the contract.
• Halfbaked Clay Suppliers Sdn Bhd’s CEO, Mr.
• Halfbaked Clay Suppliers Sdn Bhd’s CEO, Mr. Tan Ah Red, has behaved very poorly by
threatening to terminate the contract. If has stated that the company needs to do so due to valid
reasons, it would be acceptable, but the facts state that he threatened to do so, which is morally
wrong. Equity would not be on Halfbaked Clay Suppliers Sdn Bhd’s side.
2. In January 2016, Crackpot Sdn Bhd and Copperhead Metal Smelters Sdn Bhd
entered into an agreement for the supply of 25 tonnes of a unique copper-iron alloy
that Crackpot Sdn Bhd intended to use to make curry pots for sale.
Unfortunately, when these curry pots went on sale, they were found to be deficient
as these metal pots would melt during use. Copperhead Metal Smelters Sdn Bhd
realised and admitted that this was due to a wrong chemical process that greatly
reduced the melting point of the alloy. The company promised to supply Crackpot
Sdn Bhd with 25 tonnes of the same alloy, promising that there will be no defects,
within three months at no charge.
Due to some internal problems, Copperhead Metal Smelters Sdn Bhd requested for
an extension of time to complete the agreement in April 2016. Crackpot Sdn Bhd
consented to the extension. Due to the same problems, this request for extension was
made and given two more times.
On 26 December 2016, Copperhead Metal Smelters Sdn Bhd received a notice of
demand for the completion of the agreement mentioned above from Crackpot Sdn
Bhd’s solicitor. The letter insisted that the delivery of all the 25 tonnes of alloy be
completed within 48 hours of the date of the letter. As the delivery was not made
within the time stipulated, Crackpot Sdn Bhd’s solicitor wrote a letter to
Copperhead Metal Smelters Sdn Bhd to inform them that the agreement was
terminated.
Copperhead Metal Smelters Sdn Bhd has completed the process of producing the
total amount of the alloy mentioned on 31 December 2016. It subsequently offered
to complete the contract but Crackpot Sdn Bhd refused to do so stating that the
contract was at an end.
Advise Copperhead Metal Smelters Sdn Bhd. on the matter of specific performance.
3. “Specific performance is an equitable relief which may be granted by the court to
enforce against the defendant the duties and obligations which he had agreed by
contract to perform. The remedy is special and extraordinary in its character and
the court has discretion either to grant it or not. However, the discretion is not an
arbitrary or capricious discretion but it is to be exercised on fixed principles. The
conduct of the plaintiff such as delay or laches or breach on his part or some other
circumstances outside the contract may render it inequitable to grant the remedy of
specific performance”.
[per Hashim Yeop A.Sani SCJ in M.Ratnavale v S.Lourdenadin (1988)2 MLJ 371]
Critically evaluate the statement above.
• Pecuniary compensation cannot be obtained
• Sp where subject has partially ceased to exist
• SP of a part of contract
o Where part unperformed is small
o Where part unperformed is large
o Independent part
• Defences:
o Mistake, misrepresentation;
o Ineffective contract;
o Unfair advantage;
o Delay;
o Hardship;
o Defect in title;
Authorities:
• S.11 – S.29 Specific Relief Act 1950
• Cooperative Insurance Society Ltd v Argyll Stores
• Ganam Rajamany v Somoo Sinnah
• Venkatachalam Rm Chettier v Nkr Arunasalam Chettier
• Sekemas Sdn. Bhd. v Lian Seng Co. Sdn Bhd
• Khatijabai Jiwa Hasham v Zenab (As Legal Representrative Of H.G.Harji)
• Marks v Lilley
• Gan Realty Sdn Bhd v Nicholas
• Loan Investments Corporation Of Australia v Bonner
• Wolverhamptom Corporation v Emmons
• Lin Nyuk Chan v Wong Sz Tsin
• Badan Pengurusan Tiara Duta v Timeout Resources Sdn Bhd (2015)
Conclusions:
Based on student’s argument and application of law.
4. Crackpot Sdn Bhd is a well-established manufacturer of cooking pots in Malaysia.
It entered into an agreement with Cheapo (M) Sdn Bhd in September, 2016 to
supply 100 units of clay pots and 100 units of stainless steel, non-stick cooking pots
each month for a term of 6 months.
Cheapo (M) Sdn Bhd received a letter from Crackpot Sdn Bhd dated 21 January,
2017 that it intends to terminate the agreement as Cheapo (M) Sdn Bhd’s rates for
the goods are much lower than its competitors. Crackpot Sdn Bhd also claims that it
is no longer continuing the production of its patented stainless steel, non-stick
cooking pots. Despite having a total of 107 units left, Crackpot Sdn Bhd informed
Cheapo (M) Sdn Bhd via the same letter that it is terminating the contract with
immediate effect.
Crackpot Sdn Bhd purchased a plot of land in Seremban to build a new
manufacturing centre close to the county’s biggest clay quarry. The vendor, Mr.
Tuah is an old man with no family, has decided to increase the selling price of the
property 2 weeks before the transfer is to be registered. He claims that he has run
into a big debt and that this new price is the real market value of the property as
compared to in the agreement he signed. He is refusing to proceed with the
registration of the transfer until Crackpot Sdn Bhd agrees to the new purchase
price.
Advise Cheapo (M) Sdn Bhd and Crackpot Sdn Bhd as to whether they may be able
to enforce the performance of the agreements above.
