#6707 - Price V. Strange - Commercial Remedies BCL

Price v. Strange

Facts

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.

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 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 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."

The evidence, as the 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 May 17, 1974, which led to this action.

The defendant’s defence was that specific performance could not be granted because the remedy was not mutual at the date of the contract

Question

The question before the Court was whether the following passage from Fry is a correct summary of the law:

“Fry says, at p. 219: '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.' At p. 222 in paragraph 463 he says: 'The mutuality of a contract is, as we have seen, to be judged of at the time it is entered into.”

Holding

Goff LJ

Plaintiff’s argument: 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.

Holding: In my judgment, however, that is not sound. There are concurrent obligations from the start, albeit performance by the landowner is dependent upon 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 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.

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 dependant 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.

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.

Application to facts

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.

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

Buckley LJ

If one party were...