Frasers Islington Ltd v The Hanover Trustee Company Ltd & Ors

Specific performance is not automatically refused because the claimant cannot or will not perform a minor contractual obligation. The court must examine whether the defendant will receive substantially what was bargained for and must consider all relevant circumstances, including the reason for the incomplete performance. A requirement that the claimant be ready, willing and able to perform remains substantive rather than technical. Unwillingness to perform may justify refusal where it is capricious or lacks good reason, but disproportionate cost is only one possible good reason. On the facts, excluding a very small substation from the leaseback, while offering an equivalent alternative, did not deprive the defendants of the substance of their bargain.

Frasers Islington Limited appealed against an order of Master Bowles dated 27 October 2009 granting summary judgment and specific performance concerning freehold options contained in two building leases. The appellants were trustees who owned the development site and were to receive a 999-year leaseback of the commercial parts of the development.

A residential electricity transformer had been installed in the chamber intended for the commercial transformer. The claimant offered to grant the immediately adjacent chamber instead. The appellants argued that specific performance should be refused, or made conditional on relocating the transformer, because of incomplete performance, lack of intention to perform, disproportionate cost, trespass, concealment and an asserted alternative use for the chamber.

1. Appeal dismissed. The appellants had no real prospect of successfully resisting specific performance at trial.
2. The correct question was whether the respondent’s proposed performance would confer substantially what the appellants had contracted to receive. The supposed distinction between inability to give title and inability to give vacant possession of a minor part of the property was commercially and legally untenable. The rule that the claimant must be ready, able and willing to perform is substantive, not technical: Rutherford v Acton-Adams [1915] AC 866 and Mehmet v Benson [1964-1965] 113 CLR 295.
3. The “breach of an essential term” formulation is only a useful approximation. It cannot replace the broader inquiry into the substance of the bargain. The omitted chamber was a minute part of the development, and the adjacent chamber was offered in substitution.
4. Specific performance is an equitable and discretionary remedy. Where a claimant is unwilling to perform fully, the reasons for that unwillingness must be considered with all other relevant factors. Capricious or casual unwillingness may defeat the remedy. Disproportionate cost may constitute a good reason, but it is not the only possible good reason. The approach in Shepherd v Croft [1911] 1 Ch 521 was accepted.
5. The court declined to treat the “essential term” approach in Sport International Bussum v Inter-Footwear Ltd [1984] 1 WLR 776 as a substitute for the substantive inquiry.
6. The lease provisions were properly interpreted as requiring installation of the residential transformer before completion. Its installation was therefore performance under the building leases, not a trespass or impermissible attempt to accelerate the option. The alleged alternative use of the chamber was a contrivance and could be rejected without a trial.

• High Court (Chancery Division): On appeal from Master Bowles, the order granting summary judgment and specific performance was upheld; the appeal was dismissed.